UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 10-QSB (mark one) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) - --- OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2004 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) - ---- OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to --------------- --------------- Commission file number 000-16757 CONCORD MILESTONE PLUS, L.P. ----------------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) Delaware 52-1494615 - ------------------------------- ------------------------------------ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 200 CONGRESS PARK DRIVE SUITE 103 DELRAY BEACH, FLORIDA 33445 - ---------------------------------------- ------------------- (Address of Principal Executive Offices) (Zip Code) (561) 394-9260 ------------------------- Issuer's Telephone Number As of August 9, 2004, 1,518,800 Class A interests and 2,111,072 Class B interests were outstanding. Check whether the issuer (1) has filed all reports to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Transitional small business disclosure format. Yes No X ----- ----- PART I - FINANCIAL INFORMATION Item 1. Financial Statements CONCORD MILESTONE PLUS, L.P. (A LIMITED PARTNERSHIP) BALANCE SHEETS JUNE 30, 2004 (UNAUDITED) AND DECEMBER 31, 2003 Assets: June 30, 2004 December 31,2003 ------------- ---------------- Property: Building and improvements, at cost $16,850,071 $16,773,290 Less: accumulated depreciation 9,465,066 9,107,354 ----------- ----------- Building and improvements, net 7,385,055 7,665,936 Land, at cost 10,987,034 10,987,034 ----------- ----------- Property, net 18,372,039 18,652,970 Cash and cash equivalents 1,230,823 907,136 Accounts receivable 159,230 139,885 Restricted cash 98,814 240,166 Debt financing costs, net 101,835 117,502 Prepaid expenses and other assets, net 11,606 49,941 ----------- ----------- Total assets $19,974,347 $20,107,600 =========== =========== Liabilities: Mortgage loans payable $15,283,955 $15,418,851 Accrued interest 104,007 106,487 Deposits 118,450 114,445 Accrued expenses and other liabilities 179,000 270,155 Accrued expenses payable to affiliates 9,524 1,296 ----------- ----------- Total liabilities 15,694,936 15,911,234 ----------- ----------- Commitments and Contingencies Partners' capital: General partner (79,771) (80,601) Limited partners: Class A Interests, 1,518,800 4,359,182 4,276,967 Class B Interests, 2,111,072 - - ----------- ----------- Total partners' capital 4,279,411 4,196,366 ----------- ----------- Total liabilities and partners' capital $19,974,347 $20,107,600 =========== =========== See Accompanying Notes to Financial Statements -2- CONCORD MILESTONE PLUS, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF REVENUES AND EXPENSES (UNAUDITED) FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND 2003 June 30, 2004 June 30, 2003 ------------- ------------- Revenues: Rent $719,529 $670,292 Reimbursed expenses 153,948 156,639 Interest and other income 5,492 4,197 ----------- ----------- Total revenues 878,969 831,128 ----------- ----------- Expenses: Interest expense 317,948 321,363 Depreciation and amortization 186,796 171,750 Management and property expenses 268,361 244,417 Administrative and management fees to affiliates 57,307 51,988 Professional fees and administrative expenses 41,798 30,748 ----------- ----------- Total expenses 872,210 820,266 ----------- ----------- Net income $ 6,759 $ 10,862 =========== =========== Net income attributable to: Limited partners $6,691 $ 10,753 General partner 68 109 ----------- ----------- Net income $ 6,759 $ 10,862 =========== =========== Income per weighted average Limited Partnership 100 Class A Interests outstanding, basic & diluted $ 0.44 $ 0.72 =========== =========== Weighted average number of 100 Class A interests outstanding 15,188 15,188 =========== =========== See Accompanying Notes to Financial Statements -3- CONCORD MILESTONE PLUS, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF REVENUES AND EXPENSES (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 June 30, 2004 June 30, 2003 ------------- ------------- Revenues: Rent $1,434,096 $1,321,154 Reimbursed expenses 317,191 298,119 Interest and other income 21,172 8,511 ----------- ----------- Total revenues 1,772,459 1,627,784 ----------- ----------- Expenses: Interest expense 635,264 640,548 Depreciation and amortization 376,656 341,147 Management and property expenses 506,445 495,738 Administrative and management fees to affiliates 113,238 103,023 Professional fees and administrative expenses 57,811 48,877 ----------- ----------- Total expenses 1,689,414 1,629,333 ----------- ----------- Net income (loss) $ 83,045 $ (1,549) =========== =========== Net income (loss) attributable to: Limited partners $ 82,215 $ (1,534) General partner 