UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2008
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-19765
Boston Financial Qualified Housing Tax Credits L.P. IV
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(Exact name of registrant as specified in its charter)
Massachusetts 04-3044617
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 Arch Street, Boston, Massachusetts 02110-1106
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (617) 439-3911
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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 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 .
____ _____
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ___ Accelerated Filer ___
Non-accelerated filer ___ (Do not check if a Smaller reporting company X
smaller reporting company) _____
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes No X .
_____ ______
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page No.
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Item 1. Financial Statements
Balance Sheet (Unaudited) - December 31, 2008 1
Statements of Operations (Unaudited) - For the Three and Nine
Months Ended December 31, 2008 and 2007 2
Statement of Changes in Partners' Equity
(Unaudited) - For the Nine Months Ended December 31, 2008 3
Statements of Cash Flows (Unaudited) - For the
Nine Months Ended December 31, 2008 and 2007 4
Notes to the Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 16
Item 4. Controls and Procedures 16
PART II - OTHER INFORMATION
Items 1-6 17
SIGNATURE 18
CERTIFICATIONS 19
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
BALANCE SHEET
December 31, 2008
(Unaudited)
Assets
______
Cash and cash equivalents $ 3,863,618
Investments in Local Limited Partnerships (Note 1) 704,756
Due from affiliate(s) 56,056
------------------------
Total Assets $ 4,624,430
========================
Liabilities and Partners' Equity
________________________________
Due to affiliate(s) $ 51,466
Accrued expenses 89,667
------------------------
Total Liabilities 141,133
------------------------
General, Initial and Investor Limited Partners' Equity 4,483,297
------------------------
Total Liabilities and Partners' Equity $ 4,624,430
========================
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 2008 and 2007
(Unaudited)
Three Months Ended Nine Months Ended
December December 31, December December
31, 31, 31,
2008 2007 2008 2007
------------- --------------- ------------ -------------
Revenue
Investment $ 15,077 $ 51,733 $ 31,288 $649,049
Other 56,056 - 56,056 -
------------- --------------- ------------ -------------
Total Revenue 71,133 51,733 87,344 649,049
------------- --------------- ------------ -------------
Expenses:
Asset management fees, affiliate 16,674 20,593 50,022 61,779
Provision for (recovery of) valuation
allowance on advances to Local Limited
Partnerships (Note 1) (650,938) 1,334 (616,300) 15,338
Provision for valuation allowance on
investments in Local Limited
Partnerships (Note 1) - 761,000 28,000 761,000
General and administrative
(includes reimbursement to affiliate in
the amounts of $44,115 and $51,805 for the
nine months ended December 31, 2008 and
2007, respectively) 146,696 346,776 628,128 492,231
Amortization 768 (11,599) 2,068 2,068
------------- --------------- ------------ -------------
Total Expenses (486,800) 1,118,104 91,918 1,332,416
------------- --------------- ------------ -------------
Income (Loss) before equity in income (losses) of Local
Limited Partnerships and gain on sale of investments
in Local Limited Partnerships 557,933 (1,066,371) (4,574) (683,367)
Equity in income (losses) of Local Limited
Partnerships (Note 1) 111,485 (81,570) 15,257 (64,648)
Gain on sale of investments in Local
Limited Partnerships (Note 1) 2,122,701 66,441 2,122,701 165,867
------------- --------------- ------------ -------------
Net Income (Loss) $2,792,119 $(1,081,500) $2,133,384 $(582,148)
============= =============== ============ =============
Net Income (Loss) allocated:
General Partners $ 27,921 $(10,815) $ 21,334 $ (5,821)
Limited Partners
2,764,198 (1,070,685) 2,112,050 (576,327)
------------- --------------- ------------ -------------
$2,792,119 $(1,081,500) $2,133,384 $(582,148)
============= =============== ============ =============
Net Income (Loss) Per Limited Partner
Unit (68,043 Units) $ 40.62 $ (15.74) $ 31.04 $ (8.47)
============= =============== ============ =============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
STATEMENT OF CHANGES IN PARTNERS' EQUITY
For the Nine Months Ended December 31, 2008
(Unaudited)
Initial Investor
General Limited Limited
Partners Partner Partners Total
--------------- -------------- --------------- --------------
Balance at March 31, 2008 $ 23,496 $ 5,000 $2,321,417 $2,349,913
Net Income 21,334 - 2,112,050 2,133,384
--------------- -------------- --------------- --------------
Balance at December 31, 2008 $ 44,830 $ 5,000 $4,433,467 $4,483,297
=============== ============== =============== ==============
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 2008 and 2007
(Unaudited)
2008 2007
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Net cash provided by (used for) operating activities $ (991,383) $ 449,866
Net cash provided by investing activities 2,150,609 2,012,031
Net cash used for financing activities - (15,548,170)
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Net increase (decrease) in cash and cash equivalents 1,159,226 (13,086,273)
Cash and cash equivalents, beginning 2,704,392 15,869,238
---------------- ----------------
-
Cash and cash equivalents, ending $ 3,863,618 $ 2,782,965
================ ================
The accompanying notes are an integral part of these financial statements.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-Q and do not include all of the
information and note disclosures required by accounting principles generally
accepted in the United States of America. These statements should be read in
conjunction with the financial statements and notes thereto included with the
Partnership's Form 10-KSB for the year ended March 31, 2008. In the opinion of
the Managing General Partner, these financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the Partnership's financial position and results of operations.
