The registrant is filing restated 1994-1997 financial statements. These
restatements reflect changes discussed in Note 7 to the consolidated financial
statements.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Quarterly Report Pursuant to Section 13 or 15(d)
of
The Securities Exchange Act of 1934
For the Quarterly Period ended September 30, 1997
Commission File No. 0-19963
TMP LAND MORTGAGE FUND, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0451040
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
801 North Parkcenter Drive, Suite 235
Santa Ana, California 92705
(Address of principal executive office) (Zip Code)
(714) 836-5503
(Registrant's telephone number, including area code)
------------------------------
Indicate by check mark whether Registrant has [1] filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and [2] has been subject to such filing requirement for
the past 90 days.
Yes [X ] No [ ]
TMP LAND MORTGAGE FUND, LTD
INDEX
PART IFINANCIAL INFORMATION Page
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 1997
(unaudited) and December 31, 1996 3
Consolidated Statements of Operations for the Three
and Nine Months ended September 30, 1997 and 1996
(unaudited) 4-5
Consolidated Statements of Cash Flows for the
Nine Months ended September 30, 1997 and 1996 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Balance Sheets
September 30,
1997 December 31,
(unaudited) 1996
------------ -----------
Assets
------
Cash $ 1,081,369 $ 361,515
Mortgage Loans on Real Estate 0 0
Investment in Unimproved Land
(net of valuation allowance of $3,983,458
and $3,978,272, respectively) 10,344,213 10,575,184
Due from Affiliates (net of unamortized discount
of $108,506 and $123,688, respectively) 177,233 162,051
Accounts Receivable 90,404 18,507
Investment in Joint Venture 608,411 1,610,019
------------- -----------
Total Assets $ 12,301,630 $ 12,727,276
============= ===========
Liabilities and Partners' Capital
---------------------------------
Accounts Payable $ 2,912 $ 4,754
Property Taxes Payable 3,974,138 3,251,916
Accrued Expenses 0 800
Due to Affiliates 49,626 23,885
------------- -----------
Total Liabilities 4,026,676 3,281,355
------------- -----------
Minority Interest 283,553 216,173
Partners' Capital
General Partners (77,288) (64,906)
Limited Partners, 20,000 equity units
authorized; 15,715 units outstanding as
of June 30, 1997 and December 31, 1996 8,068,689 9,294,654
------------- -----------
Total Partners' Capital 7,991,401 9,229,748
------------- -----------
Total Liabilities and Partners' Capital $ 12,301,630 $ 12,727,726
============= ===========
See Accompanying Notes to Consolidated Financial Statements
3
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
September 30, September 30,
1997 1996
----------- --------------
Income
- ------
Gain on Sale of Land $ 554,335 $ 0
Interest Income 13,698 92,588
Joint Venture Income 0 17,347
Loss on Investments (24,767) (168,861)
Other Income 900 1,900
----------- --------------
Total Income 544,166 (57,026)
----------- --------------
Expenses
Loss on Decline in Market Value of Property 425 31,395
Loan Costs 42,693 0
Outside Services 2,148 0
Joint Venture Expense 3,863 0
----------- --------------
Total Expenses 49,129 31,395
----------- --------------
Net Income before Minority Interest 495,037 (88,421)
Minority Interest (362) (332)
----------- --------------
Net Income (Loss) $ 494,675 $ (88,753)
=========== ==============
Allocation of Net Income (Loss)
General Partners $ 4,947 $ (888)
=========== ==============
Limited Partners $ 489,728 $ (87,865)
=========== ==============
Limited Partners, per unit $ 31.16 $ (5.59)
=========== ==============
See Accompanying Notes to Consolidated Financial Statements
4
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended
September 30, September 30,
1997 1996
------------- -------------
Income
- ------
Gain on Sale of Land $ 554,335 $ 0
Interest Income 32,622 160,423
Joint Venture Income 550,048 81,131
Loss on Investments (68,416) (193,845)
Other Income 2,700 3,700
------------- -------------
Total Income 1,071,289 51,409
------------- -------------
Expenses
- --------
Loss on Decline in Market Value of Property 5,186 90,077
Loan Costs 42,693 0
Outside Services 14,628 1,020
Interest Expense 0 1,082
California Franchise Taxes 1,600 0
Joint Venture Expense 12,342 151
------------- -------------
Total Expenses 76,449 92,330
------------- -------------
