15
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
For the Quarter ended September 30, 1998
Commission File Number 33-4682
CAPITAL BUILDERS DEVELOPMENT PROPERTIES II,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
California 77-0111643
State or other jurisdiction I.R.S. Employer
of organization Identification No.
4700 Roseville Road, Suite 206, North Highlands, California 95660
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (916) 331-8080
Former name, former address and former fiscal year, if changed since
last year:
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 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 ___
<TABLE>
PART 1 - FINANCIAL INFORMATION
Capital Builders Development Properties
II
(A California Limited Partnership)
BALANCE SHEETS
<CAPTION>
September 30 December 31
1998 1997
<S> <C> <C>
ASSETS
Cash and cash equivalents $355,011 $254,626
Accounts receivable, net 141,603 163,738
Investment property, at cost, net
of accumulated depreciation and
amortization of $2,165,221 and
$2,061,160 at September 30, 1998,
and December 31, 1997, respectively 12,255,452 12,431,881
Lease commissions, net of accumulated
amortization of $195,352 and
179,388 at September 30, 1998, and
December 31, 1997, respectively 151,583 162,386
Other assets, net of accumulated
amortization of 24,017 and
$34,606 at September 30, 1998 and
December 31, 1997, respectively 80,577 64,587
Total assets $12,984,226 $13,077,218
LIABILITIES AND PARTNERS' EQUITY
Notes payable $ $
9,123,838 8,950,372
Accounts payable and accrued
liabilities 63,844 127,777
Tenant deposits 103,640 93,690
Total liabilities 9,291,322 9,171,839
Commitments and Contingencies
Partners' Equity:
General partner (58,902) (56,777)
Limited partners 3,751,806 3,962,156
Total partners' equity 3,692,904 3,905,379
Total liabilities and
partners' equity $12,984,226 $13,077,218
See accompanying notes to the financial statements.
</TABLE>
<TABLE>
Capital Builders
Development
Properties II
(A California
Limited Partnership)
STATEMENT OF
OPERATIONS
THREE AND NINE
MONTHS ENDED
SEPTEMBER 30,
<CAPTION>
1998 1997
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
<S> <C> <C> <C> <C>
Revenues
Rental and other
income $486,643 $1,459,461 $500,111 $1,123,146
Interest income 5,419 13,292 1,950 125,471
Total revenues 492,062 1,472,753 502,061 1,248,617
Expenses
Operating expenses 105,225 291,845 111,362 263,177
Repairs and
maintenance 63,455 196,430 71,596 167,189
Property taxes 29,054 94,581 37,127 74,377
Interest 202,004 584,456 180,057 441,175
General and
administrative 38,995 135,418 42,670 125,694
Depreciation and
amortization 124,290 382,498 128,565 304,499
Total expenses 563,023 1,685,228 571,377 1,376,111
Loss before Joint
Venture Interest (70,961) (212,475) (69,316) (127,494)
Loss on investment
in Joint Venture - - - - - - - - - (22,806)
Net loss (70,961) (212,475) (69,316) (150,300)
Allocated to general
partners (710) (2,125) (693) (1,503)
Allocated to limited
partners ($70,251) ($210,350) ($68,623) ($148,797)
Net loss per limited
partnership unit ($3.05) ($9.13) ($2.98) ($6.46)
Average units
outstanding 23,030 23,030 23,030 23,030
See accompanying notes to the financial statements
</TABLE>
<TABLE>
Capital Builders
Development Properties II
(A California Limited
Partnership)
STATEMENTS OF CASH
FLOWS
THREE AND NINE MONTHS
ENDED SEPTEMBER 30,
<CAPTION>
1998 1997
Three Nine Three Nine
Months Months Months Months
Ended Ended Ended Ended
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net loss ($70,961) ($212,475) ($69,316) ($150,300)
Adjustments to reconcile
net loss to cash flow
provided by/used in
operating activities:
Depreciation and
amortization 124,290 382,498 128,565 304,499
Equity in losses of
Joint Venture - - - - - - - - - - - - 22,806
Uncollected interest
earned from Joint Venture - - - - - - - - - - - - (114,046)
Changes in assets and
liabilities:
Decrease/(Increase) in 20,636 22,135 (50,814) (77,232)
accounts receivable
Increase in leasing
commissions (24,090) (46,164) (23,685) (80,690)
(Increase)/Decrease in
other assets (8,053) (4,810) (3,398) 8,319
Increase/(Decrease) in
accounts payable and
and accrued liabilities 36,002 (63,933) 201,764 109,053
Increase/(Decrease) in
tenant deposits 3,985 9,950 (1,402) (2,498)
Net cash provided by
operating activities 81,809 87,201 181,714 19,911
Cash flows from investing
activities:
Acquisition of remaining
joint venture interest,
net of cash acquired - - - - - - - - - - - - (14,380)
Improvements to
investment properties (129,379) (160,282) (411,292) (810,815)
Net cash used in
investing activities (129,379) (160,282) (411,292) (825,195)
Cash flows from financing
activities:
Proceeds from issuance
of debt - - - - 260,085 655,382 655,382
Payments of debt (29,674) (86,619) (28,180) (66,619)
Net cash (used
in)/provided by
financing activities (29,674) 173,466 627,202 588,763
Net (decrease)/increase in
cash (77,244) 100,385 397,624 (216,521)
Cash, beginning of period 432,255 254,626 87,683 701,828
Cash, end of period $355,011 $355,011 $485,307 $485,307
See accompanying notes to the financial statements.
