U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report under Section 13 or 15 (d) of
The Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 2000
Commission File No. 33-39238
TMP LAND MORTGAGE FUND, LTD
A CALIFORNIA LIMITED PARTNERSHIP
(Name of small business issuer as specified in its charter)
CALIFORNIA 33-0451040
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
801 North Parkcenter Drive, Suite 235
Santa Ana, California 92705
(Address of principal executive offices, including Zip Code)
(714) 836-5503
(Issuer's telephone number, including Area Code)
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 [ ]
Transitional Small Business Disclosure Format:____Yes__X__No
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following financial statements are filed as a part of this form 10-QSB:
Consolidated Balance Sheets as of September 30, 2000 and December 31, 1999,
Consolidated Statements of Operations for the three and nine months ended
September 30, 2000 and 1999, and Consolidated Statements of Cash Flows for the
nine months ended September 30, 2000 and 1999.
The interim financial statements presented have been prepared by the Partnership
without audit and in the opinion of the management, reflect all adjustments of a
normal recurring nature necessary for a fair statement of (a) the results of
operations for the three and nine months ended September 30, 2000 and 1999 (b)
the financial position at September 30, 2000 and (c) the cash flows for the nine
months ended September 30, 2000 and 1999. Interim results are not necessarily
indicative of results for a full year.
The balance sheet presented as of December 31, 1999 has been derived from the
financial statements that have been audited by the Partnership's independent
public accountants. The financial statements and notes are condensed as
permitted by Form 10-QSB and do not contain certain information included in the
annual financial statements and notes of the Partnership. The financial
statements and notes included herein should be read in conjunction with the
financial statements and notes included in the Partnership's Form 10-KSB.
2
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Consolidated Balance Sheets
September 30, December 31,
2000 1999
(unaudited)
____________ ____________
Assets
Cash ................................... $ 920,041 $ 178,234
Notes Receivable from Affiliate (Note 6) 0 346,038
Prepaid Expenses & Other ............... 85,359 37,998
Other Receivables (Note 9) ............. 13,661 13,661
Investments (Note 8) ................... 607,439 607,439
Investment in Unimproved Land, Net ..... 17,771,443 16,352,585
---------- ----------
Total Assets ..................... $ 19,397,943 $17,535,955
============ ============
Liabilities and Partners' Capital
Accounts Payable & Other ......................... $ 710,128 $ 806,413
Due to Affiliates (Notes 5 & 7) .................. 40,888 192,800
Franchise Taxes Payable .......................... 800 800
Property Taxes Payable (Note 10) ................. 7,105,978 6,301,117
Notes Payable (Note 11) .......................... 4,334,256 2,445,801
------------ -----------
Total Liabilities .......................... 12,192,050 9,746,931
------------ -----------
Minority Interests (Note 12) ..................... 761,253 899,177
------------ -----------
General Partners ................................. (92,756) (88,304)
------------ -----------
Limited Partners: 20,000 Equity Units Authorized:
15,715 Units Outstanding ........................ 6,537,396 6,978,151
------------ -----------
Total Partners' Capital .................... 6,444,640 6,889,847
----------- -----------
Total Liabilities and Partners' Capital .... $ 19,397,943 $17,535,955
============ ============
See Accompanying Notes to Consolidated Financial Statements
3
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Consolidated Statements of Operations
(unaudited)
Three Months Ended
September 30, September 30,
2000 1999
Property Sales $ 514,140 $ 507,770
Cost of Property Sales (871,898) (472,846)
------------ --------------
Net (Loss) Gain on Property Sales (357,758) 34,924
Income
Interest 6,475 10,798
Other 1,200 1,800
------------ ------------
Total (Loss) Income (350,083) 47,522
------------ ------------
Expenses
Accounting & Financial Reporting 7,677 12,889
General & Administrative 2,661 3,083
Manager Profit Participation 3,750 24,985
Interest 0 1,483
Outside Professional Services 10,311 11,618
Other 80,584 5,613
----------- ------------
Total Expenses 104,983 59,671
----------- ------------
Net Loss before Minority Interests and Income Taxes (455,066) (12,149)
Minority Interests Gain (Loss) in Consolidated
Affiliates 120,809 (450,646)
State Franchise & Other Taxes 0 0
----------- ------------
Net Loss $ (334,257) $ (462,795)
============= =============
Allocation of Net Loss:
General Partners, in the Aggregate: $ (3,343) $ (4,628)
============ =============
Limited Partners, in the Aggregate: $ (330,914) $ (458,167)
============ =============
Limited Partners, per Equity Unit: $ (21.05) $ (29.15)
============ =============
See Accompanying Notes to Consolidated Financial Statements