The results of operations for the periods may not be indicative of the results
to be expected for the year.
The Managing General Partner of the Partnership has elected to report results of
the Local Limited Partnerships in which the Partnership has a limited
partnership interest on a 90 day lag basis because the Local Limited
Partnerships report their results on a calendar year basis. Accordingly, the
financial information of the Local Limited Partnerships that is included in the
accompanying financial statements is as of September 30, 2008 and 2007.
Generally, profits, losses, tax credits and cash flows from operations are
allocated 99% to the Limited Partners and 1% to the General Partners. Net
proceeds from a sale or refinancing will be allocated 95% to the Limited
Partners and 5% to the General Partners, after certain priority payments. The
General Partners may have an obligation to fund deficits in their capital
accounts, subject to limits set forth in the Partnership Agreement. However, to
the extent that the General Partner' capital accounts are in a deficit position,
certain items of net income may be allocated to the General Partners in
accordance with the Partnership Agreement.
1. Investments in Local Limited Partnerships
The Partnership has limited partnership interests in five Local Limited
Partnerships which were organized for the purpose of owning and operating
multi-family housing complexes, all of which are government-assisted. The
Partnership's ownership interest in each Local Limited Partnership is 99%, with
the exception of Leawood Manor which is 89%. The Partnership may have negotiated
or may negotiate options with the Local General Partners to purchase or sell the
Partnership's interests in the Local Limited Partnerships at the end of the
Compliance Period at nominal prices. In the event that Properties are sold to a
third party or upon dissolution of the Local Limited Partnerships, proceeds will
be distributed according to the terms of each Local Limited Partnership
agreement.
The following is a summary of investments in Local Limited Partnerships at
December 31, 2008:
Capital contributions to Local Limited Partnerships
and purchase price paid to withdrawing partners of Local Limited Partnerships $ 16,444,363
Cumulative equity in losses of Local Limited Partnerships
(excluding cumulative unrecognized losses of $1,568,780) (9,450,334)
Cumulative cash distributions received from Local Limited Partnerships (2,636,932)
---------------------
Investments in Local Limited Partnerships before adjustments 4,357,097
Excess investment costs over the underlying assets acquired:
Acquisition fees and expenses 1,389,419
Cumulative amortization of acquisition fees and expenses (632,360)
---------------------
Investments in Local Limited Partnerships before valuation allowance 5,114,156
Valuation allowance on investments in Local Limited Partnerships (4,409,400)
---------------------
Investments in Local Limited Partnerships $ 704,756
=====================
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
1. Investments in Local Limited Partnerships (continued)
For the nine months ended December 31, 2008, the Partnership advanced $41,717 to
one of the Local Limited Partnerships, all of which was reimbursed as a result
of the sale. In addition, $616,300 was also reimbursed, as a result of the sale,
from the Local Limited Partnership relating to advances made in the previous
years. The Partnership has recorded a valuation allowance for its investments in
certain Local Limited Partnerships in order to appropriately reflect the
estimated net realizable value of these investments.
The Partnership's share of the net losses of the Local Limited Partnerships for
the nine months ended December 31, 2008 is $447,843. For the nine months ended
December 31, 2008, the Partnership has not recognized $463,100 of equity in
losses relating to certain Local Limited Partnerships in which cumulative equity
in losses and cumulative distributions exceeded its total investments in these
Local Limited Partnerships.
The Partnership's interest in one of its investments in Local Limited
Partnerships was sold during the nine months ended December 31, 2008, resulting
in a gain on sale of $2,122,701. The Partnership's interest in another of its
investments in Local Limited Partnerships was transferred during the nine months
ended December 31, 2008 having no impact on the Partnership's financial
position, results of operations or cash flows.
2. New Accounting Principle
FIN48-3
In December 2008, the Financial Accounting Standards Board (`FASB") issued
Interpretation No. 48-3 "Effective Date of FASB Interpretation No. 48 for
Certain Nonpublic Enterprises" ("FIN48-3"). FIN48-3 deferred the effective date
of FIN48 for certain nonpublic organizations. The deferred effective date is
intended to give the FASB additional time to develop guidance on the application
of FIN48 by pass-through and not-for-profit entities. The General Partner may
modify the Partnership's disclosures if the FASB's guidance regarding the
application of FIN48 to pass-through entities chnages.
..
SFAS No. 157
In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 157, "Fair Value Measurements" ("SFAS No. 157"), which provides enhanced
guidance for using fair value to measure assets and liabilities. SFAS No. 157
establishes a common definition of fair value, provides a framework for
measuring fair value under U.S. generally accepted accounting principles and
expands disclosure requirements about fair value measurements. SFAS No. 157 is
effective for financial statements issued in fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. In February
2008, the FASB issued FASB Staff Position 157-2, "Effective Date of FASB
Statement No. 157", which delays the effective date of SFAS No. 157 for all
nonfinancial assets and liabilities except those that are recognized or
disclosed at fair value in the financial statements on at least an annual basis
until November 15, 2008. The Partnership adopted the provisions of SFAS No. 157
for financial assets and liabilities recognized at fair value on a recurring
basis effective April 1, 2008. The partial adoption of SFAS No. 157 did not have
a material impact on the Partnership's Financial Statements. The Partnership
does not expect the adoption of the remaining provisions of SFAS No. 157 to have
a material effect on the Partnership's financial position, operations or cash
flow. This standard requires that a Partnership measure its financial assets and
liabilities using inputs from the three levels of the fair value hierarchy. A
financial asset or liability classification within the hierarchy is determined
based on the lowest level input that is significant to the fair value
measurement. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Partnership has the
ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active,
inputs other than quoted prices that are observable for the
asset or liability and inputs that are derived principally from
or corroborated by observable market data by correlation or
other means (market corroborated inputs).