</TABLE>
Capital Builders Development Properties II
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998 and December 31, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND
ORGANIZATION
A summary of the significant accounting policies applied in the
preparation of the accompanying financial statements follows:
Basis of Accounting
The financial statements of Capital Builders Development Properties II
(The "Partnership") are prepared on the accrual basis of accounting and
therefore revenue is recorded as earned and costs and expenses are
recorded as incurred.
Organization
Capital Builders Development Properties II, a California Limited
Partnership, is owned under the laws of the State of California. The
Managing General Partner is Capital Builders, Inc., a California
corporation (CB).
The Partnership is in the business of real estate development and is
not a significant factor in its industry. The Partnership's investment
properties are located near major urban areas and, accordingly, compete
not only with similar properties in their immediate areas but with
hundreds of properties throughout the urban areas. Such competition is
primarily on the basis of locations, rents, services and amenities. In
addition, the Partnership competes with significant numbers of
individuals and organizations (including similar companies, real estate
investment trusts and financial institutions) with respect to the
purchase and sale of land, primarily on the basis of the prices and
terms of such transactions.
Investment Properties
Long-lived assets and certain identifiable intangibles are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the fair
value of the assets. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.
The Partnership's investment property consists of commercial land,
buildings and leasehold improvements that are carried net of
accumulated depreciation. Depreciation is provided for in amounts
sufficient to relate the cost of depreciable assets to operations over
their estimated service lives of three to forty years. The straight-
line method of depreciation is followed for financial reporting
purposes.
Other Assets
Included in other assets are loan fees. Loan fees are amortized over
the life of the related note.
Lease Commissions
Lease commissions are being amortized over the related lease terms.
Income Taxes
The Partnership has no provision for income taxes since all income or
losses are reported separately on the individual Partners' tax returns.
Revenue Recognition
Rental income is recognized on a straight-line basis over the life of
the lease, which may differ from the scheduled rental payments.
Net Loss per Limited Partnership Unit
The net loss per Limited Partnership Unit is computed based on the
weighted average number of Units outstanding during the three and nine
months ended September 30 of 23,030 in 1998 and 1997.
Statement of Cash Flows
For purposes of the statement of cash flows, the Partnership considers
all short-term investments with a maturity, at date of purchase, of
three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2 - RELATED PARTY EXPENSE REIMBURSEMENT AND FEE
ARRANGEMENT
The Managing General Partner (Capital Builders, Inc.) and the Associate
General Partners are entitled to reimbursement of expenses incurred on
behalf of the Partnership and certain fees from the Partnership. These
fees include: a portion of the sales commissions payable by the
Partnership with respect to the sale of the Partnership Units; an
acquisition fee of up to 12.5% of gross proceeds from the sale of the
Partnership Units; a property management fee up to 6% of gross rental
revenues realized by the Partnership with respect to its properties; a
subordinated real estate commission of up to 3% of the gross sales
price of the properties; and a subordinated 25% share of the
Partnership's distributions of cash from sales or refinancing. The
property management fee currently being charged is 5% of gross rental
revenues collected.
All acquisition fees and expenses, all underwriting commissions, and
all offering and organizational expenses which can be paid are limited
to 20% of the gross proceeds from sales of Partnership Units provided
the Partnership incurs no borrowing to develop its properties.
However, these fees may increase to a maximum of 33% of the gross
offering proceeds based upon the total acquisition and development
costs, including borrowing. Since the formation of the Partnership,
27.5% of these fees were paid to the Partnership's related parties,
leaving a remaining maximum of 5.5% ($633,325) of the gross offering
proceeds. The ultimate amount of these costs will be determined once
the properties are fully developed and leveraged.