4
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Consolidated Statements of Operations
(unaudited)
Nine months Ended
September 30, September 30,
2000 1999
Property Sales $ 3,513,839 $ 1,677,032
Cost of Property Sales (3,926,254) (1,602,819)
------------ ------------
Net Gain (Loss) on Property Sales (412,415) 74,213
Income
Interest 23,305 32,377
Other 5,307 3,600
---------- ------------
Total Income (Loss) (383,803) 110,190
---------- ------------
Expenses
Accounting & Financial Reporting 31,832 93,106
General & Administrative 13,668 9,501
Manager Profit Participation 3,750 24,985
Interest 0 2,144
Outside Professional Services 38,308 31,008
Other 104,161 27,828
---------- -----------
Total Expenses 191,719 188,572
---------- -----------
Net Loss before Minority Interests and Income Taxes (575,522) (78,382)
Minority Interests Gain (Loss) in Consolidated
Affiliates 137,905 (512,267)
State Franchise & Other Taxes (7,590) (2,400)
------------- ------------
Net Loss $ (445,207) $ (593,049)
============ =============
Allocation of Net Loss:
General Partners, in the Aggregate: $ (4,452) $ (5,930)
============ =============
Limited Partners, in the Aggregate: $ (440,755) $ (587,119)
============ ==============
Limited Partners, per Equity Unit: $ (28.04) $ (37.36)
============ ==============
See Accompanying Notes to Consolidated Financial Statements
5
TMP LAND MORTGAGE FUND, LTD
A California Limited Partnership
Consolidated Statements of Cash Flows
(unaudited)
Nine months Ended
September 30, September 30,
2000 1999
____________ ____________
Cash Flows from Operating Activities:
Net Loss $ (445,207) $ (593,049)
Adjustments to Reconcile Net Loss to Net Cash
(Used In) Provided By Operating Activities:
Minority Interests in Consolidated Affiliates (137,924) 452,242
(Loss)Gain on Property Sales 412,415 (74,213)
Accretion of Discounted Notes Receivable (12,151) (28,770)
Other 104,161 27,828
Changes in Assets and Liabilities:
Increase in Prepaid Expenses and Other (47,361) (20,065)
Decrease in Other Receivables 0 8,892
Increase in Due to Affiliates 0 (3,267)
(Decrease) Increase in Accounts Payable & Other (96,285) 122,767
---------- ----------
Net Cash (Used In) Provided By Operating
Activities (222,352) (107,635)
---------- ----------
Cash Flows from Investing Activities:
Net Proceeds from Property Sales 3,513,839 1,677,032
Payment of Selling Expenses (9,789) (55,691)
Increase in Land Development and Carrying
Costs (4,634,623) (3,335,570)
---------- -----------
Net Cash Used In Investing Activities (1,130,573) (1,714,229)
---------- ----------
Cash Flows from Financing Activities:
Net Proceeds from Affiliates 206,277 192,800
Net Proceeds from Notes Payable 1,888,455 1,505,534
Net Cash Provided By Financing Activities 2,094,732 1,698,334
--------- ---------
Increase (Decrease) in Cash 741,807 (123,530)
Cash, Beginning of Period 178,234 416,098
--------- ----------
Cash, End of Period $ 920,041 $ 292,568
========== =========
See Accompanying Notes to Consolidated Financial Statements
6
TMP LAND MORTGAGE FUND, LTD
A California Limited Partnership
Consolidated Statements of Cash Flows, con't
(unaudited)
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Taxes $ 7,590 $ 1,600
============ =============
Cash Paid for Interest $ 254,788 $ 95,704
============ =============
Other Disclosures:
Non-cash investing activities during the nine months ended September 30, 2000
and 1999 consisted of an increase in the carrying costs of Investment in
Unimproved Land equal to additional property tax liabilities incurred of
$804,861 and $1,040,280, respectively.
See Accompanying Notes to Consolidated Financial Statements
7
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Notes to the Consolidated Financial Statements
September 30, 2000
(unaudited)
Note 1 - General and Summary of Significant Accounting Policies
General - TMP Land Mortgage Fund, Ltd., A California Limited Partnership (the
"Partnership"), was organized in 1991 in accordance with the provisions of the
California Uniform Limited Partnership Act. The purpose of the Partnership is to
make short-term (generally one to three-year) loans to unaffiliated parties
secured by first trust deeds (mortgages) on unimproved real property primarily
in the Inland Empire area of Southern California and to provide cash
distributions on a current basis to the limited partners, primarily from
interest earned on the mortgage loans.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Partnership and its majority-owned investments, TMP Homes
Remington, LLC (Remington) and TMP Homes Flowerfield-Sun City, LLC (Sun City).
All significant inter-company accounts and transactions have been eliminated in
consolidation.
Investment in Unimproved Land - Investment in unimproved land is stated at the
balance of the foreclosed loan plus carrying and improvement costs incurred
subsequent to foreclosure, net of a valuation allowance, as necessary, to state
the properties at their fair value. All costs associated with the acquisition
and improvement of a property are capitalized including all direct carrying
costs; such as interest expense and property taxes.
