UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2003
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 incorporation or organization)
Employer Identification No.)
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 10QSB, QUARTER ENDED JUNE 30, 2003
INDEX
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Interim Balance Sheets as of June 30, 2003 and December 31, 2002........ 3
Interim Statements of Operations for the Quarters Ended
June 30, 2003 and 2002 ................................................. 4
Interim Statements of Cash Flows for the Quarters Ended
June 30, 2003 and 2002.................................................. 5
Notes to Interim Financial Statements................................... 6
Item 2 Management's Discussion and Analysis or Plan of Operation............. 7
Item 3 Controls and Procedures............................................... 9
PART II OTHER INFORMATION
Item 1 Legal Proceedings..................................................... 10
Item 2 Changes in Securities and Use of Proceeds............................. 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 and Form 8-K..................................... 10
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PART I: FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial statements
included in the Form 10QSB 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
INTERIM BALANCE SHEET
JUNE 30, 2002 AND DECEMBER 31, 2002
(Unaudited) (Audited)
June 30, 2003 December 31, 2002
------------- -----------------
ASSETS
Current Assets
Cash and cash equivalents $ 195,892 $ 219,430
Restricted cash - Escrow Deposits (Note 5) 265,000 --
---------- ----------
Total Current Assets 460,892 219,430
Assets Held for Sale (Note 2) 3,287,136 3,287,136
---------- ----------
TOTAL ASSETS $3,748,028 $ 219,430
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities
Accounts Payable $ 11,420 $ 18,238
Escrow Deposits (Note 5) 265,000 --
---------- ----------
Total Current Liabilities 276,420 18,238
PARTNERS' CAPTIAL
General Partners' Capital (203 units) 35,450 35,622
Limited Partners' Capital (19,676 unites) 3,436,159 3,452,706
---------- ----------
Total Partners' Capital 3,471,609 3,488,328
TOTAL LIABILITIES & PARTNERS' CAPITAL $3,748,028 $3,506,566
========== ==========
See condensed notes to financial statements.
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TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDING JUNE 30, 2003 AND JUNE 30, 2002
Three Six Three Six
Months Ended Months Ended Months Ended Months Ended
June 30, 2003 June 30, 2003 June 30, 2002 June 30, 2002
------------- ------------- ------------- -------------
INCOME
Sales Proceeds $ -- $ -- $ 40,000 $ 40,000
Cost of Sales -- -- (43,437) (43,437)
Interest Income 440 1,519 288 671
Transfer Fees 315 680 2,415 2,660
Misc. Income -- 30,000 -- --
-------- -------- -------- --------
Total Income 755 32,199 (734) (106)
EXPENSE
General and Administrative 35,103 48,919 48,495 71,194
-------- -------- -------- --------
Total Expenses 35,103 48,919 48,495 71,194
-------- -------- -------- --------
Net Income (Loss) $(34,348) $(16,720) $(49,229) $(71,300)
======== ======== ======== ========
Net Loss Per Limited Partnership
Unit $ (1.75) $ (0.85) $ (2.50) $ (3.62)
Weighted Average Number of Limited
Partnerhsip Units Outstanding 19,676 19,676 19,676 19,676
Weighted Average Number of General
Partnerhsip 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 (UNAUDITED)
FOR THE SIX MONTHS ENDING JUNE 30, 2003
Six Six
Months Ended Months Ended
June 30, 2003 June 30, 2002
------------- -------------
Cash Flows From Operating Activities
Net Income (Loss) $ (16,720) $ (71,300)
Adjustments to reconcile net income (loss) provided
provided by (used in) operating activities:
Changes in assets and liabilities:
(Increase)/Decrease on Land held for investment purposes -- 40,000
Increase/(Decrease) in accounts payable (6,818) 3,447
--------- ---------
Net cash provided by (used in) operating activities (23,538) (27,853)
Cash Flows From Investing Activities: -- --
Cash Flows From Financing Activities: -- --
--------- ---------
Increase (decrease) in Cash and Cash Equivalents (23,538) (27,853)
Cash and Cash Equivalents at beginning of Period 219,430 106,869
--------- ---------
Cash and Cash Equivalents at End of Period $ 195,892 $ 79,016
========= =========
See condensed notes to financial statements.