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS (continued)
(Unaudited)
2. New Accounting Principle (continued)
Level 3 - Unobservable inputs reflect the Partnership's judgments
about the assumptions market participants would use in pricing
the asset or liability since limited market data exists. The
Partnership develops these inputs based on the best information
available, including the Partnership's own data.
Financial assets accounted for at fair value on a recurring basis at December
31, 2008 include cash equivalents of $3,863,618.
3. Significant Subsidiaries
The following Local Limited Partnerships invested in by the Partnership
represent more than 20% of the Partnership's total assets or equity as of
December 31, 2008 or 2007 or net losses for the three months ended either
December 31, 2008 or 2007. The following financial information represents the
performance of these Local Limited Partnerships for the three months ended
September 30, 2008 and 2007:
2008 2007
----------------- ----------------
Prince Street Towers L.P.
Revenue $ 429,499 $ 453,238
Net Income (Loss) $ 4,702 $ (70,078)
Sencit Towne House, L.P.
Revenue $ 552,228 $ 538,217
Net Income $ 117,890 $ 37,525
Bentley Court II, Limited Partnership
Revenue $ 518,828 $ 477,086
Net Loss $ (98,473) $ (131,629)
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain matters discussed herein constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. The
Partnership intends such forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements and is including this statement
for purposes of complying with these safe harbor provisions. Although the
Partnership believes the forward-looking statements are based on reasonable
assumptions, the Partnership can give no assurance that its expectations will be
attained. Actual results and timing of certain events could differ materially
from those projected in or contemplated by the forward-looking statements due to
a number of factors, including, without limitation, general economic and real
estate conditions and interest rates.
Critical Accounting Policies
The Partnership's accounting policies include those that relate to its
recognition of investments in Local Limited Partnerships using the equity method
of accounting. The Partnership's policy is as follows:
The Local Limited Partnerships in which the Partnership invests are Variable
Interest Entities ("VIE"s). The Partnership is involved with the VIEs as a
non-controlling limited partner equity holder. The investments in the Local
Limited Partnerships are made primarily to obtain tax credits on behalf of the
Partnership's investors. The general partners of the Local Limited Partnerships,
who are considered to be the primary beneficiaries, control the day-to-day
operations of the Local Limited Partnerships. The general partners are also
responsible for maintaining compliance with the tax credit program and for
providing subordinated financial support in the event operations cannot support
debt and property tax payments. The Partnership, through its ownership
percentages, may participate in property disposition proceeds. The timing and
amounts of these proceeds are unknown but can impact the Partnership's financial
position, results of operations or cash flows. Because the Partnership is not
the primary beneficiary of these VIEs, it accounts for its investments in the
Local Limited Partnerships using the equity method of accounting. As a result of
its involvement with the VIEs, the Partnership's exposure to economic and
financial statement losses is limited to its investments in the VIEs ($704,756
at December 31, 2008). The Partnership may be subject to additional losses to
the extent of any financial support that the Partnership voluntarily provides in
the future. Under the equity method, the investment is carried at cost, adjusted
for the Partnership's share of net income or loss and for cash distributions
from the Local Limited Partnerships; equity in income or loss of the Local
Limited Partnerships is included currently in the Partnership's operations. A
liability is recorded for delayed equity capital contributions to Local Limited
Partnerships. Under the equity method, a Local Limited Partnership investment
will not be carried below zero. To the extent that equity in losses are incurred
when the Partnership's carrying value of the respective Local Limited
Partnership has been reduced to a zero balance, the losses will be suspended and
offset against future income. Income from Local Limited Partnerships, where
cumulative equity in losses plus cumulative distributions have exceeded the
total investment in Local Limited Partnerships, will not be recorded until all
of the related unrecorded losses have been offset. To the extent that a Local
Limited Partnership with a carrying value of zero distributes cash to the
Partnership, that distribution is recorded as income on the books of the
Partnership and is included in "other revenue" in the accompanying financial
statements.
The Partnership has implemented policies and practices for assessing
other-than-temporary declines in values of its investments in Local Limited
Partnerships. Periodically, the carrying values of the investments are compared
to their respective fair values. If an other-than-temporary decline in carrying
value exists, a provision to reduce the asset to fair value, as calculated based
primarily on remaining tax benefits, will be recorded in the Partnership's
financial statements. The tax benefits for each Local Limited Partnership
consist of future tax losses, tax credits and residual receipts at disposition.
Included in the residual receipts calculation is current net operating income
capitalized at the regional rate specific to each Local Limited Partnership.
Generally, the carrying values of most Local Limited Partnerships will decline
through losses and distributions in amounts sufficient to prevent
other-than-temporary impairments. However, the Partnership may record similar
impairment losses in the future if the expiration of tax credits outpaces losses
and distributions from any of the Local Limited Partnerships.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Liquidity and Capital Resources
At December 31, 2008, the Partnership had cash and cash equivalents of
$3,863,618 as compared to $2,704,392 at March 31, 2008. The increase is mainly
attributable to proceeds received from the sale of investments in Local Limited
Partnerships and distributions from Local Limited Partnerships partially offset
by cash used for operating activities.