Syndication Costs - Syndication costs (such as commissions, printing, and legal
fees) were paid by an affiliate of the Partnership, TMP Realty, Inc.
Income Taxes - No provision for federal income taxes has been made in the
accompanying consolidated financial statements as all profits and losses flow
through to the respective partners and is recognized on their individual income
tax returns. However, the minimum California franchise tax required to be paid
by the Partnership and it's consolidated entities is $800 per year per entity.
Cash and Cash Equivalents - For purposes of the Consolidated Statements of Cash
Flows, the Partnership considers all highly liquid investments with maturity of
three months or less to be cash equivalents. During the normal course of its
business, the Partnership accumulates cash and maintains deposits at various
banks. Occasionally, the cash deposit at a particular bank may exceed the
federally insured limit. Any accounting loss or cash requirement resulting from
the failure of a bank would be limited to such excess amounts.
8
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Notes to the Consolidated Financial Statements
September 30, 2000
(unaudited)
Use of Estimates - In the preparation of financial statements in conformity with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities as of the
date of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from these estimates.
Concentration - All unimproved land parcels held for sale are located in the
Inland Empire area of Southern California. The eventual sales price of all
parcels is highly dependent on the real estate market conditions. The
Partnership attempts to mitigate any potential risk by continually monitoring
the market conditions and holding the land parcels through any periods of
declining market conditions.
Note 2 - Organization of the Partnership
The Partnership was formed on November 15, 1991 of which, TMP Properties (A
California General Partnership) and TMP Investments, Inc. (A California
Corporation) are the general partners ("General Partners"). The partners of TMP
Properties are William O. Passo, Anthony W. Thompson and Scott E. McDaniel.
William O. Passo and Anthony W. Thompson were the shareholders of TMP
Investments, Inc. until October 1, 1995, when they sold their shares to TMP
Group, Inc. and then became the shareholders of TMP Group, Inc.
The Partnership was formed principally to make short-term loans to unaffiliated
parties secured by first trust deeds on unimproved properties, primarily in the
Inland Empire area of Southern California and in some instances, in other areas
of Southern California, and to provide cash distributions to the limited
partners, primarily from interest earned on the mortgage loans. The Partnership
is not a mutual fund or any other type of Investment Company within the meaning
of, and is not subject to regulations under, the Investment Company Act of 1940.
Since its formation, the Partnership had received and accepted subscriptions of
15,715 units, representing total subscription proceeds in the amount of
$15,715,000. All proceeds were committed to mortgage loan investments made by
the Partnership and to working capital reserves. During 1992, the Partnership
funded five mortgage loans, four loans were funded in 1993 and three loans were
funded in 1994 for a total of twelve loans.
The General Partners manage and control the affairs of the Partnership,
including final approval of all loans and investments, and have ultimate
authority for matters affecting the interests of the Partnership. All
organization and offering expenses of the Partnership were paid by TMP Realty,
an affiliate of the General Partners, in exchange for loan fees (or points) on
each mortgage loan.
9
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Notes to the Consolidated Financial Statements
September 30, 2000
(unaudited)
As a consequence of adverse changes in market conditions and other economic and
business factors, nine of the twelve loans went into default. The Partnership
foreclosed on the properties secured by the defaulted loans and is in the
process of developing and/or selling these properties. (See update of property
status included in the Management's Discussion and Analysis of Financial
Condition and Results of Operations located elsewhere in this report)
The partnership agreement provides for two types of investments: Individual
Retirement Accounts (IRA) and others. The IRA minimum purchase requirement was
$2,000 and all others were a minimum purchase requirement of $5,000. The maximum
liability of the limited partners is the amount of their capital contribution.
Note 3 - Partners' Contributions
The Partnership raised capital through a public offering of limited partnership
units ("Unit(s)") at $1,000 per Unit. The minimum offering size was 1,000 Units
or $1,000,000. The maximum offering size was 20,000 Units or $20,000,000. As of
April 21, 1994, 15,715 Units were sold for total capital contributions of
$15,715,000 and the offering was closed.
Note 4 - Allocation of Profits and Losses and Cash Distributions
Profit, losses, and cash distributions are allocated ninety-nine percent to the
limited partners and one percent to the General Partners until the limited
partners have received an amount equal to their capital contributions plus a
cumulative, non-compounded return of eight percent per annum based on their
adjusted capital account balances, at which time, remaining profits, losses and
cash distributions are allocated seventy-six percent to the limited partners and
twenty-four percent to the General Partners. Distributions of cash from
operations, if any, are made monthly within 30 days after the end of the month.
No distributions were made during the periods presented.
Note 5 - Related Party Transactions
TMP Homes, LLC (TMP Homes), managing member of Remington, paid $17,800 of bank
loan fees on behalf of Remington. TMP Homes paid $165,000 to Sun City and
$38,500 to Remington as an advance for fees. Remington paid back all but $14,500
of these funds during the six-month period ended June 30, 2000. As of September
30, 2000, Sun City owes TMP Homes $25,500 and will pay back these funds as
proceeds are received on properties sold. These funds due are recorded in the
Consolidated Balance Sheets in Due to Affiliates.
