1
U. S. 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, 1998
[ ] Transition report under Section 13 or 15 (d) of the Exchange Act
For the transition period from ________ to ___________
Commission file number: 000-24167
EBS Building, L.L.C.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 43-1794872
-------- ----------
(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
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(314)206-8500
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
(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______ No X*
*The Issuer became subject to the filing requirements of the Exchange
Act on June 29, 1998, the day that the Issuer's Registration Statement on Form
10-SB became effective.
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________
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,
1998, there were 9,467,217 Class A Membership Units outstanding.
Transitional Small Business Disclosure Format (check one):
Yes_________ No X
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
EBS BUILDING, L.L.C.
BALANCE SHEET
JUNE 30, 1998
JUNE 30, 1998 DECEMBER 31, 1997
(UNAUDITED)
ASSETS
Rental property $ 19,779,544 $ 19,584,653
Cash 4,579 403,919
Rents receivable 640 7,465
Due from Edison Brothers Stores, Inc. -- 61,398
Prepaid expenses 115,055 61,040
Other assets 402 --
------------ ------------
Total assets $ 19,900,220 $ 20,118,475
------------ ------------
LIABILITIES
Accounts payable $ 47,973 $ 63,418
Accrued professional fees 101,654 139,297
Accrued utilities 108,942 72,644
Accrued salaries 6,668 45,777
Accrued property taxes 208,063 --
Accrued property insurance 15,834 --
Due to Edison Brothers Stores, Inc. -- 112,022
Other liabilities 176,559 12,495
------------ ------------
Total liabilities 665,693 445,653
------------ ------------
MEMBERS' EQUITY:
Membership Units (Class A - 10,000,000 authorized,
9,467,217 and 9,058,041 issued and
outstanding at June 30, 1998 and December 31,
1997, respectively; Class B - 532,783 and
941,959 authorized, issued and outstanding
at June 30, 1998 and December 31, 1997, respectively) -- --
Paid-in capital 19,810,522 19,810,522
Retained earnings (575,995) (137,700)
------------ ------------
Total members' equity 19,234,527 19,672,822
------------ ------------
Total liabilities and members' equity $ 19,900,220 $ 20,118,475
============ ============
The accompanying notes are an integral part of these financial statements.
3
EBS BUILDING, L.L.C.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1998
FOR THE FOR THE
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
(UNAUDITED) (UNAUDITED)
Income:
Rent $ 876,511 $ 1,693,398
Other 27,982 58,300
----------- -----------
Total income 904,493 1,751,698
----------- -----------
Expenses:
Maintenance 343,851 639,207
Professional fees 255,134 452,321
Utilities 180,974 351,255
General and administrative 130,600 208,912
Depreciation 131,278 246,329
Property taxes 104,234 208,265
Other operating expenses 43,891 83,704
----------- -----------
Total expenses 1,189,962 2,189,993
----------- -----------
Net loss $ (285,469) $ (438,295)
=========== ===========
Net loss per Class A unit - primary $ (0.03) $ (0.05)
Net loss per Class A unit - fully
diluted $ (0.03) $ (0.04)
The accompanying notes are an integral part of these financial statements.
4
EBS BUILDING, L.L.C.
STATEMENT OF CHANGES IN MEMBERS' EQUITY
FOR THE PERIOD ENDED JUNE 30, 1998
CLASS A CLASS B
MEMBERSHIP MEMBERSHIP PAID IN RETAINED
UNITS UNITS CAPITAL EARNINGS TOTAL
Balance, December 31, 1997 9,058,041 941,959 $ 19,810,522 $ (137,700) $ 19,672,822
Units transferred (unaudited) 409,176 (409,176) -- -- --
Year to date loss (unaudited) -- -- -- (438,295) (438,295)
------------ ------------ ------------ ------------ ------------
Balance, June 30, 1998 (unaudited)
9,467,217 532,783 $ 19,810,522 $ (575,995) $ 19,234,527
============ ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
5
EBS BUILDING, L.L.C.
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED JUNE 30, 1998
FOR THE
6 MONTHS ENDED
JUNE 30, 1998
(UNAUDITED)
Cash flows from operating activities:
Net loss $(438,295)
Reconciliation of net loss to cash flows
provided by operating activities:
Depreciation expense 246,329
Changes in operating assets and liabilities:
Increase in assets, excluding cash
and rental property 9,838
Increase in liabilities 220,040
---------
Cash flows provided by operating activities 37,912
---------
Cash flows from investing activities:
Capital Expenditures (net) (437,252)
---------
Cash flows provided by investing activities (437,252)
---------
Net decrease in cash (399,340)
Cash, beginning of period 403,919
---------
Cash, end of period $ 4,579
=========
The accompanying notes are an integral part of these financial statements.