830 (15) ----------- ----------- Net income (loss) $ 83,045 $ (1,549) =========== =========== Income (loss) per weighted average Limited Partnership 100 Class A Interests outstanding, basic & diluted $ 5.47 $ (0.10) =========== =========== Weighted average number of 100 Class A interests outstanding 15,188 15,188 =========== =========== See Accompanying Notes to Financial Statements -4- CONCORD MILESTONE PLUS, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2004 General Class A Class B Total Partner Interests Interests ----------- ---------- ------------ ----------- PARTNERS' CAPITAL (DEFICIT) January 1, 2004 $4,196,366 $(80,601) $4,276,967 $0 Net Income 83,045 830 82,215 0 ----------- ---------- ------------ ----------- PARTNERS' CAPITAL (DEFICIT) June 30, 2004 $4,279,411 $(79,771) $4,359,182 $0 =========== ========== ============ =========== See Accompanying Notes to Financial Statements -5- CONCORD MILESTONE PLUS, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 June 30, 2004 June 30, 2003 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 83,045 $ (1,549) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 376,656 341,147 Change in operating assets and liabilities: (Increase) decrease in accounts receivable (19,345) 48,894 Decrease in prepaid expenses and other assets, net 35,058 47,989 Decrease in accrued interest (2,480) (4,423) (Decrease) increase in accrued expenses and other liabilities (87,150) 28,484 Increase (decrease) in accrued expenses payable to affiliates 8,228 (1,006) ------------- ------------- Net cash provided by operating activities 394,012 459,536 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Property improvements (76,781) (181,142) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Decrease (increase) in restricted cash 141,352 (19,332) Principal repayments on mortgage loans payable (134,896) (127,668) ------------- ------------- Net cash provided by (used in) financing activities 6,456 (147,000) ------------- ------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 323,687 131,394 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 907,136 1,005,152 ------------- ------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $1,230,823 $1,136,546 ============= ============= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest $ 637,744 $ 644,971 ============= ============= See Accompanying Notes to Financial Statements -6- INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors of CM Plus Corporation, General Partner of Concord Milestone Plus, L.P. We have reviewed the accompanying balance sheet of Concord Milestone Plus, L.P. (the "Partnership") as of June 30, 2004, and the related statements of revenues and expenses, changes in partners' capital, and cash flows for the three month and six month periods ended June 30, 2004 and June 30, 2003. These financial statements are the responsibility of the management of the Partnership. We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles. We have previously audited, in accordance with the Standards of the Public Company Accounting Board Oversight (United States), the balance sheet of the Partnership as of December 31, 2003, and the related statements of revenues and expenses, changes in partners' capital, and cash flows for the year then ended (not presented herein); and in our report dated February 21, 2004, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2003 is fairly stated, in all material respects, in relation to the balance sheet from which it has been derived. /s/ Ahearn, Jasco + Company, P.A. AHEARN, JASCO + COMPANY, P.A. Certified Public Accountants Pompano Beach, Florida August 4, 2004 -7- CONCORD MILESTONE PLUS, L.P. (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The financial statements as of and for the periods ended June 30, 2004 and 2003 are unaudited. The financial statements for the periods ended June 30, 2004 and 2003 have been reviewed by an independent public accountant pursuant to Item 310(b) of Regulation S-B and following applicable standards for conducting such reviews, and the report of the accountant is included as part of this filing. The results of operations for the interim periods shown in this report are not necessarily indicative of the results of operations for the fiscal year. These interim financial statements should be read in conjunction with the annual financial statements and footnotes included in the Partnership's financial statements filed on Form 10-KSB for the year ended December 31, 2003. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS GENERAL This Form 10-QSB and the documents incorporated herein by reference, if any, contain forward-looking statements that have been made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on current expectations, estimates and projections about the Partnership's (as defined below) industry, management beliefs, and certain assumptions made by the Partnership's management and involve known and unknown risks, uncertainties and other factors. Such factors include the following: general economic and business conditions, which will, among other things, affect the demand for retail space or retail goods, availability and creditworthiness of prospective tenants, lease rents and the terms and availability of financing; risks of real estate development and acquisition; governmental actions and initiatives; and environmental and safety requirements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. -8- ORGANIZATION AND CAPITALIZATION Concord Milestone Plus, L.P., a Delaware limited partnership (the "Partnership"), was formed on December 12, 1986, for the purpose of investing in existing income-producing commercial and industrial real estate. The general partner is CM Plus Corporation. The Partnership began operations on August 20, 1987, and currently owns and operates three shopping centers located in Searcy, Arkansas; Valencia, California; and Green Valley, Arizona. The Partnership commenced a public offering on April 8, 1987 in order to fund the Partnership's real property acquisitions. The Partnership terminated its public offering on April 2, 1988 and was fully subscribed to with a total of 16,452 Bond Units and 15,188 Equity Units issued. Each Bond Unit consisted of $1,000 principal amount of Bonds and 36 Class B Interests. The Partnership redeemed all of the outstanding Bonds as of September 30, 1997 with the proceeds of three fixed rate mortgage loans. Each Equity Unit consists of 100 Class A Interests and 100 Class B Interests. Capital contributions to the Partnership consisted of $15,187,840 from the sale of the Equity Units and $592,272 which represent the Class B Interests from the sale of the Bond Units. RESULTS OF OPERATIONS COMPARISON OF THREE MONTHS ENDED JUNE 30, 2004 TO THREE MONTHS ENDED JUNE 30, 2003 The Partnership recognized a net income of $6,759 for the three months ended June 30, 2004 as compared to a net income of $10,862 for the same period in 2003.The change is primarily due to the following factors: (i) An increase in revenue of $47,841 or 5.76% to $878,969 for the three months ended June 30, 2004 as compared to $831,128 for the three months ended June 30, 2003 due to an increase in base rent collected by the Partnership of $49,237 due to the decrease in vacancy at the Green Valley and Valencia properties. (ii) An increase in expenses of $51,944 or 6.33% to $872,210 for the three months ended June 30, 2004 as compared to $820,266 for the three months ended June 30, 2003. The net increase is primarily due to the following: a) an increase in depreciation expense of $15,046 due to capital expenditures incurred during 2003 and 2004 for roof replacement and tenant improvements at the Valencia and Green Valley properties b) an increase in professional fees and administrative expenses of $11,050 due to an increase in accounting and legal fees and c) an increase of $23,944 in management and property expenses in the three months ended June 30, 2004. This increase was mainly due to a real estate tax refund of $46,255 received in the second quarter of 2003 resulting from a successful appeal of the 2002 real estate taxes was a one-time return that the Partnership did not incur again and which effectively decreased the 2003 real estate tax expense. This impact was offset by a reduction in insurance and various maintenance expenses for all properties in the quarter ending June 30, 2004 compared to the quarter ending June 30, 2003. COMPARISON OF SIX MONTHS ENDED JUNE 30, 2004 TO SIX MONTHS ENDED JUNE 30, 2003 The Partnership recognized a net income of $83,045 for th six months ended June 30, 2004 as compared to a net loss of $1,549 for the same period in 2003. The change is primarily due to the following factors: -9- (i) An increase in revenue of $144,675 or 8.89% to $1,772,459 for the six months ended June 30, 2004 as compared to $1,627,784 for the six months ended June 30, 2003. The net increase is due to the following: a) an increase in base rent collected by the Partnership of $112,942 due to the decrease in vacancy at the Green Valley and Valencia properties and b) an increase of $19,072 in reimbursed expenses due to higher expenses incurred at the Green Valley Property in 2003 as compared to 2002. Such 2003 expenses were billed out to tenants and the revenue was recognized in the first quarter of 2004. (ii) An increase in expenses of $60,081 or 3.68% to $1,689,414 for the six months ended June 30 2004 as compared to $1,629,333 for the six months ended June 30, 2003. The net increase is primarily due to the following: a) an increase in depreciation expense of $35,509 due to capital expenditures