See Note 2 regarding information on management of the Partnership during 2000.
10
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Notes to the Consolidated Financial Statements
September 30, 2000
(unaudited)
Note 6 - Notes Receivable from Affiliate
In November, 1996, the Partnership sold a parcel of land (including the
capitalized interest costs and the related property taxes payable) to an
affiliated partnership, TMP Mortgage Income Plus, LTD (MIP) for $286,000 and
recorded a note receivable for a five year period without interest with a 12%
discount (imputed interest). The total sales price represented the Partnerships'
original interest of $100,000, as well as $186,000 of other advances and
capitalized costs for the development of the land. The Partnership recognized a
$127,000 discount on the note as a charge to operations for the difference
between the total value of the land and the face value of the note. In 1998, the
Partnership loaned an additional $165,000 to MIP for a five year period without
interest (and discounted the note at 12%) and recognized approximately $73,000
as a charge to operations due to the non-interest bearing terms of the note.
As of September 30, 2000 MIP has repaid the Partnership in full. The Partnership
accreted interest income on these notes during the nine-month period ended
September 30, 2000 of $12,151, which is included in interest income in the
Consolidated Statements of Operations.
Note 7 - Agreements with PacWest Inland Empire, LLC ("PacWest")
In April 1998, the General Partners entered into an agreement (the Financing
Agreement) with PacWest, a Delaware Limited Liability Company, whereby PacWest
paid the General Partners of the Partnership and ten other related partnerships
(the TMP Land Partnerships) a total of $300,000 and agreed to pay up to an
additional 300,000 for any deficit capital accounts for these 11 partnerships in
exchange for the rights to the General Partners' distributions; referred to as a
"distribution fee" as defined by the Financing Agreement.
In addition, PacWest agreed to loan and/or secure a loan for the Partnership and
the TMP Land Partnerships in the amount of $2,500,000. Loan proceeds will be
allocated among the TMP Land Partnerships, based on partnership needs, from
recommendations made by PacWest, and under the approval and/or direction of the
General Partners. A portion of these funds will be loaned to the Partnership at
12% simple interest beginning April 1, 1998. The borrowings are secured by the
Partnership's properties, and funds will be loaned, as needed, in the opinion of
the General Partners. These funds are not to exceed 50% of the 1997 appraised
value of the properties, and will primarily be used to pay for on-going property
maintenance, pay down existing debt, accrued property taxes and appropriate
entitlement costs.
As of September 30, 2000 the TMP Land Partnerships have been funded
approximately $3,080,000 by PacWest. An addendum to the Financing Agreement
which states PacWest shall be entitled to increase the aggregate amount of the
loan by written agreement is currently being approved by both the General
Partners and PacWest. Upon signing of this addendum, PacWest, can, at their
option and with the written agreement of the General Partners, make additional
advances and the aggregate amount of cash loaned to the TMP Land
11
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Notes to the Consolidated Financial Statements
September 30, 2000
(unaudited)
Note 7 - Agreements with PacWest Inland Empire, LLC ("PacWest") (continued)
Partnerships will not be limited to a maximum of $2,500,000.
In April 1998, PacWest entered into a management, administrative and consulting
agreement (the Management Agreement) with the General Partners to provide the
Partnership with overall management, administrative and consulting services.
PacWest currently contracts with third party service providers to perform
certain of the financial, accounting, and investor relations' services for the
Partnership.
Pursuant to the Financing Agreement, PacWest has acquired the General Partners'
unsubordinated 1% interest in the Partnership and assumed responsibility for all
partnership administration while not replacing any of the General Partners.
PacWest will charge a fee for its administrative services equal to an amount not
to exceed the average reimbursements to the General Partners for such services
over the past five years. As of September 30, 2000, the Partnership owes PacWest
$888 related to the aforementioned agreements.
Note 8 - Investments
The following is a summary of the investments of the Partnership as of September
30:
2000 1999
------- --------
TMP Flowerfield - San Jacinto, LLC
(Flowerfield) $ 107,439 $ 107,439
Peppertree Park, LLC (Peppertree) 500,000 500,000
----------- ------------
$ 607,439 $ 607,439
=========== =============
The Partnership has a 75% membership interest in Flowerfield, which was
organized for the purpose of acquiring, owning and developing certain parcels of
land into single family home developments in San Jacinto, California. The equity
method is used to account for the Partnership's share of Flowerfield's earnings
or losses, which is not materially different than the consolidation of this
majority owned investment.
The Partnership has a 20% interest in Peppertree, which was formed to acquire
and develop certain property in San Diego, California. The Partnership's 20%
interest is stated at its cost of $500,000.