Net Income (Loss) before Minority Interest 994,840 (40,921)
Minority Interest (822) (332)
------------- -------------
Net Income (Loss) $ 994,018 $ (41,253)
============= =============
Allocation of Net Income (Loss)
General Partners $ 9,940 $ (413)
============= =============
Limited Partners $ 984,078 $ (40,840)
============= =============
Limited Partners, per unit $ 62.62 $ (2.60)
============= =============
See Accompanying Notes to Consolidated Financial Statements
5
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30, September 30,
1997 1996
----------- -----------
Cash Flows From Operating Activities
Net Income (Loss) $ 994,018 $ (41,253)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by (Used in)
Operating Activities:
Loss on Decline in Market Value of Property 5,186 90,077
Gain on Sale of Land (554,335) 0
Loss on Investments 68,416 193,845
Gain on Sale of Investment (550,048) 0
Amortization on Due from Affiliates (15,182)
Minority Interest in Income of Subsidiary 822 332
Changes in assets and liabilities:
Decrease in Accounts Payable (1,842) (1,842)
Decrease in Accrued Expenses 24,941 (189,540)
Decrease in Loans Receivable 0 2,000,000
Increase in Due From Affiliates 0 (60,348)
Decrease (Increase) in Accounts Receivable (71,897) 28,915
----------- -----------
Net Cash Provided by (Used in) Operating
Activities (99,921) 2,019,854
----------- -----------
Cash Flows from Investing Activities:
Proceeds from Sale of Land 1,950,000 0
Proceeds from Sale of Investment 1,725,096 0
Increase in Land Development Costs (308,006) (378,803)
Increase in Minority Interest in Investments 66,558 187,937
Increase in Capitalized Carrying Costs (139,652) (215,761)
Increase in Investment in Joint Ventures (241,856) (590,254)
----------- -----------
Net Cash Provided by (Used in) Investing
Activities 3,052,140 (996,881)
----------- -----------
Cash Flows From Financing Activities:
Distributions to Partners (2,232,365) (682,570)
----------- -----------
Net Cash Used in Financing Activities (2,232,365) (682,570)
----------- -----------
Net Increase in Cash 719,854 340,403
Cash, Beginning of Period 361,515 162,491
---------- -----------
Cash, End of Period $ 1,081,369 $ 502,894
========== ===========
Cash Paid for Income Taxes $ 800 $ 0
Supplemental Schedule of Non-Cash Investing and Financing Activities:
- ---------------------------------------------------------------------
Non-cash investing and financing activities during the nine months ended
September 30, 1997 consists of the Partnership capitalizing property taxes for
foreclosed properties of $722,222 as well as carrying costs of $139,652. A
valuation allowance of $5,186 was recorded to reduce the net carrying value of
the properties to their fair market values.
See Accompanying Notes to Consolidated Financial Statements
6
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - Summary of Significant Accounting Policies
Accounting Method- TMP Land Mortgage Fund, Ltd. (the Partnership) prepares its
- ------------------
financial statements on the accrual basis of accounting.
Principles of Consolidation - The consolidated financial statements include the
- ---------------------------
accounts of the Partnership and its majority-owned investments, TMP Homes
Remington, LLC (Remington) and TMP Homes Flowerfield-Sun City, LLC (Sun City).
All significant intercompany accounts and transactions have been eliminated in
consolidation.
Allowance for Losses on Loans - No provision has been made for an allowance for
- ------------------------------
losses on loans.
Income Taxes - The entity is treated as a partnership for income tax purposes
- -------------
and any income or loss is passed through and taxable at the partner level.
Accordingly, no provision for federal income taxes is provided.
NOTE 2 - Allocation of Profits, Losses and Cash Distributions
Profit, losses, and cash distributions are allocated ninety-nine percent to the
limited partners and one percent to the general partners until the limited
partners have received an amount equal to their capital contributions plus a
cumulative, non-compounded return of eight percent per annum based on their
adjusted capital account balances, at which time, remaining profits, losses and
cash distributions are allocated seventy-six percent to the limited partners and
twenty-four percent to the general partners. Distributions of cash from
operations, if any, are made monthly within 30 days after the end of the month.