The Managing General Partner originally designated 4.00% of the Gross Proceeds
as Reserves, as defined in the Partnership Agreement. The Reserves were
established to be used for working capital of the Partnership and contingencies
related to the ownership of Local Limited Partnership interests. The Managing
General Partner may increase or decrease such Reserves from time to time, as it
deems appropriate. At December 31, 2008, $3,863,618 has been designated as
Reserves.
To date, professional fees relating to various Property issues totaling
approximately $2,020,000 have been paid from Reserves. To date, Reserve funds in
the amount of approximately $379,000 also have been used to make additional
capital contributions to two Local Limited Partnerships. In the event a Local
Limited Partnership encounters operating difficulties requiring additional
funds, the Partnership's management might deem it in its best interest to
voluntarily provide such funds in order to protect its investment. As of
December 31, 2008, the Partnership has advanced approximately $860,000 to Local
Limited Partnerships to fund operating deficits.
The Managing General Partner believes that the investment income earned on the
Reserves, along with cash distributions received from Local Limited
Partnerships, to the extent available, will be sufficient to fund the
Partnership's ongoing operations. Reserves may be used to fund Partnership
operating deficits, if the Managing General Partner deems funding appropriate.
If Reserves are not adequate to cover the Partnership's operations, the
Partnership will seek other financing sources including, but not limited to, the
deferral of Asset Management Fees paid to an affiliate of the Managing General
Partner or working with Local Limited Partnerships to increase cash
distributions. To date, the Partnership has used approximately $4,401,000 of
operating funds to replenish Reserves.
Since the Partnership invests as a limited partner, the Partnership has no
contractual duty to provide additional funds to Local Limited Partnerships
beyond its specified investment. Thus, as of December 31, 2008, the Partnership
had no contractual or other obligation to any Local Limited Partnership which
had not been paid or provided for.
Cash Distributions
No cash distributions were made during the nine months ended December 31, 2008.
Results of Operations
Three Month Period
The Partnership's results of operations for three months ended December 31, 2008
resulted in a net income of $2,792,119 as compared to a net loss of $1,081,500
for the same period in 2007. The increase in net income is primarily
attributable to the increase in gain on sale of investments in Local Limited
Partnerships, the decrease in provision for valuation allowance on investments
in Local Limited Partnerships and the decrease in provision for valuation
allowance on advances to Local Limited Partnerships. The increase in gain on
sale of investments in Local Limited Partnerships is due to the transfer of two
Local Limited Partnerships during the current year. Provision for valuation
allowance on investments in Local Limited Partnerships decreased due to the
Partnership recording an impairment allowance for its investments in certain
Local Limited Partnerships in the prior year. The decrease in provision for
valuation allowance on advances to Local Limited Partnerships results from the
reimbursement, as a result of the sale, of advances made from one Local Limited
Partnership during the nine months ended December 31, 2008.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Results of Operations (continued)
Nine Month Period
The Partnership's results of operations for nine months ended December 31, 2008
resulted in a net income of $2,133,384 as compared to a net loss of $582,148 for
the same period in 2007. The increase in net income is primarily attributable to
an increase in gain on sale of investments in Local Limited Partnerships, a
decrease in provision for valuation allowance on investments in Local Limited
Partnerships and the decrease in provision for valuation allowance on advances
to Local Limited Partnerships partially offset by a decrease in investment
revenue. The increase in gain on sale of investments in Local Limited
Partnerships is due to the transfer of two Local Limited Partnerships during the
current year. Provision for valuation allowance on investments in Local Limited
Partnerships decreased due to the Partnership recording an impairment allowance
for its investments in certain Local Limited Partnerships in the prior year. The
decrease in provision for valuation allowance on advances to Local Limited
Partnerships results from the reimbursement, as a result of the sale, of
advances made from one Local Limited Partnership during the nine months ended
December 31, 2008. The decrease in investment revenue is due to a decrease in
the average balance of funds held for investment and a reimbursement of interest
during the prior year.
Portfolio Update
The Partnership was formed on March 30, 1989 under the laws of the Commonwealth
of Massachusetts for the primary purpose of investing, as a limited partner, in
Local Limited Partnerships which own and operate apartment complexes, most of
which benefit from some form of federal, state or local assistance program and
each of which qualifies for low-income housing tax credits. The Partnership's
objectives are to: (i) provide current tax benefits in the form of Tax Credits
which qualified investors may use to offset their federal income tax liability;
(ii) preserve and protect the Partnership's capital; (iii) provide limited cash
distributions which are not expected to constitute taxable income during
Partnership's operations; and (iv) provide cash distributions from sale or
refinancing transactions. The General Partners of the Partnership are Arch
Street VIII, Inc., which serves as the Managing General Partner, and Arch Street
IV L.P., which also serves as the Initial Limited Partner. Both of the General
Partners are affiliates of MMA. The fiscal year of the Partnership ends on March
31.
As of December 31, 2008, the Partnership's investment portfolio consisted of
limited partnership interests in five Local Limited Partnerships, each of which
owns and operates a multi-family apartment complex and each of which has
generated Tax Credits. Since inception, the Partnership has generated Tax
Credits, net of recapture, of approximately $1,287 per Limited Partner Unit. The
aggregate amount of Tax Credits generated by the Partnership was consistent with
the objective specified in the Partnership's prospectus.
