Edgar Filing: HMG COURTLAND PROPERTIES INC

U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB

[X] Annual Report under Section 13 or 15(d) of the Securities and
Exchange Act of 1934

For the fiscal year ended December 31, 2004

[ ] Transition Report under Section 13 or 15(d) of the Securities and
Exchange Act of 1934

Commission file number: 1-7865

HMG/COURTLAND PROPERTIES, INC.
(Name of Small Business issuer in its Charter)

Delaware 59-1914299
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

1870 S. Bayshore Drive, Coconut Grove, Florida 33133
(Address of principal executive offices) (Zip Code)

Issuer's telephone number, including area code: (305) 854-6803

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange
Title of class on which registered:
Common Stock - Par value $1.00 per share American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this form 10-KSB. [X]

DOCUMENTS INCORPORATED BY REFERENCE: See Item 13, for items incorporated by
reference into this Annual Report on Form 10KSB. Exhibit Index: Page No.: 60

The issuer's revenues for its most recent fiscal year were $5,472,481

The aggregate market value of the voting stock held by non-affiliates of the
Registrant (excludes shares of voting stock held by directors, executive
officers and beneficial owners of more than 10% of the Registrant's voting
stock; however, this does not constitute an admission that any such holder is an
"affiliate" for any purpose) based on the closing price of the stock as traded
on the American Stock Exchange on March 28, 2005 was $4,576,556. The number of
shares outstanding of the issuer's common stock, $1 par value as of the latest
practicable date: 1,089,135 shares of common stock, $1 par value, as of March
28, 2005.

TABLE OF CONTENTS

PAGE

PART I
Item 1. Description of Business.................................. 3
Item 2. Description of Property.................................. 7
Item 3. Legal Proceedings........................................ 11
Item 4. Submission of Matters to a Vote of
Security Holders......................................... 11

PART II
Item 5. Market Price for Common Equity
and Related Stockholder Matters
and Purchases of Equity Securities....................... 12
Item 6. Management's Discussion and
Analysis or Plan of Operation............................ 13
Item 7. Financial Statements..................................... 20
Item 8. Changes in and Disagreements with
Accountants On Accounting and
Financial Disclosure..................................... 51
Item 8A. Controls and Procedures.................................. 51

PART III
Item 9. Directors, Executive Officers,
Promoters and Control Persons;
Compliance with Section 16(a) of the
Exchange Act............................................. 52
Item 10. Executive Compensation................................... 53
Item 11. Security Ownership of Certain
Beneficial Owners and Management......................... 54
Item 12. Certain Relationships and Related
Transactions............................................. 55
Item 13. Exhibits and Reports on Form 8-K......................... 58
Item 14. Principal Accountants Fees and
Services................................................. 58
SIGNATURES............................................... 59

Part I.

Cautionary Statement. This Annual Report 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 Annual Report 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.

Item 1. Description of Business.
HMG/Courtland Properties, Inc. and subsidiaries ("HMG", or the "Company"), was
organized in 1972 as a Delaware corporation. HMG (excluding its 95% owned
subsidiary Courtland Investments, Inc., which files a separate tax return)
qualifies for taxation as a real estate investment trust ("REIT") under the U.S.
Internal Revenue Code.

The Company's business is the ownership and management of income-producing
commercial properties and its management considers other investments if such
investments offer growth or profit potential. As discussed below, the Company
relies on one tenant at its Grove Isle, hotel and resort property for a
significant portion of its rental and related revenue.

On August 20, 2004, the Company acquired a 50% interest in a restaurant,
office/retail mall and marina property located in Coconut Grove (Miami), Florida
known as Monty's (the "Monty's Property"). The total purchase price was
approximately $13.9 million which included $7.7 million in goodwill and was
financed by a bank loan of $10.1 million. The Monty's Property consists of a two
story building with approximately 40,000 rentable square feet, approximately
15,000 square feet of outdoor space comprising the raw bar restaurant and
approximately 3.7 acres of submerged land with approximately 132 dock slips
comprising the marina portion of the property. A portion of the upstairs space
is intended to be utilized as a restaurant and it and parts of the downstairs
restaurant are currently being renovated. The Company expects to operate, or
through a tenant-operator open, an upstairs restaurant over-looking the marina
and will expand the downstairs raw bar, as well as renovate the office/retail
mall. Construction is expected to be completed by late 2005 at estimated cost of
$3.7 million. The acquired assets also include certain trademarks and other
rights in connection with the restaurant and dock slips. The Monty's Property is
subject to a ground lease, as amended, with the City of Miami, Florida which
expires in 2035. Lease payments are based on percentage rents ranging from 5% to
15% of gross revenues from various components of the Monty's Property.

In September 2004 the Company entered into an agreement with an affiliate of the
Company's major tenant, Westgroup Grove Isle Associates, a subsidiary of Noble
House Resorts, Inc. (a national operator of hotels and resorts) for the purpose

of developing and operating on the Grove Isle property, a commercial project
consisting of a first class spa, together with related improvements and
amenities (the "Spa Property"). The Company owns 50% of this new venture. The
construction of the Spa Property is expected to be completed in 2005 at a cost
of approximately $2.4 million.

In conjunction with the spa property development, the Company amended and
restated its lease with Westgroup to extend the term of the lease from December
31, 2006 to December 31, 2016, and includes two options to extend the lease term
each for an additional 20 years. The lease with Westgroup accounts for a large
portion of the Company's rental and related revenue. For the years ended
December 31, 2004 and 2003, the Westgroup lease accounted for approximately 80%
and 72%, respectively, of total rental and related revenue.

In April 2004 the Company sold its Fashion Square shopping center located near
Jacksonville, Florida for approximately $3.9 million and recognized a net gain
on the sale of $1.8 million.

The Company's principal assets include a hotel, private club with spa and
marina, a 50% interest in a restaurant, marina and office/retail mall facility
(as discussed above) and its corporate office building. All of these properties
are located in the Coconut Grove section of Miami, Florida. The Company also
owns a 70% interest in a 17,000 square foot commercial building in Kingston, New
York, a 70% interest in a 13,000 square foot commercial building in Montpelier,
Vermont and approximately 3 acres of land held for development in Houston,
Texas.

The Company's other investments consist of equity interests in various privately
held entities, primarily limited partnerships, whose purpose is to invest
venture capital funds in growth-oriented enterprises which may include
investments in commercial real estate. Of the total amount committed in these
other investments, approximately 18% (based on carrying values) is in real
estate related investments and the remaining investments are in varied private
entities which invest in diversified growth-oriented enterprises. Other
investments give rise to exposure resulting from the volatility in capital
markets. The Company mitigates its risks by diversifying its investment
portfolio. Information with respect to the amounts and types of other
investments including the nature of the declines in value is set forth in Note 5
of the Notes to Consolidated Financial Statements.

The Company invests idle cash in income producing instruments, including equity
and debt securities issued primarily by large capital companies or government
agencies with readily determinable fair values in varying industries, including
real estate investment trusts and mutual funds focusing in commercial real
estate activities. Substantially all of the Company's marketable securities
investments are in companies listed on major national stock markets, however the
overall investment portfolio and some of the Company's investment strategies
could be viewed as risky and the market values of the portfolio may be subject
to fluctuations. Consistent with the Company's overall investment objectives and
activities, management classifies all marketable securities as being held in a
trading portfolio. Accordingly, all unrealized gains and losses on the Company's
investments in marketable securities are recorded in the statement of income.
Marketable securities are stated at market value as determined by the most
recently traded price of each security at the balance sheet date.

The Company acquires its real estate and other investments utilizing available
cash, trading securities or borrowing funds.

The Company may realize gains and losses in its overall investment portfolio
from time to time to take advantage of market conditions and/or manage the
portfolio's resources and the Company's tax liability. The Company may utilize
margin for its marketable securities purchases through the use of standard
margin agreements with national brokerage firms. The use of available leverage
is guided by the business judgment of management. The Company may also use
options and futures to hedge concentrated stock positions and index futures to
hedge against market risk and enhance the performance of the Company's portfolio
while reducing the overall portfolio's risk and volatility.

Reference is made to Item 12. Certain Relationships and Related Transactions for
discussion of the Company's organizational structure and related party
transactions.

Information with respect to the amounts and types of investments in marketable
securities is set forth in Note 4 of the Notes to Consolidated Financial
Statements.

Investment in affiliate.
The Company's investment in affiliate consists of a 49% equity interest in T.G.
I.F. Texas, Inc. (TGIF). T.G.I.F. is a Texas Corporation, which owns one net
leased property in Louisiana and holds promissory notes receivable from its
shareholders, including the Company's 95% owned subsidiary, Courtland
Investments, Inc. ("CII") and Maurice Wiener, the Chairman of the Company. This
investment's carrying value is approximately $3 million and the Company has as
note payable to TGIF of approximately $3.7 million which is due on demand.

Insurance, Environmental Matters and Other.
In the opinion of management, all significant assets of the Company are
adequately covered by insurance and the cost and effects of complying with
environmental laws do not have a material impact on the Company's operations.

The Company's subsidiary which operates a restaurant is subject to various
federal, state and local laws affecting its business. In particular, this
restaurant is subject to licensing and regulation by the alcoholic beverage
control, health, sanitation, safety and fire department agencies of Miami-Dade
County, Florida. To the extent that the Company's restaurant sells alcoholic
beverages it is subject to the State of Florida's liquor liability statues or
"dram shop laws" which allow a person injured by an "obviously intoxicated
person" to bring a civil suit against the business (or social host) who had
served intoxicating liquors to an already "obviously intoxicated person". Dram
shop claims normally involve traffic accidents and the Company would generally
not learn of such claims until such claims are filed. At the present time, there
are no dram shop cases pending against the Company. The Company has in place
insurance coverage to protect it from losses, if any.

Competition.
The Company competes for suitable opportunities for real estate investments with
other real estate investment trusts, foreign investors, pension funds, insurance
companies and other investors. The Company also competes with other real estate
investors and borrowers for available sources of financing.

In addition, to the extent the Company leases properties it must compete for
tenants with other lessors offering similar facilities. Tenants are sought by
providing modern, well-maintained facilities at competitive rentals. The Company
has attempted to facilitate successful leasing of its properties by investing in
facilities that have been developed according to the specifications of tenants
and special local needs.

The food and beverage industry is highly competitive and are often affected by
changes in taste and entertainment trends among the public, by local, national
and economic conditions affecting spending habits, and by population and traffic
patterns. The Company's restaurant is outdoors and subject to climate and
seasonal conditions.

In conjunction with the purchase of the restaurant, marina and mall facility in
August 2004 the Company obtained the right to certain trademarks and service
marks commonly known as "Monty Trainer's", "Monty's Stone Crab", "Monty's
Conch", "Monty's" and "Monty's Marina, together with certain other trademarks,
trade secrets, unique features, concepts, designs operating procedures, recipes
and materials used in connection with the operation of the restaurant. The
Company regards its trademarks and other proprietary rights as valuable assets
which are essential to the related operations. The Company will vigorously
monitor and protect its trademarks against infringement and dilution where
legally feasible and appropriate.

Employees.
The Company has one employee who is an officer of Courtland Investments (a
95%-owned consolidated subsidiary). This employee assumed the responsibilities
of the prior project manager of one of the Company's properties. The Company has
no employees other than officers who are not compensated for their services as
such in accordance with its Advisory Agreement (the "Agreement") with the
Adviser. Reference is made to Item 12. Certain Relationships and Related
Transactions.

The labor costs relating to the food and beverage operations represent the
Company's reimbursement to the manager of the restaurant for its employees and
are not employees of the Company. Reference is made to discussion of restaurant,
marina and mall in Item 2. Description of Property.

Terms of the Agreement. Under the terms of the Agreement, the Adviser serves as
the Company's investment adviser and, under the supervision of the directors of
the Company, administers the day-to-day operations of the Company. All officers
of the Company, other than the project manager described above (who is not
employed by the Adviser), who are officers of the Adviser are compensated solely
by the Adviser for their services. The Agreement is renewable annually upon the
approval of a majority of the directors of the Company who are not affiliated
with the Adviser and a majority of the Company's shareholders. The contract may
be terminated at any time on 120 days written notice by the Adviser or upon 60
days written notice by a majority of the unaffiliated directors of the Company
or the holders of a majority of the Company's outstanding shares.

On July 16, 2004, the shareholders approved the renewal of the Advisory
Agreement between the Company and the Adviser for a term commencing January 1,
2005, and expiring December 31, 2005.

The Adviser is majority owned by Mr. Wiener with the remaining shares owned by
certain officers, including Mr. Rothstein. The officers and directors of the
Adviser are as follows: Maurice Wiener, Chairman of the Board and Chief
Executive officer; Lawrence I. Rothstein, President, Treasurer, Secretary and
Director; and Carlos Camarotti, Vice President - Finance and Assistant
Secretary.

Advisory Fees. For the years ended December 31, 2004 and 2003, the Company and
its subsidiaries paid the Adviser fees of approximately $1,215,000 and $977,000,
respectively, of which $900,000 represented regular compensation and
approximately $315,000 and $77,000 represented incentive compensation for 2004
and 2003, respectively. The Adviser is also the manager for certain of the
Company's affiliates and received management fees of approximately $38,000 and
$14,000 in 2004 and 2003, respectively, for such services. Included in fees for
2004 was approximately $8,000 of management fees earned relating to management
of restaurant portion of the property acquired in August of 2004.

Item 2. Description of Property.

Grove Isle Hotel, Club and Marina (Coconut Grove, Florida). A 50 room hotel and
private club (the "facility") located on 7 acres of a private island in Coconut
Grove, Florida, known as "Grove Isle". In addition to the 50 hotel rooms, the
facility includes public space, banquet facilities and restaurant, tennis
courts, and an 85-yacht slip marina.

The facility has been leased since November 1996 to Westgroup Grove Isle
Associates, Ltd., or "Westgroup", an affiliate of Noble House Resorts, Inc.
("NHR") which is a national operator of hotels and resorts. Westgroup operates
all aspects of the facility, except for the marina which is operated by the
Company. The original terms of the lease called for base rent of $918,400 plus
participation rent consisting of a portion of Westgroup's operating surplus.
Participation rent when and if due is payable at end of each lease year. There
has been no participation rent since the inception of the lease. A 1999 lease
amendment increased base rent commencing January 1, 2002 in accordance with
changes in the Consumer Price Index ("CPI"). Base rent for 2004 was $1,003,157,
increasing to $1,037,172 in 2005. Participation rent when and if earned will be
reduced by the amount by which base rent increases solely as a result of CPI
increases for the lease year.

In September 2004 the Company entered into an agreement with Noble House
Associates, LLC ("NHA"), an affiliate of the Westgroup, for the purpose of
developing and operating on the Grove Isle property, a commercial project
consisting of a first class spa, together with related improvements and
amenities (the "Spa Property"). A newly formed subsidiary of the Company, CII
Spa, LLC ("CIISPA") and NHA formed a Delaware limited liability company, Grove
Spa, LLC ("GS") which is owned 50% by CIISPA and 50% by NHA. The Spa Property
developed by GS will be sub-leased from Westgroup. The initial term of the
sublease commenced on September 15, 2004 and ends on November 30, 2016, with the
GS having the right to extend the term for two additional consecutive 20 year
terms on the same terms as the original sublease. Annual base rent of the
sublease is $10,000, plus GS shall pay real estate taxes, insurance, utilities
and all other costs relating to the Spa Property. The construction of the Spa
Property is expected to be completed in 2005 at a cost of approximately $2.4
million.