incurred during 2003 and 2004 for roof replacement and tenant improvements at the Valencia and Green Valley properties b) an increase in administrative and management fees to affiliates of $10,215 is due to an increase in rental income at the Green Valley and Valencia properties and c) an increase of $10,707 in management and property expenses in the three months ended June 30, 2004. This increase was mainly due to a real estate tax refund of $46,255 received in the second quarter of 2003 resulting from a successful appeal of the 2002 real estate taxes was a one-time return that the Partnership did not incur again and which effectively decreased the 2003 real estate tax expense. This impact was offset by a reduction in insurance and various maintenance expenses for all properties for the period ending June 30, 2004 compared to the period ending June 30, 2003. LIQUIDITY AND CAPITAL RESOURCES CM Plus Corporation, the Partnership's General Partner believes that the Partnership's expected revenue and working capital is sufficient to meet the Partnership's current and reasonable future operating requirements for the next 12 months. Nevertheless, because the cash revenues and expenses of the Partnership will depend on future facts and circumstances relating to the Partnership's properties, as well as market and other conditions beyond the control of the Partnership, a possibility exists that cash flow deficiencies may occur. Abco, the former principal anchor tenant at the Green Valley Property vacated its space in May, 1999. This space represents about 20% of the Green Valley Property's leaseable area. The Partnership has retained a succession of several regional real estate brokerage firms to help market the space. A new Safeway Supermarket near the Green Valley Property that was built in 2002 has effectively negated the potential of a supermarket as a replacement tenant for the former Abco tenant. In March 2003, a lease was executed with Family Dollar, Inc. for 9,571 of the 38,983 total square footage, formerly leased by Abco. In conjunction with the work performed in preparing the building to be subdivided and to accommodate Family Dollar, an approximate 3,528 square foot area was reconfigured since it restricted the visibility of the remaining vacant space. This amount of square footage is no longer leaseable. The Partnership has not identified a potential tenant for the remaining 25,884 square feet, and the Partnership does not know what effect, if any, that this continuing vacant space will have on the Green Valley Property, the other tenants, or the ability of the Partnership to lease other vacant space at the Green Valley Property. The Partnership delivered the premises to Family Dollar in June 2003 and the lease was effective beginning August 2003. Rent payments of $3,982.50 per month will commence in August 2004 and continue through December 2008 with four 5 year options to renew unless the lease is breached or otherwise terminated. In accordance with applicable accounting principles, the Partnership is recognizing rent income over the full term of the lease, including the "free-rent" period from August 2003 through July 2004. -10- The Partnership has made distributions to its partners in the past. Distributions were suspended after the second quarter of 1999 following the departure of Abco from the Green Valley Property. Additionally, several capital projects were undertaken and completed at the Properties. The Partnership will evaluate the amount of future distributions, if any, on a quarter by quarter basis. No assurances can be given as to the timing or amount of any future distributions by the Partnership. Management is not aware of any other significant trends, events, commitments or uncertainties that will or are likely to materially impact the Partnership's liquidity. The cash on hand at June 30, 2004 may be used for (a) the capital requirements of the Partnership properties (b) for other general Partnership purposes. Net cash provided by operating activities of $394,012 for the six months ended June 30, 2004 included (i) a net income of $83,045, (ii) non-cash adjustments of $376,656 for depreciation and amortization expense and (iii) a net change in operating assets and liabilities of $65,689. Net cash provided by operating activities of $459,536 for the six months ended June 30, 2003 included (i) a net loss of $1,549, (ii) non-cash adjustments of $341,147 for depreciation and amortization expense and (iii) a net change in operating assets and liabilities of $119,938. Net cash used in investing activities of $76,781 for the six months ended June 30, 2004 was for capital expenditures for property improvements. Net cash used in investing activities of $181,142 for the six months ended June 30, 2003 was for capital expenditures for property