In October 2007, the Partnership distributed $15,392,688, or $226.22 per Unit,
to Limited Partners. The Partnership was able to make this distribution
primarily as a result of the disposition of twenty-nine of the Partnership's
thirty-seven properties or Limited Partnership interests in these properties,
most notably the sale of Mayfair Mansions, located in Washington, DC.
Properties that receive low income housing Tax Credits must remain in compliance
with rent restriction and set-aside requirements for at least 15 calendar years
from the date the property is placed in service. Failure to do so would result
in recapture of a portion of the property's Tax Credits. The Compliance Periods
of the remaining Properties in which the Partnership has an interest as of
December 31, 2008, all expired before December 31, 2007. The Partnership
disposed of two Local Limited Partnerships interests during the nine months
ended December 31, 2008.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Portfolio Update (continued)
The Managing General Partner will continue to closely monitor the operations of
the Properties and will formulate disposition strategies with respect to the
Partnership's remaining Local Limited Partnership interests. The Partnership
shall dissolve and its affairs shall be wound up upon the disposition of the
final Local Limited Partnership interest and other assets of the Partnership.
Investors will continue to be Limited Partners, receiving K-1s and quarterly and
annual reports, until the Partnership is dissolved.
On November 29, 2007, the Partnership and its General Partners were sued in
Superior Court for the County of Los Angeles, California (the "1st California
Lawsuit") by a Limited Partner named Danford Baker and companies named Everest
Housing Investors 2, LP and Everest Management, LLC with which Mr. Baker is
affiliated (collectively "Everest"). In this lawsuit, Everest sought a
declaration and injunction from the Court that would order the Partnership and
its General Partners to honor votes obtained in Everest's consent solicitation,
in the event that Everest obtained the votes of holders of a majority of
outstanding Limited Partner Units of the Partnership in favor of Everest's
proposal in the solicitation. The proposal in Everest's consent solicitation
asks for Limited Partner consent to remove the General Partners and replace them
with an Everest affiliate. The Partnership and its General Partners were never
served with a copy of the Complaint in this lawsuit. On or about April 17, 2008,
Everest filed a voluntary Request for Dismissal Without Prejudice of the
Complaint in the 1st California Lawsuit.
On or about, May 6, 2008, the same Everest parties referenced above in the 1st
California Lawsuit filed a nearly identical Complaint against the Partnership
and its General Partners in the same Superior Court for the County of Los
Angeles, California (the "2nd California Lawsuit"). In the 2nd California
Lawsuit, Everest once again sought a declaration and injunction from the Court
to that would order the Partnership and its General Partners to honor votes
obtained in Everest's consent solicitation. One of the Partnership's General
Partners, Arch Street VIII, Inc., was served with a copy of the complaint from
the 2nd California Lawsuit on May 12, 2008. The Partnership and its General
Partners deny the allegations in the 2nd California Lawsuit and intend to
vigorously defend the lawsuit. On or about July 3, 2008, the Partnership and its
General Partners filed a Demurrer to the 2nd California Lawsuit. Instead of
responding to the Demurrer, on or about July 29, 2008, Everest served a "First
Amended Complaint for Breach of Contract, Declaratory Relief and Injunctive
Relief," and filed that Amended Complaint with the Court on August 4, 2008. On
August 29, 2008, the Partnership and its General Partners filed a Demurrer to
the Amended Complaint, and Alternative Motion to Stay Pending Outcome of Sister
State Action (the Massachusetts complaint described below). On November 11,
2008, Everest filed a voluntary Request for Dismissal Without Prejudice of the
Complaint in the 2nd California Lawsuit.
On January 22, 2008, the Partnership and its General Partners were sued in the
District Court of Johnson County, Kansas by a Limited Partner named McDowell
Investments, L.P. ("McDowell"). In the lawsuit, McDowell alleged that the
Partnership and its General Partners violated the Partnership's Partnership
Agreement and/or breached fiduciary duties by, among other things: (i) allegedly
selling substantially all of the assets of the Partnership without a vote of the
Limited Partners; (ii) allegedly selling Partnership assets to persons formerly
affiliated with the Partnership or its General Partners; and (iii) allegedly
increasing the cash reserves owned by the Partnership to benefit affiliates of
the Partnership or its General Partners. At a hearing on June 16, 2008 in Kansas
State Court, the Court orally granted a Motion to Dismiss on behalf of all of
the Defendants on the grounds of forum non conveniens, and the Court stated that
it was dismissing McDowell's case without prejudice. On June 30, 2008, the
Kansas State Court entered a Journal Entry of Judgment dismissing the suit
without prejudice. On July 3, 2008, McDowell filed a Notice of Appeal from the
Journal Entry of Judgment. McDowell filed its appellate brief with the Kansas
Appeals Court on December 17, 2008. The Partnership's and its General Partners'
response to McDowell's appellate brief is due on February 19, 2009.