In conjunction with the Spa Property development, the Company amended and
restated its lease with Westgroup to extend the term of the lease from December
31, 2006 to December 31, 2016, and includes two options to extend the lease term
each for an additional 20 years. Furthermore, the lease's termination payment,
as defined, was amended and restated to mean 50% of the amount by which the
value of the leased property on the date of termination, as amended, exceeds
$11,480,000, plus the value of NHA's percentage ownership interest in GS.

The facility is encumbered by a mortgage note payable with an outstanding
balance of approximately $4.3 million and $3.4 million as of December 31, 2004
and 2003, respectively. This loan calls monthly principal payments of $10,000
with all outstanding principal and interest due at maturity on September 29,
2010. Interest on outstanding principal is due monthly at an annual rate 2.5%
plus one-month LIBOR Rate. In December 2004, this loan was modified to include
an increase in the loan balance outstanding of $1 million. This additional
borrowed amount (less loan costs) was loaned to GS to partially fund the
construction of the Spa Property.

As of December 31, 2004, 6 of the 85 yacht slips at the facility are owned by
the Company and the other 79 are owned by unrelated individuals or their
entities. During 2004, the Company sold two yacht slips for a total sales price
of approximately $240,000. The net gain to the Company was approximately
$166,000. The Company operates and maintains all aspects of the marina at Grove
Isle in exchange for an annual maintenance fee from the slip owners to cover
operational expenses. In addition the Company rents the unsold slips to boat
owners on a short term basis.

In 1997 and in conjunction with the original lease, the Company advanced
$500,000 to the principal owner of Noble House Resorts, Inc. and received an
unsecured promissory note bearing interest at 8% per annum with interest
payments due quarterly beginning on July 1, 1997 with all principal due at
maturity in 2006. All interest payments due have been received.

The Company has included the accounts of CIISPA in its consolidated financial
statements beginning from September 15, 2004, the date of agreement.

Restaurant, marina and mall (Coconut Grove, Florida).
On August 20, 2004, the Company, through two 50%-owned entities, Bayshore
Landing, LLC ("Landing") and Bayshore Rawbar, LLC ("Rawbar"), (collectively,
"Bayshore") purchased a restaurant, office/retail and marina property located in
Coconut Grove (Miami), Florida known as Monty's (the "Monty's Property") for
approximately $13.9 million. The other 50% owner of Bayshore is The Christoph
Family Trust (the "Trust" or "CFT"). Members of the Trust are experienced real
estate and marina operators. The seller, Bayshore Restaurant Management
Corporation and affiliates ("BRMC"), is part of a larger privately-held
organization which operates other restaurants in Florida. The acquired assets
included a two story building with approximately 40,000 rentable square feet. A
portion of the upstairs space is intended to be utilized as a restaurant. The
property also includes approximately 15,000 square feet of outdoor space
comprising the raw bar restaurant and approximately 3.7 acres of submerged land
with approximately 132 dock slips comprising the marina portion of the acquired
property. Also included in the acquired assets were certain trademarks and other
rights in connection with the restaurant and dock slips.

The acquired property is subject to a ground lease with the City of Miami,
Florida expiring in 2035 which was assigned to Bayshore upon acquisition. The
annual rent under the ground lease is based on a percentage of revenues.

The purchase price paid by Bayshore included proceeds from a bank loan secured
by the Property in the amount of $10.1 million plus approximately $3.9 million
in cash. The $10.1 million bank loan is part of a $13.275 million acquisition
and construction loan. Proceeds from the construction loan are intended for
renovations to the entire property. The outstanding principal balance of the
bank loan shall bear interest at a rate of 2.45% per annum in excess of the
LIBOR Rate. The bank loan shall be payable as follows: during the first year,
monthly payments of accrued interest will be paid. After the first year and upon
conversion to permanent terms, the loan will be repayable in equal monthly
principal payments necessary to fully amortize the principal amount over the
remaining twenty years of the loan, plus accrued interest. In conjunction with
the mortgage Bayshore has also entered into an interest rate swap agreement to
manage their exposure to interest rate fluctuation through the entire term of
the mortgage. The effect of the swap agreement is to provide a fixed interest
rate of 7.57%.

The following table sets forth the allocation of the purchase price to the
assets acquired:

Marina slips $2,500,000
Buildings 2,900,000
Furniture and fixtures 765,000
Goodwill 7,729,000
Food and beverage inventory 49,000
-------------
Total Capitalized Costs $13,943,000
=============

The allocation above was based on independent appraisal and valuation reports
which utilized as its primary valuation method the discounted cash flows from
the existing operations assigning appropriate discount rates for each of the
three operating components of the Monty's Property. The excess of capitalized
cost assigned to specific assets over the purchase price was $7,729,000 and was
recorded as goodwill. Goodwill is an intangible asset with an indefinite life.
It will be reviewed for impairment annually and whenever an event occurs or
circumstances change that would more likely than not reduce fair value below
carrying value. For federal income tax purposes goodwill is expected to be
amortized under the provisions of the Internal Revenue Code.

The upstairs and parts of the downstairs of the Monty's Property are currently
under construction. The Company expects a portion of the upstairs space to be
utilized as a restaurant and is also expanding the downstairs raw bar
restaurant. Construction is expected to be completed by late 2005 at an
estimated cost of $3.7 million.

incentive fee equal to 33% of all operating profits (as defined) greater than
$1,200,000 per year. The operations of Rawbar are performed by employees of the
Manager and the Company reimburses the Manager for such employees' payroll and
related costs. The management agreement expires in August, 2009.

In August 2004 the Company loaned $1 million to an entity which owns and
operates a restaurant in Key West, Florida. The Company has had a 10% equity
interest in this restaurant since its construction began in 1999. The proceeds
of the loan were used for leasehold improvements. The principal owner of the
restaurant is an entity whose principal is also the principal of BRMC, the
seller and current manager of the restaurant operations acquired on August 20,
2004 as described above. The promissory note is secured by a 65-year leasehold
interest and calls for quarterly payments of interest of 8% per annum beginning
on July 31, 2004. All principal and accrued and unpaid interest is due on June
30, 2009. The Company also has a ten year option to acquire an additional 20%
equity interest in this restaurant. The restaurant opened in October 2003 and
for the three months ended December 31, 2003 reported net income from operations
of $94,000 and for the year ended December 31, 2004 reported a net loss of
$564,000.

Land held for development (Texas and Rhode Island).
As of December 31, 2004, the Company owns approximately 3 acres of vacant land
held for development located in Houston, Texas. In September 2004 the Company
sold 3.4 acres of undeveloped land for approximately $885,000 and recognized a
net gain on the sale of $297,000.

Additionally the Company owns approximately 50 acres of vacant land held for
development located in Rhode Island.

Retail stores (New York and Vermont).
The Company owns a 70% interest in two retail store locations, one in Kingston,
New York and the other in Montpelier, Vermont. The Kingston property is leased
through June 2006 and calls for annual base rent of approximately $53,000 with a
renewal option after three years with adjustments for inflation. The Montpelier
property is vacant and held for development.

The Kingston, NY retail store described above is owned by a joint venture of
which the Company is an approximate 70% owner. The 30% minority partner is NAF
Associates. Reference is made to Item 12. Certain Relationships and Related
Transactions, HMG Fieber Associates.

Executive offices (Coconut Grove, Florida). The principal executive offices of
the Company and the Adviser are located at 1870 South Bayshore Drive, Coconut
Grove, Florida, 33133, in premises owned by the Company and leased to the
Adviser pursuant to a lease agreement dated December 1, 2004. The lease provides
for base rent of $48,000 per year payable in equal monthly installments during
the initial five year term of the lease. Additionally, the tenant pays the
property taxes, insurance, utility, and maintenance and security expenses
relating to the leased premises. This property is encumbered by mortgage loan
due to a bank of approximately $343,000. This loan bears interest at a fixed
rate of 4.75% through maturity and calls for monthly principal and interest
payments with all principal due at maturity in August 2007.

The Company regularly evaluates potential real estate acquisitions for future
investment or development and would utilize funds currently available or from
other resources to implement its strategy.

In April 2004 the Company sold the Fashion Square shopping center located near
Jacksonville, Florida for approximately $3.9 million and recognized a net gain
on the sale of $1.8 million.

Item 3. Legal Proceedings

None.

Item 4. Submission of Matters to a Vote of Security Holders.
On July 16, 2004, the shareholders approved the renewal of the Advisory
Agreement between the Company and the Adviser for a term commencing January 1,
2005, and expiring December 31, 2005 (Reference is made to Item 1. Business),
and reelected the Company's then existing Board of Directors by the following
votes:
Number of votes
------------------------------
For Against/Withheld
------------------------------
Amendment and renewal of Advisory Agreement (a) 1,032,394 27,007

Directors:
Walter G. Arader 1,034,024 25,377
Harvey Comita 1,034,038 25,363
Clinton Stuntebeck 1,034,024 25,377
Lawrence Rothstein 1,034,238 25,163
Maurice Wiener 1,034,238 25,163

(a) The number of votes for the Amendment and renewal of the Advisory Agreement
represents majority of the outstanding votes.

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 2004.

Part II.

Item 5. Market Price for Common Equity and Related Stockholder Matters and
Purchases of Equity Securities.

The high and low per share sales prices of the Company's stock on the American
Stock Exchange (ticker symbol: HMG) for each quarter during the past two years
were as follows:

High Low
March 31, 2004 $8.80 $9.90
June 30, 2004 $9.70 $9.50
September 30, 2004 $12.93 $9.50
December 31, 2004 $14.90 $11.39

March 31, 2003 $7.60 $6.20
June 30, 2003 $9.35 $7.70
September 30, 2003 $9.00 $8.25
December 31, 2003 $8.80 $7.90

There were no dividends paid or declared in 2004. The Company's policy has been
to pay dividends as are necessary for it to qualify for taxation as a REIT under
the Internal Revenue Code.

As of March 14, 2005, there were 393 holders of record of the Company's common
stock.

The following table illustrates securities authorized for issuance under the
Company's equity compensation plan:

Number of securities
Number of securities to Weighted-average remaining available for
be issued upon exercise exercise price of future issuance under
of outstanding options outstanding options equity compensation plans
--------------------------- -------------------------- ----------------------------

Equity compensation plan 86,000 $7.84 34,000
approved by shareholders
Equity compensation plan not
approved by shareholders -- -- --
--------------------------- -------------------------- ----------------------------
Total 86,000 $7.84 34,000
=========================== ========================== ============================

Item 6. Management's Discussion and Analysis or Plan of Operation.

Critical Accounting Policies and Estimates:
Securities and Exchange Commission Financial Reporting Release No. 60 requires
all companies to include a discussion of critical accounting policies and
methods used in the preparation of the financial statements. Note 1 of the
consolidated financial statements, included elsewhere on this annual report of
Form 10-KSB, includes a summary of the significant accounting policies and
methods used in the preparation of the Company's consolidated financial
statements. The Company believes the following critical accounting policies
affect the significant judgments and estimates used in the preparation of the
Company's financial statements:

Marketable Securities. Consistent with the Company's overall investment
objectives and activities, management has classified its entire marketable
securities portfolio as trading. As a result, all unrealized gains and losses on
the Company's investment portfolio are included in the statement of income. Our
investments in trading equity and debt marketable securities are valued based on
quoted market prices. Marketable securities are subject to fluctuations in value
in accordance with market conditions.

Other Investments. The Company's other investments consist primarily of nominal
equity interests in various privately-held entities, including limited
partnerships whose purpose is to invest venture capital funds in growth-oriented
enterprises. The Company does not have significant influence over any investee
and no single investment exceeds 5% of the Company's total assets. None of these
investments meet the criteria of accounting under the equity method and are
carried at cost; less distributions deemed return of capital and other than
temporary unrealized losses. These investments do not have available quoted
market prices, so we must rely on valuations and related reports and information
provided to us by those entities. These valuations are by their nature subject
to estimates which could change significantly from period to period. The Company
regularly reviews the underlying assets in its other investment portfolio for
events, including but not limited to bankruptcies, closures and declines in
estimated fair value, that may indicate the investment has suffered an
other-than-temporary decline in value. When a decline is deemed
other-than-temporary, we permanently reduce the cost basis component of the
investments. As such, any recoveries in the value of the investments will not be
recognized until the investments are sold.

Our estimates of each of these items historically have been adequate. However,
due to uncertainties inherent in the estimation process, it is reasonably
possible that the actual resolution of any of these items could vary
significantly from the estimate and, accordingly, there can be no assurance that
the estimates may not materially change in the near term.

Real Estate. Land, buildings and improvements, furniture, fixtures and equipment
are recorded at cost. Tenant improvements, which are included in buildings and
improvements, are also stated at cost. Expenditures for ordinary maintenance and
repairs are expensed to operations as they are incurred. Renovations and/or
replacements, which improve or extend the life of the asset are capitalized and
depreciated over their estimated useful lives.

Depreciation is computed utilizing the straight-line method over the estimated
useful lives of ten to forty years for buildings and improvements and five to
ten years for furniture, fixtures and equipment. Tenant improvements are
amortized on a straight-line basis over the term of the related leases.

The Company is required to make subjective assessments as to the useful lives of
its properties for purposes of determining the amount of depreciation to reflect
on an annual basis with respect to those properties. These assessments have a
direct impact on the Company's net income. Should the Company lengthen the
expected useful life of a particular asset, it would be depreciated over more
years, and result in less depreciation expense and higher annual net income.

Assessment by the Company of certain other lease related costs must be made when
the Company has a reason to believe that the tenant will not be able to execute
under the term of the lease as originally expected.

The Company periodically reviews the carrying value of certain of its properties
and long-lived assets in relation to historical results, current business
conditions and trends to identify potential situations in which the carrying
value of assets may not be recoverable. If such reviews indicate that the
carrying value of such assets may not be recoverable, the Company would estimate
the undiscounted sum of the expected future cash flows of such assets or analyze
the fair value of the asset, to determine if such sum or fair value is less than
the carrying value of such assets to ascertain if a permanent impairment exists.
If a permanent impairment exists, the Company would determine the fair value by
using quoted market prices, if available, for such assets, or if quoted market
prices are not available, the Company would discount the expected future cash
flows of such assets and would adjust the carrying value of the asset to fair
value. Judgments as to impairments and assumptions used in projecting future
cash flow are inherently imprecise.

Results of Operations:
For the year ended December 31, 2004, the Company reported net income of
approximately $1.5 million (or $1.37 per diluted share) compared with net income
of approximately $181,000 (or $.17 per diluted share) for the year ended
December 31, 2003.

Revenues:
Total revenues for the year ended December 31, 2004 as compared with that of
2003 increased by approximately $2,186,000 (or 66%). This increase was primarily
due to approximately $2.1 million in revenue related to the acquisition of the
Monty's Property in August 2004. Revenues from the Monty's Property consisted of
food and beverage revenue of $1.7 million, marina revenues of $337,000 and rents
and related revenue of $63,000 for the period from August 20th to December 31,
2004.

