Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

(Do not check if a smaller reporting company) Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: As of November 13, 2017,9, 2018, there were 5,317,758 shares of the registrant’s common stock, $.10 par value per share, outstanding.

 

Item 1. Financial Statements

The Company’s remaining land inventory consists of 6 single family lots, an approximate 7 acre parcel and some other minor parcels of real estate consisting of easements in Citrus County Florida, which are owned through its wholly-owned subsidiary, Sugarmill Woods, Inc. (“Sugarmill Woods”). In addition, Punta Gorda Isles Sales, Inc. (“PGIS”), a wholly-owned subsidiary of the Company, owns 12 parcels of real estate in Charlotte County, Florida, which total approximates 60 acres, but these parcels have limited value because of associated developmental constraints such as wetlands, easements, and/or other obstacles to development and sale.

During the nine month period ended September 30, 20172018, $28,000 of the debenture reserve funds were utilized with $2,000 disbursed in final distribution to debenture holders and the year ended December 31, 2016, there were no 6.5% subordinated convertible$26,000 disbursed in escheatment to states of respective debenture holders as debentures thatwith a face amount of $22,000 were surrendered by their respective debenture holders and $287,000 in face amount of debentures were effectively surrendered with the escheatment of respective funds to the states of debenture holders. Accordingly, the Company has recognized $281,000 in forgiveness of debt during the nine months ended September 30, 2018. In addition, accrued interest of $594,000 on such debentures that are considered surrendered was recorded as forgiveness of interest expense during the nine months ended September 30, 2018. There were no funds were utilized from the debenture reserve account.debentures surrendered or escheated in 2017.

As of September 30, 2017 and December 31, 20162018, the remaining outstanding principal balance on such 6.5% subordinated convertible debentures that havewere not been surrendered by the respective holders, or escheated by the Trustee to the states of residence of the respective holders, equals $447,000$138,000 plus accrued and unpaid interest of $838,000 and $817,000, respectively.$268,000. If and when such remaining debentures are surrendered to the Trustee, or escheated to the states of residence of the respective debenture holders, the applicable portion of such principal and accrued interest will be recorded as debt and accrued interest forgiveness. As the Company has consistently stated in prior filings, the Company believes that any potential claims by the respective debenture holders on such 6.5% subordinated convertible debentures would be barred under the applicable statutes of limitations.

 

RevenuesThere was no revenue for the three monthsmonth period ended September 30, 2017 increased by $6,000 to2018. Revenue of $7,000 from $1,000 for the comparable 2016 period primarily as a result of $6,000 interest earned on the Company’s short-term note receivable balance with LIC, the Company’s primary preferred shareholder.

Expenses for the three month period ended September 30, 2018 decreased by $9,000$374,000 when compared to the same period in 20162017 primarily due to recognition of $432,000 in forgiveness of debt and interest attributed to the 6.5% subordinated debentures which matured in June 1991, for which the final distribution of $92 per $1,000 in face amount was paid relating to debentures effectively surrendered in face amount of $152,000 with escheatment of the final distribution to the respective states of such debenture holders. Accrued interest in the amount of $294,000 on such escheated debentures was recorded as a resultforgiveness of (i) interest accruing on past due balances which increase at various intervals throughout the year for accrued but unpaid interest, and (ii) an increase in interest rates in 2017.

Legal and professional expenses increased by $39,000 during the three months ended September 30, 2018 when compared to the same period in 20162017. Legal expenses increased by $37,000 during the three months ended September 30, 2018 compared to the same period in 2017 primarily as a result of an increaselegal expenses incurred in real estate taxconnection with research on the effect of surrender of debentures escheated to the states of debenture holders. In addition, legal expenses increased by $2,000 when compared to the same period in 2017 as a result of legal expenses relating to a common ground transfer of title matter in Citrus County, Florida.

Taxes and assessments in 2017. Consulting and accounting expense decreased by $1,000 during the three months ended September 30, 20172018 when compared to the same period in 2016.2017. General and administrative expenses during the three month period ended September 30, 2018 increased by $14,000 when compared to the same period in 2017 primarily as a result of increased fees relating to review of the Company’s Form 10Q and disclosure of the effect of surrender of debentures escheated to the states of debenture holders.

