UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-17651
HIGH CASH PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3347257
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue, Greenwich, CT 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 203-862-7000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of class)
Indicate by check mark whether 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 Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
<PAGE>
Exhibit Index Set Forth on Page IV-1.
PART I
Item 1. Business
Registrant is a Delaware limited partnership formed in May 1986 pursuant to the
Delaware Revised Uniform Limited Partnership Act for the primary purpose of
investing in, holding, operating and otherwise acting with respect to office
buildings, shopping centers and other commercial and industrial properties which
were either existing properties or under construction. Registrant used all of
the net offering proceeds from the sale of its securities to acquire a shopping
center located in Reno, Nevada (see "Sierra Marketplace" below). Resources High
Cash, Inc., a Delaware corporation, is Registrant's managing general partner
(the "Managing General Partner") and is a wholly-owned subsidiary of XRC Corp.
("XRC"). The other General Partner of Registrant is Presidio AGP Corp., a
Delaware corporation ("Presidio AGP"), which is a wholly-owned subsidiary of
Presidio Capital Corp. ("Presidio"), and replaced as the Associate General
Partner Fourth Group Partners, a New York general partnership whose partners
were former officers, directors and/or significant stockholders of Integrated
Resources, Inc. ("Integrated"). On November 3, 1994, Integrated consummated its
plan of reorganization under Chapter 11 of the United States Bankruptcy Code, at
which time, pursuant to such plan of reorganization, the newly formed Presidio
purchased substantially all of Integrated's assets. (The Managing General
Partner and the Associate General Partner are hereinafter collectively referred
to as the "General Partners," and the limited partners of Registrant are
hereinafter collectively referred to as the "Limited Partners.")
Effective with the consummation of Integrated's plan of reorganization, Presidio
and XRC entered into a management and administrative services agreement with
Concurrency Management Corp. ("Concurrency"). Effective January 1, 1996, Wexford
Management Corp., formerly Concurrency, assigned its agreement to provide
administrative services to XRC and Presidio and its subsidiaries to Wexford
Management LLC ("Wexford").
In December 1994, Fourth Group Partners notified Registrant of its withdrawal as
Associate General Partner of Registrant. The withdrawal became effective, after
60 days prior written notice to Limited Partners, on February 28, 1995. Upon the
effective date of such withdrawal, Presidio AGP, which is a wholly-owned
subsidiary of Presidio Capital Corp., became the Associate General Partner.
Beginning June 29, 1988, Registrant offered 600,000 units of limited partnership
interest (the "Units"), pursuant to the Prospectus of Registrant dated June 29,
1988, as supplemented by Supplements dated August 19, 1988, January 13, 1989,
March 10, 1989, April 28, 1989, June 26, 1989, September 8, 1989 and October 23,
1989 (collectively, the "Prospectus") which were filed pursuant to Rules 424(b)
and 424(c) under the Securities Act of 1933, as amended. The Prospectus was
filed as part of Registrant's Registration Statement on Form S-11, Commission
File No. 33-6412 (the "Registration Statement") pursuant to which the Units were
registered. Due to Integrated's financial difficulties, Registrant suspended its
public offering of Units in October 1989 and, in accordance with the Prospectus,
terminated its public offering on June 29, 1990. Before this suspension,
Registrant accepted subscriptions for 77,901 of such Units (including the Units
sold to the initial limited partner) for an aggregate of $19,475,250 in gross
proceeds, resulting in net proceeds from the offering of $17,284,566 (gross
<PAGE>
proceeds of $19,475,250 less organization and offering costs of $2,190,684). All
underwriting and sales commissions were paid by Registrant. In addition, on
December 19, 1990, Integrated purchased 18,571 units which were not publicly
registered pursuant to its obligation to provide Registrant with sufficient
funds to repay Registrant's unsecured loans (the "Short Term Loans") from three
unaffiliated lenders (the "Banks"). Integrated's purchase was made pursuant to
an agreement among Integrated, Registrant and the Banks in connection with the
settlement of various claims among the parties. The aforementioned Units were
sold by Integrated, as a part of the same transaction, to the Banks that held
the Short-Term Loans. On February 4, 1991, one of the Banks sold its 8,361 Units
back to Integrated, and effective April 1, 1993 one of the Banks sold its 8,998
Units to Equity Resources Fund XIV, L.P. See Item 12, "Security Ownership of
Certain Beneficial Owners and Management."