On January 29, 2008, the Partnership and its General Partners filed suit against
McDowell in the Superior Court for Suffolk County, Massachusetts, alleging,
among other things, that McDowell has damaged the Partnership by intentionally
and unlawfully interfering with efforts of the Local Limited Partnership that
owns the Leawood Manor Apartments to sell that real estate. McDowell filed a
motion to dismiss, asking the Massachusetts court to dismiss the case because
Massachusetts is allegedly not a convenient forum to hear the matter. The
Partnership and its General Partners filed an opposition to McDowell's motion to
dismiss. Prior to the Court adjudicating McDowell's
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Portfolio Update (continued)
motion to dismiss, McDowell withdrew the motion and filed an Answer and
Counterclaim. The Counterclaim is substantially similar to McDowell's claims
that were dismissed in Kansas, alleging that the Partnership and its General
Partners violated the Partnership's Partnership Agreement and/or breached
fiduciary duties by, among other things: (i) allegedly selling substantially all
of the assets of the Partnership without a vote of the Limited Partners; (ii)
allegedly selling Partnership assets to persons formerly affiliated with the
Partnership or its General Partners; and (iii) allegedly increasing the cash
reserves owned by the Partnership to benefit affiliates of the Partnership or
its General Partners. The Partnership and its General Partners deny the
allegations in the Counterclaim and intend to vigorously defend such claims. The
parties have agreed by stipulation that the Partnership's and the General
Partners' response to the Counterclaim shall be due on February 27, 2009.
On April 22, 2008, the Partnership and its General Partners filed suit against
the following defendants: Everest Housing Investors 2, L.P.; Everest Management
LLC; Everest Properties, Inc.; Everest Properties, LLC; McDowell Investments,
L.P.; MGM Holdings, LLC; Park G.P., Inc., Bond Purchase, L.L.C.; Anise L.L.C.;
Paco Development, L.L.C.; Maxus Realty Trust, Inc.; David L. Johnson; W. Robert
Kohorst; Danford M. Baker; Monte G. McDowell; Kevan D. Acord (collectively the
"Johnson/Everest Group"), in the Superior Court for Suffolk County,
Massachusetts. The Complaint asserts claims against the Johnson/Everest Group
for breach of the Partnership's Partnership Agreement, breach of fiduciary duty,
conspiracy and tortuous interference with advantageous business relationships,
for their concerted efforts to improperly gain control of the Partnership and/or
certain real estate assets in which the Partnership is invested, block
arms-length transactions with third parties for the sale of real estate assets
in which the Partnership is invested, and gain non-public information for use in
trading limited partner units at below-market prices. On June 20, 2008, McDowell
Investments, L.P.; MGM Holdings, LLC; Bond Purchase, L.L.C.; Anise L.L.C.; Paco
Development, L.L.C.; Maxus Realty Trust, Inc.; David L. Johnson; Monte G.
McDowell; and Kevan D. Acord filed an answer to the Complaint. On June 20, 2008,
Everest Housing Investors 2, L.P.; Everest Management LLC; Everest Properties,
Inc.; Everest Properties, LLC; W. Robert Kohorst; and Danford M. Baker (the
"Everest Defendants") filed motions to dismiss the complaint on various grounds.
The Everest Defendants, the Partnership and its General Partners have agreed by
stipulation that the Partnership and its General Partners shall have until
February 27, 2009 to file any opposition to the Motions to Dismiss and that the
Everest Defendants shall have until March 13, 2009 to file any reply to the
opposition.
The Partnership and its General Partners are currently engaged in discussions
with each of the above referenced parties to reach a resolution of these
disputes and to achieve a global settlement of the litigation described herein.
While some progress has been made in the settlement discussions, it is premature
at this stage of the discussions to remark upon the possibility of such global
settlement being achieved.
Property Discussions
A majority of the Properties in which the Partnership has an interest had
stabilized operations and operated above breakeven as of September 30, 2008.
Some Properties generate cash flow deficits that the Local General Partners of
those Properties fund through project expense loans, subordinated loans or
operating escrows. However, a few Properties have had persistent operating
difficulties that could either: (i) have an adverse impact on the Partnership's
liquidity; (ii) result in their foreclosure; or (iii) result in the Managing
General Partner deeming it appropriate for the Partnership to dispose of its
interest in the Local Limited Partnership. Also, the Managing General Partner,
in the normal course of the Partnership's business, may arrange for the future
disposition of its interest in certain Local Limited Partnerships. The following
Property discussions focus only on such Properties.
As previously reported, an IRS audit of the 1993 tax return for Bentley Court II
Limited Partnership questioned the treatment of certain items and had findings
of non-compliance in 1993. The IRS then expanded the scope of the audit to
include the 1994 and 1995 tax returns. As a result, the IRS disallowed the
Property's Tax Credits for each of
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
these years (the disallowance of the 1993, 1994 and 1995 Tax Credits applies
only to the Limited Partners of the Partnership that claimed Tax Credits for
those years and the recapture applies to all current Limited Partners of the
Partnership). On behalf of the Partnership, the Managing General Partner
retained counsel to appeal the IRS's findings in order to minimize the loss of
Tax Credits. This administrative appeal has been unsuccessful, and the IRS has
not retracted its position of disallowing Tax Credits for 1993, 1994 and 1995, a
total of $2,562,173, plus accrued interest of approximately $3,900,000, or
approximately $95 per Unit. Based on advice of tax counsel, the Managing General
Partner determined to concede the disallowance of Tax Credits for those three
years.
In addition, the Local General Partner received notification that the IRS was
expanding its claims to recapturing $502,472 of Tax Credits taken in 1990, 1991
and 1992, plus accrued interest of approximately $800,000, or approximately $20
per Unit. Based on advice of tax counsel, the Managing General Partner
determined to challenge the IRS's findings with respect to this $502,472 of
recapture, and a trial was held on this issue in November 2005. In May 2006, the
Tax Court ruled against the Partnership. Upon advice of counsel, this decision
was not appealed by the Managing General Partner.