Note 9 - Other Receivables
During 1995 the Partnership invested approximately $855,000 in Steadfast H.S.C.,
LLC which was formed to acquire and operate an apartment building. In 1997, this
investment was sold for a $521,110 gain to the Partnership; of which all but
$13,661 was distributed. This amount is included in other receivables in the
Consolidated Balance Sheets at September 30, 2000 and December 31, 1999.
12
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Notes to the Consolidated Financial Statements
September 30, 2000
(unaudited)
Note 10 - Property Taxes Payable
As of September 30, 2000 and December 31, 1999, approximately $7,101,349 and
$6,301,117, respectively, of property taxes is owed on the San Jacinto property
representing the cumulative unpaid property taxes and Mello-Roos tax assessments
at that date. The amount accrues interest each quarter at a rate of 3.75% on the
outstanding balance. The additional liability relates to current property taxes
that are due in December 2000, not yet paid.
Note 11 - Notes Payable
On March 10, 1998, Sun City entered into a promissory note agreement for a
construction loan for Phase I construction with a bank. The maximum loan amount
is $2,275,000 and accrues interest at 1.5% per annum in excess of the prime
rate. Interest is payable monthly. Sun City paid off the loan in full on May 15,
2000. As of September 30, 2000 and December 31, 1999, Sun City has a principal
balance due on the note of $0 and $154,306,respectively. Interest paid for the
nine-month period ended September 30, 2000 was $9,051 and has been capitalized.
In June 1999, Sun City entered into a second promissory note agreement for Phase
II construction loan with the same bank. The maximum loan amount is $4,119,000
and accrues interest at 1.5% per annum in excess of the prime rate. Interest is
payable monthly. Sun City paid off the loan in full on May 15, 2000. As of
September 30, 2000 and December 31, 1999, Sun City has a principal balance due
on the note of $0 and $1,043,776. Interest paid for the nine-month period ended
September 30, 2000 was $49,738 and has been capitalized. </FONT></P>
On August 17, 1999, Remington entered into a promissory note agreement for a
construction loan with a bank. The maturity date of the note is December 10,
2000. The maximum loan amount is $8,498,000 and accrues interest at 1% per annum
in excess of the Index Rate. Interest is payable monthly. As of September 30,
2000, Remington has a principal balance due on the note of $4,334,256. Interest
paid for the nine-month period ended September 30, 2000 was $205,050 and has
been capitalized.
Note 12 - Minority Interests
In 1995, the Partnership entered into joint venture agreements with TMP Homes
whereby the Partnership contributed land for a 75% interest in Remington and Sun
City. TMP Homes contributed $100 for its 25% interest. As a result of this
transaction and subsequent capital contributions whereby the Partnership has
contributed assets for a 75% interest, the Partnership has recognized a loss
equal to the fair value of 25% of the assets contributed to the joint venture.
TMP Homes, as the minority interest owner, who will develop the property, has
recorded a gain equal to the fair value of 75% of the assets contributed to the
joint venture by the Partnership.
In June 1999, the Partnership contributed approximately $206,000 to Sun City to
pay down the construction loan and the Partnership incurred a loss of
approximately $51,500 (25%) on this contribution which is included in Minority
Interests in Consolidated Affiliates in the Consolidated Statements of
Operations for
13
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
Notes to the Consolidated Financial Statements
September 30, 2000
(unaudited)
Note 12 - Minority Interests (continued)
the year ended December 31, 1999. In addition, a loss of $106,306 and $363
related to Sun City and Remington's operations, respectively, are included in
Minority Interests in Consolidated Affiliates in the Consolidated Statements of
Operations for the nine-month period ended September 30, 2000.
Note 13 - Sale of Properties
During the nine-month period ended September 30, 2000 Sun City has sold out all
homes in this project. The following is a summary of the properties sold:
Income from Sale of Properties $ 3,513,839
Cost of Properties 3,916,465
Marketing & Selling Costs 9,789
------------------
Total Costs 3,926,254
------------------
Loss on Sale of Properties $ (412,415)
==================
14
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
September 30, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis provides information that the
Partnership's management believes is relevant to an assessment and understanding
of the Partnership's results of operations and financial condition. This
discussion should be read in conjunction with the financial statements and
footnotes, which appear elsewhere in this report.
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, which are subject to the "safe harbor" created
by that section. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions or variations of such
words are intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this report.
Additionally, statements concerning future matters such as the features,
benefits and advantages of the Partnership's property regarding matters that are
not historical are forward-looking statements. The Partnership's actual future
results could differ materially from those projected in the forward-looking
statements. The Partnership assumes no obligation to update the forward-looking
statements.
Readers are urged to review and consider carefully the various disclosures made
by the Partnership in this report, which attempts to advise interested parties
of the risks and factors that may affect the Partnership's business, financial
condition and results of operations.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
Consolidated Financial Statements and notes thereto and with the Partnerships'
audited consolidated financial statements and notes thereto for the fiscal year
ended December 31, 1999.
