Captec Franchise Capital Partners LP Iii 10QSB 2006 Q1 Quarterly report (small business)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB

þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended                      March 31, 2006

OR

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission file number: 33-77510-C

CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

38-3160141

(IRS Employer Identification Number)

24 Frank Lloyd Wright Drive, Lobby L, 4th Floor
P.O. Box 544, Ann Arbor, Michigan 48106-0544

(Address of principal executive offices, including zip code)

(734) 994-5505

(Issuer’s telephone number)

Not Applicable

(Former name, former address and former fiscal year, if changed since last year)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.       Yesþ Noo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court: Not applicable

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: Not applicable

Transitional Small Business Disclosure Format (check one)       Yeso Noþ

CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III

Index to Form 10-QSB

Item No.		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Balance Sheets, March 31, 2006 and December 31, 2005		3
	Statements of Operations for the three months ended March 31, 2006 and 2005		4
	Statement of Changes in Partners’ Capital for the three months ended March 31, 2006		5
	Statements of Cash Flows for the three months ended March 31, 2006 and 2005		6
	Notes to Financial Statements		7-9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		9-11
Item 3.	Controls and Procedures		12
PART II	OTHER INFORMATION Other Information		13
SIGNATURES			14
CERTIFICATION	Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002		15-17
Certification Pursuant to Section 302
Certification Pursuant to Section 906

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Captec Franchise Capital Partners L.P. III
Balance Sheets

	March 31,		December 31,
	2006		2005
	(unaudited)
Assets
Cash and cash equivalents	$	2,393,322	$	935,510
Assets Held for Sale:
Operating leases, net		—		1,052,218
Unbilled rent, net		—		121,650
Investment in leases:
Operating leases, net		890,508		896,038
Due from related parties		151		151
Total assets	$	3,283,981	$	3,005,567
Liabilities and Partners’ Capital
Liabilities:
Accounts payable and accrued expenses	$	57,864	$	57,626
Due to Affiliates		6,936		145,371
Total liabilities		64,800		202,997
Partners’ capital:
Limited partners’ capital accounts		3,189,042		2,772,309
General partner’s capital account		30,139		30,261
Total partners’ capital		3,219,181		2,802,570
Total liabilities and partners’ capital	$	3,283,981	$	3,005,567

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. III
Statements of Operations
For the three months ended March 31, 2006 and 2005
(unaudited)

	2006			2005
Operating revenue:
Rental income	$	33,075		$	33,075
Total operating revenue		33,075			33,075
Operating costs and expenses:
Depreciation		5,530			—
General and administrative		55,246			50,002
Total operating costs and expenses		60,776			50,002
Loss from continuing operations before other income		(27,701	)		(16,927	)
Other income:
Interest and other income		15,460			222
Total other income		15,460			222
Loss from continuing operations		(12,241	)		(16,705	)
Discontinued operations:
Net income from discontinued operations, net		—			256,432
Gain on sale of real estate		428,852			—
Income from discontinued operations		428,852			256,432
Net income	$	416,611		$	239,727
Net income (loss) allocable to general partner	$	(122	)	$	2,397
Net income allocable to limited partners	$	416,733		$	237,330
Net loss from continuing operations per limited partnership unit	$	(0.62	)	$	(0.84	)
Net income from discontinued operations per limited partnership unit	$	21.85		$	12.93
Net income per limited partnership unit	$	21.23		$	12.09
Weighted average number of limited partnership units outstanding		19,633			19,633

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. III
Statement of Changes in Partners’ Capital
For the three months ended March 31, 2006
(unaudited)

	Limited		Limited		General			Total
	Partners'		Partners'		Partner's			Partners'
	Units		Accounts		Account			Capital
Balance, December 31, 2005		19,633	$	2,772,309	$	30,261		$	2,802,570
Net income		—		416,733		(122	)		416,611
Balance, March 31, 2006		19,633	$	3,189,042	$	30,139		$	3,219,181

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. III
Statements of Cash Flows
For the three months ended March 31, 2006 and 2005
(unaudited)

	2006			2005
Cash flows from operating activities:
Net Income	$	416,611		$	239,727
Adjustments to net income:
Depreciation		5,530			—
Amortization of debt issuance costs		—			11,947
Gain on sale of real estate		(428,852	)		—
Decrease (increase) in unbilled rent		770			(23,409	)
Decrease in accounts receivable		—			4,228
Increase (decrease) in accounts payable and accrued expenses		238			(21,472	)
Increase in restricted cash		—			(44,961	)
Decrease in due to related parties		(138,435	)		—
Net cash (used in) provided by operating activities		(144,138	)		166,060
Cash flows from investing activities:
Net proceeds from sale of real estate		1,601,950			—
Principal payments on financing leases		—			28,604
Net cash provided by investing activities		1,601,950			28,604
Cash flows from financing activities:
Repayments of notes payable		—			(41,105	)
Distributions to limited partners		—			(277,746	)
Net cash used in financing activities		—			(318,851	)
Net increase (decrease) in cash and cash equivalents		1,457,812			(124,187	)
Cash and cash equivalents, beginning of period		935,510			1,556,320
Cash and cash equivalents, end of period	$	2,393,322		$	1,432,133

The accompanying notes are an integral part of the financial statements.