Real estate rentals and related revenue decreased by approximately $127,000 (or
8%) for the year ended December 31, 2004 as compared with 2003. This decrease
was the result of decrease rental income of $249,000 due to the sale of the
Jacksonville, FL shopping center in April 2004. This decrease was partially
offset by an increase in rental and related revenues from the Grove Isle hotel

of approximately $35,000 primarily due to an inflationary adjustment to base
rent in 2004, approximately $24,000 from the lease renewal of Kingston, NY
retail store addition and approximately $63,000 from rental income from the
retail mall acquired in August 2004.

Marina revenues increased by approximately $320,000 (or 67%) for the year ended
December 31, 2004 as compared with 2003. This increase was primarily the result
of the acquisition of the Monty's Property in August 2004. During 2004, the
Company sold two Grove Isle yacht slips for a total sales price of approximately
$240,000. The net gain to the Company was approximately $166,000.

Net gain from investments in marketable securities, including marketable
securities distributed by partnerships in which the Company owns minority
positions, for the years ended December 31, 2004 and 2003, is as follows:

Description 2004 2003

Net realized gain from sales of securities $188,000 $ 37,000
Unrealized net gain (loss) in marketable
securities 233,000 754,000
Net change in sales of securities pending
delivery - (24,000)
----------------------- -----------------------
Total net gain from investments in marketable
securities $421,000 $767,000
======================= =======================

Net realized gain from sales of marketable securities consisted of approximately
$326,000 of gains net of $138,000 of losses for the year ended December 31,
2004. The comparable amounts in fiscal year 2003 were gains of approximately
$362,000 net of $325,000 of losses. Approximately $195,000 and $197,000 of gains
in fiscal years 2004 and 2003, respectively, were recognized from the sale of
stock distributions from the Company's investments in privately held
partnerships.

Consistent with the Company's overall current investment objectives and
activities, the entire marketable securities portfolio is classified as trading
(versus available for sale, as defined by generally accepted accounting
principles). Unrealized gains or losses from marketable securities are recorded
as revenues in the statement of income.

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.

Investments in marketable securities give rise to exposure resulting from the
volatility of capital markets. The Company believes its risk to be mitigated by
the diversity of its marketable securities portfolio.

Net gain (loss) from other investments is summarized below:

2004 2003
--------------------- -------------------

Venture capital funds - technology & ($123,332) ($108,507)
communications (a)
Real estate and related (b) 104,233 139,852
Venture capital funds - diversified
businesses (c) 449,546 ---
Income from investment in 49% owned
affiliate (d) 67,323 32,130
Other (12,300) (12,300)
--------------------- -------------------
Totals $485,470 $51,175
===================== ===================

(a) In connection with management's regular review of other investments
which includes analyzing such factors as bankruptcies and realized
losses of underlying investees the Company recorded adjustments to
write down investments in these sectors for declines in value deemed to
be other-than-temporary. In 2004 management recorded a total of
$187,000 in write-downs of two investments in the technology-related
industry. In 2003 the loss included approximately $114,000 of
write-downs related to impairments experienced in three funds with a
heavy concentration in technology-related businesses.
(b) These gains consist primarily of gains from the disposition of assets
held in partnerships in which the Company owns minority equity
interests.
(c) This gain is primarily from the sale of one of the portfolio companies
owned by a limited partnership which owns various diversified
businesses, primarily in the manufacturing and production related
sectors. The Company's ownership percentage in this limited partnership
is approximately .51%. Two of these businesses were sold in 2004
resulting in a net gain to the Company of approximately $450,000.
(d) This gain represents income from the Company's 49% owned affiliate,
T.G.I.F. Texas, Inc. The increase from the prior year is primarily as a
result of increased rental revenue.

Net gain or loss from other investments 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 gain or loss from other investments
for any given period has no predictive value and variations in amount from
period to period have no practical analytical value.

Interest, dividend and other income for the year ended December 31, 2004
increased by approximately $171,000 (or 56%), as compared with that of 2003.
This was primarily the result of interest from a new loan to the restaurant
operator in Key West, Florida of $37,000 and increased earnings from investments
in bonds of approximately $103,000.

Expenses:
Total expenses for the year ended December 31, 2004 as compared to that of 2003
increased by approximately $2,093,000 (or 61%).

Food and beverage costs are solely from the Monty's Property restaurant
operations. Sales of food and beverage from August 20, 2004 (date acquired)
through December 31, 2004 was approximately $1.73 million. The related cost of
food and beverage sales was $537,000 or approximately 31% of food and beverage
sales. Direct labor and related costs for the food and beverage operations was
$356,000 or approximately 21% of sales, and all other costs relating to the food
and beverage operations amounted to approximately $790,000 for the same period.
Net profit from food and beverage operations (excluding payments between
consolidated affiliates) was approximately $47,000 for the period since
acquisition through December 31, 2004.

Operating expenses of rental and other properties for the year ended December
31, 2004 increased by approximately $82,000 or (15%) as compared with that of
2003. This increase was primarily the result of $103,000 of costs related to the
retail mall portion of the Monty's Property acquired in August 2004. This
increase was partially offset by decreased expenses related to the Fashion
Square shopping center which was sold in April 2004.

Marina expenses increased by approximately $163,000 (or 43%) for the year ended
December 31, 2004 as compared to 2003. This increase was primarily due to costs
associated with the marina portion of the Monty's Property acquired in August
2004.

Interest expense increased by approximately $235,000 (or 48%) for year ended
December 31, 2004 as compared to 2003, primarily due to interest of
approximately $285,000 on new borrowings related to the acquisition of the
Monty's Property in August 2004. This increase was partially offset by decreased
interest as a result of loan repayments from sales of property of approximately
$38,000.

Net gain on sales of real estate for the years ended December 31, 2004, and 2003
consisted of the following:

Net gain after incentive fee and
minority interest
---------------------------------------

Property Sold 2004 2003
Yacht slips, Coconut Grove, Florida $157,000 $356,000
Undeveloped land, Houston, Texas 298,000 282,000
Shopping center, Jacksonville, Florida 1,802,000 --
------------------ -----------------
Total $2,257,000 $638,000
================== =================

Net gain on sales of properties has been reduced, where applicable, by minority
partners' interest in the gain of $8,000 and $19,000 for the years ended
December 31, 2004 and 2003, respectively, and by adviser's incentive fees of
$251,000 and $69,000 for the years ended December 31, 2004 and 2003,
respectively.

Provision for income taxes for the years ended December 31, 2004 and 2003 was
$700,000 and $323,000, respectively. The 2004 provision includes $250,000 in
current income tax liability relating to the Company's REIT activities. This tax
may be eliminated or reduced if the Company elects to make a distribution as
allowed for REIT's. The 2004 provision also includes deferred income tax expense

on non-REIT activities primarily relating to the utilization of prior year net
operating loss carry forward. For the year ended December 31, 2003 the tax
provision consisted entirely of deferred income tax expense and there was no
current income tax provision or liability as the deferred income tax expense
consisted primarily of the utilization of prior year net operating loss carry
forward.

The Company follows the liability method of accounting for income taxes. Under
this method, deferred tax liabilities and assets are recognized for the expected
future tax consequences of temporary differences between the carrying amount and
the tax basis of assets and liabilities at each year-end based on enacted tax
laws and statutory tax rates applicable to the periods in which the differences
are expected to affect taxable income. As a result of timing differences
associated with the carrying value of other investments and depreciable assets
and the future benefit of a net operating loss, as of December 31, 2004 and
2003, respectively, the Company has recorded a net deferred tax asset of $28,000
and $478,000. A valuation allowance against deferred tax asset has not been
established as management believes it is more likely than not, based on the
Company's previous history and expectation of future taxable income before
expiration, that these assets will be realized.

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 primarily consist of maturities of debt obligations of
approximately $3.9 million in 2005, contributions committed to other investments
of approximately $1.0 million due upon demand and funding of remaining
construction in progress of approximately $4.4 million. The funds necessary to
meet these obligations are expected from the proceeds from the sales of
properties or investments, bank construction loan, refinancing of existing bank
loans, distributions from investments and available cash. Included in the
maturing debt obligations for 2005 is a note payable to the Company's 49% owned
affiliate, T.G.I.F. Texas, Inc. ("TGIF") ( Reference is made to Item 12 Certain
Relationships and Related Transactions) of approximately $3.7 million. This
amount is due on demand. The obligation due to TGIF will be paid with funds
available from distributions from its investment in TGIF and from available
cash.

A summary of the Company's contractual cash obligations at December 31, 2004 is
as follows:

Payments Due by Period
--------------------------------------------------------------------------------------------
Contractual Obligations Total Less than 1 year 1 - 3 years 4 - 5 years After 5 years
------------------------- ---------------- ------------------- ------------------- ------------------- ---------------

Mortgages and notes $18,483,069 $3,929,573 $1,891,113 $4,403,603 $8,258,780
payable
Other investments
commitments (a) 994,441 994,441 -- -- --
Commitments to complete
construction in
progress (b) 4,400,000 4,400,000 -- -- --
------------------------- ---------------- ------------------- ------------------- ------------------- ---------------
Total $23,877,510 $9,324,014 $1,891,113 $4,403,603 $8,258,780
========================= ================ =================== =================== =================== ===============

(a) The timing of amounts due under commitments for other investments is
determined by the managing partners of the individual investments.
These amounts are reflected as due in less than one year although the
actual funding may not be required until some time in the future.
(b) This amount represents an estimate as of December 31, 2004 of funding
necessary to complete all construction in progress. Funding will be
provided primarily from construction loans.

Material Changes in Operating, Investing and Financing Cash Flows.
The Company's cash flows are generated primarily from its real estate
activities, sales of investment securities, distributions from other investments
and borrowings. For the year ended December 31, 2004 the Company used net cash
in operating activities of approximately $314,000. This primarily consisted of
purchases of marketable securities in excess of proceeds from sale of securities
of approximately $1.8 million partially offset by increased broker margin
payables of approximately $1.4. The Company believes that there will be
sufficient cash flows in the next year to meet its operating requirements.

For the year ended December 31, 2004, the net cash used in investing activities
was approximately $12.1 million. This consisted primarily of the acquisition of
and follow-on investments in the Monty's Property of $14.3 million, construction
of the Grove Isle Spa property of approximately $1.5 million, additions to
mortgages and notes receivable of $1.2 million and contributions to other
investments of approximately $1.3 million. These uses were partially offset by
net proceeds from the sales of properties of $4.4 million and distributions from
investments of approximately $1.6 million

For the year ended December 31, 2004, net cash used in financing activities was
approximately $13.3 million. This consisted primarily of borrowings from
mortgages and notes payable of $11.2 million ($10.1 million for Monty's Property
acquisition and $1.0 million for Spa Property construction) and contributions
from minority partners of $2.9 million.

Item 7. Consolidated Financial Statements

Report of Independent Certified Public Accountant..................21.

Consolidated balance sheets as of December 31, 2004 and 2003.......22.

Consolidated statements of income for the
years ended December 31, 2004 and 2003..........................23.

Consolidated statements of stockholders' equity
for the years ended December 31, 2004 and 2003..................24.

Consolidated statements of cash flows for the
years ended December 31, 2004, and 2003.........................25.

Notes to consolidated financial statements.........................26.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders
of HMG/Courtland Properties, Inc.:

We have audited the accompanying consolidated balances sheets of HMG/Courtland
Properties, Inc. and subsidiaries as of December 31, 2004 and 2003, and the
related consolidated statements of comprehensive income, stockholders' equity
and cash flows for each of the years in the two-year period ended December 31,
2004. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of HMG/Courtland
Properties, Inc. and subsidiaries at December 31, 2004 and 2003, and the results
of its operations and its cash flows for each of the years in the two-year
period ended December 31, 2004, in conformity with accounting principles
generally accepted in the United States of America.

Sunrise, Florida
March 17, 2005

Berenfeld, Spritzer, Shechter & Sheer

HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2003
------------------------------------------------------------------------------------------------------------------------------

December 31, December 31,
2004 2003
ASSETS

Investment properties, net of accumulated depreciation:
Commercial properties $4,721,261 $2,611,777
Commercial properties- construction in progress 210,965 -
Hotel and club facility 3,827,201 4,212,734
Hotel and club facility-Spa construction in progress 1,489,702 -
Marina properties 2,515,265 169,073
Land held for development 589,419 1,083,855
------------------ ------------------
Total investment properties, net 13,353,813 8,077,439

Cash and cash equivalents 3,410,408 2,624,643
Investments in marketable securities 7,132,542 4,892,908
Other investments 5,190,543 5,048,016
Investment in affiliate 2,993,649 2,926,326
Loans, notes and other receivables 2,027,119 1,015,118
Notes and advances due from related parties 973,242 1,003,243
Deferred taxes 28,000 478,000
Goodwill 7,728,627 -
Other assets 536,706 234,036
------------------ ------------------
TOTAL ASSETS $43,374,649 $26,299,729
------------------ ------------------

LIABILITIES
Mortgages and notes payable $18,483,069 $8,086,227
Accounts payable and accrued expenses 885,132 229,462
Margin payable to broker 1,448,605 -
Income taxes payable 250,000 -
Interest rate swap contract payable 579,000 -
------------------ ------------------
TOTAL LIABILITIES 21,645,806 8,315,689

Minority interests 2,837,944 322,193
------------------ ------------------

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 41,735,070 39,478,522
Undistributed losses from operations (48,524,414) (47,786,418)
Accumulated other comprehensive loss (289,500) -
------------------ ------------------
20,808,763 19,579,711

Less: Treasury stock, at cost (226,500 shares) (1,659,114) (1,659,114)
Notes receivable from exercise of stock options (258,750) (258,750)
------------------ ------------------
TOTAL STOCKHOLDERS' EQUITY 18,890,899 17,661,847

------------------ ------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $43,374,649 $26,299,729
================== ==================

See notes to the consolidated financial statements

HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------------------

REVENUES 2004 2003

Real estate rentals and related revenue $1,557,050 $1,684,201
Food & beverage sales 1,733,044 -
Marina revenues 796,864 477,123
Net gain from investments in marketable securities 421,196 766,712
Net gain from other investments 485,470 51,175
Interest, dividend and other income 478,041 306,754
-----------------------------------------
Total 5,471,665 3,285,965

EXPENSES
Operating expenses:
Rental and other properties 622,148 540,098
Food and beverage cost of sales 537,319 -
Food and beverage labor and related costs 433,526 -
Food and beverage other operating costs 706,552 -
Marina expenses 537,429 374,908
Depreciation and amortization 617,324 585,432
Adviser's base fee 900,000 900,000
General and administrative 288,716 271,422
Professional fees and expenses 175,584 177,619
Directors' fees and expenses 67,671 61,664
-----------------------------------------
Total operating expenses 4,886,269 2,911,143

Interest expense 723,410 488,370
Minority partners' interests in operating gain (loss) of
consolidated entities (100,018) 20,406
-----------------------------------------
Total expenses 5,509,661 3,419,919
-----------------------------------------

Loss before sales of properties and income taxes (37,996) (133,954)

Gain on sales of properties, net 2,256,548 637,743
-----------------------------------------
Income before income taxes 2,218,552 503,789

Provision for income taxes 700,000 323,000
-----------------------------------------
Net income 1,518,552 180,789
=========================================

Other comprehensive loss:
Unrealized loss on interest rate swap agreement (289,500) -
-----------------------------------------
Total other comprehensive loss (289,500)

Comprehensive income $1,229,052 $180,789
=========================================

