UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------ FORM 10-QSB (mark one) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: March 31, 2005 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 May 6, 2005, 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 MARCH 31, 2005 (UNAUDITED) AND DECEMBER 31, 2004 Assets: March 31, 2005 December 31,2004 ---------------- ---------------- Property, at cost Building and improvements $ 16,887,365 $ 16,880,689 Less: accumulated depreciation 10,006,939 9,826,826 ---------------- ---------------- Building and improvements, net 6,880,426 7,053,863 Land 10,987,034 10,987,034 ---------------- ---------------- Total property 17,867,460 18,040,897 Cash and cash equivalents 1,497,661 1,468,442 Accounts receivable 247,790 140,192 Restricted cash 105,175 93,904 Debt financing costs, net 78,335 86,168 Prepaid expenses and other assets, net 23,655 43,924 ---------------- ---------------- Total assets $ 19,820,076 $ 19,873,527 ================ ================ Liabilities: Mortgage loans payable $ 15,065,765 $ 15,143,369 Accrued interest 105,942 106,487 Deposits 117,891 121,714 Accrued expenses and other liabilities 190,387 187,953 Accrued expenses payable to affiliates 4,595 ---------------- ---------------- Total liabilities 15,484,580 15,559,523 ---------------- ---------------- Commitments and Contingencies Partners' capital: General partner (79,210) (79,425) Limited partners: Class A Interests, 1,518,800 4,414,706 4,393,429 Class B Interests, 2,111,072 -- -- ---------------- ---------------- Total partners' capital 4,335,496 4,314,004 ---------------- ---------------- Total liabilities and partners' capital $ 19,820,076 $ 19,873,527 ================ ================ 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 MARCH 31, 2005 AND 2004 March 31, 2005 March 31, 2004 -------------- -------------- Revenues: Rent $ 708,490 $ 714,567 Reimbursed expenses 264,083 163,243 Interest and other income 7,602 15,680 -------------- -------------- Total revenues 980,175 893,490 -------------- -------------- Expenses: Interest expense 308,170 317,316 Depreciation and amortization 190,002 189,860 Management and property expenses 336,821 238,084 Administrative and management fees to related party 59,067 55,931 Professional fees and other expenses 15,198 16,013 -------------- -------------- Total expenses 909,258 817,204 -------------- -------------- Net income $ 70,917 $ 76,286 ============== ============== Net income attributable to: Limited partners $ 70,208 $ 75,524 General partner 709 762 -------------- -------------- Net income $ 70,917 $ 76,286 ============== ============== Income per weighted average Limited Partnership 100 Class A Interests outstanding $ 4.67 $ 5.02 ============== ============== Distribution per Limited Partnership 100 Class A Interests outstanding $ 3.25 $ -- ============== ============== 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 CHANGES IN PARTNERS' CAPITAL (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2005 General Class A Class B Total Partner Interests Interests ------------- ---------- ------------ ------------- PARTNERS' CAPITAL (DEFICIT) January 1, 2005 $ 4,314,004 $ (79,425) $ 4,393,429 $ - Distribution (49,425) (494) (48,931) - Net income 70,917 709 70,208 - ------------- ---------- ------------ ------------- PARTNERS' CAPITAL (DEFICIT) March 31, 2005 $ 4,335,496 $ (79,210) $ 4,414,706 $ - ============= ========== ============ ============= See Accompanying Notes to Financial Statements -4- CONCORD MILESTONE PLUS, L.P. (A LIMITED PARTNERSHIP) STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004 March 31, 2005 March 31, 2004 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 70,917 $ 76,286 -------------- -------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 190,001 189,861 Change in operating assets and liabilities: Increase in accounts receivable (107,598) (34,096) Decrease in prepaid expenses and other assets, net 18,214 16,835 Decrease in accrued interest (545) (545) (Decrease) increase in accrued expenses and other liabilities (1,389) 21,864 Increase in accrued expenses payable to affiliates 4,595 3,514 -------------- -------------- Net cash provided by operating activities 174,195 273,719 -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITY: Property improvements (6,676) (36,400) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase in restricted cash (11,271) (82,347) Principal repayments on mortgage loans payable (77,604) (68,458) Cash distributions to partners (49,425) -- -------------- -------------- Net cash used in financing activities (138,300) (150,805) -------------- -------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 29,219 86,514 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,468,442 907,136 -------------- -------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,497,661 $ 993,650 ============== ============== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest $ 308,715 $ 317,861 ============== ============== See Accompanying Notes to Financial Statements -5- CONCORD MILESTONE PLUS, L.P. (A LIMITED PARTNERSHIP) NOTES TO FINANCIAL STATEMENTS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2005 The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States 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 of these quarterly periods have been included. The financial statements as of and for the periods ended March 31, 2005 and 2004 are unaudited. The results of operations for the interim periods shown in this report are not necessarily indicative of the results of operations that may be expected for any other interim period or for the full fiscal year. Certain information for 2004 has been reclassified to conform to the 2005 presentation. 