1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15 (d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2001
[ ] Transition report under Section 13 or 15 (d) of the Exchange Act
For the transition period from to
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Commission file number: 000-24167
EBS Building, L.L.C.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 43-1794872
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
c/o PricewaterhouseCoopers, LLP, 800 Market Street, St. Louis, Missouri 63101-2695
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(Address of Principal Executive Offices)
(678)419-7021
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrants 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 a court.
Yes X No
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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: As of June 30, 2001, there
were 10,000,000 Class A Membership Units outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
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2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
EBS BUILDING, L.L.C.
BALANCE SHEETS
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JUNE 30, 2001 DECEMBER 31, 2000
(UNAUDITED)
ASSETS
Rental property $ 22,892,791 $ 22,036,672
Cash - operating 4,111 13,248
Security deposit escrow 58,227 112,293
Tax and insurance escrow 268,098 91,672
Rents receivable 787,508 565,653
Prepaid expenses 105,927 36,127
Lease commissions (net) 1,721,801 1,145,366
Loan costs (net) 288,213 50,609
Other assets 988 273
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Total assets $ 26,127,664 $ 24,051,913
=============== ===============
LIABILITIES
Note payable $ 10,232,294 $ 7,561,599
Accounts payable 300,409 145,491
Accrued expenses 423,604 310,081
Tenant security deposits 57,405 104,999
Prepaid rent 132,065 -
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Total liabilities 11,145,777 8,122,170
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MEMBERS' EQUITY:
Membership Units (Class A - 10,000,000 authorized, issued and
outstanding at June 30, 2001 and December 31, 2000) - -
Paid-in capital 19,810,522 19,810,522
Retained earnings/(deficit) (4,828,635) (3,880,779)
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Total members' equity 14,981,887 15,929,743
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Total liabilities and members' equity $ 26,127,664 $ 24,051,913
=============== ===============
The accompanying notes are an integral part of these financial statements.
3
EBS BUILDING, L.L.C.
STATEMENTS OF OPERATIONS
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FOR THE 3 MONTHS ENDED FOR THE 6 MONTHS ENDED
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JUNE 30, 2001 JUNE 30, 2000 JUNE 30, 2001 JUNE 30, 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Income:
Rent $ 852,188 $ 908,146 $ 1,652,399 $ 1,783,037
Other 50,540 61,917 153,839 72,769
----------- ----------- ------------ ------------
Total income 902,728 970,063 1,806,238 1,855,806
----------- ----------- ------------ ------------
Expenses:
Maintenance 185,460 236,232 412,379 421,077
Professional fees 242,663 147,697 402,089 332,967
Utilities 153,990 119,651 321,723 283,936
General and administrative 227,397 124,822 371,658 308,721
Depreciation and amortization 331,262 270,661 602,564 513,713
Taxes (including real estate taxes) 99,600 93,540 198,600 187,080
Interest expense 157,954 166,653 347,569 330,199
Other operating expenses 50,317 29,740 97,512 88,127
----------- ----------- ------------ ------------
Total expenses 1,448,643 1,188,996 2,754,094 2,465,820
----------- ----------- ------------ ------------
Net loss $ (545,915) $ (218,933) $ (947,856) $ (610,014)
=========== =========== ============ ============
Net loss per Class A Unit - primary $ (0.05) $ (0.02) $ (0.09) $ (0.06)
Net loss per Class A Unit -
fully diluted $ (0.05) $ (0.02) $ (0.09) $ (0.06)
The accompanying notes are an integral part of these financial statements.
4
EBS BUILDING, L.L.C.
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
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CLASS A CLASS B
MEMBERSHIP MEMBERSHIP PAID IN RETAINED
UNITS UNITS CAPITAL EARNINGS TOTAL
Balance, December 31, 2000 10,000,000 - $ 19,810,522 $ (3,880,779) $ 15,929,743
Units transferred (unaudited) - - - - -
Year to date loss (unaudited) - - - (947,856) (947,856)
------------ ---------- ------------ ------------- ------------
Balance, June 30, 2001 (unaudited) 10,000,000 - $ 19,810,522 $ (4,828,635) $ 14,981,887
============ ========== ============ ============= ============
The accompanying notes are an integral part of these financial statements.