Net Income Per Common Share:
Basic $1.39 $0.17
===== =====
Diluted $1.37 $0.17
===== =====
Weighted average common shares outstanding - Basic 1,089,135 1,089,135
========= =========
Weighted average common shares outstanding - Diluted 1,112,417 1,094,993
========= =========

See notes to the consolidated financial statements

HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2004 AND 2003
-----------------------------------------------------------------------------------------
Undistributed
Gains from Sales Undistributed
Common Stock Additional of Properties Losses from
Shares Amount Paid-In Capital Net of Losses Operations

Balance as of January 1, 2003 1,315,635 $1,315,635 $26,571,972 $38,840,779 ($47,329,464)

Net income (loss) 637,743 (456,954)

Repayment of Note receivable
from exercise
of Stock Options
--------------------------------------------------------------------------------------------

Balance as of December 31, 2003 1,315,635 1,315,635 26,571,972 39,478,522 (47,786,418)

Net income (loss) 2,256,548 (737,996)

Unrealized loss on interest
rate swap contract
--------------------------------------------------------------------------------------------
Balance as of December 31, 2004 1,315,635 $1,315,635 $26,571,972 $41,735,070 ($48,524,414)
============================================================================================

Accumulated Notes
Other Receivable Total
Comprehensive Treasury Stock from exercise of Stockholders'
Loss Shares Cost Stock Options Equity

Balance as of January 1, 2003 - 226,500 ($1,659,114) ($288,750) $17,451,058

Net income (loss) 180,789

Repayment of Note receivable
from exercise
of Stock Options 30,000 30,000
----------------------------------------------------------------------------------------------

Balance as of December 31, 2003 - 226,500 (1,659,114) (258,750) 17,661,847

Net income (loss) 1,518,552

Unrealized loss on interest
rate swap contract ($289,500) (289,500)
----------------------------------------------------------------------------------------------
Balance as of December 31, 2004 ($289,500) 226,500 ($1,659,114) ($258,750) $18,890,899
==============================================================================================

See notes to the consolidated financial statements

HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
-----------------------------------------------------------------------------------------------------------------------

2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,518,552 $180,789
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 617,324 585,432
Net gain from other investments (530,134) (51,175)
Gain on sales of properties, net (2,256,548) (637,743)
Net (gain) loss from investments in marketable securities (421,196) (766,712)
Minority partners' interest in operating (losses) gains (100,018) 20,406
Deferred income tax expense 450,000 323,000
Changes in assets and liabilities:
(Increase) decrease in other assets and other recievables (200,006) 36,540
Net proceeds from sales and redemptions of securities 4,751,314 2,208,322
Decrease in sales of securities pending delivery - (80,099)
Increased investments in marketable securities (6,512,255) (2,579,794)
Increase (decrease) in accounts payable and accrued expenses 670,273 (8,796)
Increase in accrued income taxes payable 250,000 -
Increase (decrease) in margin payable to brokers and other liabilities 1,448,605 (679,891)
Repayment of note receivable from stock options exercised - 30,000
----------------- ----------------
Total adjustments (1,832,641) (1,600,510)
----------------- ----------------
Net cash used in operating activities (314,089) (1,419,721)
----------------- ----------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases and improvements of properties (including goodwill) (15,740,529) -
Net proceeds from disposals of properties 4,395,355 1,599,997
Decrease in notes and advances from related parties (31,300) 411,731
Additions in mortgage loans and notes receivables (1,200,000) -
Collections of mortgage loans and notes receivables 73,035 25,195
Distributions from other investments 1,620,019 1,523,226
Contributions to other investments (1,298,233) (843,140)
----------------- ----------------
Net cash (used in) provided by investing activities (12,181,653) 2,717,009
----------------- ----------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from mortgages and notes payables 11,180,000 -
Repayment of mortgages and notes payables (783,158) (536,179)
Contributions from minority partners 2,915,108 -
Distributions to minority partners (30,443) -
----------------- ----------------
Net cash provided by (used in) financing activities 13,281,507 (536,179)
----------------- ----------------

Net increase in cash and cash equivalents 785,765 761,109

Cash and cash equivalents at beginning of the period 2,624,643 1,863,534
----------------- ----------------

Cash and cash equivalents at end of the period $3,410,408 $2,624,643
----------------- ----------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for interest $723,000 $488,000
================= ================

See notes to the consolidated financial statements

HMG/COURTLAND PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2004 and 2003

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business and Consolidation. The consolidated financial statements include the
accounts of HMG/Courtland Properties, Inc. (the "Company") and entities in which
the Company owns a majority voting interest or controlling financial interest.
The Company was organized in 1972 and (excluding its 95% owned subsidiary
Courtland Investments, Inc., which files a separate tax return) qualifies for
taxation as a real estate investment trust ("REIT") under the Internal Revenue
Code. The Company's business is the ownership and management of income-producing
commercial properties and its management considers other investments if such
investments offer growth or profit potential. The Company's recurring operating
revenue comes from rental and related income, gains from investments and
beginning in August 2004 from food and beverage operations.

All material transactions and balances with consolidated and unconsolidated
entities have been eliminated in consolidation or as required under the equity
method.

The Company's consolidated subsidiaries are described below:

Courtland Investments, Inc. ("CII"). A 95% owned corporation, which owns 100% of
Grove Isle Yacht Club Associates and a 15% general partnership interest in Grove
Isle Associates, Ltd. CII also invests in marketable securities and various
investments in partnerships whose primary purpose is to make equity investments
in growth-oriented enterprises and real estate.

The Company holds a 95% non-voting interest and Masscap Investments Company,
Inc. ("Masscap") holds a 5% voting interest in CII. The Company and Masscap have
had a continuing arrangement with regard to the ongoing operations of CII, which
provides the Company with complete authority over all decision making relating
to the business, operations and financing of CII consistent with the Company's
status as a real estate investment trust. Masscap is a wholly-owned subsidiary
of Transco Realty Trust which is a 44% shareholder of the Company. CII files a
separate tax return and its operations are not part of the REIT tax return.

Courtland Bayshore Rawbar, LLC ("CBSRB"). This Florida limited liability company
("LLC") was formed in 2004 and is wholly owned by CII. CBSRB owns a 50% interest
in Bayshore Rawbar, LLC ("BSRB") which operates the outdoor Monty's restaurant.
The other 50% owner of BSRB is The Christoph Family Trust ("CFT") an unrelated
party.

HMG Bayshore, LLC ("HMGBS"). This Florida limited liability company ("LLC") was
formed in 2004 for the purpose of owning a 50% interest in the real property and
marina operations of Bayshore Landing, LLC ("BSL"). HMGBS and the CFT formed BSL
for the purposes of acquiring and operating Monty's Property in Coconut Grove,
Florida.

Courtland/Key West, Inc. ("CKWI"). This Florida corporation was formed in
December 1999 and is wholly-owned by CII. CKWI owns a 10% interests in a limited
liability company that owns and operates a restaurant in Key West, Florida.

CII Spa, LLC ("CIISPA"). This Florida single-member limited liability company
was formed in 2004 and is wholly-owned by CII. CIISPA owns a 50% interest Grove
Spa, LLC ("GS"), as discussed below.

In September 2004 the Company entered into an agreement with Noble House
Associates, LLC ("NHA"), an affiliate of the Company's tenant at its Grove Isle
property (Westgroup Grove Isle Associates, Ltd., or "Westgroup"), for the
purpose of developing and operating on the Grove Isle property a commercial
project consisting of a first class spa, together with related improvements and
amenities (the "Spa Property"). A newly formed and wholly-owned subsidiary of
the Company, CIISPA and NHA formed a Delaware limited liability company, GS
which is owned 50% by CIISPA and 50% by NHA. The Spa Property developed by GS
will be sub-leased from Westgroup.

Grove Isle Associates, Ltd. ("GIA"). This limited partnership (owned 85% by the
Company and 15% by CII) owns a 50-room, hotel and private club facility located
on approximately 7 acres of a private island in Coconut Grove, Florida known as
Grove Isle.

Grove Isle Yacht Club Associates ("GIYCA"). This partnership was the developer
of the 85 boat slips located at Grove Isle of which the Company owns six as of
December 31, 2004. All other slips are privately owned. Grove Isle Marina, Inc.
a wholly-owned subsidiary of GIYCA operates all aspects of the Grove Isle
marina.

The Grove Towne Center - Texas, Ltd ("TGTC"). This limited partnership is a
wholly-owned by the Company. The sole asset of the partnership is 3 acres of
undeveloped land located in suburban Houston, Texas.

South Bayshore Associates ("SBA"). This is a 75% owned joint venture where the
major asset is a receivable from the Company's 44% shareholder, Transco Realty
Trust.

HMG - Fieber Associates ("Fieber"). This is a 70% owned joint venture where the
major asset is a retail store located in the state of New York.

260 River Corp ("260"). This is a wholly-owned corporation which owns a 70%
interest in a vacant retail store location in Montpelier, Vermont.

Preparation of Financial Statements. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.

Income Taxes. The Company's 95%-owned subsidiary, CII, files a separate income
tax return and its operations are not included in the REIT's income tax return.
The Company accounts for income taxes in accordance with the Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
SFAS No. 109 requires a Company to use the asset and liability method of
accounting for income taxes. Under the asset and liability 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 bases
of existing assets and liabilities. Under SFAS No. 109, 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. The Company
(excluding CII) qualifies as a real estate investment trust and 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 their
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.
Distributed capital gains on sales of real estate as they relate to REIT
activities are not subject to taxes; however, undistributed capital gains are
taxed as capital gains. State income taxes are not significant.

Depreciation and Amortization. Depreciation of properties held for investment is
computed using the straight-line method over the estimated useful lives of the
properties, which range up to 39.5 years. Deferred mortgage and leasing costs
are amortized over the shorter of the respective term of the related
indebtedness or life of the asset. Depreciation and amortization expense for the
years ended December 31, 2004 and 2003 was approximately $617,000 and $585,000,
respectively. The Grove Isle yacht slips are being depreciated on a
straight-line basis over their estimated useful life of 20 years. The Monty's
marina is being depreciated on a straight-line basis over its estimated useful
life of 15 years.

Fair Value of Financial Instruments. The carrying value of financial instruments
including other receivables, notes and advances due from related parties,
accounts payable and accrued expenses and mortgages and notes payable
approximate their fair values at December 31, 2004 and 2003, due to their
relatively short terms or variable interest rates.

Marketable Securities. The entire marketable securities portfolio is classified
as trading consistent with the Company's overall investment objectives and
activities. Accordingly, all unrealized gains and losses on the Company's
marketable securities investment portfolio are included in the statement of
income.

Gross gains and losses on the sale of marketable securities are based on the
first-in first-out method of determining cost.

Marketable securities from time to time are pledged as collateral pursuant to
broker margin requirements. As of December 31, 2004 there was approximately $1.4
million of margin balances payable to brokers which were included in other
liabilities. As of December 31, 2003 there were no such amounts outstanding.

Notes and other receivables. Management periodically performs a review of
amounts due on its notes and other receivable balances to determine if they are
impaired based on factors affecting the collectibility of those balances.
Management's estimates of collectibility of these receivables requires
management to exercise significant judgment about the timing, frequency and
severity of collection losses, if any, and the underlying value of collateral,
which may affect recoverability of such receivables. As of December 31, 2004 and
2003, there were no receivables that required an allowance.

Sales of Securities Pending Delivery. Sales of securities pending delivery
represent the fair market value of shares sold with the promise to deliver that
security at some future date. The obligation may be satisfied with current
holdings of the same security or by subsequent purchases or acquisitions of that
security. Unrealized gains and losses from changes in the obligation are
included in earnings.

Equity investments. Investments in which the Company does not have a majority
voting or financial controlling interest but has the ability to exercise
influence are accounted for under the equity method of accounting, even though
the Company may have a majority interest in profits and losses.

The Company generally has no voting or financial controlling interests in its
other investments which include entities that invest venture capital funds in
growth oriented enterprises. These other investments are carried at cost less
adjustments for other than temporary declines in value.

Comprehensive Income (Loss). The Company reports comprehensive income (loss) in
the consolidated statement of stockholders' equity. Comprehensive income (loss)
is the change in equity from transactions and other events from nonowner
sources. Comprehensive income (loss) includes net income (loss) and other
comprehensive income (loss). For the year ended December 31, 2004 comprehensive
loss consisted of unrealized loss from interest rate swap agreement. There were
no comprehensive income (loss) items in 2003.

Earnings Per Common Share. Net income per common share (basic and diluted) is
based on the net income divided by the weighted average number of common shares
outstanding during each year. Diluted net income per share includes the dilutive
effect of options to acquire common stock. Common shares outstanding include
issued shares less shares held in treasury.

For the years ended December 31, 2004 2003
Basic:
Net Income $1,518,552 $180,789
Weighted average shares outstanding 1,089,135 1,089,135
----------------------------
Basic earnings per share $1.39 $.17
============================
Diluted:
Net Income $1,518,552 $180,789
Weighted average shares outstanding 1,089,135 1,089,135
Options to acquire common stock 23,282 5,858
----------------------------
Diluted weighted average common shares 1,112,417 1,094,993
----------------------------
Diluted earnings per share $1.37 $.17
============================

Gain on Sales of Properties. Gain on sales of properties is recognized when the
minimum investment requirements have been met by the purchaser and title passes
to the purchaser. Furthermore, gain on sales of properties has been reduced,
where applicable, by minority partners' interest in the gain of $8,000 and
$19,000 for the years ended December 31, 2004 and 2003, respectively and
adviser's incentive fees of $251,000 and $69,000 for the years ended December
31, 2004 and 2003, respectively.

Cash and Cash Equivalents. For purposes of the consolidated statements of cash
flows, the Company considers all highly liquid investments with an original
maturity of three months or less to be cash and cash equivalent.

Concentration of Credit Risk. Financial instruments that potentially subject the
Company to concentration of credit risk are cash and cash equivalents,
marketable securities, other receivables and notes and mortgages receivable.

Derivative Instruments.
The Company may or may not use derivative instruments to reduce interest rate
risk. The Company has established policies and procedures for risk assessment
and the approval, reporting and monitoring of derivative instruments. The
Company does not hold derivative instruments for trading purposes.

Interest rate swap contracts designated and qualifying as cash flow hedges are
reported at fair value. The gain or loss on the effective portion of the hedge
initially is included as a component of other comprehensive income and is
subsequently reclassified into earnings when interest on the related debt is
paid.

Inventories. Inventories consist solely of food and beverage and are stated at
the lower of cost or market. Cost is determined on a first-in, first-out basis.

Intangible Assets. Intangible assets consist primarily of goodwill and deferred
loan costs. Goodwill is carried at historical cost if its estimated fair value
is greater than its carrying value. However, if its estimated fair value is less
than the carrying amount, goodwill is reduced to its estimated fair value
through an impairment charge to the statement of income.

Deferred loan costs are amortized over the life of the loan on a straight line
basis which approximates effective interest rate method.

Reclassifications. Certain amounts in prior year's consolidated financial
statements have been reclassified to conform to the current year's presentation.

Minority Interest. Minority interest represents the minority partners'
proportionate share of the equity of the Company's majority owned subsidiaries.