The total management fees paid to the Managing General Partner were
$73,346 and $54,969 for the nine months ended September 30, 1998 and
September 30, 1997, respectfully, while total reimbursement of expenses
were $143,885 and $131,201 respectively.
The Managing General Partner will reduce its future participation in
proceeds from sales by an amount equal to the loss on the abandonment
of option fees in 1988 ($110,000) and interest on the amount at a rate
equal to that of the borrowed funds rate as determined by construction
or permanent funds utilized by the Partnership.
NOTE 3 - INVESTMENT PROPERTY
The components of the investment property account are as follows:
September 30, December 31,
1998 1997
Land $4,053,799 $4,053,799
Building and Improvements 9,132,132 9,111,111
Tenant Improvements 1,234,742 1,328,131
Investment property, at cost 14,420,673 14,493,041
Less: accumulated depreciation
and amortization (2,165,221) (2,061,160)
Investment property, net $12,255,452 $12,431,881
NOTE 4 - NOTES PAYABLE
Notes Payable consist of the following at:September 30, 1998December
31, 1997
A mini-permanent loan of $5,000,000 with a
fixed 8.95% interest rate. The loan
requires monthly principal and interest
payments of $41,789 which is sufficient to
amortize the loan over 25 years. The loan
is due October 1, 2002. The note is
collateralized by a First Deed Of Trust on
Highlands 80 Phase I
land, buildings and improvements. $4,814,261 $4,865,609
A construction loan of $2,280,000 with a
variable interest rate of prime plus 1.5%
(9.75% as of September 1998). The loan
requires monthly interest only payments,
and is due March 1, 1999. The note
provides for future draws of $1,342,856
for shell and tenant improvement
construction costs and leasing commissions
for future lease-up of Phase II. The note
is collateralized by a First Deed of Trust
on Highlands 80 Phase II land, buildings
and improvements. 937,659 677,059
A mini-permanent loan with a fixed
interest rate of 8.24% and requiring
monthly principal and interest payments of
$27,541, which is sufficient to amortize
the loan over 25 years. The loan is due
January 1, 2001. The note is
collateralized by a First Deed Of Trust on
Capital Professional Center's land,
buildings and improvements. 3,371,918 3,407,704
Total Notes Payable $9,123,838 $8,950,372
NOTE 5 - LEASES
The Partnership leases its properties under long term noncancelable
operating leases to various tenants. The facilities are leased through
agreements for rents based on the square footage leased. Minimum
annual base rental payments under these leases for the years ending
December 31 are as follows:
1998 $1,539,083
1999 992,648
2000 666,691
2001 438,442
2002 186,594
Total $3,823,458
NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Partnership in
estimating its fair value disclosures for financial instruments.
Cash and cash equivalents
The carrying amount approximates fair value because of the short
maturity of these instruments.
Notes payable
The fair value of the Partnership's Notes Payable are estimated
based on the quoted market prices for the same or similar issues
or on the current rates offered to the Partnership for debt of the
same remaining maturities.
The estimated fair values of the Partnership's financial instruments as
of are as follows:
September 30, December 31,
1998 1997
Carrying Estimated Carrying Estimated
Amount Fair Value AmountFair Value
Assets
Cash and cash equivalents$ 355,011$ 355,011 $254,626$ 254,626
Liabilities
Note payable $ 4,814,261$ 4,814,261$ 4,865,609$ 4,865,609
Note payable $ 937,659 $ 937,659 $677,059 $677,059
Note payable $ 3,371,918$ 3,371,918$ 3,407,704$ 3,407,704
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Partnership is involved in litigation arising in the normal course
of its business. In the opinion of Management, the Partnership's
recovery or liability if any, under any pending litigation would not
materially affect its financial condition or operations.
NOTE 8 - PROSPECTIVE ACCOUNTING PRONOUNCEMENTS
Accounting for Derivative Instruments and Hedging Activity
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999.
Management believes that the adoption of SFAS No. 133 will not have a
material impact on the financial statements due to the Partnership's
inability to invest in such instruments as stated in the Partnership
agreement.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
In March 1998, the American Society of Certified Public Accountants
(AICPA) issued Statement of Position (SOP) 98-1, Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use. SOP
98-1 provides guidance on accounting for the costs of computer software
developed or obtained for internal use. It specifies that computer
software meeting certain characteristics be designated as internal-use
software and sets forth criteria for expensing capitalizing, and
amortizing certain costs related to the development or acquisition of
internal-use software. SOP 98-1 is effective for fiscal years
beginning after December 15, 1998. Management does not expect that
adoption of SOP 98-1 will have a material impact on the Partnership's
financial statements.