5
EBS BUILDING, L.L.C.
STATEMENTS OF CASH FLOWS
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FOR THE FOR THE
6 MONTHS 6 MONTHS
ENDED ENDED
JUNE 30, 2001 JUNE 30, 2000
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net loss $ (947,856) $ (610,014)
Reconciliation of net loss to cash flows
Used by operating activities:
Depreciation and amortization expense 602,564 513,713
Changes in operating assets and liabilities:
Increase in assets, excluding cash
and rental property (417,728) (125,305)
Increase in liabilities 352,912 33,410
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Cash flows used by operating activities (410,108) (188,196)
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Cash flows from investing activities:
(Additions)/Reductions to rental property (1,306,943) 6,288
Payments for lease commissions (657,614) (3,292)
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Cash flows provided/(used) by investing activities (1,964,557) 2,996
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Cash flows from financing activities:
Proceeds from note payable 2,670,695 58,171
Payments for loan costs (305,167) -
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Cash flows provided by investing activities 2,365,528 58,171
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Net decrease in cash (9,137) (127,029)
Cash, beginning of period 13,248 819,394
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Cash, end of period $ 4,111 $ 692,365
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The accompanying notes are an integral part of these financial statements.
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EBS BUILDING, L.L.C.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2001
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1. The accompanying unaudited financial statements, in the opinion of the
Manager, include all adjustments necessary for a fair presentation of
the results for the interim periods presented. These adjustments
consist of normal recurring accruals. The financial statements are
presented in accordance with the requirements of Form 10-QSB and
consequently do not include all the disclosures required by generally
accepted accounting principles. For further information, refer to the
financial statements and notes thereto for the period ended December
31, 2000 included in the Company's Annual Report on Form 10-KSB filed
on April 13, 2001.
2. The following table sets forth the computation of primary and fully
diluted earnings (loss) per unit for the periods ended:
For the 3 Months Ended For the 6 Months Ended
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June 30, 2001 June 30, 2000 June 30, 2000 June 30, 2000
(unaudited) (unaudited) (unaudited) (unaudited)
Numerator:
Net Earnings/(Loss) - Primary and Diluted $ (545,915) $ (218,933) $ (947,856) $ (610,014)
============= ============= =========== ===========
Denominator:
Weighted Average Units Outstanding -
Primary 10,000,000 10,000,000 10,000,000 10,000,000
Effect of Potentially Dilutive Units
- - - -
------------- ------------- ----------- -----------
Units Outstanding - Diluted 10,000,000 10,000,000 10,000,000 10,000,000
============= ============= =========== ===========
Primary Earnings/(Loss) per Unit $ (0.05) $ (0.02) $ (0.09) $ (0.06)
============= ============= =========== ===========
Diluted Earnings/(Loss) per Unit $ (0.05) $ (0.02) $ (0.09) $ (0.06)
============= ============= =========== ===========
</Table>
3. Rental property consists of the following:
<Table>
June 30, 2001 December 31, 2000
(unaudited)
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Land $ 2,250,520 $ 2,250,520
Building 17,765,629 17,765,629
Building Improvements 1,116,906 841,042
Tenant Improvements 4,030,692 3,521,860
Construction in progress 629,932 104,686
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25,793,679 24,483,737
Less Accumulated Depreciation 2,900,888 2,447,065
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$ 22,892,791 $ 22,036,672
============= ================
The building and building improvements are depreciated using the
straight-line method over their estimated useful life of 38 and 39
years, respectively. Tenant improvements are depreciated over the term
of the tenant's lease.
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EBS BUILDING, L.L.C.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2001
PAGE 2
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4. Rents receivable include an accrual for the straight-line recognition
of escalating tenant rental rates in accordance with Financial
Accounting Standards Board Statement of Financial Accounting Standards
No. 13, Accounting for Leases. Such tenant rents are recognized on a
straight-line basis over the term of the lease.