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. III
NOTES TO FINANCIAL STATEMENTS

1.	THE PARTNERSHIP AND ITS SIGNIFICANT ACCOUNTING PRINCIPLES:
	Captec Franchise Capital Partners L.P. III (the “Partnership”), a Delaware limited partnership, was formed on February 18, 1994 for the purpose of acquiring income-producing commercial real properties and equipment leased on a “triple net” basis, primarily to operators of national and regional franchised businesses.
	The initial general partners upon formation of the Partnership were Captec Franchise Capital Corporation III (the “Corporation”), a wholly-owned subsidiary of Captec Financial Group, Inc. (“Captec”), an affiliate, and Patrick L. Beach, the Chairman of the Board of Directors, President and Chief Executive Officer of the Corporation and Captec. In August 1998, Captec Net Lease Realty, Inc. (“Captec Net Lease Realty”), an affiliate, acquired the general partnership interests of the Partnership. In December 2001, Captec Net Lease Realty merged with and into Commercial Net Lease Realty, Inc. (“Commercial Net Lease”). In connection with the merger, Commercial Net Lease agreed to sell and assign its general partnership interest in the Partnership to GP3 Asset Acquisition, LLC (“GP3 Asset Acquisition”), which is wholly-owned by Mr. Beach and is an affiliate of Captec. Effective January 15, 2002, the limited partners consented to the transfer of the general partnership interest. On September 11, 2003, the Partnership’s secured lender consented to the transfer of the general partnership interest to GP3 Asset Acquisition. Upon receipt of the secured lender’s consent, the general partnership interest was immediately transferred to GP3 Asset Acquisition. Therefore, as of September 11, 2003, GP3 Asset Acquisition became the general partner of the Partnership.
	The Partnership commenced a public offering (the “Offering”) of up to 20,000 units (the “Units”) of limited partnership interests, priced at $1,000 per Unit, by means of a Registration Statement on Form SB-2, under the Securities Act of 1933, as amended, which was declared effective by the Securities and Exchange Commission on August 12, 1994. The Partnership accepted subscriptions for the minimum number of Units on January 24, 1995 and immediately commenced operations. The Offering was fully subscribed in August 1996. Since 1997, 367 Units have been repurchased by the Partnership pursuant to the terms of the Repurchase Plan set forth in the Partnership’s August 12, 1994 prospectus with respect to the Offering. At March 31, 2006, the Partnership had 19,633 Units issued and outstanding.
	The principal investment objectives of the Partnership are: (i) preservation and protection of capital; (ii) distribution of cash flow generated by the Partnership’s leases; (iii) capital appreciation of the Partnership’s properties; (iv) generation of increased income and protection against inflation through contractual escalation of base rents or participation in gross revenues of tenants of the Partnership’s properties; and (v) deferred taxation of cash distributions to the limited partners.
	Allocation of profits, losses and cash distributions from operations and cash distributions from sale or refinancing are made pursuant to the terms of the Partnership Agreement. Profits and losses from operations are allocated among the limited partners based upon the number of Units owned.
	Net income per limited partnership interest is calculated using the weighted average number of limited partnership Units outstanding during the period and the limited partners’ allocable share of the net income.
	Distributions per limited partnership Unit is calculated using the actual distributions disbursed during the period to the weighted average number of limited partnership Units during the period. Actual individual limited partner distributions realized may vary from this calculation as a result of a variety of factors including: (i) actual distributions are computed based on quarterly operating