For the years ended December 31, 1996, 1995 and 1994, revenues from Sierra
Marketplace accounted for 97.2%, 97.3% and 98.0% of Registrant's gross revenues,
respectively, with interest and other income accounting for the remaining 2.8%,
2.7% and 2.0%, respectively, of Registrant's revenues in each of such years.
Sierra Marketplace
On February 10, 1989, Registrant purchased from Sierra Virginia, Inc., an
unaffiliated third party (the "Seller"), Sierra Marketplace, a community retail
shopping center completed in October 1988 and situated on 18.67 acres of land
located in the southern portion of Reno, Nevada. Sierra Marketplace consists of
two main buildings and three "out parcel" structures containing approximately
233,000 square feet of net leasable area. The property was 90.2% leased to 32
tenants as of March 1, 1997, as more specifically described immediately below.
Registrant acquired fee title to the property subject to the first mortgage also
described below.
Sierra Marketplace contained 32 tenants as of March 1, 1997. Three tenants,
Smith's Management Corp., Levitz Furniture Store and Good Guys, Inc., comprised
in the aggregate approximately 57.2% of the total rental revenues, and each had
rental revenues greater than 10% of the total.
1) Smith's Management Corp., a large food and drug store, occupies 68,972
square feet of space and has a lease agreement with Sierra Marketplace
that extends through mid 2008. The rental revenue provided by Smith's
Management Corp. comprised approximately 20.8% of the total rental
revenue.
2) Levitz Furniture Store occupies 52,660 square feet of space and has a
lease agreement with Sierra Marketplace that extends through the year
2008. The rental revenue provided by Levitz Furniture Store was
approximately 16.9% of the total rental revenue.
3) Good Guys, Inc., a consumer electronics store, occupies 16,961 square
feet of space and has a lease agreement with Sierra Marketplace that
extends through the year 2003. The rental revenue provided by Good
Guys, Inc. was approximately 19.5% of the total rental revenue.
<PAGE>
No tenants of Sierra Marketplace were affiliated with Registrant.
The purchase price for Sierra Marketplace was $24,812,000, excluding closing
costs of $172,598. This amount was paid by Registrant as follows: $18,312,000 in
cash and $6,500,000 was financed with a zero coupon first mortgage loan (the
"RAM 2 Loan") from Resources Accrued Mortgage Investors 2 L.P. ("RAM 2"), a
public limited partnership sponsored by Integrated. Approximately one-half of
the cash portion of the purchase price was financed using the proceeds of the
three Short-Term Loans from the Banks, with such Short-Term Loans guaranteed by
Integrated. Registrant obtained the Short-Term Loans because, at the time of
closing, it had not yet raised enough capital from the proceeds from the sale of
Units to fund the acquisition of Sierra Marketplace. The Short-Term Loans, which
were originally in the amount of $9,151,003, were partially repaid using a
portion of the net offering proceeds raised subsequent to the acquisition of
Sierra Marketplace, and the remainder was paid on December 19, 1990 using a
portion of the net proceeds raised from the sale of Units to Integrated pursuant
to the settlement agreement. Financing
RAM Loan
The RAM 2 Loan is a $6,500,000 12-year, zero-coupon first mortgage loan, and,
except as set forth below, no payments of interest or principal are due thereon
until maturity. The RAM 2 Loan bears interest at the rate of 11.22% per annum
compounded monthly and will be due and payable on February 28, 2001, together
with additional interest, if any, as described below. The amount due upon
maturity of the RAM 2 Loan will be $24,966,653, not including additional
interest. The RAM Loan may not be prepaid, except in the event of condemnation
or casualty of the Sierra Marketplace property, until after the expiration of
its tenth year. After such ten years, it may be prepaid, in whole only, for the
remainder of its term without penalty or premium.
