UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2002 Commission file number: 33-2121
TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
ARIZONA 86-0540409
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2944 N. 44th Street, Suite 200, Phoenix, Arizona 85018
(Address of principal executive offices) (Zip Code)
(602) 955-4000
(Registrant's telephone number, including area code)
Indicate by 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 [X] yes [ ] no
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [X] yes [ ] no
TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
FORM 10-QSB, QUARTER ENDED JUNE 30, 2002
INDEX
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
Balance Sheet as of June 30, 2002 .......................................... 3
Statement of Operations for the Quarters Ended June 30, 2002 and 2001 ...... 4
Statement of Cash Flows for the Quarters Ended June 30, 2002 and 2001....... 5
Notes to Interim Financial Statements....................................... 6
Item 2 Management's Discussion and Analysis................................. 7
PART II OTHER INFORMATION
Item 1 Legal Proceedings.................................................... 10
Item 2 Changes in Securities................................................ 10
Item 3 Defaults Upon Senior Securities...................................... 10
Item 4 Submission of Matters to a Vote of Security Holders.................. 10
Item 5 Other Information.................................................... 10
Item 6 Exhibits and Reports on Form 8-K..................................... 10
Signatures.................................................................. 10
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial statements
included in this Form 10-QSB reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the results of
operations for the periods presented. The results of operations for the periods
presented are not necessarily indicative of the results to be expected for the
full year.
TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
Balance Sheet
As of June 30, 2002
Unaudited
June 30, 2002 December 31, 2001
------------- -----------------
ASSETS
Current Assets
Cash and cash equivalents $ 79,016 $ 106,869
---------- ----------
Total Current Assets 79,016 106,869
Land Held for Investment Purposes (Note 2) 4,293,372 4,333,372
---------- ----------
TOTAL ASSETS $4,372,388 $4,440,241
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Accounts Payable $ 36,098 $ 32,652
---------- ----------
Total Current Liabilities 36,098 32,652
CAPITAL
General Partners' Capital 44,280 45,105
Limited Partners' Capital 4,292,010 4,362,484
---------- ----------
Total Capital 4,336,290 4,407,589
---------- ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $4,372,388 $4,440,241
========== ==========
See condensed notes to financial statements.
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TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
Statement of Operations
for the Three and Six Months' Ending June 30, 2002 and June 30, 2001
Unaudited
Three Six Three Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2002 June 30, 2002 June 30, 2001 June 30, 2001
------------- ------------- ------------- -------------
INCOME
Sales Proceeds $ 40,000 $ 40,000 $ -- $ --
Cost of Sales (43,437) (43,437) -- --
Interest Income 288 671 2,339 4,891
Transfer Fees 2,415 2,660 280 735
-------- -------- -------- --------
Total Income (734) (106) 2,619 5,626
EXPENSES
General and Administrative 48,495 71,194 36,465 74,058
-------- -------- -------- --------
NET LOSS $(49,229) $(71,300) $(33,846) $(68,432)
======== ======== ======== ========
Net Loss Per Limited Partnership Unit $ (2.50) $ (3.62) $ (1.72) $ (3.48)
======== ======== -------- ========
Weighted Average Number of Limited
Partnership Units Outstanding 19676 19676 19679 19679
======== ======== ======== ========
Weighted Average Number of General
Partnership Units Outstanding 203 203 203 203
======== ======== ======== ========
See condensed notes to financial statements.
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TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
Statement of Cash Flows for the Six Months' Ending June 30, 2002
Unaudited
Six months ended June 30,
2002 2001
--------- ---------
Cash Flows From Operating Activities
Net Loss $ (71,300) $ (68,432)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Changes in current assets and liabilities:
(Increase)/decrease in land held for investment purposes 40,000 --
Increase/(decrease) in accounts payable 3,447 8,686
--------- ---------
Total adjustments 43,447 8,686
--------- ---------
Net cash provided by (used in) operating activities (27,853) (59,746)
Cash Flows From Investing Activities: -- --
Cash Flows From Financing Activities: -- --
--------- ---------
Net decrease in Cash and Cash Equivalents (27,853) (59,746)
Cash and cash equivalents at beginning of Period 106,869 229,301
--------- ---------
Cash and cash equivalents at end of Period $ 79,016 $ 169,555
========= =========
See condensed notes to financial statements.