It is possible that the IRS will further expand its claims for additional
amounts with respect to other years. However, counsel has advised that the
statute of limitations has expired for the tax years 1996, 1997 and 1998. At
this point, there appears to be no possibility of a settlement with the IRS, and
the Managing General Partner anticipates that the IRS will forward the
assessments for disallowance and recapture directly to the affected Limited
Partners. The accrued interest calculations above respecting the disallowance
and recapture of Tax Credits are estimates only, based upon a rate of 8% simple
interest from the dates that the taxes were deemed to be owed. The Managing
General Partner has not included estimates for penalties because it is not
expecting them. However, it is possible that the IRS will attempt to claim
penalties. Tax counsel has advised that Limited Partners that acquired Units
after 1998 will not be affected by these assessments. The Managing General
Partner strongly recommends that Limited Partners consult with their tax
advisors regarding the appropriate treatment of any disallowance or recapture
assessments.
As previously reported, the Managing General Partner began marketing Bentley
Court II in May 2008. On October 9, 2008, the Property was sold, effectively
terminating the Partnership's interest in the Local Limited Partnership that
owned and operated this Property. The sale resulted in the Partnership receiving
a total of $2,780,718, or $40.87 per Unit. $658,017 of these proceeds were
applied against advances that the Partnership had made to the Local Limited
Partnership during the current and previous years. This disposition is expected
to result in 2008 taxable income of approximately $5,920,000 or $87.00 per Unit.
The Partnership no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner expected a disposition of
46th and Vincennes, located in Chicago, Illinois, during 2008. On May 30, 2008,
an assignment of interest in the Local Limited Partnership was executed by the
Partnership, effectively terminating the Partnership's interest in the Local
Limited Partnership. No proceeds from the transfer of interest were received by
the Partnership, but approximately $56,000 of cumulative priority distributions
from the Local Limited Partnership was received in January 2009 after a
developer fee escrow was released. The Managing General Partner currently
projects taxable income of approximately $965,000, or $14.18 per Unit. The
Partnership's investment value in the Local Limited Partnership has been zero
since 1999. The assignment of interest did not have an impact on the
Partnership's financial position, results of operations or cash flows. The
Partnership no longer has an interest in this Local Limited Partnership.
As previously reported, the Managing General Partner negotiated an agreement to
transfer the Local General Partner interest in West Pine, located in Findlay,
Pennsylvania, to an affiliate of the Allegheny County Housing Authority
("ACHA"), contingent upon receiving approval from the U.S. Department of Housing
and Urban Development ("HUD"). HUD approval was received, and the Local General
Partner interest was transferred on October 17, 2003. In addition, the ACHA
informed the Managing General Partner of its interest in acquiring the
Partnership's interest in the Local Limited Partnership, pending their
assumption of the Local General Partner interest. Concurrent with the
replacement of the Local General Partner, another ACHA affiliate acquired 30% of
the Partnership's limited
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
partner interest in the Local Limited Partnership. As part of this transaction,
the Partnership acquired a put option for the remaining 70% exercisable for $1
anytime after the expiration of the Compliance Period on December 31, 2006. West
Pine generated its final year of Tax Credits in 2001. The Managing General
Partner's pursuit of an exit strategy culminated in the transfer of the
Partnership's interest in the Local Limited Partnership for $20,000, or $0.29
per Unit, on December 2, 2007. The Managing General Partner, in accordance with
and as permitted by the Partnership Agreement, will retain the sales proceeds in
Reserves for the time being until it deems a subsequent distribution to be
prudent. This transaction resulted in 2007 taxable income of $519,798, or $7.64
per Unit. The Partnership no longer has an interest in this Local Limited
Partnership.
In accordance with the terms of their respective Local Limited Partnership
Agreements, the Managing General Partner, effective November 28, 2007,
transferred the Partnership's interest in the following Local Limited
Partnerships: Prince Street Towers, L.P., located in Lancaster, Pennsylvania;
Sencit Towne House L.P., located in Shillington, Pennsylvania; and Allentown
Towne House, L.P., located in Allentown, Pennsylvania. The interests in the
aforementioned Local Limited Partnerships were transferred to MMA Lancaster
North, L.P., MMA Sencit Townhouse, L.P. and MMA Allentown Towne House, L.P.,
respectively (together, the "Transferee Partnerships"). The Partnership is the
sole limited partner of each of the Transferee Partnerships. An affiliate of the
Partnership is the general partner of each of the Transferee Partnerships and
has obtained a 1% interest in each of the Transferee Partnerships in exchange
for a promissory note in favor of the Partnership.