The Partnership was formed principally to make short-term loans to unaffiliated
parties secured by first trust deeds on unimproved properties, primarily in the
Inland Empire area of Southern California and in some instances, in other areas
of Southern California, and to provide cash distributions to the limited
partners, primarily from interest earned on the mortgage loans. The Partnership
is not a mutual fund or any other type of Investment Company within the meaning
of, and is not subject to regulations under, the Investment Company Act of 1940.
Since its formation, the Partnership had received and accepted subscriptions of
15,715 Units, representing total subscription proceeds in the amount of
$15,715,000. All proceeds were committed to mortgage loan investments made by
the Partnership and to working capital reserves. During 1992, the Partnership
funded five mortgage loans, four loans were funded in 1993 and three loans were
funded in 1994 for a total of twelve loans.
As a consequence of adverse changes in market conditions and other economic and
business factors, nine of the twelve loans went into default. The Partnership
foreclosed on the properties secured by the defaulted loans and is in the
process of developing and/or selling these properties. (See update of properties
status below)
15
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
September 30, 2000
The Partnership's management believes that inflation has not had a material
effect on the Partnership's results of operations.
During the year ended December 31, 1999, Sun City sold twenty-three lots. The
following is a summary of the properties sold:
Income from Sale of Properties $ 3,389,887
Cost of Properties 3,437,723
Marketing & Selling Costs 39,340
------------------
Total Costs 3,477,063
------------------
Loss on Sale of Properties $ 87,176
==================
In July 1999, the Partnership sold approximately 1.84 acres in Sun City. The
sale price of the property was $100,000 and the Partnership recorded a gain of
approximately $93,000 (excluding the "manager profit participation" as defined
in the Management Agreement of $12,073 that was paid to PacWest). The following
is a summary of the property sold:
Sales Price $ 100,000
Cost of Property
(Includes capitalized carrying & selling
costs) 7,129
------------------
Gain on Sale of Property $ 92,871
==================
In July 1999, the Partnership sold approximately 2.14 acres in Sun City. The
sale price of the property was $279,655 and the Partnership recorded a gain of
approximately $18,000 (excluding the "manager profit participation" as defined
in the Management Agreement of $12,912 that was paid to PacWest). The following
is a summary of the property sold:
Sales Price $ 279,655
Cost of Property
(Includes capitalized carrying costs) 243,306
Selling Costs 18,661
-----------------
Total Costs 261,967
-----------------
Gain on Sale of Property $ 17,688
==================
16
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
September 30, 2000
During the nine-month period ended September 30, 2000 Sun City has sold out all
homes in this project. The following is a summary of the properties sold:
Income from Sale of Properties $ 3,513,839
Cost of Properties 3,916,465
Marketing & Selling Costs 9,789
------------------
Total Costs 3,926,254
------------------
Loss on Sale of Properties $ (412,415)
==================
During the three-month periods ended September 30, 2000 and 1999, $6,475 and
$10,798, respectively, of interest income was earned, of which $0 and $9,878,
respectively, was earned from the notes receivable from affiliate. During the
nine-month periods ended September 30, 2000 and 1999, approximately $23,305 and
$32,000, respectively, of interest income was earned of which approximately,
$12,151 and $28,770 respectively was earned from the notes receivable from
affiliate.
Total expenses for the three month period ended September 30, 2000 compared with
the three month period ended September 30, 1999, increased by approximately
$45,000, due to a $74,971 increase in Other expenses. Other expenses includes
certain carrying costs related to the PR Equities, Ltd. properties in San
Jacinto, CA which are expensed as incurred in order to bring the stated value of
the property to fair market value. These expenses are related to property
services incurred to prepare the property for future sale. This increase was
partially offset by decreases in Accounting & Financial Reporting and Manager
Profit Participation. Accounting & Financial Reporting decreases are directly
related to the restatement of financial statements in prior years.
Total expenses for the nine month period ended September 30, 2000 compared with
the nine month period ended September 30, 1999, increased by approximately
$3,000, due to primarily to a $76,333 increase in Other expenses. Other expenses
includes certain carrying costs related to the PR Equities, Ltd. properties in
San Jacinto, CA which are expensed as incurred in order to bring the stated
value of the property to fair market value. These expenses are related to
property services incurred to prepare the property for future sale. This
increase was almost completely offset by decreases in Accounting & Financial
Reporting and Manager Profit Participation. Accounting & Financial Reporting
decrease of $61,274 is directly related to the restatement of financial
statements in prior years.
Net gains (losses) of approximately $138,000 and $512,000 are recorded in
Minority Interests in Consolidated Affiliates for the nine-month periods ended
September 30, 1999 and 2000.
Investing activities for the nine-month period ended September 30, 1999 used
$1,714,229 of cash of the Partnership. The Partnership used $55,691 to pay for
certain selling expenses relating to the sale of properties during the nine
month period ended September 30, 1999. In addition, the Partnership used
$3,335,570 for the payment of certain development and carrying costs of the land
held for investment. This use of funds was partially offset by the funds
provided by the Partnership of $1,677,032 from the sale of these properties.