6
EBS BUILDING, L.L.C.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
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, 1997 included in the Company's Registration
Statement on Form 10-SB filed on April 30, 1998.
2. During February 1998 and June 1998, Edison Brothers Stores, Inc.
("Edison") exchanged an additional 280,560 and 128,616 Class B
Membership Units respectively, for an equal number of Class A
Membership Units of the Company and simultaneously distributed such
units to holders of Allowed General Unsecured Claims. All outstanding
Class B Membership Units will eventually be canceled and an
equivalent number of Class A Membership Units issued to the holders
of Allowed General Unsecured Claims as required by the Members
Agreement and the Plan of Reorganization. At June 30, 1998, Edison
held 532,783 Class B Membership Units.
3. The following table sets forth the computation of primary and fully
diluted earnings (loss) per unit for the periods ended:
FOR THE FOR THE
3 MONTHS ENDED 6 MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
(UNAUDITED) (UNAUDITED)
Numerator:
Net Earnings/(Loss)-Primary and Diluted $ (285,469) $ (438,295)
=============== =============
Denominator:
Weighted Average Class A Units
Outstanding-Primary 9,381,002 9,304,117
Effect of Potentially Dilutive Units 618,998 695,883
--------------- -------------
Class A Units Outstanding-Diluted 10,000,000 10,000,000
=============== =============
Primary Earnings/(Loss) per Class A Unit $ (0.03) $ (0.05)
=============== =============
Diluted Earnings/(Loss) per Class A Unit $ (0.03) $ (0.04)
=============== =============
The weighted average units outstanding - primary was calculated based
upon the number of Class A Units outstanding on each day during the
period covered. The units outstanding - diluted was calculated
assuming that all of the Class B Units currently issued and
outstanding will eventually be converted into an equal number of
Class A Units.
4. Effective March 16, 1998, the Company entered into a $2,000,000
revolving line of credit with First Bank (the "Line of Credit"). The
Company presently intends to use the Line of Credit for working
capital needs and tenant improvements. Borrowings under the Line of
Credit bear interest at a rate per annum equal to the LIBOR rate plus
2.25%. There was no commitment fee for this Line of Credit. Payments
due for borrowings on the Line of Credit are for interest only until
maturity (March 15, 1999), when all outstanding principal and
interest is due and payable. As of June 30, 1998, the Company had
outstanding borrowings of $170,000 under the Line of Credit.
5. On June 16, 1998, Edison informed the Company of its intent to
terminate a portion of its lease for 62,784 square feet of rentable
office space, effective March 31, 1999, thereby decreasing the
Building's occupancy rate from 78% to 64%.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
During the forthcoming twelve months of operations, the Issuer
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").
During the six months ended June 30, 1998, the Issuer had a net
decrease in cash of $399,340. This decline was caused primarily by commissions
paid to leasing agents and tenant improvement costs incurred related to a tenant
lease entered into on February 16, 1998, as well as various corporate costs
incurred associated with the registration of the Issuer's Class A Membership
Units under the Securities Exchange Act of 1934, as amended. In March 1998, the
Issuer entered into a $2,000,000 revolving line of credit with First Bank to
cover any shortfalls in cash flows. As of June 30, 1998, the Issuer had $170,000
of outstanding borrowings under its line of credit. Management believes that
funds from operations and the Issuer's present availability under its revolving
line of credit provide sufficient resources to meet the Issuer's present and
anticipated financing needs.
Rental income increased 7.3% from the quarter ended March 31, 1998 to
the quarter ended June 30, 1998 due to the commencement of a new tenant lease on
March 1, 1998. Total operating expenses increased 19% during this same period
primarily due to various corporate costs incurred associated with the
registration of the Issuer's Class A Membership Units under the Securities
Exchange Act of 1934, as amended as well as increased leasing cost and deferred
maintenance costs.
During the quarter ended June 30, 1998, Edison Brothers Stores, Inc.