In processing these transactions, the Managing General Partner acted out of
necessity, due to the impending expiration of the Partnership's ability to
transfer its interest in the above-mentioned Local Limited Partnerships without
the Local General Partner's consent. As previously disclosed, these Local
Limited Partnership interests were originally expected to be sold as part of a
settlement agreement between the Partnership, Boston Financial Qualified Housing
Tax Credits L.P. III, , Boston Financial Qualified Housing Tax Credits L.P. V,
Boston Financial Tax Credit Fund VII, A Limited Partnership, and certain of
their affiliates on the one hand, and on the other hand, Everest Housing
Investors 2, LP, certain of its affiliates, Park GP, Inc., Bond Purchase, L.L.C,
Anise, L.L.C., and Paco Development, L.L.C. (together, the "Everest and Park
Parties"). When the Everest and Park Parties failed to exercise their option to
purchase these Local Limited Partnership interests, the above-described
transfers were carried out. The Managing General Partner may now have
flexibility in being able to dispose of the Partnership's interest in the Local
Limited Partnerships without the Local General Partners' consent, expediting the
Managing General Partner's ability to liquidate the assets of, and dissolve, the
Partnership. It is possible that such Local General Partner may contest this
right to free transferability.
As previously reported, the Partnership's interest in the Local Limited
Partnership that owns Mayfair Mansions, located in Washington, DC, was
terminated upon the July 2006 sale of the Property to an unaffiliated entity.
The Partnership received net sales proceeds in 2006 of $12,794,835, or $188.04
per Unit, resulting in taxable income of $17,236,598, or $253.32 per Unit. The
Managing General Partner believed that the Partnership had a claim of up to an
additional $1,500,000 of sale proceeds under the terms of the partnership
agreement and investment documents for this Local Limited Partnership. The Local
General Partners disputed that at least a portion of this amount was due.
On behalf of the Partnership, the Managing General Partner retained counsel and
filed suit in the Superior Court of the District of Columbia (Civil Action No.
0006755-06) seeking a declaratory judgment and damages. The Local General
Partners filed counter-claims and disputed the Partnership's claims. On January
10, 2007, representatives of the Managing General Partner and the Local General
Partners reached a settlement during court-ordered mediation with regard to all
of the above referenced legal claims. All pending legal matters were
subsequently dismissed with prejudice. The settlement required an additional
distribution in the amount of $1,096,441, or $16.11 per Unit, that was received
by the Partnership in October 2007. As previously reported, the Managing General
Partner estimated the additional distribution would result in 2007 taxable
income equal to the settlement distribution. Actual 2007 taxable income of
$46,441, or $0.68 per Unit, was incurred by the Partnership. This amount was
significantly lower than estimated because the Partnership included, as part of
the total 2006 gain of $17,236,598, or $253.32 per Unit,
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
Property Discussions (continued)
an estimated amount of $1,050,000, or $15.43 per Unit, from the settlement
proceeds. The Partnership distributed a majority of the initial net sales
proceeds in October 2007. The Managing General Partner, in accordance with and
as permitted by the Partnership Agreement, will retain the remaining sales
proceeds in Reserves for the time being until it deems a subsequent distribution
to be prudent. In March 2008, the Partnership received an additional
distribution of approximately $14,000, or $0.21 per Unit. In accordance with the
terms of the Partnership agreement, the Managing General Partner retained these
funds in Reserves. This distribution will result in 2008 taxable income of
approximately $14,000, or $0.21 per Unit. The Partnership no longer has an
interest in this Local Limited Partnership.
As previously reported, the Managing General Partner anticipated the termination
of the Partnership's interest in the Local Limited Partnership that owned
Oakview Square, located in Chesterfield, Michigan, upon the sale of the
Property. The sale of this Property, which resulted in net proceeds during the
year ended March 31, 2007 to the Partnership of $100,000, or $1.47 per Unit,
occurred on February 28, 2007, effectively terminating the Partnership's
interest in this Local Limited Partnership. In October 2007, the Partnership
received additional proceeds of $74,426, or $1.09 per Unit, upon a
reconciliation of tax and utility payments. This sale resulted in a 2007 taxable
loss of $59,158, or $0.87 per Unit. In April 2008, the Partnership received
final sale proceeds of $7,146, or $0.11 per Unit. The Partnership no longer has
an interest in this Local Limited Partnership.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Non Applicable
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, to ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities
Exchange Commission's rules and forms, including to ensure that information
required to be disclosed by us in the reports filed or submitted by us under the
Exchange Act is accumulated and communicated to management to allow timely
decisions regarding required disclosure. Based on that evaluation, management
has concluded that as of December 31, 2008, our disclosure controls and
procedures were effective.
Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rules
13a-15(f) and 15d-15(f). Our management conducted an assessment of the
effectiveness of our internal control over financial reporting. This assessment
was based upon the criteria for effective internal control over financial
reporting established in Internal Control - Integrated Framework, issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
The Partnership's internal control over financial reporting involves a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. Internal control over
financial reporting includes the controls themselves, as well as monitoring of
the controls and internal auditing practices and actions to correct deficiencies
identified. Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements.
Management assessed the effectiveness of the Partnership's internal control over
financial reporting as of December 31, 2008. Based on this assessment,
management concluded that, as of December 31, 2008, the Partnership's internal
control over financial reporting was effective.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
PART II OTHER INFORMATION
Items 1-5 Not applicable
Item 6 Exhibits and reports on Form 8-K
(a) Exhibits
31.1 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter ended December 31, 2008.
BOSTON FINANCIAL QUALIFIED HOUSING TAX CREDITS L.P. IV
(A Limited Partnership)
SIGNATURE
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: February 17, 2009 BOSTON FINANCIAL QUALIFIED HOUSING
TAX CREDITS L.P. IV
By: Arch Street VIII, Inc.,
its Managing General Partner
/s/Greg Judge
_____________
Greg Judge
President
Arch Street VIII, Inc.