Consulting and accounting-related party expenses decreased by $1,000 during the nine month period ended September 30, 2018 when compared to the same period in 2017. A quarterly consulting fee is paid to Love Real Estate Company (“LREC”), an affiliate of LIC, of one-tenth of one percent of the carrying value of the Company’s assets which have decreased since the same period in 2016. Legal2017.

General and professionaladministrative expenses decreased by $2,000 during the three monthsnine month period ended September 30, 20172018 increased by $9,000 when compared to the same period in 2016 due2017 primarily as a result of increased fees relating to additional legal expenses incurred in 2016 in connection with the filingreview of the Company’s periodic reportsForm 10Q and disclosure of the effect of surrender of debentures escheated to the states of debenture holders.

Income tax expense of $57,000 was recognized during the three months ended September 30, 2016. General and administrative expenses during the threenine month period ended September 30, 2017 increased by $1,000 when compared tofor the same period inestimated 2016 primarily asAlternative Minimum Tax on the 2016 gain on sales of real estate.

The Company incurred a resultnet loss of increased audit and tax service fees$332,000 during the threenine month period ended September 30, 2017. As a result,2018 compared to a net loss of $366,000 was incurred$1,188,000 for the three months ended September 30, 2017 compared to net loss of $364,000 incurred for the three months ended September 30, 2016.comparable period in 2017. After deducting preferred dividends, totaling $160,000$480,000 for the threenine month periods ended September 30, 20172018 and 2016,2017, with respect to the Class A Preferred Stock, a net loss per share of $(.10)$(.15) and $(.31) was incurred for both of the threenine month periods ended September 30, 2018 and 2017, and 2016. The total cumulative preferred dividends in arrears with respect to the Class A Preferred Stock through September 30, 2017 is $14,355,000.respectively.

During the nine month period ended September 30, 2017 decreased by $8,994,0002018, the Company’s net cash used in operating activities was $112,000 compared to $9,000 from $9,003,000 for the comparable 2016 period primarily as a result of the sale by Sugarmill Woods in 2016 of the Property to the Florida DOT for $9 million. Related party interest income increased by $5,000 during the nine months ended September 30, 2017 to $7,000 from $2,000$232,000 for the comparable period in 2016. The related party interest income for the nine month period ended September 30, 2017 is a result of the Company’s investment in a $560,000 short term note with LIC, which investment was made2017. Cash provided by investing activities during the nine month period ended September 30, 2017. The Company received payment2018 consisted of the previous note receivable proceeds received from LIC, on June 23, 2016. Interest income on the Company’s money market account increased by $1,000 during the nine months ended September 30, 2017 compared to the same periodprimary preferred shareholder. Cash used in 2016.

Total assets decreased by $153,000 at September 30, 2018 compared to interest expense-related party of $3,832,000 duringtotal assets at December 31, 2017, reflecting the same period in 2016. Proceeds from the Property sale were used by the Company on June 23, 2016 to repay the entire outstanding principal of the primary lender debt of $500,000, which was held by PGIP, and the entire outstanding principal of the collateralized convertible debenture of $1,500,000, which was held by LIC and Love-1989. With the full repayment of such principal, no additional interest expense was accrued with respect to such debentures subsequent to June 23, 2016. Interest expense relating to the Company’s current outstanding debt, held by non-related parties, increased by $26,000 duringfollowing changes:

During the nine month period ended September 30, 20172018, cash increased by $448,000 and receivables-related party decreased by $573,000 compared to the same period in 2016,December 31, 2017, primarily as a result of (i) interest accruingthe note receivable proceeds received from LIC on past due balances which increase at various intervals throughout the year for accrued but unpaid interest, and (ii) an increase in interest rates in 2017.March 7, 2018.

Taxes and assessments expense decreased by $1,000 duringDuring the nine month period ended September 30, 2017 when compared2018, $28,000 of the 6.5% subordinated convertible debenture restricted sinking funds were utilized with $2,000 disbursed in final distribution to debenture holders and $26,000 disbursed in escheatment to states of respective debenture holders. There were no surrendered or escheated 6.5% subordinated convertible debentures for the same period in 2016 as a result of lower real estate tax expense during the nine month periodyear ended September 30, 2017 due to the sale of Property sold to the Florida DOT on June 21, 2016.