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, 2004. 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. 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 -6- $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 MARCH 31, 2005 TO THREE MONTHS ENDED - --------------------------------------------------------------------- MARCH 31, 2004 - -------------- The Partnership recognized a net income of $70,917 for the three months ended March 31, 2005 as compared to a net income of $76,286 for the same period in 2004.The decrease is primarily due to the following factors: An increase in revenue of $86,685 or 9.70%, to $980,175 for the three months ended March 31, 2005 as compared to $893,490 for the three months ended March 31, 2004. The net increase is due to an increase of $100,840 in common area reimbursed expenses at the Valencia Property of which $75,000 is for the accrual of tenants reimbursement of a major parking lot repair that was completed in the first quarter of 2005 and $25,000 is for reimbursement of higher expenses incurred in 2004. Such expenses were billed out to tenants and revenue was recognized in the first quarter of 2005. An increase in expenses of $92,054 or 11.26%, to $909,258 for the three months ended March 31, 2005 as compared to $817,204 for the three months ended March 31, 2004. The net increase is primarily due to management and property expenses of $98,737 due to a major parking lot repair expense of $108,188 at the Valencia Property. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- The 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 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. 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 commenced in August 2004 and continue through December 2008 with four 5 years 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. 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, this 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. -7- 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. The Partnership resumed making distributions commencing with the first quarter of 2005. The first quarter distribution of $49,425.03 was paid during January 2005. A second quarter distribution of $49,512.88 will be paid during May 2005. 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 March 31, 2005 may be used to fund (a) the capital requirements of the Partnership properties (b) for distributions and (c) for other general Partnership purposes including the Partnership's compliance with Section 404 of the Sarbanes-Oxley Act of 2002. See "Section 404 compliance" below. Net cash provided by operating activities of $174,195 for the three months ended March 31, 2005 included (i) a net income of $70,917, (ii) non-cash adjustments of $190,001 for depreciation and amortization expense and (iii) a net change in operating assets and liabilities of ($86,723) mainly due to the Partnership recording of receivables from its tenants for the parking lot improvement at the Valencia Property and due to higher 2004 common area expenses. Such expenses were billed out to tenants and revenue was recognized in the first quarter of 2005. . Net cash provided by operating activities of $273,719 for the three months ended March 31, 2004 included (i) a net income of $76,286, (ii) non cash adjustments of $189,861 for depreciation and amortization expense and (iii) a net change in operating assets and liabilities of $7,572. Net cash used in investing activities of $6,676 for the three months ended March 31, 2005 was for capital expenditure for property improvements. Net cash used in investing activities of $36,400 for the three months ended March 31, 2004 was for capital expenditure for property improvements. Net cash used in financing activities of $138,300 for the three months ended March 31, 2005 include (i) principal repayments on mortgage loans payable of $77,604 (ii) an increase in restricted cash of $11,271 and (iii) cash distribution to partners of $49,425. Net cash used in financing activities of $150,805 for the three months ended March 31, 2004 include (i) principal repayments on mortgage loans payable of $68,458 and (ii) an increase in restricted cash of $82,347. On March 29, 2005, the Partnership received an unsolicited letter from a third party expressing such party's interest in purchasing the Green Valley Property. The Partnership has engaged only in preliminary discussions with such party and it is too early to predict whether such discussions will result in a transaction with such party and what the terms of any such transaction would be. Such discussions have included clarifying to the third party that the size of the Green Valley Property is less than what such party originally assumed in its original letter. There can be no assurance that any such discussions will result in a contract for sale, or that a sale of the Green Valley Property will be consummated or how much the Partnership will actually realize in the event that the Green Valley Property is sold. -8- OFF-BALANCE SHEET ARRANGEMENTS - ------------------------------ The Partnership has no off-balance sheet arrangements as contemplated by Item 303(c) of Rule S-B. ITEM 3. CONTROLS AND PROCEDURES. The President and Treasurer of CM Plus Corporation, the general partner of the Partnership, have evaluated, in accordance with Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 (the "Act"), the effectiveness of the partnership's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-(e) of the Act) as of the end of the period covered by this report. Based on that evaluation, the President and Controller of CM Plus Corporation have concluded that as of the end of the period covered by this report the Partnership's disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by the Partnership and its subsidiaries in the report it files or submits under the Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Through their evaluation required by Rules 13a-15 and 15-d-15 of the Act that occurred during the Partnership's last fiscal quarter, the President and Treasurer of CM Plus Corporation identified significant deficiencies in the Partnership's internal control over financial reporting. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the company's ability to initiate, authorize, record, process or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the company's annual or interim financial statements that is more than inconsequential will not be prevented or detected. The significant deficiencies in the Partnership's internal control over financial reporting relate to the limited number of personnel involved in financial reporting and the fact that the responsibilities and tasks to complete the Partnership's financial reports are not segregated or well-defined. Through the process of evaluating and testing the effectiveness of the Partnership's internal control over financial reporting, as discussed below under "Section 404 Compliance," the Partnership may identify other deficiencies that require remediation. There were no changes in the Partnership's internal control over financial reporting identified in connection with the required evaluation performed by the President and Treasurer of CM Plus Corporation that occurred during the Partnership's last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Partnership's internal control over financial reporting. SECTION 404 COMPLIANCE - ---------------------- Section 404 of the Sarbanes-Oxley Act of 2002 (the "S-O Act") requires the Partnership to include an internal control report from management in its Annual Report on Form 10-KSB for the year ended December 31, 2006 and in subsequent Annual Reports thereafter. The internal control report must include (i) a statement of management's responsibility for establishing and maintaining adequate internal control over financial reporting, (ii) a statement identifying the framework used by management to conduct the required evaluation of the effectiveness of the Partnership's internal control over financial reporting, (iii) management's assessment of the effectiveness of the Partnership's internal control over financial reporting as of December 31, 2006, including a statement as to whether internal control over financial reporting is effective, and (iv) a statement that the Partnership's independent auditors have issued an attestation on management's assessment of internal control over financial reporting. In order to achieve compliance with Section 404 of the S-O Act within the required timeframe, the Partnership and its General Partner will conduct a process to document and evaluate the Partnership's internal control over financial reporting. The Partnership plans to dedicate internal resources and develop a detailed work plan to (i) assess and document the adequacy of internal control over financial reporting, (ii) take steps to improve control processes where required, (iii) validate through testing that controls are functioning as documented, and (iv) implementing a continuous reporting and improvement process for internal control over financial reporting. The Partnership expects to validate any potential control deficiencies and to assess whether or not they rise to the level of significant deficiencies or material weaknesses. -9- To ensure that the Partnership addresses these issues thoroughly, effectively and in a timely manner, it will seek to supplement its internal project team with the services of outside consultants and advisors. The Partnership anticipates that the costs associated with the retention and use of such consultants and advisors would be significant and material to the Partnership. PART II - OTHER INFORMATION - --------------------------- ITEM 6. EXHIBITS - ---------------- On April 27, 2005, Sutter Opportunity Fund 3, LLC, Sutter Opportunity Fund 3 (TE), LLC, SCM-CMP Acquisition Ffund, LLC, MacKenzie Patterson Fuller, Inc., Robert E. Dixon and C.E. Patterson (the "Purchasers") disclosed in a Tender Offer Statement on Schedule TO an offer (the "Tender Offer") to purchase any and/or all of the outstanding units of Limited Partnership Interests of the Partnership, each of which is comprised of one Class A Interest and one Class B Interest (a "Unit"), for a purchase price of $2.50 per Unit. The deadline to accept the Tender Offer is May 27, 2005, unless extended by the Purchasers. The Partnership has decided to remain neutral as to the Tender Offer and filed a Schedule 14D-9 with the SEC on May 10, 2005. Among other things, the Partnership pointed out the restrictions on transfer in its partnership agreement that are intended to prevent a termination of the Partnership for federal income tax purposes. These restrictions would limit the number of Units that the Purchasers may acquire in the Tender Offer. The Schedule TO filed with the SEC by the Purchasers and the Schedule 14D-9 filed with the SEC by the Partnership are available on the SEC's website at www.sec.gov. 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. 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. -10- 10.19 Administrative Services Agreement dated March 1, 2005, is made by and between CM Plus Corporation, a Delaware Corporation ("CM Plus") and Milestone Properties, Inc., a Delaware Corporation ("Milestone"). 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. -11- 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: May 6, 2005 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 -12-
- Company Dashboard
- Filings
-
10QSB Filing
Concord Milestone Plus L P Inactive 10QSB2005 Q1 Quarterly report (small business)
Filed: 16 May 05, 12:00am