NOTE 3 - Investment in Unimproved Land
The Partnership had made twelve land loans as of September 30, 1997. Three of
the loans had been repaid in full, and nine of the loans had defaulted. On all
the defaults which had occurred, the Partnership foreclosed on the properties
securing the loans.
NOTE 4 - Property Taxes Payable
As of September 30, 1997, the Partnership owed approximately $3,900,000 in
property taxes payable on the PR Equities properties. This includes
approximately $3,500,000 of Mello-Roos tax. In addition, the Partnership owed
approximately $36,000 in property taxes on the other Partnership properties. If
the property taxes remain delinquent for five years, the County can foreclose on
the property.
7
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 5 - Restatements and reissuances of 1994 - 1997 Financial Statements
In 1992, the Partnership made two loans totaling $3,500,000 to PR Equities,
Ltd., a California Limited Partnership. The loans were secured by first trust
deeds on residential property located in San Jacinto, California. In 1994, the
Partnership foreclosed on the properties securing these loans and continues to
own these properties. In accordance with generally accepted accounting
principles, assets acquired through foreclosure should be recorded at the lower
of cost or fair value less costs of disposal at the date of foreclosure. The
1994-1997 financial statements originally issued reported this property at the
amount of the outstanding mortgage balances due on these loans at the time of
foreclosure, which did not represent their fair value less costs of disposal.
Management has subsequently determined that a valuation allowance for these
properties should have been established for approximately $3.8 million at the
date of foreclosure in 1994. The valuation allowance should have been adjusted
each year thereafter such that the only value for these properties is the
capitalized direct carrying costs that represent the total accumulated property
taxes and Mello-Roos bond assessments. Therefore, the consolidated financial
statements for 1994 through 1996 have been restated to record the valuation
allowance and to adjust these properties to their fair value for those years.
In addition, management has determined that the amount of property taxes payable
as recorded in June, 1994, and subsequent periods through 1997, were understated
by approximately $556,000. Accordingly, the consolidated financial statements
for those periods have been restated for this understatement by adjusting the
carrying value of the land and the property taxes payable in the appropriate
fiscal years.
In accordance with generally accepted accounting principles, the financial
statements of majority-owned investments are required to be consolidated. The
1995, 1996 and 1997 financial statements originally issued did not properly
account for the consolidation of all significant majority-owned investments.
Therefore, the financial statements of these majority owned entities have been
consolidated with the financial statements of the Partnership's and have been
restated for fiscal years 1995, 1996 and 1997 to reflect the consolidation and
related minority interests of $216,000 for Remington and Sun City as of December
31, 1996 and $284,000 at September 30, 1997.
In November, 1996, the Partnership entered into a non-interest bearing note for
$286,000. In accordance with generally accepted accounting principles, the note
should have been discounted at the date of execution and interest accreted over
the period of the note for $127,000. The consolidated financial statements have
been restated for this discount and accretion of interest.
8
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
TMP Land Mortgage Fund, Ltd., is a California Limited Partnership formed in
April 1992, of which TMP Investments, Inc., a California corporation, and TMP
Properties, a California general partnership, are the General Partners (the
"General Partners"). The Partnership was formed principally to make short-term
loans to unaffiliated parties secured by first trust deeds on unimproved
properties, primarily in the Inland Empire area of Southern California and in
some instances, in other areas of Southern California, and to provide cash
distributions to the Limited Partners, primarily from interest earned on the
mortgage loans. The Partnership is not a mutual fund or any other type of
investment company within the meaning of, and is not subject to regulations
under, the Investment Company Act of 1940.
As of September 30, 1997, the Partnership had received and accepted
subscriptions of 15,715 Units, representing total subscription proceeds in the
amount of $15,715,000. All proceeds had been committed to the twelve mortgage
loan investments made by the Partnership and to working capital reserves. During
1992, the Partnership funded five mortgage loans. Four loans were funded in 1993
and three loans were funded in 1994.