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TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
NOTES TO INTERIM FINANCIAL STATEMENTS
June 30, 2002
NOTES TO INTERIM FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF INFORMATION FURNISHED (6/30/2002)
The accompanying unaudited interim financial statements have been prepared in
accordance with Form 10-QSB instructions and in the opinion of management
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position as of June 30, 2002, the
results of operations, and of cash flows for the six month period ended June 30,
2002. These results have been determined on the basis of generally accepted
accounting principles and practices and applied consistently with those used in
the preparation of the Partnership's 2001 annual report on Form 10-KSB. Certain
information and footnote disclosure normally included in the financial
statements presented in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that the accompanying financial
statements be read in conjunction with the financial statements and notes
thereto incorporated by reference in the Partnership's 2001 annual report on
Form 10-KSB.
NOTE 2: LAND
Costs incurred by the Partnership for acquisition and holding of land as of June
30, 2002 are as follows:
24th St. & Baseline $2,331,204
79th Ave. & Peoria 955,932
Van Buren & Central/Goodyear 1,006,236
----------
$4,293,372
==========
NOTE 3: COMPUTATION OF PARNTERSHIP LOSS PER UNIT
Partnership loss per unit is based on the weighted average number of partnership
units outstanding during the period of the financials. The numerator represents
the net loss for the period and the denominator represents the weighted average
number of partnership units outstanding.
NOTE 4: BASIS OF ACCOUNTING
The Partnership's financial statements are prepared using the accrual method of
accounting. The Partnership's intent to sell all of the remaining properties and
liquidate the Partnership will not impact the accounting treatment applied by
the Partnership in its financial statements prepared in accordance with
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generally accepted accounting principles as the liquidation proceeds and the
timing thereof are not currently estimable. When the timing of the last cash
receipt from the sale of the last property is reasonably determinable, the
Partnership will adopt the liquidation basis of accounting in that quarter. At
that time, all assets and liabilities will be adjusted to their settlement
amounts and an amount to be distributed to the remaining limited partners upon
liquidation will be estimated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
When used in this discussion, the words "believes", "anticipates",
"expects", and similar expressions are intended to identify forward-looking
statements. Such statements are subject to certain risks and uncertainties,
which could cause actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. Actual results, performance
or achievements could differ materially from those anticipated in such
forward-looking statements as a result of numerous factors. The Partnership
undertakes no obligation to republish revised forward-looking statements to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events. Readers are also urged to carefully review
and consider the various disclosures made by the Partnership which attempt to
advise interested parties of the factors which affect the Partnership's
business, in this report, as well as the Partnership's periodic reports on Forms
10-KSB and 8-K filed with the Securities and Exchange Commission.
RESULTS OF OPERATONS
REVENUES: For the six months ended June 30, 2002, the Partnership recognized
$40,000 in revenues resulting from the sale of the real property located at
Central Avenue and Ludlow, Avondale, AZ on April 29, 2002. Total sales price was
$40,000 and cost of sales was $43,437, resulting in a net loss on the sale of
$3,437. The basis in the real property was $40,000. Land held for investment
purposes is stated at the lower of cost or estimated fair value less cost of
sales and is adjusted for impairment of value. Management assesses the carrying
value periodically and records provisions for losses accordingly for financial
statement purposes. For tax purposes, losses from property sales will be
realized upon the sales of the respective properties. There were no property
sales for the six months ended June 30, 2001.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses were
$71,194 for the six months ended June 30, 2002 and primarily consisted of
property taxes ($25,565), management fees ($20,397), and accounting fees
($21,544). General and administrative expenses were $74,058 for the six months
ended June 30, 2001 and primarily consisted of property taxes ($25,953),
management fees ($19,529), and accounting fees ($21,970).
NET LOSS. Net loss for the six months ended June 30, 2002 and 2001 was $71,300
and $68,432, respectively.