17
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
September 30, 2000
Investing activities for the nine-month period ended September 30, 2000 used
$1,130,573 of cash of the Partnership. The Partnership used $9,789 to pay for
certain selling expenses relating to the sale of properties during the nine
month period ended September 30, 2000. In addition, the Partnership used
$4,634,623 for the payment of certain development and carrying costs of the land
held for investment. This use of funds was partially offset by the funds
provided by the Partnership of $3,513,839 from the sale of these properties.
Financing activities for the nine-month period ended September 30, 1999 include
proceeds of approximately $1,505,500 relating to borrowings on the construction
loans and proceeds of $192,800 from advances from TMP Homes. Financing
activities for the nine-month period ended September 30, 2000 provided
approximately $1,888,500 from borrowings on the construction loans. In addition,
payments of $151,912 were made to TMP Homes to pay back certain advances and
$346,038 was received from MIP to pay off the Notes Receivable due from
Affiliate balance.
The Partnership had three properties as of September 30, 2000 that are being
held for appreciation and resale. Remington is holding additional parcels for
development and future sale of residential units. Sun City was holding parcels,
but as of September 30, 2000 all homes have been sold. The Partnership does not
intend to acquire any additional properties. Upon the sale of each property, the
Partnership intends to distribute the sales proceeds, less any reserves needed
for operations, to the partners.
The following is an update of the foreclosed properties status from the December
31, 1999 10-KSB report:
TMP Flowerfield, LLC - The foreclosed San Jacinto properties have substantial
Mello-Roos assessments and property tax delinquencies. An Installment Payment
Plan (five-year payment plan) with the County of Riverside Tax Collector was
begun in June 1999 to avoid the property being sold at a tax sale. An
installment payment was due on April 10, 2000; however, it was decided not to
pay the installment. In the meantime, the General Partners are attempting
both to have the Mello-Roos bonds restructured and/or the penalties reduced,
and sell the property by aggressively marketing the six tracts. A default
judgment was filed against the property on October 10, 2000.
Fox-Olson Loan #1 - 2.14 acres of this property were sold in July 1999 for a
sales price of $279,655. The Partnership recorded a net gain on the sale of
approximately $18,000.
Sunset Crossing I Loan - The property is currently in escrow for $2,750,000.
The escrow period has an estimated closing date of June 17, 2002. In accord-
ance with the escrow instructions, $10,000 was released to TMP Land Mortgage
Fund on November 3, 2000.
TMP Remington, LLC - The Partnership, together with TMP Homes, LLC, formed a
joint venture to construct homes on the site. During 1999, and in accordance
with the LLC Member Agreement, the Partnership contributed this property to
the LLC for a predetermined value of $1,638,000. Phase I will consist of 48
production homes, 4 models and one parking lot. Phase II will consist of 43
production homes. Phase III will consist of 38 production homes and Phase IV
will consist of 50 production homes. Grading, Sewer, Water and all other
underground utilities have been completed for Phase I, II and III. Phase I
construction began in the third quarter of 1999 upon obtaining financing in
July 1999.
18
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
September 30, 2000
All 29 homes of the first releases of Phase I have been reserved by prospect-
ive buyers and contracts have been forwarded to escrow. The remaining 19
homes of Phase I will begin before the end of 2000. The Grand Opening for
the model complex is expected in January 2001.
TMP Homes Flowerfield - Sun City, LLC - The Partnership, together with TMP
Homes, LLC, formed a joint venture to construct homes on this site. Phase
I will consist of 11 production homes and 2 models. Phase II will consist
of 17 production homes. Phase III will consist of 15 production homes.
Phase I and Phase II construction were completed in 1999. Phase III
construction was completed in 2000. During the year ended December 31, 1998
, and in accordance with the LLC Member Agreement, the Partnership contri-
buted this property to the LLC for a predetermined value of $420,000.
The following is a summary of home sales:
Phase I 13 homes sold
Phase II 17 homes sold
Phase III 15 homes sold
The 1.84 acres of this property was sold in July 1999 for a sales price of
$100,000.
No other significant activity or changes have occurred in the Partnership
properties.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2000, the Partnership had cash on hand of approximately
$920,000. All other proceeds from the sale of Units and property have been
invested in the making of loans, working capital reserves, or have been used in
foreclosure proceedings or maintaining the foreclosed properties for the
Partnership.
The Partnership raised a total of $8,334,000, $6,127,000, and $1,254,000 during
the calendar years ended December 31, 1992, 1993, and 1994, respectively for a
total of $15,715,000 in gross proceeds from the sale of Units. The offering was
closed on April 22, 1994, and no additional subscriptions were accepted after
that date. The Partnership made a total of twelve mortgage loans for a total of
$15,015,000. Loans of $4,870,000, $7,420,000, and $2,725,000 were made during
the calendar years ended December 31, 1992, 1993, and 1994, respectively. Excess
proceeds from the sale of Units were invested in interest-bearing reserve
accounts.