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	results and outstanding limited partnership units, which are disbursed in the subsequent quarter; (ii) certain limited partners have elected to receive monthly distributions versus quarterly distributions which creates timing differences between comparative calculations, (iii) the calculation ignores the timing of repurchases, and (iv) liquidating distributions are determined based on the tax account balances of the partners per the Partnership agreement.
	In November 2004, the limited partners approved a plan to liquidate the Partnership and dispose of all the assets of the Partnership. With this approval, the Partnership commenced activities to liquidate and dispose of the assets of the Partnership, which activities included entering into an exclusive listing agreement with a third party, who will oversee the marketing and offering for sale of all the real estate assets and equipment leases and loans on behalf of the Partnership. In accordance with Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long Lived-Assets” (“FAS 144”), as a result of the approval of this plan, as of December 31, 2004 all assets, excluding cash were previously classified as Assets Held for Sale, and the results of the operations for these Assets Held for Sale were previously classified as discontinued operations for all years presented, since the operations are directly related to the assets held for sale. Depreciation of real estate assets ceased at that time. One real property owned by the Partnership as of March 31, 2006 and December 31, 2005 which was not disposed of within one year from the initial held for sale designation has been reclassified to investment in operating leases, and the respective results of operations have been presented within continuing operations for all periods presented in accordance with FAS 144. Also, in accordance with FAS 144, the partnership recognized depreciation expense of $5,530 in the quarter ended March 31, 2006 and $22,121 for this asset for the year ended December 31, 2005 in the fourth quarter of 2005 to cumulatively catch-up depreciation since its cessation in December 2004 upon reclassification of this asset. One property remained classified as held for sale at December 31, 2005 due to the sale of this property on January 3, 2006. The remaining asset of the Partnership will be sold and the cash will be used to distribute the net proceeds from such liquidation after the repayment of all liabilities in accordance with the partnership agreement.
	On January 3, 2006, the Partnership sold the property located in Ewing, New Jersey and the related lease for net sale proceeds of approximately $1.6 million. There were no debt retirement costs associated with the disposition of this property.
	The balance sheet of the Partnership as of March 31, 2006, the statements of operations and cash flows for the periods ending March 31, 2006 and March 31, 2005 and the statement of changes in partners’ capital for the period ending March 31, 2006 have not been audited. In the opinion of management, these unaudited financial statements contain all adjustments necessary to present fairly the financial position and results of operations and cash flows of the Partnership for the periods then ended. Results of operations for the interim periods are not necessarily indicative of results for the full year. These unaudited financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership’s annual report on Form 10-KSB for the year ended December 31, 2005 filed with the United States Securities and Exchange Commission on March 29, 2006.
2.	LAND AND BUILDING SUBJECT TO OPERATING LEASES:
	The net investment in operating leases, including Assets Held for Sale, as of March 31, 2006 and December 31, 2005 is comprised of the following:

	March 31, 2006			December 31, 2005
Land	$	217,665		$	721,665
Building and improvements		884,835			1,580,985
		1,102,500			2,302,650
Less accumulated depreciation		(211,992	)		(354,394	)
Total	$	890,508		$	1,948,256

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3.	NOTES PAYABLE:
	In November 1998, the Partnership entered into a $6.2 million term note. The note had a ten-year term, was collateralized by certain properties subject to operating leases which had a carrying value of approximately $7.6 million, and bore interest at a rate of 8.37% per annum. In September 2003, the Partnership defeased approximately $1,979,000 of this notes payable with proceeds from the sale of a property. The Partnership incurred approximately $481,000 of yield maintenance costs and $49,000 of professional fees related to the defeasance. In June 2005, the Partnership defeased the remaining amounts payable under this note using the proceeds from the sale of nine properties. The Partnership incurred approximately $539,000 of yield maintenance costs and $35,000 of professional fees in connection with the June 2005 defeasance of this note.
	In March 1999, the Partnership entered into an additional $2.0 million term note. The note had a ten-year term, was collateralized by certain properties subject to operating leases which had a carrying value of approximately $3.7 million, and bore interest at a rate of 8.5% per annum. In June 2005, the Partnership defeased the remaining amounts payable under this note using the proceeds from the sale of nine properties. The Partnership incurred approximately $295,000 of yield maintenance costs and $36,000 of professional fees in connection with the defeasance of this note
	The Partnership has no further obligations related to any of its notes payable.
	Debt issuance costs of $477,909 in the aggregate were incurred in connection with the issuance of the notes and were being amortized to interest expense using the straight-line method over the ten-year term of the notes. Upon the defeasance and prepayment of the notes payable in June 2005, the remaining unamortized debt issuance costs associated with the debt that was prepaid were expensed.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 When used in this discussion, the words, “intends,” “anticipates,” “expects,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are subject to certain risks and uncertainties, some of which are beyond the Partnership’s control, which could cause actual results to differ materially from those projected. Such risks and uncertainties include the following: (i) a tenant may default in making rent payments, (ii) a fire or other casualty may interrupt the cash flow stream from a property, (iii) the properties may not be leased at the assumed rental rates, (iv) unexpected expenses may be incurred in the ownership of the properties, and (v) properties may not be sold at the presently anticipated prices and times. Any statements contained in this report or any documents incorporated herein by reference that are not statements of historical fact may be deemed to be forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. The Partnership disclaims, except as may be required by law, any obligations to update or release revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

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 RESULTS OF OPERATIONS

Three Months Ended March 31, 2006

During the three months ended March 31, 2006, total operating revenue, consisting of rental revenues from one operating lease was approximately $33,000, unchanged compared to the three months ended March 31, 2005.

