FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2002 Commission File Number: 33-17579 REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP -VI B ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 16-1309988 -------- ---------- (State of organization) (IRS Employer Identification No.) 2350 North Forest Road, Suite 12A,Getzville, New York 14068 - ----------------------------------------------------- ----- (Address of principal executive offices) (716) 636-0280 - -------------- (Registrant's telephone number) Indicate by a 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 [ ] Part I - FINANCIAL INFORMATION Item 1. Financial Statements -------------------- Consolidated Statement of Net Assets in Liquidation --------------------------------------------------- (Liquidation Basis) September 30, 2002 Assets: Cash $ 2,172,459 Note receivable 276,950 Receivable from affiliated party 97,343 -------------- Total assets 2,546,752 Liabilities - accounts payable and accrued expenses 3,852 -------------- Net assets in liquidation $ 2,542,900 ============== Consolidated Statement of Changes in Net Assets in Liquidation -------------------------------------------------------------- (Liquidation Basis) For the period June 1, 2002 to September 30, 2002 Partners' equity at June 1, 2002 $ 2,883,271 Adjustment to liquidation basis - loss on settlement of lawsuit (257,929) -------------- Net assets in liquidation at June 1, 2002 2,625,342 Operating loss (82,442) -------------- Net assets in liquidation at September 30, 2002 $ 2,542,900 ============== 2 Condensed Consolidated Balance Sheets ------------------------------------- December 31, 2001 ------------------- Assets - --------------------------------------------------------- Cost of property and equipment, all held for sale $ 3,228,531 Less accumulated depreciation 1,164,899 2,063,632 Cash and equivalents 340,444 Note receivable 326,950 Other assets 282,806 ------------------- Total assets $ 3,013,832 =================== Liabilities and Partners' Equity - --------------------------------------------------------- Mortgage loan payable 2,620,735 Accounts payable and accrued expenses 91,660 Other liabilities 56,911 Partners' equity 244,526 ------------------- Total liabilities and partners' equity $ 3,013,832 =================== Condensed Consolidated Statements of Operations ----------------------------------------------- Nine months Three months Period from ended ended September January 1, 2002 September 30, 30, 2001 to May 31, 2002 2001 ------------------ ----------------- -------------- Rental income 328,574 405,338 1,272,008 Other income 29,821 49,844 99,793 ----------------- ----------------- -------------- Total income 358,395 455,182 1,371,801 ----------------- ----------------- -------------- Property operating costs 235,636 302,086 779,317 Administrative expense - affiliates 38,427 40,941 129,844 Other administrative expense 26,703 65,308 80,716 Interest 208,870 91,036 433,802 ----------------- ----------------- -------------- Total expenses 509,636 499,371 1,423,679 ----------------- ----------------- -------------- Income (loss) before equity in earnings of (151,241) (44,189) (51,878) joint venture and gain on sale of property Equity in earnings of joint venture -- -- 546,261 Gain on property sale 1,851,531 2,682,934 1,851,531 ----------------- ----------------- -------------- Net income 1,700,290 2,638,745 2,345,914 ================= ================= ============== Net income per limited partnership unit 20.98 32.55 28.94 ================= ================= ============== Weighted average limited partnership units 78,625 78,625 78,625 ================= ================= ============== 3 Condensed Consolidated Statements of Cash Flows ----------------------------------------------- Period from Nine months January 1, ended 2002 to May September 30, 31, 2002 2001, ---------------- ---------------- Cash provided (used) by: Operating activities: Net income $ 2,638,745 2,345,914 Adjustments: Equity in earnings of joint venture -- (546,261) Gain on sale of property (2,682,934) (1,851,531) Other, principally changes in other assets and liabilities (429,941) 86,274 ---------------- ---------------- Net cash provided (used) by operating activities (474,130) 34,396 ---------------- ---------------- Investing activities: Proceeds from sale of property, excluding note receivable 5,273,215 4,209,377 Distributions from joint ventures -- 647,823 ---------------- ---------------- Net cash provided by investing activities 5,273,215 4,857,200 ---------------- ---------------- Financing activities: Distribution to partners -- (2,680,412) Principal payments on mortgage loans (2,620,735) (2,600,361) ---------------- ---------------- Net cash provided (used) by financing activities (2,620,735) (5,280,773) ---------------- ---------------- Net increase (decrease) in cash and equivalents 2,178,350 (389,177) Cash and equivalents at beginning of period 340,444 708,683 ---------------- ---------------- Cash and equivalents at end of period $ 2,518,794 319,506 ================ ================ Notes to Consolidated Financial Statements Nine months ended September 30, 2001 and 2000 Liquidation of the Partnership - ------------------------------ On May 30, 2002 the Partnership sold its remaining property investment, Player's Club, at which time the Partnership adopted a plan of termination and liquidation under which liabilities will be paid and net proceeds will be distributed to the Partners. Organization - ------------ Realmark Property Investors Limited Partnership - VI B (the Partnership), a Delaware limited partnership, was formed on September 21, 1987, to invest in a diversified portfolio of income producing real estate investments. The general partners are Realmark Properties, Inc. (the corporate general partner) and Joseph M. Jayson (the individual general partner). Joseph M. Jayson is the sole stockholder of J.M. Jayson & Company Inc. Realmark Properties, Inc. is a wholly-owned subsidiary of J.M. Jayson & Company, Inc. Under the partnership agreement, the general partners and their affiliates can receive compensation for services rendered and reimbursement for expenses incurred on behalf of the Partnership. Basis of Presentation - --------------------- As a result of the plan termination and liquidation, the Partnership changed its basis of accounting to the liquidation basis effective June 1, 2002. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts. The accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America 4 and, in the opinion of management, contain all necessary adjustments for a fair presentation. The Partnership's significant accounting policies are set forth in its December 31, 2001 Form 10-K. The interim financial statements should be read in conjunction with the financial statements included therein. The interim results should not be considered indicative of the annual results. Property and Equipment - ---------------------- On May 30, 2002, the Partnership closed on the sale of its remaining property, Player's Club, resulting in a gain of approximately $2,680,000. During 2002 and 2001, the Partnership's properties were being actively marketed for sale and, therefore, were not being depreciated. Depreciation not recorded for the period from April 1, 2002 to May 31, 2002 and for the period from January 1, 2002 to May 31, 2002 was approximately $22,000 and $56,000, respectively. Depreciation not recorded in the three and nine month periods ended September 30, 2001 was approximately $50,000 and $166,000, respectively. As of September 30, 2002, the Partnership does not have an interest in any property or equipment. Investment in Joint Venture - --------------------------- The Partnership had an 11.5% interest in a joint venture with Realmark Property Investors Limited Partnership-II (RPILP-II), an entity affiliated through common general partners, owning 88.5%. The Joint Venture was formed to own and operate the Foxhunt Apartments, located in Dayton, Ohio. The Foxhunt property had been the subject of a plan of disposal since July 1999 and was sold on March 1, 2001, to an unaffiliated entity, for $7,600,000. After satisfaction of the $5,942,000 mortgage loan on the property and payment of closing costs, the net proceeds were approximately $1.1 million. The Partnership's equity in the net income of the venture includes its share of the net gain of approximately $4,700,000. Current Accounting Pronouncements - --------------------------------- Statements of Financial Accounting Standards Nos. 145, 146 and 147 which concern accounting for gains and losses from the extinguishments of debt, exit or disposal activities, and acquisitions of certain financial institutions will become effective for the Partnership in the first quarter of 2003. The Partnership is currently evaluating the impact of these pronouncements to determine the effect, if any, they may have on the consolidated financial statements. PART I - Item 2. Management's Discussion and Analysis of Financial Condition ----------------------------------------------------------- and Results of Operations ------------------------- Liquidity and Capital Resources - ------------------------------- Since January 1, 2001, the Partnership's only remaining property, Player's Club, had been actively marketed for sale. On May 30, 2002, the Partnership sold Player's Club to an unaffiliated entity for cash of $5,548,000. After satisfaction of the $3,031,000 mortgage loan, including a prepayment penalty, on the property and payment of closing costs, the net proceeds available amounted to approximately $2,180,000, before satisfaction of any remaining obligations related to the property. Prior to the sale of Player's Club, the Partnership maintained a cash position adequate to fund capital improvements and scheduled debt payments. The Partnership's cash position and the proceeds from the sale of Fairway Club Apartments (sold August 16, 2001) enabled the Partnership to make a $2,600,000 distribution to the Limited Partners in the last quarter of 2001. 5 The Partnership's cash position and the proceeds from the sale of Player's Club (sold May 30, 2002) will enable the Partnership to make a distribution to the Limited Partners in the last quarter of 2002. Results of Operations - --------------------- As a result of the sale of the sole remaining property, Player's Club, and the establishment of a plan of liquidation, the Partnership began reporting on the liquidation basis of accounting effective June 1, 2002. Therefore, operations for the period June 1, 2002 to September 30, 2002 are reported on the consolidated statement of changes in net assets in liquidation while the operations for the period January 1, 2002 to May 31, 2002 and for the three and nine months ended September 30, 2001 are reported on the condensed consolidated statement of operations. PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- The Partnership's cash equivalents are short-term, interest-bearing bank accounts. It has not entered into any derivative contracts. Therefore, it has no market risk exposure. PART I - Item 4. Controls and Procedures ----------------------- Within the 90 days prior to the filing date of this report, the Partnership carried out an evaluation, under the supervision and with the participation of the Partnership's management, including Joseph M. Jayson (the Partnership's Individual General Partner and Principal Financial Officer), of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures. Based upon that evaluation, the Principal Financial Officer concluded that the Partnership's disclosure controls and procedures are effective in timely alerting them to material information relating to the Partnership (including its consolidated subsidiaries) required to be included in the Partnership's periodic SEC filings. There have not been any significant changes in the Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation. PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- As previously reported, the Partnership, as a nominal defendant, the General Partners of the Partnership and of affiliated public partnerships (the "Realmark Partnerships") and the officers and directors of the Corporate General Partner, as defendants, had been involved in a class action litigation in New York State court. The Partnership's settlement of this litigation is described in its Annual Report on Form 10-K for the year ended December 31, 2001. Subsequent to September 30, 2002, the court appointed a sales agent to work with the General Partners to continue to sell the Partnership's remaining properties. 6 Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 99.1 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes- Oxley Act of 2002. 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 10-K None. 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. REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP - VIB November 14, 2002 /s/ Joseph M. Jayson ----------------- -------------------- Date Joseph M. Jayson, Individual General Partner and Principal Financial Officer 7