Pursuant to the terms of the RAM 2 Loan, additional interest may be payable in
an amount equal to 23.9% of the appreciation in value of Sierra Marketplace
after payment of a specified return to Registrant and is due on the earlier of
the maturity date or the date the RAM 2 Loan is prepaid in whole. Registrant
believes, based upon current market conditions, that it is unlikely Registrant
will receive a return on Sierra Marketplace which would require the payment of
additional interest. The maximum annual rate of interest including the
additional interest will not exceed 16% compounded annually. The terms of the
RAM 2 Loan additionally require Registrant to provide RAM 2 with a current
appraisal of Sierra Marketplace upon RAM 2's request. If it is determined, based
upon the requested appraisals, that the sum of (i) the principal balance of the
RAM 2 Loan plus all other then outstanding indebtedness secured by Sierra
Marketplace and (ii) all accrued and unpaid interest in excess of 5% per annum
of the principal balance of such mortgages exceeds 85% of the appraised value
(which event could possibly occur in a few years), an amount equal to such
excess shall become immediately due and payable to RAM 2. In the event that RAM
2 insisted upon such payment, Registrant might not have the liquidity to make
such payment. In that event, Registrant would attempt to negotiate terms for
such payment (which could include the reduction or elimination of cash
distributions), but could be forced to sell the property or seek other relief,
including protection under the bankruptcy laws, and in any event might
ultimately lose its investment in the property. Registrant provided an appraisal
to RAM 2 in 1994 and the appraisal indicated that no additional amounts were
due.
<PAGE>
Locale and Competition
Registrant believes that there are approximately 7.17 million square feet of
retail space in the Reno area, including two regional malls and 61 community,
neighborhood and strip centers. Sierra Marketplace is located in the southern
section of Reno, which is well-developed commercially along major thoroughfares
with substantial residential development along secondary streets. The primary
trade area is considered affluent to middle class. Although there is little room
left for significant new competing development in the immediate geographical
vicinity, the competition for non-anchor tenants (including existing tenants
whose leases expire) is strong among existing centers due to the overall market
vacancy for this type of space. In addition, a portion of the space left for
development in the immediate geographic vicinity is utilized by a center
predominantly tenanted by large anchor tenants of approximately 700,000 square
feet. Approximately 10% of the space is available to non-anchor tenants.
Generally, as a result of current real estate market conditions, new leases
being signed at Sierra Marketplace are at lower per-square-foot amounts than the
expiring leases.
Employees
Registrant does not have any employees. Services are currently performed for
Registrant by the Managing General Partner and Resources Supervisory Management
Corp., an affiliate of the Managing General Partner ("Resources Supervisory").
Certain services are performed for Resources Supervisory by CB Commercial Real
Estate Group, Inc., an unaffiliated management company ("CB Commercial").
Wexford currently performs accounting, secretarial, transfer and administrative
services for Registrant, and Registrant pays its pro rata portion of such
services.
Wexford also performs similar services for other affiliates of the Managing
General Partner.
Item 2. Properties
For a description of Registrant's property, see Item 1, "Business -- Sierra
Marketplace" above.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report through the solicitation of
proxies or otherwise.
<PAGE>
PART II
Item 5. Market for Registrant's Securities and Related Security Holder
Matters
There is no established public trading market for the Units of Registrant and it
is not anticipated that a public market for the Units will develop.
In 1987, the U.S. Congress adopted certain rules concerning "publicly traded
partnerships." Beginning in 1998, the effect of being classified as a publicly
traded partnership would be that income produced by the Registrant would be
taxed as a corporation. On November 29, 1995, the Internal Revenue Service
adopted final regulations ("Final Regulations") describing when interests in
partnerships will be considered to be publicly traded. The Final Regulations do
not take effect with respect to existing partnerships until the year 2006. Due
to the nature of the Registrant's income and to the low volume of transfers of
Units, it is not anticipated that the Registrant will be treated as a publicly
traded partnership under currently applicable rules and interpretations or under
the Final Regulations.
There are certain restrictions set forth in the Limited Partnership Agreement
which may limit the ability of a limited partner to transfer Units. Such
restrictions could impair the ability of a limited partner to liquidate its
investment in the event of an emergency or for any other reason.
As of March 1, 1997, there were approximately 1,480 holders of Units of
Registrant, owning an aggregate of 96,472 Units (including 10 Units held by the
initial Limited Partner).