Operating expenses were approximately $61,000 for the three months ended March 31, 2006, compared to approximately $50,000 for the three months ended March 31, 2005. In accordance with FAS 144, the Partnership recognized $5,530 and $0 of depreciation expense in the quarters ended March 31, 2006 and 2005, respectively, for investment in operating leases. The Partnership recognized $22,121 of depreciation expense for investment in operating leases in the fourth quarter of 2005 to cumulatively catch-up depreciation on this asset, when the asset was reclassified from held for sale in accordance with FAS 144. In accordance with FAS 144, the Partnership had ceased depreciation on all assets classified as Assets Held for Sale at December 31, 2004, with the expectation of disposal of all assets within one year. General and administrative expenses increased by approximately $5,000 due to increased professional fees.

Other income for the quarter ended March 31, 2006 increased to approximately $15,500 compared to $200 for the quarter ended March 31, 2005 due to interest income earned on cash proceeds from the sale of assets.

Income from discontinued operations, net for the quarter ended March 31, 2005 consisted of the following:

Revenues	$	384,503
Interest expense		128,071
Income from discontinued operations, net	$	256,432

Interest expense is allocated 100% to discontinued operations based on the lender’s requirement that the notes be paid in full with the proceeds from the sale of properties during the year ended December 31, 2005. There is no income from discontinued operations for the quarter ended March 31, 2006 as all assets classified as Assets Held for Sale have been disposed by January 3, 2006.

On January 3, 2006, the Partnership sold the property located in Ewing, New Jersey and the related lease for net sale proceeds of approximately $1.6 million, resulting in a gain on the sale of real estate of approximately $429,000. There were no debt retirement costs associated with the disposition of this property. There were no sales of properties during the quarter ended March 31, 2005.

As a result of the foregoing, the Partnership’s net income increased to approximately $417,000 for the three months ended March 31, 2006, compared to approximately $240,000 for the three months ended March 31, 2005.

LIQUIDITY AND CAPITAL COMMITMENTS

The Partnership commenced the Offering of up to 20,000 Units, priced at $1,000 per Unit, on August 12, 1994. The Partnership accepted subscriptions for the minimum number of Units on January 24, 1995, and immediately commenced operations. The Offering was fully subscribed on August 12, 1996. Net proceeds after Offering expenses were $17.4 million.

In November 1998, the Partnership entered into a $6.2 million term note. The note had a ten-year term, was collateralized by certain properties subject to operating leases which had a carrying value of approximately $7.6 million, and bore interest at a rate of 8.37% per annum. In September

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2003, the Partnership defeased approximately $1,979,000 of this notes payable with proceeds from the sale of a property. The Partnership incurred approximately $481,000 of yield maintenance costs and $49,000 of professional fees related to the defeasance. In June 2005, the Partnership defeased the remaining amounts payable under this note using the proceeds from the sale of nine properties. The Partnership incurred approximately $539,000 of yield maintenance costs and $35,000 of professional fees in connection with the June 2005 defeasance of this note.

In March 1999, the Partnership entered into an additional $2.0 million term note. The note had a ten-year term, was collateralized by certain properties subject to operating leases which had a carrying value of approximately $3.7 million, and bore interest at a rate of 8.5% per annum. In June 2005, the Partnership defeased the remaining amounts payable under this note using the proceeds from the sale of nine properties. The Partnership incurred approximately $295,000 of yield maintenance costs and $36,000 of professional fees in connection with the defeasance of this note.

The Partnership has no further obligations related to any of its notes payable.

Debt issuance costs of $477,909 in the aggregate were incurred in connection with the issuance of the notes and were being amortized to interest expense using the straight-line method over the ten-year term of the notes. Upon the defeasance and prepayment of the notes payable in June 2005, the remaining unamortized debt issuance costs associated with the debt that was prepaid were expensed.

As of March 31, 2006, the Partnership had invested $1.1 million in 1 net leased real estate property. As of March 31, 2006, the Partnership has not made any commitments to purchase additional properties or equipment, nor does it intend to make any such commitments.