Reporting on the Costs of Start-Up Activities
In April 1998, the AICPA issued SOP 98-5, Reporting on the Costs of
Start-Up Activities. SOP 98-5 provides guidance on the financial
reporting of start-up costs and organization costs. It requires costs
of start-up activities and organization costs to be expensed as
incurred. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998. Management does not expect that adoption of SOP 98-
5 will have a material impact on the Partnership's financial
statements.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Year 2000 Compliance
The potential impact of the Year 2000 compliance issue on the real
estate industry could be material, as virtually every aspect of the
industry and processing of transactions will be affected. Due to the
size of the task facing the real estate industry, the Partnership may
be adversely affected by the problem, depending on whether it and the
entities with which it does business address this issue successfully.
The impact of Year 2000 issues on the Partnership will then depend not
only on corrective actions that the Partnership takes, but also on the
way in which Year 2000 issues are addressed by governmental agencies,
businesses and other third parties that provide services or data to, or
received services or data from, the Partnership, or whose financial
condition or operational capability is important to the Partnership.
The Partnership's State of Readiness
The Partnership engages the services of third-party software vendors
and service providers for substantially all of its electronic data
processing. Thus, the focus of the Partnership is to monitor the
progress of its primary software providers toward Year 2000 compliance.
The Partnership's Year 2000 compliance program has been divided into
phases, all of them common to all sections of the process: (1)
inventorying date-sensitive information technology and other business
systems; (2) assigning priorities to identified items and assessing the
efforts required for Year 2000 compliance of those determined to be
material to the Partnership; (3) upgrading or replacing material items
that are determined not to be Year 2000 compliant and testing material
items; (4) assessing the status of third party risks; and (5) designing
and implementing contingency and business continuation plans.
In the first phase, the Partnership is conducting a thorough evaluation
of current information technology systems and software. Non-
information technology systems such as climate control systems,
elevators and security equipment will also be surveyed.
In phase two of the process, results from the inventory are assessed to
determine the Year 2000 impact and what actions are required to obtain
Year 2000 compliance. For the Partnership's internal systems,
application upgrades of software are needed. The Partnership has opted
for a course of action that will result in upgrading or replacing all
critical internal systems.
The third phase includes the upgrading, replacement and/or retirement
of systems, and testing. This stage of the Year 2000 process is
ongoing and is scheduled to be completed by the second quarter of 1999.
The fourth phase, assessing third party risks, includes the process of
identifying and prioritizing critical suppliers and customers at the
direct interface level. This evaluation includes communicating with
the third parties about their plans and progress in addressing Year
2000 issues.
Contingency Plan
The final phase of the Partnership's Year 2000 compliance program
relates to contingency plans. The Partnership maintains contingency
plans in the normal course of business designed to be deployed in the
event of various potential business interruptions.
Costs
As the Company relies upon third-party software vendors and service
providers for substantially all of its electronic data processing, the
primary cost of the Year 2000 Project has been and will continue to be
the reallocation of internal resources and, therefore, does not
represent incremental expense to the Partnership.
Risks
Failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. The Partnership believes that, with the implementation of
new or upgraded business systems and completion of the Year 2000
Project as scheduled, the possibility of significant interruptions of
normal operations due to the failure of those systems will be reduced.
However, the Partnership is also dependent upon the power and
telecommunications infrastructure within the United States. The most
reasonably likely worst case scenario would be that the Partnership may
experience disruption in its operations if any of these third-party
suppliers reported a system failure. Although the Partnership's Year
2000 Project will reduce the level of uncertainty about the compliance
and readiness of its material third-party providers, due to the general
uncertainty over Year 2000 readiness of these third-party suppliers,
the Partnership is unable to determine at this time whether the
consequences of Year 2000 failures will have a material impact.
Liquidity and Capital Resources
The Partnership commenced operations on May 22, 1986, upon the sale of
the minimum number of Limited Partnership Units. The Partnership's
initial source of cash was from the sale of Limited Partnership Units.
Through the offering of Units, the Partnership has raised $11,515,000
(represented by 23,030 Limited Partnership Units). Cash generated from
the sale of Limited Partnership Units has been used to acquire land and
for the development of a mixed use commercial project and a 40 percent
interest in a commercial office project.