Quarterly Distributions per Unit of Registrant for periods during 1996 and 1995
were as follows:
<TABLE>
<CAPTION>
Distribution with
Respect to Quarter Ended Amount of Distribution Per Unit
--------------------------- ------------------------------------
1996 1995
--------------------------- ------------------------------------
<S> <C> <C>
March 31 $ 3.13 $ 3.13
--------------------------- ------------------------------------
June 30 $ 3.13 $ 3.13
--------------------------- ------------------------------------
September 30 $ 3.13 $ 3.13
--------------------------- ------------------------------------
December 31 $ 3.13 $ 3.13
--------------------------- ------------------------------------
</TABLE>
During 1996 and 1995, the source of distributions was derived from cash flow
from operations.
There are no material legal restrictions set forth in the Limited Partnership
Agreement upon Registrant's present or future ability to make distributions.
See, however, Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a discussion of financial conditions
affecting Registrant's ability to make distributions in the future.
<PAGE>
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
Year ended December 31,
------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues ................. $ 2,637,022 $ 2,632,230 $ 2,477,410 $ 2,321,894 $ 2,269,592
Net Loss ................. $ (640,184) $ (442,098) $ (357,863) $ (298,167) $ (255,179)
Net (Loss) Per Unit (1) .. $ (6.57) $ (4.54) $ (3.67) $ (3.06) $ (2.62)
Distributions Per Unit (1) $ 12.52 $ 12.52 $ 12.50 $ 12.50 $ 11.24
Long-term Obligations (2) $ 15,691,865 $ 14,030,719 $ 12,548,175 $ 11,222,229 $ 10,036,393
Total Assets ............. $ 24,485,903 $ 24,652,234 $ 24,814,694 $ 25,186,722 $ 25,272,006
(1) Calculated based upon the weighted average number of Units outstanding.
(2) Consisting of the principal amount of the RAM 2 Loan plus deferred interest
thereon.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
Registrant's sole property is a community shopping center located in Reno,
Nevada containing approximately 233,000 square feet of net rentable area.
Registrant's public offering commenced on June 29, 1988 and, as of its
termination on June 29, 1990, Registrant had accepted subscriptions for 77,891
Units (not including Units held by the initial limited partner) for aggregate
proceeds of $17,282,066 (gross proceeds of $19,472,750 less organization and
offering costs aggregating $2,190,684). Registrant had committed 100% of its net
proceeds available for investment to the Sierra Marketplace acquisition. In
addition, pursuant to a settlement agreement, on December 19, 1990 Registrant
settled all claims with respect to its Short-Term Loans. As a part of this
transaction, Registrant sold 18,571 unregistered units to Integrated for
aggregate net proceeds of $4,120,441 (gross proceeds of $4,642,750 less
organization and offering costs aggregating $522,309) who in turn, sold these
units to Registrant's three bank creditors. On February 4, 1991, Integrated
purchased all of the 8,361 units owned by one of the banks. This transfer became
effective on April 1, 1991. Effective January 1, 1995, these units were
transferred to XRC Corp., the bankruptcy successor to Integrated.
Registrant uses working capital reserves set aside from the net proceeds of its
public offering and undistributed cash flow from operations as its primary
measure of liquidity. Registrant's working capital reserves initially consisted
of 5% of the gross proceeds from its public offering that were set aside. As of
December 31, 1996, working capital reserves are $1,454,000 which may be used to
fund capital expenditures, insurance, real estate taxes, and distributions to
partners. All of the above expenditures made during the year ended December 31,
1996 were funded from cash flow from operations.
<PAGE>
For 1996, Registrant paid distributions of cash flow from operations to Partners
on a quarterly basis aggregating a 5% return on the Partner's original
investment. For the quarter ended December 31, 1996, Registrant declared a
distribution of cash flow from operations to Partners which was consistent with
the prior three quarterly distributions representing a 5% annualized return on
the Partners' original investment. The final quarter distribution was paid
subsequent to December 31, 1996. Future distributions will depend upon results
from operations. Although there are three tenants that each accounted for more
than 10% of the total rental revenues of Sierra Marketplace, Registrant's sole
property, none of their leases are due to expire before the year 2003 and
Registrant is not aware of any significant problems with respect to these three
tenants. Registrant intends in the future to distribute less than all of its
cash flow from operations, when appropriate, to maintain adequate reserves for
capital improvements and capitalized lease procurement costs and to be in a
position to pay RAM 2, should a payment be required, in accordance with
Registrant's mortgage note. See Part 1 "Financing - RAM Loan". Thus, cash
distributions might be reduced even if operations continue at the current level.