2004 2003
--------------- ---------------

Minority interest balance at beginning of year $322,000 $271,000
Minority partners' interest in operating gains (losses) of
consolidated subsidiaries (100,000) 20,000
Minority partners' interest in net gains on sales of real estate
of consolidated subsidiaries 8,000 19,000
Net contributions from minority partners 2,885,000 ---
Unrealized loss on interest rate swap agreement (290,000) ---
Other 13,000 12,000
--------------- ---------------

Minority interest balance at end of year $2,838,000 $322,000
=============== ===============

Stock-Based Compensation. In December 2004, the FASB issued SFAS No. 123R,
"Accounting for Stock-Based Compensation." This statement is a revision to SFAS
No. 123, "Accounting for Stock-Based Compensation" and supersedes APB Opinion
No. 25, "Accounting for Stock Issued to Employees." This statement requires a
public entity to measure the cost of employee services received in exchange for
an award of equity instruments based on the grant-date fair value of the award
(with limited exceptions). That cost will be recognized over the period during
which an employee is required to provide service, the requisite service period
(usually the vesting period). The grant-date fair value of employee share
options and similar instruments will be estimated using option-pricing models.

In addition, a public entity is required to measure the cost of employee
services received in exchange for an award of liability instruments based on its
current fair value. The fair value of that award will be re-measured
subsequently at each reporting date through the settlement date. Changes in fair
value during the requisite service period will be recognized as compensation
cost over that period.

For public entities that file as small business issuers, this statement is
effective as of the beginning of the first interim or annual reporting period
that begins after December 15, 2005.

At the required effective date, all public entities that used the fair value
based method for either recognition or disclosure under Statement 123 are
required to apply this statement using a modified version of prospective
application. Under that transition method, compensation cost is recognized on or
after the required effective date for the portion of outstanding awards for
which the requisite service has not yet been rendered, based on the grant-date
fair value of those awards calculated under Statement 123 for either recognition
or pro-forma disclosures. For periods before the required effective date, those
entities may elect to apply the modified version of retrospective application
under which financial statements for prior periods are adjusted on a basis
consistent with the pro forma disclosures required for those periods by
Statement 123. The Company does not expect SFAS No. 123R to have a material
effect on its financial statements.

Revenue Recognition. The Company is the lessor of various real estate
properties. All of the lease agreements are classified as operating leases and
accordingly all rental revenue is recognized as earned based upon total fixed
cash flow over the initial term of the lease, using the straight line method.
Percentage rents are based upon tenant sales levels for a specified period and
are recognized on the accrual basis, based on the lessee's monthly sales.
Reimbursed expenses for real estate taxes, common area maintenance, utilities
and insurance are recognized in the period in which the expenses are incurred,
based upon the provisions of the tenant's lease. In addition to base rent, the
Company may receive participation rent consisting of a portion of the tenant's
operating surplus, as defined in the lease agreement. Participation rent is due
at end of each lease year and recognized when earned. Revenues earned from
restaurant and marina operations are in cash or cash equivalents with an
insignificant amount of customer receivables.

Asset Impairments. The Company periodically reviews the carrying value of its
properties and long-lived assets in relation to historical results, current
business conditions and trends to identify potential situations in which the
carrying value of assets may not be recoverable. If such reviews indicate that
the carrying value of such assets may not be recoverable, the Company would
estimate the undiscounted sum of the expected future cash flows of such assets
or analyze the fair value of the asset, to determine if such sum or fair value
is less than the carrying value of such assets to ascertain if a permanent
impairment exists. If a permanent impairment exists, the Company would determine
the fair value by using quoted market prices, if available, for such assets, or
if quoted market prices are not available, the Company would discount the
expected future cash flows of such assets and would adjust the carrying value of
the asset to fair value.

Recent Accounting Pronouncements. In December 2004, the FASB issued SFAS No.
123R, "Accounting for Stock-Based Compensation". This statement is a revision to
SFAS No. 123, "Accounting for Stock-Based Compensation" and supersedes APB
Opinion No. 25, "Accounting for Stock Issued to Employees." This statement
requires a public entity to measure the cost of employee services received in
exchange for an award of equity instruments based on the grant-date fair value
of the award (with limited exceptions). That cost will be recognized over the
period during which an employee is required to provide service, the requisite

service period (usually the vesting period). The grant-date fair value of
employee share options and similar instruments will be estimated using
option-pricing models.

For public entities that file as small business issuers, this statement is
effective as of the beginning of the first interim or annual reporting period
that begins after December 15, 2005. At the required effective date, all public
entities that used the fair value based method for either recognition or
disclosure under Statement 123 are required to apply this statement using a
modified version of prospective application. Under that transition method,
compensation cost is recognized on or after the required effective date for the
portion of outstanding awards for which the requisite service has not yet been
rendered, based on the grant-date fair value of those awards calculated under
Statement 123 for either recognition or pro-forma disclosures. For periods
before the required effective date, those entities may elect to apply the
modified version of retrospective application under which financial statements
for prior periods are adjusted on a basis consistent with the pro forma
disclosures required for those periods by Statement 123. The Company does not
expect SFAS No. 123R to have a material effect on its financial statements.

2. INVESTMENT PROPERTIES

The components of the Company's investment properties and the related
accumulated depreciation information follow:

December 31, 2004
-----------------------------------------------------------
Accumulated
Cost Depreciation Net
------------------- ------------------- -------------------

Commercial Properties:

Restaurant and retail mall (Coconut Grove, FL) - Building $2,900,000 $35,318 $2,864,682

Restaurant and retail mall (Coconut Grove, FL) - F,F &E 894,069 28,688 865,381

Corporate Office - (Coconut Grove, FL) - Building 642,686 127,525 515,161

Corporate Office - (Coconut Grove, FL) - Land 325,000 - 325,000

Other (New York and Vermont) - Buildings 191,416 187,392 4,024

Other (New York and Vermont) - Land 147,013 - 147,013
------------------- ------------------- -------------------

5,100,184 378,923 4,721,261
Commercial Properties- Construction in Progress:

Restaurant and retail mall (Coconut Grove, FL) 210,965 - 210,965
------------------- ------------------- -------------------
210,965 - 210,965
Hotel and Club Facility (Coconut Grove, FL):

Land 1,338,518 - 1,338,518

Building and improvements 6,967,862 4,479,179 2,488,683
------------------- ------------------- -------------------
4,479,179
8,306,380 3,827,201
Hotel and Club Facility - Construction in Progress:

Hotel and club facility - Spa (Coconut Grove, FL) 1,489,702 - 1,489,702
------------------- ------------------- -------------------
1,489,702 - 1,489,702
Marina Properties (Coconut Grove, FL):

132 slips located at restaurant and retail mall 2,500,000 62,500 2,437,500

6 slips located at hotel and club facility (6 slips) 215,569 137,804 77,765
------------------- ------------------- -------------------

2,715,569 200,304 2,515,265
Land Held for Development:

Houston, Texas (approximately 3 acres) 561,730 - 561,730

Hopkington, Rhode Island (approximately 50 acres) 27,689 - 27,689
------------------- ------------------- -------------------

589,419 - 589,419
------------------- ------------------- -------------------
$ 18,412,219 $ 5,058,406 $ 13,353,813
=================== =================== ===================

2. INVESTMENT PROPERTIES (continued)

December 31, 2003
---------------------------------------------------
Accumulated
Cost Depreciation Net

Commercial Properties
Land $1,289,786 $1,289,786
Buildings and improvements 2,280,394 $958,403 1,321,991
---------------------------------------------------
3,570,180 958,403 2,611,777
Hotel and Club Facility (Coconut Grove, FL):
Land 1,338,518 1,338,518
Hotel/club facility and improvements 6,819,032 3,949,069 2,869,963
Furniture, fixtures & equipment 144,164 139,911 4,253
---------------------------------------------------
8,301,714 4,088,980 4,212,734

Yacht Slips 300,136 131,063 169,073

Land Held for Development 1,083,855 1,083,855
---------------------------------------------------

Total $13,255,885 $5,178,446 $8,077,439
===================================================

3. ACQUISITION OF RESTAURANT, MARINA AND OFFICE/RETAIL PROPERTY, COCONUT GROVE,
FLORIDA

On August 20, 2004, the Company, through two 50%-owned entities, Bayshore
Landing, LLC ("Landing") and Bayshore Rawbar, LLC ("Rawbar"), (collectively,
"Bayshore") purchased a restaurant, office/retail and marina property located in
Coconut Grove (Miami), Florida (the "Monty's Property") for approximately $13.9
million. The other 50% owner of Bayshore is The Christoph Family Trust ("CFT").
Members of CFT are experienced real estate and Marina operators. The seller,
Bayshore Restaurant Management Corporation and affiliates, is part of a larger
privately-held organization which operates other restaurants in Florida. The
acquired assets included a two story building with approximately 40,000 rentable
square feet. A portion of the upstairs space is intended to be utilized as a
restaurant. The property also includes approximately 15,000 square feet of
outdoor space comprising the raw bar restaurant and approximately 3.7 acres of
submerged land with approximately 132 dock slips comprising the marina portion
of the acquired property. Also included in the acquired assets were certain
trademarks and other rights in connection with the restaurant and dock slips.

The acquired property is subject to a ground lease with the City of Miami,
Florida which expires on May 31, 2035. Under the lease the Company pays

percentage rents ranging from 5% to 15% of gross revenues from various
components of the project. Total rent paid to the City of Miami for August 20th
(date of purchase) to December 31, 2004 was approximately $268,000.

The purchase price paid by Bayshore included proceeds from a bank loan secured
by the Monty's Property in the amount of $10.1 million plus approximately $3.9
million in cash. The $10.1 million bank loan is part of a $13.275 million
acquisition and construction loan. Proceeds from the construction loan are
intended for renovations to the entire property. The outstanding principal
balance of the bank loan shall bear interest at a rate of 2.45% per annum in
excess of the LIBOR Rate. The bank loan shall be payable as follows: during the
first year, monthly payments of accrued interest will be paid. After the first
year and upon conversion to permanent terms, the loan will be repayable in equal
monthly principal payments necessary to fully amortize the principal amount over
the remaining twenty years of the loan, plus accrued interest. In conjunction
with the mortgage Bayshore has also entered into an interest rate swap agreement
to manage their exposure to interest rate fluctuation through the entire term of
the mortgage. The effect of the swap agreement is to provide a fixed interest
rate of 7.57%.

The following table sets forth the allocation of the purchase price to the
assets acquired:

Marina slips $2,500,000
Buildings 2,900,000
Furniture and fixtures 765,000
Goodwill 7,729,000
Food and beverage inventory 49,000
-------------
Total Capitalized Costs $13,943,000
-------------

The allocation above was based on an independent appraisal and valuation report
which utilized as its primary valuation method the discounted cash flows from
the existing operations assigning appropriate discount rates for each of the
three operating components of the Monty's Property. The excess of capitalized
cost assigned to specific assets over the purchase price was $7,729,000 and was
recorded as goodwill.

Effective from the date of acquisition, the operations of Rawbar will be managed
by a company (the "Manager") whose principal was a principal of the seller and
has operated this restaurant for the last 15 years. The Manager also operates
two other Monty's restaurants in Miami Beach and Key West. The Company has a 10%
equity interest in the Key West location. Under the management agreement Rawbar
will pay the Manager a management fee equal to the greater of $300,000 per year
or 4% of gross sales, as defined. In addition, the Manager is entitled to an
incentive fee equal to 33% of all operating profits greater than $1,200,000 per
year. The operations of Rawbar are performed by employees of the Manager and the
Company reimburses the Manager for such employees' payroll and related costs.
The management agreement expires in August, 2009.

restaurant. Construction is expected to be completed by late 2005 at an
estimated cost of $3.7 million.

Summarized combined statement of income for Landing and Rawbar for the period
from the date of purchase of August 20, 2004 through December 31, 2004 is
presented below (Note: the Company's ownership percentage in these operations is
50%):

Combined Bayshore Landing, LLC and August 20, 2004 through
Bayshore Rawbar, LLC December 31, 2004
----------------------------------------- -----------------------
Revenues:
Food and Beverage Sales $1,733,000
Marina dockage, upland rents and other 400,000
-----------------------
Total Revenues 2,133,000
Expenses:
Cost of food and beverage sold 537,000
Labor and related costs 355,000
Other food and beverage related costs 196,000
Insurance 137,000
Management fees 138,000
Utilities 107,000
Ground Rent 267,000
Interest 285,000
Depreciation 126,000
Other 214,000
-----------------------
Total Expenses 2,362,000
-----------------------
Net Loss ($229,000)
=======================

Unaudited Pro-forma Results of Operations

The following are the Company's results of operations for the year ended
December 31, 2004 with comparative results of operations for the year ended
December 31, 2003, as if the acquisition of the Monty's property had taken place
at the beginning of the years.

2004 2003
---- ----
Revenues $9,871,000 $9,314,000
---------- ----------
Net income $1,939,000 $513,000
---------- --------
Basic earnings per share $1.78 $.47
----- ----
Diluted earnings per share $1.74 $.47
----- ----

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 (see table below).
These securities are stated at market value, as determined by the most recently
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. Accordingly all
unrealized gains and losses on this portfolio are recorded in the statement of
income. For the years ended December 31, 2004 and 2003 net unrealized gains on
trading securities were approximately $233,000 and $754,000, respectively.

December 31, 2004 December 31, 2003
------------------------------------------------- -------------------------------------------------

Cost Fair Unrealized Cost Fair Unrealized
Description Basis Value Gain (loss) Basis Value Gain (loss)

Real Estate
Investment Trusts $193,817 $354,048 $160,231 $177,256 $277,501 $100,245

Mutual Funds 873,132 958,742 85,610 625,389 683,584 58,195

Other Equity
Securities 1,672,866 1,950,606 277,740 1,287,395 1,444,935 157,540
------------ ---------------- -------------- ------------- -------------- --------------
Total Equity
Securities 2,739,815 3,263,396 523,581 2,090,040 2,406,020 315,980

Corporate Debt
Securities (a) 974,685 1,002,931 28,245 631,340 626,326 (5,014)

Government Debt
Securities (a) 2,949,187 2,866,215 (82,972) 1,921,289 1,860,562 (60,727)
------------ ---------------- -------------- ------------- -------------- --------------
Total Debt
Securities 3,923,872 3,869,146 (54,727) 2,552,629 2,486,888 (65,741)
------------ ---------------- -------------- ------------- -------------- --------------

Total $6,663,687 $7,132,542 $468,855 $4,642,669 $4,892,908 $250,239
============ ================ ============== ============= ============== ==============

(a) As of December 31, 2004, corporate and government debt securities are
scheduled to mature as follows:

Cost Fair Value
2005 - 2009 $1,135,000 $1,190,000
2010-2014 878,000 852,000
2015 - thereafter 1,911,000 1,827,000
-------------- --------------
$3,924,000 $3,869,000
============== ==============

Net gain from investments in marketable securities for the years ended December
31, 2004 and 2003 is summarized below:

Description 2004 2003
Net realized gain from sales of securities $188,000 $37,000
Unrealized net gain in marketable securities 233,000 754,000
Net change in sales of securities pending
delivery - (24,000)
-------------- -------------
Total net gain $421,000 $767,000
============== =============

Net realized gain from sales of marketable securities consisted of approximately
$326,000 of gains net of $139,000 of losses for the year ended December 31,
2004. The comparable amounts in fiscal year 2003 were gains of approximately
$362,000 net of $325,000 of losses. Approximately $195,000 and $197,000 of gains
in fiscal years 2004 and 2003, respectively, were recognized from the sale of
stock distributions from the Company's investments in privately held
partnerships.