Three loans, in the total amount of $4,825,000 were repaid during the year ended
December 31, 1995. Nine loans totaling $10,190,000 were foreclosed. Proceeds
from loan repayments were reinvested, added to Partnership reserves, or
distributed to investors.
19
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
September 30, 2000
The Partnership does not intend to make any new land loans with existing or
future partnership cash. At September 30, 2000, the Partnership had development
agreements with TMP Homes, LLC, an affiliated company, to develop single family
homes on three of the properties the Partnership has acquired through
foreclosure. In addition, the Partnership has a $500,000 investment in a
single-family development that resulted from the Peppertree loan. The
Partnership was repaid $1,500,000 of the $2,000,000 Peppertree loan in cash. The
remaining $500,000 represents a 20% investment in the project. The Partnership
may incur indebtedness from nonaffiliated financial institutions in order to
complete any development for projects in which the Partnership is involved.
The properties relating to the nine loans that were foreclosed upon by the
Partnership produce no income. Accordingly, the Partnership is not making
distributions to partners except from the sales proceeds of certain partnership
assets. The Partnership cash reserves are being used to fund the operating cash
needs of the Partnership. As of September 30, 2000, the Partnership had
sufficient cash reserves for the next twelve months.
In April 1998, the General Partners entered into the Financing Agreement with
PacWest, whereby PacWest paid a total of $300,000 to the General Partners and
the TMP Land Partnerships. PacWest agreed to pay up to an additional $300,000
for any deficit capital accounts for these 11 partnerships in exchange for the
rights to the General Partners' distributions; referred to as a "distribution
fee" as defined by the Financing Agreement.
In addition, PacWest agreed to loan and/or secure a loan for the TMP Land
Partnerships in the amount of $2,500,000. Loan proceeds are allocated among the
TMP Land Partnerships, based on partnership needs, from recommendations made by
PacWest, and under the approval and/or direction of the General Partners.
Portions of these funds were loaned to the Partnership at 12% simple interest
beginning April 1, 1998. The borrowings are secured by the Partnership's
properties, and the funds will be loaned, as needed, in the opinion of the
General Partners. These funds are not to exceed 50% of the 1997 appraised value
of the properties, and will primarily be used to pay for on-going property
maintenance, reduction of existing debt, property taxes in arrears, appropriate
entitlement costs and partnership operations.
As of September 30, 2000 the TMP Land Partnerships have been funded
approximately $3,080,000 by PacWest. An addendum to the Financing Agreement
which states PacWest shall be entitled to increase the aggregate amount of the
loan by written agreement is currently being approved by both the General
Partners and PacWest. Upon signing of this addendum, PacWest, can, at their
option and with the written agreement of the General Partners, make additional
advances and the aggregate amount of cash loaned to the TMP Land Partnerships
will not be limited to a maximum of $2,500,000.
In April 1998, PacWest entered into the Management Agreement with the General
Partners to provide the Partnership with overall management, administrative and
consulting services. PacWest currently contracts with third party service
providers to perform certain of the financial, accounting, and investor
relations' services for the Partnership.
Pursuant to the Financing Agreement, PacWest has acquired the General Partners'
unsubordinated 1% interest in the Partnership and assumed responsibility for all
partnership administration while not replacing any of the General Partners.
PacWest is paid a fee of $24,588 annually for its administrative services.
20
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
September 30, 2000
>On March 10, 1998, Sun City entered into a promissory note agreement for a
construction loan for Phase I construction with a bank. Sun City paid off the
loan in full on May 15, 2000. In June 1999, Sun City entered into a second
promissory note agreement for Phase II construction loan with the same bank. Sun
City paid off the loan in full on May 15, 2000.
On August 17, 1999, Remington entered into a promissory note agreement for a
construction loan with a bank.
Aside from the foregoing, the Partnership knows of no demands, commitments,
events, or uncertainties, which might affect its liquidity or capital resources
in any material manner.
21
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: November 15, 2000
TMP LAND MORTGAGE FUND, LTD.
A California Limited Partnership
By: TMP Investments, Inc., A California Corporation
as Co-General Partner
By: \s\ William O. Passo
-------------------------------------
William O. Passo, President
By: \s\ Anthony W. Thompson
-------------------------------------
Anthony W. Thompson, Exec. Vice President
By: TMP Properties, A California General Partnership
as Co-General Partner
By: \s\ William O. Passo
-------------------------------------
William O. Passo, Partner
By: \s\ Anthony W. Thompson
-------------------------------------
Anthony W. Thompson, Partner
By: \s\ Scott E. McDaniel
-------------------------------------
Scott E. McDaniel Partner
By: JAFCO, Inc., A California Corporation as Chief Accounting
Officer
By: \s\ John A. Fonseca
-------------------------------------
John A. Fonseca, President
22