As a consequence of adverse changes in market conditions and other factors,
three of the loans were repaid and nine of the loans were foreclosed upon.
During the nine months ended September 30, 1997, the following activity occurred
on the properties that the Partnership owns:
See restatement and resissuance of financial statements in Note 5 to the
Partnership's consolidated financial statements.
PR Equities Loan #1 and #2
The Partnership foreclosed on the property that secured these loans during 1995
and now owns the property. The current outstanding payments due as a result of
the regular tax and Mello-Roos tax assessments against the Partnership's lots
taken back in foreclosure is approximately $3,900,000. This debt, plus the
continuing tax accrual makes the property unsaleable in the current real estate
market. The City of San Jacinto received the overall appraisal of the properties
in the CFD during the first week of July. The low land values reflected in the
appraisal confirmed the General Partners' opinion that the bonds should be
restructured, with the overall bonded indebtedness and the annual debt service
reduced.
The city was forced by the terms of the bonds to schedule a sale of the property
for delinquent bond assessments. The buyer would be required to pay the full
unpaid assessment, penalties, and interest as well as assume the full amount of
the remaining assessment. The sale occurred in April 1997 but there was no buyer
for the properties; therefore, the Partnership continues to own these parcels.
During the third quarter of 1997, the bonds were purchased at a discount and the
General Partners believe that the land will ultimately be foreclosed upon by the
new bondholders.
9
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations, Continued
Environmental Development Loan
The Partnership accepted a deed in lieu of foreclosure and now owns the
property. A joint venture with TMP Homes has been formed to build single family
homes on the 181 lots. The final map and the improvement plans for Phase I and
II have been approved by the city.
Tokai Bank has issued a letter of intent to provide a construction loan.
Fox Olson Loan #2
Property on Newport Avenue west of the Interstate 215 is now owned by the
Partnership. A joint venture with TMP Homes has been formed to build 45 single
family homes. The final map has been approved by the city and First Bank & Trust
has expressed an interest in providing a construction loan.
LaMonte Loan
The Partnership acquired this 6.5 acre commercial property through foreclosure
in April 1996. During September 1997, the property was sold for a profit of
approximately $500,000.
Distributions to investors began August 1, 1992, and continued monthly through
May 1, 1995. On June 1, 1995, the General Partners suspended distributions due
to the default and subsequent foreclosure on several of the mortgage loans.
During 1997, the Partnership made two distributions from the proceeds of the two
1997 property sales.
During the nine months ended September 30, 1997, the Partnership generated
approximately $3,000,000 of cash from the sale of the Hollywood Studio Club
Apartments and the `LaMonte' land. There was no interest received on mortgage
loans. Approximately $2,200,000 was distributed to investors from the proceeds
of these two sales.
Management believes there is sufficient cash to meet anticipated Partnership
cash needs for the next 12 months. However, management does not plan to pay the
Mello-Roos taxes on the PR Equities properties unless the bonds can be
restructured under more favorable terms.
The Partnership will maintain reserves for working capital and contingency
reserves in an amount as the General Partners deem necessary for the operation
of the business of the Partnership. In addition, the Partnership may incur
indebtedness as necessary for development or other expenses incurred in holding
the properties and/or developing the property in conjunction with an affiliated
development company. The Partnership is making every effort to develop and/or
sell all of the properties that it holds.
10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
11
SIGNATURES
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: JUNE 11, 1999
TMP Land Mortgage Fund, Ltd.
A California Limited Partnership
By: TMP Investments, Inc., as General Partner
By: /S/ WILLIAM O PASSO
-------------------------------------------
William O. Passo, President
By: /S/ ANTHONY W THOMPSON
-------------------------------------------
Anthony W. Thompson, Exec. VP
By: /S/ RICHARD HUTTON JR
-------------------------------------------
Richard Hutton, Jr., Controller
By: TMP Properties, a California General
Partnership as General Partner
By: /S/ WILLIAM O PASSO
-------------------------------------------
William O. Passo, General Partner
By: /S/ ANTHONY W THOMPSON
-------------------------------------------
Anthony W. Thompson, General Partner
By: /S/ SCOTT E MCDANIEL
------------------------------------------
Scott E. McDaniel, General Partner
12