         The Company paid a Federal income tax deposit of $75,000 on April 18, 2017 for the estimated 2016 Alternative Minimum Tax on the 2016 gain on sales of real estate. Estimated recoverable income taxes as ofLiabilities were approximately $91,227,000 at September 30, 2017 is $18,000 and the Company recognized an income tax expense of $57,000 during the nine month period ended September 30, 2017. As a result, a net loss of $1,188,000 was incurred for the nine month period ended September 30, 20172018 compared to net incomeapproximately $91,048,000 at December 31, 2017, reflecting the following changes which resulted in an increase of $3,330,000 for the comparable period in 2016. After deducting preferred dividends, totaling $480,000 for the nine month periods ended September 30, 2017 and 2016, with respect to the Class A Preferred Stock, net income (loss) per share$179,000 of $(.31) and $.54 was incurred for the nine month periods ended September 30, 2017 and 2016, respectively.liabilities:

During the nine month period ended September 30, 2017, the Company’s net cash used in operating activities was $232,000 compared to cash provided by operating activities of $2,846,000 for the comparable period in 2016, reflecting the net effect of the $9 million received in the sale of Property to the Florida DOT and $5,925,000 of accrued interest paid on collateralized debt. Net cash used in investing activities during the nine months ended September 30, 2017, consisted of a $560,000 short-term loan to LIC, the Company’s primary preferred shareholder, bearing interest at 4.5% per annum and to be repaid by December 31, 2017. During the nine months ended September 30, 2016, the Company received $178,000 in payment of the note receivable principal from LIC and the restricted cash of $5,000 from PGIP, the first mortgage lender, which was released with the sale of Property and satisfaction of the primary lender debt obligation owed to PGIP. Net cash used in financing activities for the nine month period ended September 30, 2016 was for the repayment of $2 million of related party primary lender debt and related party collateralized convertible debentures. There was no financing activities during the nine months ended September 30, 2017.

The Company remains in default on the entire principal amount plus interest (including certain sinking fund and interest payments with respect to the subordinated convertible debentures) of its subordinated convertible debentures and notes payable as well as the remaining accrued interest owed with respect to the collateralized convertible debentures.

The principal and accrued interest amounts due as of September 30, 20172018 are as indicated in the following table:

The Company does not have sufficient funds available (after payment of, or the reserving for the payment of, anticipated future operating expenses) to satisfy the principal or interest obligations on the above debentures and notes payable or any arrearage in preferred dividends.

The Company remains totally dependent upon the sale of parcels of its various remaining properties with respect to its ability to make any future debt service payments.

The Company’s independent registered public accounting firm included an explanatory paragraph regarding the Company’s ability to continue as a going concern in their opinion on the Company’s consolidated financial statements for the year ended December 31, 2016.2017.

The discussion set forth in this Item 2, as well as other portions of this Form 10-Q, may contain forward-looking statements. Such statements are based upon the information currently available to management of the Company and management’s perception thereof as of the date of the Form 10-Q. When used in this Form 10-Q, words such as “anticipates,” “estimates,” “believes,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to risks and uncertainties. Actual results of the Company’s operations could materially differ from those forward-looking statements. The differences could be caused by a number of factors or combination of factors including, but not limited to: changes in the real estate market in Florida and the counties in which the Company owns any property; institution of legal action by the bondholders for collection of any amounts due under the subordinated convertible debentures (notwithstanding the Company’s belief that at least a portion of such actions might be barred under applicable statute of limitations); changes in management strategy; and other factors set forth in reports and other documents filed by the Company with the Securities and Exchange Commission from time to time.

Not applicable.

The Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures under the supervision and with the participation of its Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based on this evaluation, the Company’s management, including the CEO and CFO, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2017.2018. There have been no changes in the Company’s internal control over financial reporting during the quarter ended September 30, 20172018 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company, to its knowledge, currently is not a party to any material legal proceedings.

Not applicable.

Not applicable.

See discussion in Item 2 of Part I with respect to defaults under the Company's subordinated convertible debentures, collateralized convertible debentures and other indebtedness and with respect to cumulative preferred dividends in arrears, which discussions are incorporated herein by this reference.

Not applicable.

Not applicable.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.