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 September 30, 2002
[ ] 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 FTI Consulting, Inc. 50 Hurt Plaza, Suite 1700 Atlanta, GA 30303
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(Address of Principal Executive Offices)
(678)419-8747
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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 September 30, 2002,
there were 10,000,000 Class A Membership Units outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
EBS BUILDING, L.L.C.
BALANCE SHEETS
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SEPTEMBER 30, 2002 DECEMBER 31, 2001
(UNAUDITED)
ASSETS
Rental property, net $ 26,022,745 $ 26,329,910
Cash - operating 566,736 198,160
Security deposit escrow 10,359 10,275
Tax and insurance escrow 309,760 41,921
Rents receivable 990,357 881,733
Prepaid expenses 141,258 42,371
Lease commissions, net 2,115,773 2,320,415
Loan costs, net 161,058 237,351
Other assets 202 13,651
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Total assets $ 30,318,248 $ 30,075,787
================== ==================
LIABILITIES
Note payable $ 16,853,140 $ 15,597,329
Accounts payable 19,201 136,309
Accrued expenses 535,091 179,917
Tenant security deposits 9,477 9,477
Prepaid rent 94 --
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Total liabilities 17,417,003 15,923,032
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MEMBERS' EQUITY
Membership Units (Class A - 10,000,000 authorized,
issued and outstanding) -- --
Paid-in capital 19,810,522 19,810,522
Retained earnings (deficit) (6,909,277) (5,657,767)
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Total members' equity 12,901,245 14,152,755
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Total liabilities and members' equity $ 30,318,248 $ 30,075,787
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The accompanying notes are an integral part of these financial statements.
EBS BUILDING, L.L.C.
STATEMENTS OF OPERATIONS
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FOR THE 3 MONTHS ENDED FOR THE 9 MONTHS ENDED
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SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2002 2001 2002 2001
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
Income:
Rent $ 1,208,004 $ 876,351 $ 2,869,375 $ 2,528,750
Other 127,589 31,926 394,038 185,765
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Total income 1,335,593 908,277 3,263,413 2,714,515
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Expenses:
Maintenance 277,863 250,309 906,340 662,687
Professional fees 110,468 97,315 379,594 499,404
Utilities 227,737 182,170 556,704 503,892
General and administrative 153,123 143,715 454,052 515,373
Depreciation and amortization 449,412 311,934 1,236,606 914,498
Taxes (including real estate taxes) 99,999 99,000 299,997 297,600
Interest expense 160,740 185,439 472,635 533,008
Other operating expenses 85,473 51,878 208,995 149,390
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Total expenses 1,564,815 1,321,760 4,514,923 4,075,852
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Net loss $ (229,222) $ (413,483) $ (1,251,510) $ (1,361,337)
============= ============= ============= =============
Net loss per Class A Unit -
basic and diluted $ (0.02) $ (0.04) $ (0.13) $ (0.14)
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
EBS BUILDING, L.L.C.
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
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CLASS A PAID IN RETAINED TOTAL
MEMBERSHIP CAPITAL EARNINGS
UNITS (DEFICIT)
Balance, December 31, 2001 10,000,000 $ 19,810,522 $ (5,657,767) $ 14,152,755
Net loss (unaudited) -- -- (1,251,510) (1,251,510)
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Balance, Sept. 30, 2002 (unaudited) 10,000,000 $ 19,810,522 $ (6,909,277) $ 12,901,245
================================================================
The accompanying notes are an integral part of these financial statements.
EBS BUILDING, L.L.C.
STATEMENTS OF CASH FLOWS
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FOR THE 9 MONTHS FOR THE 9 MONTHS
ENDED ENDED
SEPT. 30, 2002 SEPT. 30, 2001
(UNAUDITED) (UNAUDITED)
Cash flows from operating activities:
Net loss $ (1,251,510) $ (1,361,337)
Reconciliation of net loss to cash flows
used in operating activities:
Depreciation and amortization expense 1,236,606 914,498
Changes in operating assets and liabilities:
Increase in escrows, rents receivable, prepaid
expenses and deposits (461,985) (415,064)
Increase in liabilities, excluding note payable 238,160 251,378
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Cash flows used in operating activities (238,729) (610,525)
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Cash flows from investing activities:
Payments for lease commissions -- (719,943)
Additions to rental property (648,506) (3,522,929)
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Cash flows used in investing activities (648,506) (4,242,872)
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Cash flows from financing activities:
Proceeds from note payable 1,255,811 5,210,951
Payments for loan costs -- (305,167)
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Cash flows provided by financing activities 1,255,811 4,905,784
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Net increase in cash 368,576 52,387
Cash, beginning of period 198,160 13,248
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Cash, end of period $ 566,736 $ 65,635
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The accompanying notes are an integral part of these financial statements.
EBS BUILDING, L.L.C.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
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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 accounting
principles generally accepted in the United States of America. For
further information, refer to the financial statements and notes
thereto for the period ended December 31, 2001 included in the
Company's Annual Report on Form 10-KSB filed on March 29, 2002.