PROVISION FOR INCOME TAXES. There is no provision for income taxes because the
Partnership's income (loss) is passed from the partnership to the partners and
taxed at the individual level.
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LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2002 the Partnership had $79,016 in cash and money market
instruments. The sources of revenue during the operating period were proceeds
from the sale of real property, interest on the money market account and
administrative transfer fees.
RELATED PARTY TRANSACTIONS AND COMMITMENTS
MANAGEMENT FEES. The general partner, Investors Recovery Group L.L.C., entered
into an agreement with Horizon Real Estate Group, dated September 1996, to
provide broker/manager and accounting services for the Partnership. The
broker/manager receives the following fees and commissions:
(1) a monthly asset management fee equal to one twelfth of .75% times the
total values of the real property on hand,
(2) a brokerage services fee equal to five percent (5%) of (a) the selling
price of each parcel of the property sold; (b) of the amount of
damages actually collected by suit or otherwise if completion of a
sale is prevented by the default of the buyer under a purchase and
sale agreement; and (c) of the list price of any parcel of property
for which the broker/manager has procured a buyer who is ready,
willing and able to purchase such parcel at the listed price and upon
the listed terms upon Partnership's refusal to sell such parcel,
(3) a disposition fee of one percent (1%) of the selling price upon the
closing of each sale of a portion of the property which occurs while
this agreement remains in effect,
(4) an accounting fee equal to the reasonable hourly charges for the time
of its employees spent in performing the accounting services required,
not to exceed $10,000 per year. In addition, a tax return preparation
fee equal to the reasonable hourly charges for the time of its
employees spent in the preparation of the annual income tax returns,
not to exceed $7,000 per year, and
(5) if the broker/manager is required to administer more than one
distribution to the partners during a single calendar year,
compensation shall be at $35 per hour for its clerical employees. In
addition, if any extraordinary professional services are required from
the broker/manager beyond the services required by this agreement,
compensation shall be at $150 per hour, provided that the
broker/manager obtains the Partnership's approval in writing.
The agreement is dated September 1996 and continues until terminated at any time
by written consent of either party. Total management fees paid for the six
months ended June 30, 2002 and 2001 were $20,397 and $19,529, respectively.
PLAN OF OPERATION
The General Partner is in the process of winding up the Partnership affairs as
promptly as possible, and is actively and aggressively attempting to sell all of
its remaining properties in order to liquidate the Partnership. The real
property located at Central Avenue and Ludlow, Avondale, AZ sold with an escrow
closing date of April 29, 2002 for a total selling price of $40,000, and closing
costs totaling $3,437. The General Partner has successfully negotiated
agreements with buyers and entered into escrows on the real properties located
at Baseline and 24th Street, Phoenix, AZ and at Peoria and 79th Avenue, Peoria,
AZ. The agreements include options for the buyers to extend the closing dates as
far out as June 30, 2003. For the fourth and final parcel, the real property
located at Van Buren and Central Avenue, Goodyear, AZ, the General Partner has
identified a potential buyer and the property has entered escrow.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis or plan of operations are based upon our financial
statements, which have been prepared in accordance with accounting principles
generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. Actual results may differ from these
estimates under different assumptions or conditions. We believe the following
critical accounting policies affect our more significant judgments and estimates
used in the preparation of our financial statements.
LAND HELD FOR INVESTMENT PURPOSES - On an on-going basis, we evaluate our
estimates, including those related to land held for investment purposes and
provisions for loan losses. We base our estimates on the lower of cost or
estimated fair value less costs to sell and adjust for any impairment of
value. Estimated fair value is based upon independent appraisals or
prevailing market rates for comparable properties. Appraisals are estimates
of fair value based upon assumptions about the property and the market in
which it is located. The Partnership's judgments and estimates may be
impacted by changes in interest rates, property values, geographic economic
conditions, or the entry of other competitors into the market.
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TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
June 30, 2002
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITES
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.
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.
TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
By Investor's Recovery Group, LLC, General Partner
By: /s/ Lawrie Porter
--------------------------------------------
Lawrie Porter, Managing Member
Date: July 19, 2002
-------------------------------------------
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