Consistent with the Company's overall current investment objectives and
activities the entire marketable securities portfolio is classified as trading
(versus available for sale, as defined by generally accepted accounting
principles). Unrealized gains or loss of marketable securities on hand are
recorded in the statement of income.

Net change in sales of securities pending delivery represents the changes in the
market value of those securities and the delivery of securities during 2003 to
realize gain or loss from these transactions. There were no sales of securities
pending delivery as of December 31, 2004.

Investments in marketable securities give rise to exposure resulting from the
volatility of capital markets. The Company attempts to mitigate its risk by
diversifying its marketable securities portfolio.

5. OTHER INVESTMENTS

The Company's other investments consist primarily of nominal equity interests in
various privately-held entities, including limited partnerships whose purpose is
to invest venture capital funds in growth-oriented enterprises. The Company does
not have significant influence over any investee and no single investment
exceeds 5% of the Company's total assets. None of these investments meet the

criteria of accounting under the equity method and are carried at cost less
distributions and other than temporary unrealized losses.

The Company's other investments consist of:

Carrying values as of December 31,
-----------------------------------

Investment Focus 2004 2003
------------------------------------------------ ---------------- ---------------

Venture capital funds - technology and
communications $639,870 $882,748

Venture capital funds - diversified businesses 969,828 1,914,575

Restaurant development and operation 575,000 500,000

Real estate and related 955,506 745,686

Hedge and debt funds 1,753,339 645,007

Other 297,000 360,000
---------------- ---------------
Totals $5,190,543 $5,048,016
================ ===============

As of December 31, 2004, the Company has unfunded commitments relating to other
investments of approximately $994,000. During the years ended December 31, 2004
and 2003 the Company contributed approximately $1.3 million and $843,000,
respectively, toward these commitments and received distributions from these
investments (primarily cash distributions) of $1.7 million and $1.5 million,
respectively.

The Company regularly reviews the underlying assets in its investment portfolio
for events, including but not limited to bankruptcies, closures and declines in
estimated fair value, that may indicate the investment has suffered an
other-than-temporary decline in value. When a decline is deemed
other-than-temporary, the Company recognizes an investment loss.

Net gain from other investments, which includes adjustments to write down the
carrying value of such investments as a result of an other-than-temporary
declines in value, is as follows (included in these amounts are investments
written down during 2004 and 2003 of approximately $187,000 and $114,000,
respectively):

Net gain from other investments:

Years ended December 31,
-----------------------------------------
2004 2003
--------------------- -------------------

Venture capital funds - technology & ($123,332) ($108,507)
communications (a)
Real estate and related (b) 104,233 139,852
Venture capital fund - diversified
businesses (manufacturing) (c) 449,546 ---
Income from investment in 49% owned
affiliate (d) 67,323 32,130
Others, net (12,300) (12,300)
--------------------- -------------------
Totals $485,470 $51,175
===================== ===================

(a) In connection with management's regular review of other investments
including analyzing such factors as bankruptcies and realized losses of
underlying investees the Company recorded adjustments to write down
investments in these sectors for declines in value deemed to be
other-than-temporary. In 2004 management recorded a total of $187,000
in write-downs of two investments in the technology-related industry.
In 2003 the loss included approximately $114,000 of write-downs related
to impairments experienced in three funds with a heavy concentration in
technology-related businesses.
(b) These gains consist primarily of gains from the disposition of assets
held in partnerships in which the Company owns minority equity
interests.
(c) This gain is primarily from the sale of one of the portfolio companies
owned by a limited partnership which owns various diversified
businesses, primarily in the manufacturing and production related
sectors. The Company's ownership percentage in this limited partnership
is approximately .51%. Two of these businesses were sold in 2004
resulting in a net gain to the Company of approximately $450,000.
(d) This gain represents income from the Company's 49% owned affiliate,
T.G.I.F. Texas, Inc. (see Note 6 below). The increase from the prior
year is primarily as a result of increased rental revenue.

Other investments give rise to exposure resulting from credit risks and the
volatility in capital markets. The Company attempts to mitigate its risks by
diversifying its investment portfolio. Net gain or loss from other investments
may fluctuate significantly from period to period in the future and could have a
significant impact on the Company's net earnings.

6. INVESTMENT IN AFFILIATE

Investment in affiliate consists of CII's 49% equity interest in T.G. I.F.
Texas, Inc. (T.G.I.F.). T.G.I.F. is a Texas Corporation, which owns one net
leased property in Louisiana and holds promissory notes receivable from its
shareholders, including CII and Maurice Wiener, the Chairman of the Company.
Reference is made to Notes 8 and 10 for discussion on notes payable by CII to
T.G. I.F. and notes payable by Mr. Wiener to T.G.I.F. This investment is
recorded under the equity method of accounting. For the years ended December 31,
2004 and 2003 income from investment in affiliate amounted to approximately
$67,000 and $32,000, respectively and is included in gain (loss) from other
investments in the consolidated statement of income.

7. LOANS, NOTES AND OTHER RECEIVABLES

In August 2004 the Company loaned $1 million to an entity which owns and
operates a restaurant in Key West, Florida. The Company has had a 10% equity
interest in this restaurant since its construction began in 1999. The proceeds
of loan were used for leasehold improvements. The principal owner of the
restaurant is an entity whose principal is also the principal of the seller and
current manager of the restaurant operations acquired on August 20, 2004
(Monty's Property). The promissory note is secured by a 65-year leasehold
interest and calls for quarterly payments of interest of 8% per annum beginning
on July 31, 2004. All principal and accrued and unpaid interest is due on June
30, 2009. The Company also has a ten year option to acquire an additional 20%
equity interest in this restaurant. The restaurant opened in October 2003 and
for the three months ended December 31, 2003 reported net income from operations
of $94,000 and for the year ended December 31, 2004 reported a net loss of
$564,000.

8. NOTES AND ADVANCES DUE FROM AND TRANSACTIONS WITH RELATED PARTIES

The Company has an agreement (the "Agreement") with HMG Advisory Corp. (the
"Adviser") for its services as investment adviser and administrator of the
Company's affairs. All officers of the Company who are officers of the Adviser
are compensated solely by the Adviser for their services. The Company has one
employee who is a vice president of CII. This employee assumed the
responsibilities of the prior project manager of one of the Company's
properties.

The Adviser is majority owned by Mr. Wiener, the Company's Chairman, with the
remaining shares owned by certain officers including Mr. Rothstein. The officers
and directors of the Adviser are as follows: Maurice Wiener, Chairman of the
Board and Chief Executive Officer; Lawrence I. Rothstein, President, Treasurer,
Secretary and Director; and Carlos Camarotti, Vice President - Finance and
Assistant Secretary.

Under the terms of the Agreement, the Adviser serves as the Company's investment
adviser and, under the supervision of the directors of the Company, administers
the day-to-day operations of the Company. All officers of the Company, other
than the project manager described above, who are officers of the Adviser are

compensated solely by the Adviser for their services. The Agreement is renewable
annually upon the approval of a majority of the directors of the Company who are
not affiliated with the Adviser and a majority of the Company's shareholders.
The contract may be terminated at any time on 120 days written notice by the
Adviser or upon 60 days written notice by a majority of the unaffiliated
directors of the Company or the holders of a majority of the Company's
outstanding shares.

On July 16, 2004, the shareholders approved renewal of the Advisory Agreement
between the Company and the Adviser for a term commencing January 1, 2005, and
expiring December 31, 2005. All terms of the existing Advisory Agreement will
remain the same.

For the years ended December 31, 2004 and 2003, the Company and its subsidiaries
paid the Adviser approximately $1.2 million and $977,000 in fees, respectively,
of which $900,000 represented regular compensation and approximately $315,000
and $77,000 represented incentive compensation for 2004 and 2003, respectively.
The Adviser is also the manager for certain of the Company's affiliates and
received management fees of approximately $17,000 and $12,000 in 2004 and 2003,
respectively, for such services. Furthermore, for each of the fiscal years 2004
and 2003 the Company paid approximately $85,000 to one of the Company's officers
in his capacity as project manager of a specific property, as described above.

At December 31, 2004 and 2003, the Company had amounts due from the Adviser of
approximately $234,000 and $259,000, respectively. In March 2005 the Adviser
made a cash payment of $50,000 on amounts due the Company. The amount due from
the Adviser bears interest at prime plus 1% and is due on demand. At December
31, 2004 and 2003, the Company had amounts due from Courtland Group, Inc. (CGI)
(the former adviser) of approximately $303,000. In March 2005 CGI made a cash
payment of $50,000 on amounts due the Company. The amount due from CGI bears
interest at prime plus 1% and is due on demand.

The Adviser leases its executive offices from CII pursuant to a lease agreement.
This lease agreement is at the going market rate for similar property and calls
for base rent of $48,000 per year payable in equal monthly installments.
Additionally, the Adviser is responsible for all property insurance, utilities,
maintenance, and security expenses relating to the leased premises. The lease
term is five years, expiring in November 2009.

In August 2004 the HMG Advisory Bayshore, Inc. ("HMGABS") (a wholly owned
subsidiary of the Adviser) was formed for the purposes of overseeing the Monty's
restaurant operations acquired in August 2004. HMGABS will receive a management
fee $25,000 per year from Bayshore Rawbar, LLC. As of December 31, 2004 HMGBS
had earned $8,333 in such management fees.

On August 24, 2000, certain officers and directors of the Company exercised all
of their stock options and purchased a total of 70,000 shares of the Company's
stock for $358,750. The Company received $70,000 in cash and promissory notes
for the balance of $288,750. These promissory notes bear interest at 6.18% per
annum payable quarterly in arrears on the first day of January, April, July and
October. The balance of the notes as of December 31, 2004 is $258,750. The

outstanding principal is due on August 23, 2005 and the notes are collateralized
by the stock.

The Company, via its 75% owned joint venture (SBA), has a note receivable from
Transco (a 44% shareholder of the Company) of $300,000 plus accrued interest of
approximately $132,000 and $139,000 as of December 31, 2004 and 2003,
respectively. This note bears interest at the prime rate and is due on demand.

Mr. Wiener is an 18% shareholder and the chairman and director of T.G.I.F.
Texas, Inc., a 49% owned affiliate of CII (See Note 6). As of December 31, 2004
and 2003, T.G.I.F. had amounts due from CII in the amount of approximately
$3,661,000. These amounts are due on demand and bear interest at the prime rate.
All interest due has been paid. T.G.I.F. also owns 10,000 shares of the
Company's common stock it purchased at market value in 1996.

As of December 31, 2004 and 2003, T.G.I.F. had amounts due from Mr. Wiener in
the amount of approximately $707,000. These amounts bear interest at the prime
rate and principal and interest are due on demand. All interest due has been
paid.

The Adviser received no fees from TGIF during 2004 and received $4,000 during
2003. Mr. Wiener received consulting and director's fees from T.G.I.F totaling
$41,000 and $29,000 for the years ended December 31, 2004 and 2003,
respectively.

9. OTHER ASSETS

The Company's other assets consisted of the following as of December 31, 2004
and 2003:

Description 2004 2003
Deferred loan costs, net of accumulated amortization $214,225 $25,963
Prepaid expenses and other assets 148,148 122,956
Food and beverage inventory 97,853 -
Utility deposits 76,480 -
Deferred leasing costs - 85,117
---------- ---------
Total other assets $536,706 $234,036
---------- ---------

10. MORTGAGES AND NOTES PAYABLES

December 31,
-------------------------------------------
2004 2003
------------------ ------------------

Collateralized by Investment Properties (Note 2)

Restaurant, marina and mall:
Mortgage loan payable with interest at 1-month LIBOR plus 2.45% (4.05% as
of December 31, 2004). Interest only monthly payments due for one year or
until completion of construction at which time initial loan plus
construction advances will be combined into one permanent loan. Upon
conversion to permanent terms, the loan will be repayable in equal monthly
principal payments of approximately $126,000 per month. The loan matures
in August 2020. See (a) below. $10,180,000 $-

Hotel, private club, yacht slips and spa:
Mortgage loan payable with interest at 1-month LIBOR plus 2.5% (4.92% as of
December 31, 2004). Monthly payments of principal of $10,000 with all
unpaid principal and interest payable at
maturity on September 29, 2010. 4,299,046 3,414,302

Office building:
Mortgage loan payable, interest at prime plus 3/4% (6.0% as of
December 31, 2004). Monthly payment of $3,981 in principal and
interest. All unpaid principal and interest due on August 25,
2007. 343,352 361,254

Shopping center:
Mortgage loans payable satisfied in April 2004 with proceeds from sale of
shopping center. The interest rate on these loans
was 7.5% fixed. - 650,000

Other (unsecured) (Note 6):

Note payable to affiliate:
Note payable is to affiliate T.G.I.F., interest at prime (5.25%
at December 31, 2004) payable annually. Principal outstanding
due on demand. 3,660,671 3,660,671
------------------ ------------------

Totals $18,483,069 $8,086,227
================== ==================

(a) In addition to the acquisition loan, the Company has committed to a
construction loan of $3,225,000 which will be funded in installments as
construction is completed. The loan is guaranteed by the Company as well as a
personal guaranty from the trustee of CFT. The loan includes certain covenants
regarding income. As of December 31, 2004, the Company was in compliance with
the covenants. See Note 11 for discussion of interest rate swap agreement
related to this loan.

A summary of scheduled principal repayments or reductions for all types of notes
and mortgages payable is as follows:

Year ending December 31, Amount
2005 $3,929,573
2006 298,174
2007 928,867
2008 664,072
2009 704,557
2010 and thereafter 11,957,826
-----------
Total $18,483,069
===========

11. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to interest rate risk through their borrowing activities.
In order to minimize the effect of changes in interest rates, the Company has
entered an interest rate swap contract under which the Company agrees to pay an
amount equal to a specified rate of 7.57% times a notional principal
approximating the outstanding loan balance, and to receive in return an amount
equal to the one month LIBOR rate plus 2.45% times the same notional amount. The
Company designated this interest rate swap contract as a cash flow hedge. The
fair value of the cash flow hedge, which is a loss of $289,500 (net of 50%
minority interest) at December 31, 2004, is deferred to other comprehensive loss
and reclassified to interest expense over the life of the swap contract. The
Company expects to reclassify $41,000 of deferred net loss on the interest rate
swap to interest expense during 2005.

12. LEASE COMMITMENTS

The Company's 50% owned subsidiary (Landing), as lessee, leases land and
submerged lands on which it operates the Monty's Property under a lease with the
City of Miami which expires on May 31, 2035. Under the lease, the Company pays
percentage rents ranging from 5% to 15% of gross revenues from various
components of the property's operations. Total rent paid to the City of Miami
for the period since August 20, 2004 (acquisition date) through December 31,
2004 was approximately $268,000.

13. INCOME TAXES
The Company (excluding CII) qualifies as a real estate investment trust and
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 their 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. Distributed capital gains on sales of real estate as
they relate to REIT activities are not subject to taxes; however, undistributed
capital gains are taxed as capital gains. The Company's 95%-owned subsidiary,
CII, files a separate income tax return and its operations are not included in
the REIT's income tax return. The Company accounts for income taxes in
accordance with the Statement of Financial Accounting Standards (SFAS) No. 109,

"Accounting for Income Taxes". SFAS No. 109 requires a Company to use the asset
and liability method of accounting for income taxes. Under the asset and
liability 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 bases of existing assets and liabilities. Under SFAS No. 109, 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
a result of timing differences associated with the carrying value of other
investments and depreciable assets and the future benefit of a net operating
loss, the Company has recorded a net deferred tax asset of $28,000. A valuation
allowance against deferred tax asset has not been established as it is more
likely than not, based on the Company's previous history, that these assets will
be realized.