improvements. Net cash provided by financing activities of $6,456 for the six months ended June 30, 2004 include (i) principal repayments on mortgage loans payable of $134,896 and (ii) a decrease in restricted cash of $141,352. During the quarter ending June 30, 2004, the Partnership has been successful in its request to release the $150,000 that was held in escrow in connection with the refinancing by the holder of the first mortgage on the Green Valley Property pending the resolution of the Abco vacancy. Net cash used in financing activities of $147,000 for the six months ended June 30, 2003 include (i) principal repayments on mortgage loans payable of $127,668 and (ii) an increase in restricted cash of $19,332. OFF-BALANCE SHEET ARRANGEMENTS The Partnership has no off-balance sheet arrangements as contemplated by Item 303(c) of Regulation S-B. ITEM 3. CONTROLS AND PROCEDURES. The President and Treasurer of the Partnership's General Partner have concluded, based on their evaluation as of June 30, 2004, that our disclosure controls and procedures are effective to ensure that material information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, made known to management and reported within the time periods specified in the SEC's rules and forms. -11- Our management, including the President and Treasurer of the Partnership's General Partner, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met and cannot detect all deviations. Because of the inherent limitations in all control systems, no evaluation of control can provide absolute assurance that all control issues and instances of fraud or deviations, if any, within the Partnership have been detected. While we believe that our disclosure controls and procedures and our internal control over financial reporting have been effective, in light of the foregoing, we intend to continue to examine and refine our disclosure controls and procedures and our internal control over financial reporting to monitor ongoing developments in this area. During the quarter ended June 30, 2004, there were no significant changes in our internal control over financial reporting or other factors that have materially affected or are reasonably likely to materially affect our internal control over financial reporting including any corrective actions with regard to significant defiencies and material weaknesses. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit: Number Description of Document ------ ----------------------- 3.1 Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. Incorporated herein by reference to Exhibit A to the Registrant's Prospectus included as Part I of the Registrant's Post-Effective Amendment No. 3 to the Registrant's Registration Statement on Form S-11 (the "Registration Statement") which was declared effective on April 3, 1987. 3.2 Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P., included as Exhibit 3.2 to Registrant's Form 10-K for the fiscal year ended December 31, 1987 ("1987 Form 10-K"), which is incorporated herein by reference. 3.3 Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.3 to the 1987 form 10-K, which is incorporated herein by reference. 3.4 Amendment No. 3 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.4 to the 1987 Form 10-K, which is incorporated herein by reference. 3.5 Amendment No. 4 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.5 to the 1987 Form 10-K, which is incorporated herein by reference. -12- 3.6 Amendment No. 5 to Amended and Restated Agreement of Limited Partnership of Concord Milestone Plus, L.P. included as Exhibit 3.6 to Registrant's Form 10-K for the fiscal year ended December 31, 1988, which is incorporated herein by reference. 31.1 Certification by the principal executive officer, pursuant to Rules 13a-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934, as amended. 31.2 Certification by the principal financial officer, pursuant to Rules 13a-14(a) and 15(d)-14(a) of the Securities Exchange Act of 1934, as amended. 32.1 Certifications by the principal executive officer, pursuant to 18 U.S.C. 1350. 32.2 Certifications by the principal financial officer, pursuant to 18 U.S.C. 1350. (b) Reports: No reports on form 8-K were filed during the quarter covered by this Report. -13- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATE: August 9, 2004 CONCORD MILESTONE PLUS, L.P. -------------- ---------------------------- (Registrant) BY: CM PLUS CORPORATION -------------------------- General Partner By: /S/ Leonard Mandor -------------------------- Leonard Mandor President By: /S/ Patrick Kirse -------------------------- Patrick Kirse Treasurer and Controller -14-
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10QSB Filing
Concord Milestone Plus L P Inactive 10QSB2004 Q2 Quarterly report (small business)
Filed: 13 Aug 04, 12:00am