The Partnership annually considers written requests to repurchase Units pursuant to the terms of the repurchase plan set forth in the Partnership’s prospectus with respect to the Offering. Since 1997, a total of 367 Units have been repurchased by the Partnership. The Partnership is not obligated to accept Unit repurchase requests if the General Partner determines that such purchases would impair the capital or operation of the Partnership and the Partnership may suspend or cancel the Repurchase Plan at any time in its sole discretion. In connection with the announcement of the Partnership’s liquidation plans, the General Partner has indefinitely suspended the Repurchase Plan.

The Partnership expects that only limited amounts of liquid assets will be required for existing properties since its property and equipment leases require tenants and lessees to pay all taxes and assessments, maintenance and repairs and insurance premiums, including casualty insurance thereby minimizing the Partnership’s operating expenses and capital requirements. The General Partner expects that the cash flow to be generated by the Partnership’s properties and equipment will provide adequate liquidity and capital resources to pay operating expenses and provide distributions to the limited partners.

Effective November 8, 2004, the limited partners consented to the Plan of Liquidation and Dissolution, which involves the dissolution of the Partnership, the liquidation of its assets and the winding up of its affairs. As a result, the general partner is authorized to liquidate the assets of the Partnership and distribute the net proceeds from such liquidation after the repayment of all debt in accordance with the partnership agreement. The Partnership is undertaking steps to liquidate and dispose of its assets in accordance with the Plan of Liquidation and Dissolution and has entered into an exclusive listing agreement with a third party that will oversee the marketing and sale of the Partnership’s assets. Management believes the proceeds on sale will be adequate to pay off all liabilities and make one or more distributions to the partners.

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ITEM 3. Controls and Procedures

Mr. Beach, acting in his capacity as the principal executive officer of GP3 Asset Acquisition is ultimately responsible for the disclosure controls and procedures of the Partnership. Disclosure controls and procedures are established and maintained by the Partnership to ensure the information required to be disclosed by the Partnership in the reports that it files or submits pursuant to the Securities Exchange Act of 1934, as amended (the “Act”), is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms. Mr. Beach has evaluated the effectiveness of the Partnership’s disclosure controls and procedures and has determined that, as of the end of the fiscal period covered by this report, these controls and procedures effectively communicate the information required to be disclosed by the Partnership in the report it files or submits under the Act in a manner that allows timely decisions regarding such disclosures.

There have been no significant changes in the Partnership’s internal controls or in other factors that could significantly affect these controls subsequent to the evaluation date, including, but not limited to, any actions with regard to significant deficiencies and material weaknesses.

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PART II — OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS.None.

ITEM 2.      CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES.None.

ITEM 3.      DEFAULTS UPON SENIOR SECURITIES.None.

ITEM 4.      SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.None.

ITEM 5.      OTHER INFORMATION.None

ITEM 6.      EXHIBITS

                       The following exhibits are included herein or incorporated by reference:

Number	Exhibit
2	Plan of Liquidation and Dissolution (Incorporated by reference to the Registrant’s Definitive Proxy Statement on Schedule 14A, filed on September 21, 2004)
4	Amended Agreement of Limited Partnership of Registrant. (Incorporated by reference to the corresponding exhibit in the Registrant’s Form 10-KSB for the year ended December 31, 1998)
10.1	Promissory Note dated November 28, 1998 between Registrant and National Realty Funding L.C. (Incorporated by reference to the corresponding exhibit in the Registrant’s Form 10-KSB for the year ended December 31, 1998)
10.2	Promissory Note dated March 31, 1999 between Registrant and National Realty Funding L.C. (Incorporated by reference to the corresponding exhibit in the Registrant’s Form 10-QSB for the quarter ended March 31, 1999)
31	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

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

By:	Captec Franchise Capital Partners L.P. III
	GP3 Asset Acquisition, LLC
	Its Manager

By:	/s/ Patrick L. Beach
	Patrick L. Beach
	President
Date:	May 12, 2006

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EXHIBIT INDEX

Number	Exhibit
2	Plan of Liquidation and Dissolution (Incorporated by reference to the Registrant’s Definitive Proxy Statement on Schedule 14A, filed on September 21, 2004)
4	Amended Agreement of Limited Partnership of Registrant. (Incorporated by reference to the corresponding exhibit in the Registrant’s Form 10-KSB for the year ended December 31, 1998)
10.1	Promissory Note dated November 28, 1998 between Registrant and National Realty Funding L.C. (Incorporated by reference to the corresponding exhibit in the Registrant’s Form 10-KSB for the year ended December 31, 1998)
10.2	Promissory Note dated March 31, 1999 between Registrant and National Realty Funding L.C. (Incorporated by reference to the corresponding exhibit in the Registrant’s Form 10-QSB for the quarter ended March 31, 1999)
31	Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002