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TPI LAND DEVELOPMENT III LIMITED PARTNERSHIP
NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 2003
NOTE 1: STATEMENT OF INFORMATION FURNISHED
The accompanying unaudited interim financial statements have been prepared in
accordance with Form 10QSB 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, 2003, the results of
operations and of cash flows for the three and six month period ended June 30,
2003. These results have been determined on the basis of generally accepted
accounting principles and practices in the United States of America and have
been applied consistently with those used in the preparation of the
Partnership's 2002 annual report on Form 10KSB.
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 2002 annual report on
Form 10KSB.
NOTE 2: ASSETS HELD FOR SALE
Costs incurred by the Partnership for acquisition and holding of land as of June
30, 2003 are as follows:
24th St. & Baseline $2,331,204
79th Ave. & Peoria 955,932
----------
$3,287,136
==========
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 periods presented. Loss per unit is calculated by
net loss for the period (numerator) divided by the weighted average number of
partnership units outstanding (denominator).
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
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
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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.
NOTE 5: RESTRICTED CASH AND ESCROW DEPOSITS
Restricted cash and escrow deposits represent earnest money deposits (released
to the Partnership per the purchase agreements), which will be applied to the
purchase price at closing, but nonrefundable to the purchaser upon termination
or cancellation of the purchase agreement. As of August 8, 2003, the escrow
agent has released escrow money totaling $170,000 to the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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 10KSB and
8-K filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS
There were no sales of vacant land for the six months ended June 30, 2003.
Subsequent to June 30, 2003, the Partnership closed the sale of the real
property located at Baseline and 24th Street, Phoenix, AZ on July 23, 2003 for a
gross sales price of $3,066,316. The cost of sale was $2,707,963, resulting in
net income of $358,353. The basis in the property sold was $2,331,204.
The General Partner is actively and aggressively attempting to sell its
remaining property in order to liquidate the Partnership. The General Partner
has successfully negotiated an agreement with a buyer and entered into escrow on
the real property located at Peoria and 79th Avenue, Peoria, AZ. Options
available to the buyer have been exercised/granted to extend the closing date to
August 31, 2003. The Partnership received two nonrefundable extension deposits
of $15,000 each on July 24, 2003 and August 8, 2003 respectively, which are in
addition to the purchase price. The agreement provides for extension periods to
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extend the closing deadline by the purchaser depositing certain funds as
described in the agreement, including any amendments thereto. Pursuant to the
terms of the agreement, all earnest money deposits are to be released to the
Partnership and applied to the purchase price at closing, but nonrefundable to
the purchaser upon termination or cancellation of the purchase agreement. As of
August 8, 2003, the escrow agent has released escrow money totaling $170,000 to
the Partnership, of which $60,000 is option income that is in addition to the
purchase price and nonrefundable.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses were
$48,918 for the six months ended June 30, 2003, and primarily consisted of
property taxes ($8,674), management fees ($16,606), and accounting fees
($18,633). 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).
NET LOSS. Net loss for the six months ended June 30, 2003 and 2002 was $16,720
and $71,300, 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.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2003 the Partnership had $460,892 in cash and money market
instruments, including restricted cash of $265,000. The sources of revenue
during the operating period were proceeds from the interest on the money market
account, and administrative transfer fees and escrow funds released to the
Partnership pursuant to the escrow agreements.
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
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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 $40 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, 2003 and 2002 were $16,606 and $20,397, respectively.
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.
ASSETS HELD FOR SALE - On an on-going basis, we evaluate our estimates,
including those related to land held for investment purposes (assets held
for sale) 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.
ITEM 3. CONTROLS AND PROCEDURES
Lawrie Porter, Managing Member of Investors Recovery Group, Inc., the General
Partner, is the principal executive officer and the principal financial officer
of the Registrant, and has concluded based on her evaluation as of a date within
90 days prior to the date of the filing of this Report, that the Registrant's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Registrant in the reports filed or submitted by
it under the Securities Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms, and include controls and procedures
designed to ensure that information required to be disclosed by the Registrant
in such reports is accumulated and communicated to the Registrant's management,
including the General Partner, as appropriate to allow timely decisions
regarding required disclosure.
There were no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
such evaluation.
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PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITES 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
(a) Exhibits
31 Certification of the Chief Executive Officer and Principal Financial
Officer pursuant to Rule 13a-14(a)
32 Certification by the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K -
No reports on Form 8-K were filed during the quarter ending June 30,2003.
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: August 7, 2003
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