The Partnership's primary current sources of cash are from cash
reserves, property rental income and construction financing. As of
September 30, 1998, the Partnership had $355,011 in cash reserves.
It is the Partnership's investment goal to utilize existing capital
resources for continued leasing operations (tenant improvements and
leasing commissions) and further development of its investment
properties. The Partnership is currently proceeding with the
development of Phase II for Highlands 80 Commerce Center, consisting of
approximately 45,921 square feet of two, one-story Light
Industrial/Office space buildings. The shell construction of both
Phase II buildings has been completed, and approximately 16,457 square
feet has been leased. The remaining Phase II development costs,
consisting of tenant improvements and leasing commissions, are
estimated to be approximately $665,000 and will be funded with the
remaining funds available from the Phase II construction loan.
During the nine months ended September 30, 1998, the Partnership
generated $87,201 of net cash from operations. Management anticipates
the Partnership's cash flow from operations to continue to improve due
to Highlands 80's Phase II continued lease-up and Capital Professional
Center's stabilized occupancy.
During the nine months ended September 30, 1998, financing activities
provided the Partnership with net cash proceeds of $173,466. This was
primarily the result of construction draws from its construction loan
for the Highlands 80 Phase II shell completion. The Partnership had
funded the improvement costs during 1997 with its cash reserves and
accounts payable, and was reimbursed by the construction loan once the
shell was completed in 1998.
The Partnership's ability to maintain or improve cash flow is dependent
upon its ability to maintain and improve the occupancy of its
investment properties. The Partnership's financial resources appear to
be adequate to meet current year's obligations and no adverse change in
liquidity is foreseen.
Results of Operations
There were no material differences in reported revenues or expenses for
the third quarter ended September 30, 1998 as compared to September 30,
1997.
The Partnership's total revenues increased by $224,136 (18%) for the
nine months ended September 30, 1998, as compared to September 30,
1997. Total expenses, also increased by $309,117 (22.5%) for the nine
months ended September 30, 1998, as compared to September 30, 1997. In
addition, the loss on the investment in Joint Venture decreased by
$22,806 (100%) in 1998 as compared to 1997, all resulting in an
increase in net loss of $62,175 (41.4%) for the nine months ended
September 30, 1998, as compared to September 30, 1997.
The year-to-date increase in revenues is primarily due to an increase
in occupied space at Highlands 80 and the Partnership's acquisition of
the remaining 60% interest of Capital Builders Roseville Venture
(Capital Professional Center). Since the purchase on May 1, 1997,
property income earned by Capital Professional Center has been fully
recognized by the Partnership. Prior to the purchase, the Partnership
recognized only a 40% share of net income (loss) from Capital
Professional Center as income (loss) in Joint Venture.
Expenses increased for the nine months ended September 30, 1998, as
compared to September 30, 1997, due to the net effect of:
a) the purchase of the 60% interest in Capital Builders Roseville
Venture, resulting in an increase in total reported expenses of
$216,157.
b) $48,560 (15.1%) increase in interest due to loan costs associated
with Highlands 80, Phase II completion.
c) $14,159 (11.7%) increase in general and administration at the
Partnership level due to the increase in ownership of Capital
Professional Center and the development of Highlands 80, Phase II.
d) $30,435 (12.3%) increase in depreciation at Highlands 80 due to the
Phase II completion.
PART II - OTHER INFORMATION
Item 1 - Legal Proceeding
The Partnership is not a party to, nor is the Partnership's property
the subject of, any material pending legal proceedings.
Item 2 - Not applicable
Item 3 - Not applicable
Item 4 - Not applicable
Item 5 - Not applicable
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has dully caused this report to be signed on its behalf
by the undersigned, hereunto dully authorized.
CAPITAL BUILDERS DEVELOPMENT PROPERTIES II
a California Limited Partnership
By: Capital Builders, Inc.
Its Corporate General Partner
Date: November 12, 1998
By:_____________________________________
Michael J. Metzger
President
Date: November 12, 1998
By:_____________________________________
Kenneth L. Buckler
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 355,011
<SECURITIES> 0
<RECEIVABLES> 141,603
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 496,614
<PP&E> 14,420,673
<DEPRECIATION> 2,165,221
<TOTAL-ASSETS> 12,984,226
<CURRENT-LIABILITIES> 63,844
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,984,226
<SALES> 0
<TOTAL-REVENUES> 1,472,753
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,100,772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 584,456
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (212,475)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