The components of income before income taxes and the effect of adjustments to
tax computed at the federal statutory rate for the years ended December 31, 2004
and 2003 were as follows:

2004 2003
---- ----

Income before income taxes $2,218,000 $504,000
-------------------------------------------------------------------------------------------------
Computed tax at federal statutory rate of 34% $754,000 $171,000
State taxes at 5.5% 122,000 25,000
REIT related adjustments (327,000) 136,000
Other items, net 151,000 (9,000)
-------------------------------------------------------------------------------------------------
Provision for income taxes $700,000 $323,000
-------------------------------------------------------------------------------------------------
Effective tax rate 32% 64%
-------------------------------------------------------------------------------------------------

In 2004 the REIT related adjustments represent the difference between estimated
taxes on undistributed dividends and book taxes computed on the REIT's income
before income taxes. In 2003 the REIT related adjustments are for REIT related
book losses for which there is no provision or benefit. The Company can elect to
make a dividend distribution (relating to its REIT income) by the time it files
its 2004 income tax return including extensions.

The provision for income taxes in the consolidated statement of income consists
of the following:

Year ended December 31, 2004 2003
----------------------------------------------------
Current:
Federal $204,000 $-
State 36,000 -
----------------------------------------------------
250,000 -
Deferred:
Federal 405,000 296,000
State 45,000 27,000
----------------------------------------------------
450,000 323,000
----------------------------------------------------
Total $700,000 $323,000
====================================================

As of December 31, 2004 and 2003, the components of the deferred tax assets and
liabilities are as follows:

As of December 31, 2004 As of December 31, 2003
Deferred tax Deferred tax
-----------------------------------------------------------
Assets Liabilities Assets Liabilities
----------- --------------- ------------- -------------

Net operating loss carry forward $250,000 $705,000
Excess of book basis of 49% owned
corporation over tax basis
608,000 583,000
Excess of tax basis over book basis of
investment property 220,000 205,000
Unrealized gain/loss on marketable
securities 120,000 44,000
Excess of tax basis over book basis of
other investments 348,000 62,000 292,000 97,000
----------- --------------- ------------- -------------
Totals $818,000 $790,000 $1,202,000 $724,000
=========== =============== ============= =============

14. STOCK-BASED COMPENSATION

The Company applies APB Opinion 25, Accounting for Stock Issued to Employees,
and related Interpretations in accounting for its stock option plan. Under APB
Opinion 25, if the exercise price of the Company's employee stock options equals
or exceeds the market price of the underlying stock on the date of grant, no
compensation is recognized.

In December 2004, the FASB issued SFAS No. 123R, "Accounting for Stock-Based
Compensation". This statement is a revision to SFAS No. 123, "Accounting for
Stock-Based Compensation" and supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees." This statement requires a public entity to measure
the cost of employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award (with limited
exceptions). That cost will be recognized over the period during which an
employee is required to provide service, the requisite service period (usually
the vesting period). The grant-date fair value of employee share options and
similar instruments will be estimated using option-pricing models.

For public entities that file as small business issuers, this statement is
effective as of the beginning of the first interim or annual reporting period
that begins after December 15, 2005.

application. Under that transition method, compensation cost is recognized on or
after the required effective date for the portion of outstanding awards for
which the requisite service has not yet been rendered, based on the grant-date
fair value of those awards calculated under Statement 123 for either recognition
or pro-forma disclosures. For periods before the required effective date, those
entities may elect to apply the modified version of retrospective application
under which financial statements for prior periods are adjusted on a basis
consistent with the pro forma disclosures required for those periods by
Statement 123. The Company does not expect SFAS No. 123R to have a material
effect on its financial statements.

The 2000 Stock Option Plan.
In November 2000, the Company's Board of Directors authorized the 2000 Stock
Option Plan, which was approved by the shareholders in June 2001. The Plan
provides for the grant of options to purchase up to 120,000 shares of the
Company's common stock to the officers and directors of the Company. Under the
2000 Plan, options are vested immediately upon grant and may be exercised at any
time within ten years from the date of grant. Options are not transferable and
expire upon termination of employment, except to a limited extent in the event
of retirement, disability or death of the grantee. On June 25, 2001, options
were granted to all officers and directors to purchase an aggregate of 86,000
common shares at no less than 100% of the fair market value at the date of
grant. The average exercise price of the options granted in 2001 was $7.84 per
share. The Company's stock price on the date of grant was $7.57 per share. There
were no options granted in 2004 or 2003.

A summary of the status of the Company's stock option plan as of December 31,
2004 and 2003, and changes during the years ending on those dates are presented
below:

As of December 31, 2004 As of December 31, 2003
----------------------------------------------------------------
Shares Weighted-Average Shares Weighted-Average
Exercise Exercise
Price Price
------------------------------------------------------------------------------------------------------

Outstanding at beginning of year 86,000 $7.84 86,000 $7.84
Granted -- -- -- --
Exercised -- -- -- --
Forfeited -- -- -- --

------------------------------------------------------------------------------------------------------

Outstanding at end of year 86,000 $7.84 86,000 $7.84

------------------------------------------------------------------------------------------------------

Options exercisable at year-end 86,000 $7.84 86,000 $7.84
Weighted average fair value of
options granted during the year -- -- -- --
======================================================================================================

15. OPERATING LEASES AS LESSOR

Lease of Grove Isle hotel property. In November 1996, the Company entered into a
long-term lease and a Master Agreement with Westgroup Grove Isle Associates,
Ltd. ("Westgroup"), an affiliate of Noble House Resorts, Inc. which is a
national operator of hotels and resorts. The Master Agreement, among other
things, transferred the operations of the Grove Isle hotel and club to
Westgroup.

The term of the lease with Westgroup (as amended in 2004, see below) expires in
November 2016 and calls for annual net base rent (as amended in 1999), of
$918,400, plus real estate taxes and property insurance, payable in monthly
installments. In addition to the base rent Westgroup pays GIA participation rent
consisting of a portion of Westgroup's operating surplus, as defined in the
lease agreement. Participation rent is due at end of each lease year. There has
been no participation rent since the inception of the lease. The lease also
calls for an increase in base rent commencing January 1, 2002 in accordance with
changes in the Consumer Price Index ("CPI"). Base rent for 2004 was $1,003,157
increasing to $1,037,172 in 2005. Participation rent if due will be reduced by
the amount by which base rent increases solely as a result of CPI increases for
the lease year.

In September 2004 the Company entered into an agreement with Noble House
Associates, LLC ("NHA"), an affiliate of the Westgroup, for the purpose of
developing and operating on the Grove Isle property a commercial project
consisting of a first class spa, together with related improvements and
amenities (the "Spa Property"). A newly formed subsidiary of the Company, CII
Spa, LLC ("CIISPA") and NHA formed a Delaware limited liability company, Grove
Spa, LLC ("GS") which is owned 50% by CIISPA and 50% by NHA. The Spa Property
developed by GS will be sub-leased from Westgroup. The initial term of the
sublease commenced on September 15, 2004 and ends on November 30, 2016, with the
GS having the right to extend the term for two additional consecutive 20 year
terms on the same terms as the original sublease. Annual base rent of the
sublease is $10,000, plus GS shall pay real estate taxes, insurance, utilities
and all other costs relating to the Spa Property. The construction of the Spa
Property is expected to cost approximately $2.4 million and is to be completed
in 2005.

In conjunction with the Spa Property development, the Company amended and
restated its lease with Westgroup to extend the term of the lease from December
31, 2006 to December 31, 2016 and includes two options to extend the lease term
each for an additional 20 years. Furthermore, the lease's termination payment,
as defined, was amended and restated to mean 50% of the amount by which the
value of the leased property on the date of termination, as amended, exceeds
$11,480,000, plus the value of NHA's percentage ownership interest in GS.

During 1997 and in conjunction with the aforementioned agreements, GIA advanced
$500,000 to the principal owner of the tenant of the Grove Isle property. GIA
received a promissory note bearing interest at 8% per annum with interest
payments due quarterly beginning on July 1, 1997 and all principal due at
maturity in 2006. All interest payments due have been received.

Minimum lease payments receivable. The Company leases its commercial and
industrial properties under agreements for which substantially all of the leases
specify a base rent and a rent based on tenant sales (or other benchmark)
exceeding a specified percentage. Such percentage rent was not material in 2004
and 2003.

These leases are classified as operating leases and generally require
the tenant to pay all costs associated with the property. Minimum annual rentals
on non-cancelable leases in effect at December 31, 2004, are as follows:

Year ending December 31, Amount
2005 $1,354,000
2006 1,343,000
2007 1,267,000
2008 1,103,000
2009 1,097,000
Subsequent years 7,259,000
-----------
Total $13,423,000
===========

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.

There are no items to report.

Item 8A. 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
Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
by the Annual Report on Form 10-KSB have concluded that, based on such
evaluation, our disclosure controls and procedures were adequate 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 Exchange Act of 1934, was made known to them by others within those
entities and reported within the time periods specified in the SEC's rules and
forms.

There were no changes in our internal controls over financial reporting
identified in connection with the evaluation of such internal control over
financial reporting that occurred during our last fiscal year which have
materially affected or are reasonably materially likely to affect, our internal
control over financial reporting.

Part III.

Item 9. Directors, Executive Officers and Control Persons.
Listed below is certain information relating to the executive officers and
directors of the Company:

Principal Occupation and Employment other
than With the Company During the Past Five Years - Other
Name and Office Age Directorships

Maurice Wiener; Chairman of the 63 Chairman of the Board and Chief Executive Officer of the Adviser;
Board of Directors and Chief Executive Trustee, Transco; Director, T.G.I.F. Texas, Inc.; Chairman
Executive Officer of the Board and Chief Executive Officer of Courtland Group, Inc.

Lawrence I. Rothstein; Director, 52 Director, President and Secretary of the Adviser; Trustee and Vice
President, Treasurer and Secretary President of Transco; Director, President and Secretary of Courtland
Group, Inc. Vice President and Secretary, T.G.I.F. Texas, Inc.

Carlos Camarotti; Vice 44 Vice President - Finance and Assistant Secretary of the Adviser;
President-Finance and Assistant Vice President - Finance and Assistant Secretary of Courtland Group,
Secretary Inc.

Walter Arader; Director 86 President, Walter G. Arader and Associates (financial and management
consultants).

Harvey Comita; Director 75 Business Consultant; Trustee of Transco Realty Trust.

Clinton Stuntebeck; Director (since 66 Partner Emeritus, Schnader Harrison Segal & Lewis, LLP (2004);
March 2004) Chairman, Concordia Holdings, Ltd. (investment and business
consulting) Senior Partner, Schnader Harrison Segal & Lewis, LLP.

All executive officers of the Company were elected to their present positions to
serve until their successors are elected and qualified at the 2005 annual
organizational meeting of directors immediately following the annual meeting of
shareholders. All directors of the Company were elected to serve until the next
annual meeting of shareholders and until the election and qualification of their
successors. All directors and executive officers have been in their present
position for more than five years, except for Mr. Stuntebeck who became a
director in March 2004.

Code of Ethics.
The Company has adopted a Code of Ethics that applies to directors, officers
(including principal executive officer, principal financial officer, principal
accounting officer and controller and HMG Advisory Corp. and subsidiary ("HMGA")
and its employees in all instances in which HMGA is acting on behalf of the
Company. The Company will provide to any person without charge, upon written
request, a copy of the Code of Ethics including any amendments as well as any
waivers that are required to be disclosed by the rules of the SEC or the
American Stock Exchange.

Audit Committee and Audit Committee Financial Expert.

The Company has a separately designated standing Audit Committee established in
accordance with Section 3(a) (58) (A) of the Securities Exchange act of 1934, as
amended (the "Exchange Act"). The members of the Audit Committee are Messrs.
Arader and Comita. The Board of Directors has determined that each of Messrs.
Arader and Comita is (1) an " audit committee financial expert," as that term is
defined in Item 401(e) of Regulation S-B of the Exchange Act, and (2)
independent as defined by the listing standards of the American Stock Exchange
and Section 10A(m)(3) of the Exchange Act.

Item 10. Executive Compensation.
Executive officers received no cash compensation from the Company in their
capacity as executive officers. Reference is made to Item 1. Business and Item
6. Management's Discussion and Analysis or Plan of Operation for information
concerning fees paid to the Adviser.

Compensation of Directors. Each Director receives an annual fee of $8,000, plus
expenses and $500 per each Board of Directors meeting attended.

Stock Options. In November 2000, the Company's Board of Directors authorized the
2000 Stock Option Plan (the "Plan"), which was approved by the shareholders in
June 2001. The Plan, which permits the grant of qualified and non-qualified
options expires in 2010, and is intended to provide incentives to the directors
and employees (the "employees") of the Company, as well as to enable the Company
to obtain and retain the services of such employees. The Plan is administered by
a Stock Option Committee (the "Committee") appointed by the Board of Directors.
The Committee selects those key officers and employees of the Company to whom
options for shares of common stock of the Company shall be granted. The
Committee determines the purchase price of shares deliverable upon exercise of
an option; such price may not, however, be less than 100% of the fair market
value of a share on the date the option is granted. Payment of the purchase
price may be made in cash, Company stock, or by delivery of a promissory note,
except that the par value of the stock must be paid in cash or Company stock.
Shares purchased by delivery of a note must be pledged to the Company. Shares
subject to an option may be purchased by the optionee within ten years from the
date of the grant of the option. However, options automatically terminate if the
optionee's employment with the Company terminates other than by reason of death,
disability or retirement. Further, if, within one year following exercise of any
option, an optionee terminates his employment other than by reason of death,
disability or retirement, the shares acquired upon exercise of such option must
be sold to the Company at a price equal to the lesser of the purchase price of
the shares or their fair market value.

On June 25, 2001, options were granted to all officers and directors to purchase
an aggregate of 86,000 common shares at no less than 100% of the fair market
value at the date of grant. The average exercise price of the options granted in
2001 is $7.84 per share. The Company's stock price on the date of grant was
$7.57 per share.

Item 11. Security Ownership of Certain Beneficial Owners and Management.
Set forth below is certain information concerning common stock ownership by
directors, executive officers, directors and officers as a group, and holders of
more than 5% of the outstanding common stock.

Shares Held as of March 4, 2005

Shares Owned by Named Additional Shares in Which the named
Persons & Members of His Person Has, or Participates in, the Total Shares & Percent
Name (7) Family (1) Voting or Investment Power (2) of Class

Maurice Wiener 65,100 (4) 541,830 (3), (5) 606,930 52%

Lawrence Rothstein 50,000 (4) 541,830 (3) 591,830 50%

Walter G. Arader 15,400 (4) 15,400 1%

Harvey Comita 10,000 (4) 477,300 (6) 487,300 41%

All 6 Directors and 151,000 (4) 541,830 (3) 692,830 59%
Officers as a Group

Emanuel Metz 59,500 59,500 5%
CIBC Oppenheimer Corp.
One World Financial Center
200 Liberty Street
New York, NY 10281

Transco Realty Trust 477,300 (5) 477,300 41%
1870 S. Bayshore Drive
Coconut Grove, FL 33133
___________________________

(1) Unless otherwise indicated, beneficial ownership is based on sole
voting and investment power.