2. The following table sets forth the computation of basic and diluted
earnings (loss) per unit for the periods ended:
For the 3 Months Ended For the 9 Months Ended
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Sept. 30, 2002 Sept. 30, 2001 Sept. 30, 2002 Sept. 30, 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Numerator:
Net Earnings/(Loss) - Basic and Diluted $ (229,222) $ (413,483) $ (1,251,510) $ (1,361,337)
============== ============== ============== ==============
Denominator:
Weighted Average Units Outstanding -
Basic 10,000,000 10,000,000 10,000,000 10,000,000
Effect of Potentially Dilutive Units -- -- -- --
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Units Outstanding - Diluted 10,000,000 10,000,000 10,000,000 10,000,000
============== ============== ============== ==============
Basic and Diluted Earnings/(Loss) per Unit $ (0.02) $ (0.04) $ (0.13) $ (0.14)
============== ============== ============== ==============
3. Rental property consists of the following:
Sept. 30, 2002 December 31, 2001
(unaudited)
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Land $ 2,250,520 $ 2,250,520
Building 17,765,629 17,765,629
Building Improvements 1,507,154 1,346,013
Tenant Improvements 8,806,810 4,195,574
Construction in progress 20,971 4,144,841
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30,351,084 29,702,577
Less Accumulated Depreciation 4,328,339 3,372,667
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$ 26,022,745 $ 26,329,910
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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.
The improvements for the Jacobs Engineering lease were reclassified
from Construction in Progress to Tenant Improvements in April 2002.
EBS BUILDING, L.L.C.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
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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 an $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 September 30, 2002, the Company had
outstanding borrowings of $16,853,140 under the Line of Credit.
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 $18,600,000.00
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 are
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 September 30, 2002, the Company's rental
income increased by 37.8% over the third quarter of 2001, from $876,351 during
the third quarter of 2001 to $1,208,004 during the third quarter of 2002. This
increase in revenue is primarily due to the commencement of the rental payments
on September 1, 2002 by Jacobs Engineering, Inc. The new Jacobs Engineering,
Inc. lease was entered into on February 22, 2001, however rental payments did
not commence until September 1, 2002. Other income increased from $31,926 during
the third quarter of 2001 to $127,589 during the third quarter of 2002. This is
primarily due to revenue for parking, conference room usage and other expenses
from the new Jacobs Engineering, Inc. lease. The Company's total expenses
increased by 18.4% during the three months ended September 30, 2002 from prior
year, with the largest percentage increase in other operating expenses and
depreciation and amortization. Depreciation and amortization expense increased
from $311,934 during the third quarter of 2001 to $449,412 during the third
quarter of 2002 due to the capitalization of additional tenant improvements
associated with the Jacobs Engineering, Inc. lease entered into in 2001. Other
operating expenses increased 64.8% over the prior year due to increased expenses
from the Jacobs Engineering lease, as Jacobs did not occupy rental space until
October 2001. Accrued expenses increased by $355,174 from $179,917 at December
31, 2001 to $535,091 at September 30, 2002. This increase can be primarily
attributed to the monthly accrual for real estate taxes. These amounts are paid
in December, therefore having a zero balance at year-end.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90 days prior to the date of this report, the Company carried out an
evaluation, under the supervision and with the participation of the Company's
management, including the Senior Managing Director of the Manager of the
Company, of the effectiveness of the design and operation of the Company's
disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based
upon that evaluation, the Senior Managing Director of the Manager of the Company
concluded that the company's disclosure controls and procedures are effective in
timely alerting them to material information relating to the Company required to
be included in the Company's periodic SEC filings.
There have been no significant changes in our internal controls or in other
factors that could significantly affect those controls subsequent to the date of
their last evaluation.
PART II
OTHER INFORMATION
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.
10.29: Sixth Amendment to Lease by and between EBS Building,
L.L.C. and Edison Brothers Stores, Inc. dated April
29, 2002.46
(b) Reports on Form 8-K. The Issuer filed reports on Form 8-K on
August 14, 2002 and on September 19, 2002 during the second fiscal quarter.
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: FTI Consulting, Inc., as Manager
By:/s/ Keith F. Cooper
-----------------------------------
Keith F. Cooper, Senior Managing Director
Date: November 14, 2002
CERTIFICATIONS
I, Keith F. Cooper, Senior Managing Director the Manager of EBS Building,
L.L.C., who serves in the position equivalent to chief executive officer and
chief financial officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of EBS Building,
L.L.C.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002
EBS BUILDING, L.L.C.
By: FTI Consulting, Inc., as Manager
By: /s/ Keith F. Cooper
--------------------
Keith F. Cooper, Senior Managing Director
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.
10.29: Sixth Amendment to Lease by and between EBS Building,
L.L.C. and Edison Brothers Stores, Inc. dated April
29, 2002.