5. On May 31, 2001, the Company entered into a $18,600,000 revolving line
of credit with Commerce Bank, N.A. (the "Line of Credit"). The Line of
Credit, which expires in May 2004, replaces the $12,000,000 line of
credit previously extended by FINPRO. L.L.C. which became due and
payable on May 31, 2001. The Company presently intends to use the Line
of Credit for working capital needs, tenant improvements and lease
commissions. Borrowings under the Line of Credit bear interest at a
rate equal to the ninety (90) day LIBOR interest rate plus one hundred
ninety (190) basis points. As of June 30, 2001, the Company had
outstanding borrowings of $10,232,294 under the Line of Credit.
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
During the forthcoming twelve months of operations, the Company intends
to continue owning, managing, maintaining, repairing, leasing, selling,
hypothecating, mortgaging or otherwise dealing with the building located at 501
North Broadway, St. Louis, Missouri (the "Building"). Further, the Company
intends to continue actively marketing the Building for sale during the
forthcoming twelve months as well as to continue to secure additional tenant
leasing agreements.
On May 31, 2001, the Company entered into an $18,600,000 credit
facility (the "Credit Facility") with Commerce Bank, N.A in order to refinance
its existing mortgage loan and obtain funds for improvements, interest carry and
other working capital needs. Borrowings under the Credit Facility will be at an
interest rate equal to the ninety (90) day LIBOR interest rate plus one hundred
ninety (190) basis points. Borrowings under the Credit Facility are secured by
substantially all of the assets of the Company. Management believes that funds
from operations and the Company's present availability under its revolving line
of credit provide sufficient resources to meet the Company's present and
anticipated financing needs.
During the three months ended June 30, 2001, the Company's rental
income decreased by 6.2% over the second quarter of the prior year, from
$908,146 during the second quarter of 2000 to $852,188 during the second
quarter of 2001. Such decrease was attributed to the expiration of certain
tenant leasing agreements during the second quarter of 2000 as well as the
consensual reduction of rentable space leased to Edison Brothers Stores, Inc.
commencing July 1, 2000. The Company's total expenses increased by 21.8% over
the second quarter of the prior year. Such increase is primarily attributable
to expenses incurred in connection with securing the replacement line of
credit, including professional fees, which increased from $147,697 during
the second quarter of 2000 to $242,663 during the second quarter of 2001. In
addition, general and administrative expenses increased 82.2% as the result of
loan fees incurred associated with the Credit Facility. Depreciation expense
also increase from $270,661 during the second quarter of 2000 to $331,262
during the second quarter of 2001 due to the capitalization of additional
tenant improvements associated with the Jacobs Engineering Group, Inc. lease
entered into on February 22, 2001. Other operating expense increased 69.2% over
the prior year due to an increase in insurance premiums.
PART II
OTHER INFORMATION
9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (listed by numbers corresponding to the Exhibit Table
Item 601 of Regulation S-B)
3.1: Articles of Organization of the Issuer filed with the
Delaware Secretary of State on September 24, 1997
incorporated by reference to the Issuer's
Registration Statement on Form 10-SB filed on April
30, 1998, Exhibit 2.1.
3.2: Members Agreement of EBS Building, L.L.C. a Limited
Liability Company, dated as of September 26, 1997
incorporated by reference to the Issuer's
Registration Statement on Form 10-SB filed on April
30, 1998, Exhibit 2.2.
4: See the Members Agreement, referenced as Exhibit 3.2.
(b) Reports on Form 8-K. The Issuer filed a report on Form 8-K on
June 11, 2001.
10
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
REGISTRANT:
EBS Building, L.L.C.
By: PricewaterhouseCoopers LLP, as Manager
By: /s/ Keith F. Cooper
-----------------------------------
Keith F. Cooper, Partner
Date: August 13, 2001
11
Exhibit Index
3.1: Articles of Organization of the Issuer filed with the
Delaware Secretary of State on September 24, 1997
incorporated by reference to the Issuer's
Registration Statement on Form 10-SB filed on April
30, 1998, Exhibit 2.1.
3.2: Members Agreement of EBS Building, L.L.C. a Limited
Liability Company, dated as of September 26, 1997
incorporated by reference to the Issuer's
Registration Statement on Form 10-SB filed on April
30, 1998, Exhibit 2.2.
4: See the Members Agreement, referenced as Exhibit 3.2.