(2) Shares listed in this column represent shares held by entities with
which directors or officers are associated. Directors, officers and
members of their families have no ownership interest in these shares.

(3) This number includes the number of shares held by Transco Realty Trust
(477,300 shares), Courtland Group, Inc. (54,530 shares) and T.G.I.F.
Texas, Inc. (10,000 shares). Several of the directors of the Company
are directors, trustees, officers or shareholders of certain of those
firms.

(4) This number includes options granted under the 2000 Stock Option Plan,
none of which have been exercised. These options have been granted to
Mr. Wiener, 30,000; Mr. Rothstein, 25,000; 5,000 each to Mr. Arader and
Mr. Comita; and 16,000 to two officers. Reference is made to Item 10.
Executive Compensation for further information about the 2000 Stock
Option Plan.

(5) Mr. Wiener holds approximately 34% and 65% of the stock of Transco and
Courtland Group Inc., respectively, and may therefore be deemed to be
the beneficial owner of the shares of the Company held by Transco and
Courtland Group, Inc.

(6) This number represents the number of shares held by Transco Realty
Trust, of which, Mr. Comita is a Trustee.

(7) Except as otherwise set forth, the address for theses individuals is
1870 South Bayshore Drive, Coconut Grove, Florida 33133.

Item 12. Certain Relationships and Related Transactions. The following
discussion describes the organizational structure of the Company's subsidiaries
and affiliates.

Transco Realty Trust ("Transco").
Transco is a 44% shareholder of the Company of which Mr. Wiener is its executive
trustee of and holds 37% of its stock.

HMG Advisory Corp. (the "Adviser") and subsidiary.
The day-to-day operations of the Company are handled by the Adviser, as
described above under Item 1. Business "Advisory Agreement." The Adviser is
majority owned by Mr. Wiener, its Chairman and CEO.

Reference is made to Item 1. Business and Item 6. Management's Discussion and
Analysis or Plan of Operation for further information about the remuneration of
the Adviser.

Courtland Group, Inc. ("CGI").
CGI served as the Company's investment Adviser until January 1, 1998 and owns
approximately 32% of Transco's stock and owns approximately 5% of the Company's
common stock. CGI is majority owned by Mr. Wiener, its Chairman and CEO

Courtland Investments, Inc. ("CII").
The Company holds a 95% non-voting interest and Masscap Investment Company
("Masscap") holds a 5% voting interest in CII. In May 1998, the Company and
Masscap entered into a written agreement in order to confirm and clarify the
terms of their previous continuing arrangement with regard to the ongoing
operations of CII, all of which provide the Company with complete authority over
all decision making relating to the business, operation, and financing of CII
consistent with the Company's status as a real estate investment trust.

CII and its wholly-owned subsidiary own 100% of Grove Isle Club, Inc., Grove
Isle Yacht Club Associates, Grove Isle Marina, Inc., CII Spa, LLC, Courtland
Bayshore Rawbar, LLC and it also owns 15% of Grove Isle Associates, Ltd., (the
Company owns the other 85%).

T.G.I.F. Texas, Inc. ("T.G.I.F.").
CII owns approximately 49% of the outstanding shares of T.G.I.F. Mr. Wiener is a
director and chairman of T.G.I.F. and owns, directly and indirectly,
approximately 18% of the outstanding shares of T.G.I.F. T.G.I.F also owns 10,000
shares of the Company's stock.

HMG-Fieber Associates ("Fieber").
The Company owns approximately 70% interest in Fieber and the other 30% is owned
by NAF Associates ("NAF").

The following discussion describes all material transactions, receivables and
payables involving related parties. All of the transactions described below were
on terms as favorable to the Company as comparable transactions with
unaffiliated third parties.

The Adviser.
As of December 31, 2004 and 2003 the Adviser owed the Company approximately
$234,000 and $259,000, respectively. In March 2005 the Adviser made a cash
payment of $50,000 on amounts due the Company. Amounts due from the Adviser bear
interest at the prime rate plus 1% payable monthly, with principal due on
demand.

South Bayshore Associates ("SBA").
SBA is a joint venture in which Transco and the Company hold interests of 25%
and 75%, respectively. The sole major asset of SBA is a demand note from
Transco, bearing interest at the prime rate, with an outstanding balance of
approximately $432,000 in principal and interest as of December 31, 2004
compared to a balance of $439,000 as of December 31, 2003.

The Company also holds a demand note from SBA bearing interest at the prime rate
plus 1% with an outstanding balance as of December 31, 2004 and 2003 of
approximately $1,122,000 and $1,107,000, in principal and accrued interest,
respectively. Interest payments of $20,000 were made in 2004 and 2003. Accrued
and unpaid interest is not added to the principal. Because the Company
consolidates SBA, the note payable and related interest income is eliminated in
consolidation.

CGI. As of December 31, 2004 and 2003, CGI owed the Company approximately
$303,000. In March 2005 CGI made a cash payment of $50,000 on amounts due the
Company. Amounts due from CGI bear interest at the prime rate plus 1% payable
monthly, with principal due on demand.

CII. The Company holds a demand note due from CII bearing interest at the prime
rate plus 1% with an outstanding balance of $3,695,000 and $3,401,000 as of
December 31, 2004 and 2003, respectively. During 2004 and 2003, advances from

the Company to CII totaled $3.1 million and $769,000, respectively. Repayments
from CII to the Company during 2004 and 2003 were $1.9 million and $483,000,
respectively. Accrued and unpaid interest is capitalized and included in
advances. Because CII is a 95%-owned consolidated subsidiary of the Company, the
note payable and related interest is eliminated in consolidation.

In 1986, CII acquired from the Company the rights to develop the marina at Grove
Isle for a promissory note of $620,000 payable at an annual rate equal to the
prime rate. The principal matures on January 2, 2006. Interest payments are due
each January 2. Because the Company consolidates CII, the note payable and
related interest income is eliminated in consolidation.

CII compensates one employee directly in his capacity as project manager for the
Company's Texas property. This employee is Mr. Bernard Lerner who is a vice
president of Courtland Investments, Inc. and is also a cousin of the Company's
Chairman and CEO Mr. Maurice Wiener. For the years ended December 31, 2004 and
2003 CII paid Mr. Lerner $85,000.

CII Spa, LLC.
As more fully discussed in Item 2.Description of Property, in September 2004 the
Company entered into an agreement with Noble House Associates, LLC ("NHA"), an
affiliate of the Company's tenant at Grove Isle ("Westgroup"), for the purpose
of developing and operating on the Grove Isle property a commercial project
consisting of a first class spa. A newly formed subsidiary of the Company, CII
Spa, LLC ("CIISPA") and NHA formed a Delaware limited liability company, Grove
Spa, LLC ("GS") which is owned 50% by CIISPA and 50% by NHA. The Spa Property
developed by GS will be sub-leased from Westgroup. The initial term of the
sublease commenced on September 15, 2004 and ends on November 30, 2016, with the
GS having the right to extend the term for two additional consecutive 20 year
terms on the same terms as the original sublease. Annual base rent of the
sublease is $10,000, plus GS shall pay real estate taxes, insurance, utilities
and all other costs relating to the Spa Property.

In December 2004 the loan which secured by the Grove Isle property was renewed
and extended with an additional $1 million borrowed. The additional $1 million
(less loan costs) was loaned to GS to partially fund the construction of the
spa. The Company received a promissory note from GS under the same terms as the
renewed and extended bank loan. Since this loan is between two consolidated
entities (i.e. Grove Isle Associates, Ltd and Grove Spa, LLC) it is eliminated
in consolidation.

T.G.I.F.
As of December 31, 2004 and 2003, CII owed approximately $3,661,000 to T.G.I.F.
All advances between CII and T.G.I.F. are due on demand and bear interest at the
prime rate plus 1%. All interest due has been paid. As of December 31, 2004 and
2003, T.G.I.F. had amounts due from Mr. Wiener of approximately $707,000. These
amounts are due on demand and bear interest at the prime rate. All interest due
has been paid. The Adviser received management fees of $4,000 for the year ended

December 31, 2003 and no fees in 2004. Mr. Wiener received consulting and
director's fees from T.G.I.F of $40,800 and $29,000 for the years ended December
31, 2004 and 2003, respectively. Also, T.G.I.F. owns 10,000 shares of the
Company which were purchased in 1996 at the market value.

Exercised stock options and related promissory notes.
On August 24, 2000, certain officers and directors of the Company exercised all
of their stock options and purchased a total of 70,000 shares of the Company's
common stock for $358,750. The Company received $70,000 in cash and $288,750 in
promissory notes for the balance. These promissory notes bear interest at 6.18%
per annum payable quarterly in arrears on the first day of January, April, July
and October. The balance of the notes as of December 31, 2003 is $258,750. The
outstanding principal is due on August 23, 2005 and the notes are collateralized
by the stock.

Item 13. Exhibits and Reports on Form 8-K.

(a) Exhibits listed in the Index to Exhibits.

(b) Reports on Form 8-K: The Company filed a Report on Form 8-K/A to
amend the Company's Report on Form 8-K filed on August 20, 2004,
to include the required pro-forma financial statements pursuant to
Item 9.01(b) (1) of Form 8-K.

Item 14. Principal Accountants Fees and Services.
The following table sets forth fees billed to the Company by the Company's
independent auditors for the year ended December 31, 2004 and December 31, 2003
for (i) services rendered for the audit of the Company's annual financial
statements and the review of the Company's quarterly financial statements, (ii)
services rendered that are reasonably related to the performance of the audit or
review of the Company's financial statements that are not reported as Audit
Fees, and (iii) services rendered in connection with tax preparation,
compliance, advice and assistance. The Audit Committee pre-approved all services
rendered by the Company's independent auditors.

Principal Accountant Fees and Services

For the fiscal year ended December 31, 2004 December 31, 2003
------------------------------------------------------- ------------------
Audit Fees $40,000 $56,000
Audit - Related Fees 21,000 3,222
Tax Fees 20,000 20,000
------------------- ------------------
Total Fees $81,000 $79,222
=================== ==================

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

March 30, 2005 By: /s/ Maurice Wiener
Maurice Wiener
Chairman and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

/s/ Maurice Wiener March 30, 2005
-----------------------------------
Maurice Wiener
Chairman of the Board
Chief Executive Officer

/s/ Lawrence I. Rothstein March 30, 2005
-----------------------------------
Lawrence I. Rothstein
Director, President, Treasurer and Secretary
Principal Financial Officer

/s/ Walter G. Arader March 30, 2005
-----------------------------------
Walter G. Arader, Director

/s/ Harvey Comita March 30, 2005
-----------------------------------
Harvey Comita, Director

/s/ Clinton Stuntebeck March 30, 2005
-----------------------------------
Clinton Stuntebeck, Director

/s/ Carlos Camarotti March 30, 2005
-----------------------------------
Carlos Camarotti
Vice President - Finance and Controller
Principal Accounting Officer

INDEX EXHIBIT
Description

(3) (a) Amended and Restated Incorporated by reference to Annex A of the
Certificate of Incorporation May 29, 2001 Proxy Statement.

(b) By-laws Incorporated by reference to Exhibit 6.1 to the
Registration Statement of Hospital Mortgage
Group, Inc. on Form S-14, No. 2-64, 789, filed
July 2, 1979.

(10) (a) Amended and restated lease Incorporated by reference to Exhibit 10(d) to
agreement between Grove Isle the 1996 Form 10-KSB
Associates, Ltd. and
Westgroup Grove Isle
Associates, Ltd. dated
November 19, 1996.

(b) Master agreement between Incorporated by reference to Exhibit 10(e)
Grove Isle Associates, Ltd. to the 1996 Form 10-KSB
Grove Isle Clubs Inc., Grove
Isle Investments, Inc. and
Westbrook Grove Isle
Associates, Ltd. dated
November 19, 1996.

(c) Agreement Re: Lease Incorporated by reference to Exhibit 10(f)
Termination between Grove Isle to the 1996 Form 10-KSB
Associates, Ltd. and Grove Isle
Club, Inc. dated November 19, 1996.

(d) Amended and restated Incorporated by reference to Exhibit 10(f)
agreement between NAF to the 1999 Form 10-KSB
Associates and the Company,
dated August 31, 1999.

(e) Amendment to Amended and Incorporated by reference to Exhibit 10(g)
restated lease agreement to the 1999 Form 10-KSB
between Grove Isle Associates,
Ltd. and Westgroup Grove Isle
Associates, Ltd. dated
December 1, 1999.

(f) Lease agreement between Incorporated by reference to Exhibit 10(h)
Courtland Investments, Inc. and to the 1999 Form 10-KSB
HMG Advisory Corp. dated
December 1, 1999.

(g) 2000 Incentive Stock Option Incorporated by reference to Exhibit 10(h)
Plan of HMG/ Courtland to the 2001 Form 10-KSB
Properties, Inc.

(h) Amended and Restated Advisory Incorporated by reference to Exhibit 10(i)
Agreement between the and 10(j) to the 2002 Form 10-KSB
Company and HMG Advisory
Corp. effective January 1, 2003.

(i) Second Amendment to Amended and Included herein.
restated lease agreement
included herein between Grove Isle
Associated, Ltd. and Westgroup Grove
Isle Associates, Ltd. dated
September 15, 2004

(j) Operating Agreement of Grove Included herein.
Spa, LLC dated September 15,
2004

(k) Sublease between Westgroup Included herein.
Grove Isle Associates, Ltd. and
Grove Spa, LLC dated
September 15, 2004

(l) Purchase and Sale Agreement Included herein.
("Acquisition of Monty's Property")
between Bayshore Restaurant Management
Corp. and Bayshore Landing, LLC
dated August 20, 2004, and amendments
thereto.

(m) Ground Lease between City of Miami and Included herein.
Bayshore Landing, LLC
dated August 20, 2004 and
related document

(n) Loan Agreement between Included herein.
Wachovia Bank and Bayshore
Landing, LLC dated August 20,
2004

(o) Operating Agreement of Bayshore Included herein.
Landing, LLC dated August 19, 2004

(p) Management Agreement for Bayshore Included herein.
Rawbar, LLC executed by RMI,LLC
dated August 20, 2004.
Included herein.
(q) Management Agreement for Bayshore
Rawbar, LLC executed by HMG
Advisory Bayshore, Inc.
dated August 20, 2004.

(r) Management and Leasing Agreement for Included herein.
Bayshore Landing, LLC executed by RCI
Bayshore, Inc.
dated August 20, 2004.

(14) Code of Ethics for Chief Executive Incorporated by
Officer and Senior Financial Officers reference to Item 99 of 2003
dated May 2003 Form 10-KSB.

(21) Subsidiaries of the Company. Included herein.

(31) (a) Certification of Chief Executive Included herein.
Officer as adopted pursuant
to Section 302 of the Sarbanes-
Oxley Act of 2002

(b) Certification of Chief Financial Included herein.
Officer as adopted pursuant to
Section 302 of the Sarbanes-
Oxley Act of 2002

(32) (a) Certification of Chief Executive Included herein.
Officer pursuant to 18 U.S.C. ss. 1350
as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002

(b) Certification of Chief Financial Included herein.
Officer pursuant to 18 U.S.C.
ss. 1350 as adopted pursuant to
ss. 906 of the Sarbanes-Oxley
Act of 2002