("Edison") informed the Issuer, pursuant to their lease, they would terminate a
portion of the lease for 62,784 square feet of rentable office space effective
March 31, 1999. The Issuer intends to actively market such space and attempt to
secure replacement tenant(s) at market rental rates. If the Issuer is
unsuccessful in securing replacement tenant(s), the Building's occupancy rate
would fall from 78% to 64% and the annual average rental rate of all tenants,
including Edison, would become $10.43 per square foot and, excluding Edison,
would become $16.73 per square foot.
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a) Not Applicable.
(b) Not Applicable.
(c) As of March 31, 1998, Edison owned all of the issued and
outstanding Class B Membership Units of the Issuer ("Class B Units"), which
consisted of 661,399 Class B Units at such time. In accordance with the terms of
the Issuer's Members Agreement and the Joint Plan of Reorganization (the "Plan
of Reorganization") of Edison and its affiliates, on June 1, 1998, 128,616 of
Edison's Class B Units were canceled and
8
simultaneously 128,616 Class A Membership Units were issued to the holders of
allowed general unsecured claims of Edison pursuant to the Edison bankruptcy. As
a result of such issuance, as of June 30, 1998, Edison owned 532,783 Class B
Units.
The Issuer believes that the above mentioned sales of securities were
exempt from registration under the Securities Act pursuant to Section 1145(a)(1)
of the Bankruptcy Code. Section 1145(a)(1) exempts from registration the offer
and sale of securities under a plan of reorganization if three requirements are
met: (i) the securities must be offered or sold under a plan of reorganization
and must be securities of the debtor, of an affiliate participating in a joint
plan with the debtor, or of a successor of the debtor under the plan; (ii) the
recipients of the securities must hold a pre-petition or administrative expense
claim against the debtor or interest in the debtor; and (iii) the securities
must be issued entirely in exchange for the recipient's claim against or
interest in the debtor, or principally in such exchange and partly for cash or
property. The Issuer believes that it is a "successor" to Edison within the
meaning of Section 1145(a)(1) of the Bankruptcy Code and that it has satisfied
all the other requirements of such section.
(d) Not Applicable.
(e) Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (listed by numbers corresponding to the Exhibit Table of
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.
10.1: See the Members Agreement, referenced as Exhibit 3.2.
10.2: Management and Leasing Agreement by and between EBS
Building, L.L.C. and Insignia Commercial Group, Inc.,
dated December 31, 1997 incorporated by reference to the
Issuer's Registration Statement on Form 10-SB filed on
April 30, 1998, Exhibit 6.2.
10.3: Lease by and between EBS Building, L.L.C. and Edison
Brothers Stores, Inc. incorporated by reference to the
Issuer's Registration Statement on Form 10-SB filed on
April 30, 1998, Exhibit 6.4.
9
10.4: Property Management Agreement by and between EBS Building,
L.L.C. and Edison Brothers Stores, Inc. dated September
26, 1997 incorporated by reference to the Issuer's
Registration Statement on Form 10-SB filed on April 30,
1998, Exhibit 6.5.
10.5: Loan Agreement by and between EBS Building, L.L.C. and
First Bank, dated as of March 16, 1998 incorporated by
reference to the Issuer's Registration Statement on Form
10-SB filed on April 30, 1998, Exhibit 6.6.
27: Financial Data Schedule.
(b) Reports on Form 8-K. The Issuer did not file any reports on Form
8-K during the quarter ended June 30, 1998.
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 14, 1998
10
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.
10.1: See the Members Agreement, referenced as Exhibit 3.2.
10.2: Management and Leasing Agreement by and between EBS
Building, L.L.C. and Insignia Commercial Group, Inc.,
dated December 31, 1997 incorporated by reference to the
Issuer's Registration Statement on Form 10-SB filed on
April 30, 1998, Exhibit 6.2.
10.3: Lease by and between EBS Building, L.L.C. and Edison
Brothers Stores, Inc. incorporated by reference to the
Issuer's Registration Statement on Form 10-SB filed on
April 30, 1998, Exhibit 6.4.
10.4: Property Management Agreement by and between EBS Building,
L.L.C. and Edison Brothers Stores, Inc. dated September
26, 1997 incorporated by reference to the Issuer's
Registration Statement on Form 10-SB filed on April 30,
1998, Exhibit 6.5.
10.5: Loan Agreement by and between EBS Building, L.L.C. and
First Bank, dated as of March 16, 1998 incorporated by
reference to the Issuer's Registration Statement on Form
10-SB filed on April 30, 1998, Exhibit 6.6.
27: Financial Data Schedule.