To the extent that adjusted cash from operations during the operating years
exceeds 11% per annum, noncumulative, of original contributions of the offering,
such excess may be retained in a separate reserve account to prepay a portion of
the RAM 2 loan obligations. However, it is unlikely that adjusted cash flow will
exceed such a threshold in the near future.
The Managing General Partner believes that cash flow from operations combined
with current working capital reserves will be sufficient to fund future
essential capital expenditures. A significant portion of capital expenditures
consists of capitalized lease procurement costs. Since the level of leasing
activity cannot be predicted with any degree of certainty, Registrant cannot
accurately estimate capital expenditures for the remainder of the year, but
believes that its existing reserves will be sufficient.
Real Estate Market
The real estate market continues to suffer from the effects of the recent
recession which included a substantial decline in the market value of existing
properties. Furthermore, the competition for non-anchor tenants is strong among
existing centers in the Sierra Marketplace vicinity. This has hindered the lease
up of difficult rear space in Sierra Market Place. These factors may continue to
reduce rental rates. As a result, Registrant's potential for realizing the full
value of its investment in its property is at increased risk.
Write-down for Impairment
A write-down for impairment is recorded based upon a quarterly review of
Registrant's property. Real estate property is carried at the lower of cost or
estimated fair value. In performing the review, management considers the
estimated fair value of the property based on future cash flows, as well as
other factors, such as the current occupancy, the prospects for the property and
the economic situation in the region where the property is located.
Because this determination of estimated fair value is based upon projections of
future economic events which are inherently subjective, the amount ultimately
realized at disposition may differ materially from the carrying value as of
December 31, 1996.
<PAGE>
A write-down is inherently subjective and is based on management's best estimate
of current conditions and assumptions about expected future conditions. No
write-downs have been required to date. See "Write-down for Impairment" in Note
2 of the Financial Statements.
Results of Operations
1996 vs. 1995
The net loss increased for the year ended December 31, 1996 when compared to
1995. The increase was a result of a greater increase in costs and expenses than
the slight increase in revenues.
Revenues increased slightly for the year ended December 31, 1996 compared with
1995, primarily due to an increase in rental income partially offset by a
decrease in other income. Rental revenue increased due to an increase in
insurance escalations at the property. Other income decreased due to less
transfer fee income.
Costs and expenses increased for the year ended December 31, 1996 compared with
the prior year, primarily due to an increase in mortgage loan interest expense.
Mortgage loan interest expense increased due to the compounding effect from the
deferral of the interest expense on the zero coupon mortgage.
1995 vs. 1994
The net loss increased for the year ended December 31, 1995 compared to 1994, as
the increase in costs and expenses related to the property exceeded the increase
in revenues. Revenues increased overall for the year ended December 31, 1995
primarily due to an increase in rental and investment income. Rental and other
income increased due to an increase in rental rates offset by a slightly lower
occupancy level. Short-term interest income increased due to an increase in
interest rates coupled with an increase in the average funds held in reserve in
comparison to the same period in the prior year. Other income increased slightly
in the current year as a result of fluctuations in transfer fee income.
Costs and expenses increased for the year ended December 31, 1995 compared to
1994 due to increases in all categories except general and administrative
expenses and property management fees. Mortgage interest expense increased as a
result of the compounding of deferred interest expense on the zero coupon
mortgage. Operating expenses increased in the aggregate as a result of an
increase in utility and insurance expense, offset by all other operating
expenses either decreasing or remaining consistent with the prior years. Utility
expenses increased due to rate increases throughout the year and insurance
increased due to insurance premium increases. Partnership management fees
increased in conjunction with a rate increase in 1995.
Depreciation and amortization expense increased due to increases in tenant
improvements and leasing commissions.
Partnership management fees increased in 1995 compared to 1994 in conjunction
with a rate increase effective in the third quarter of 1994, which resulted in
an overall increase of the 1995 partnership management fee expense.
Administrative expense decreased in 1995 due to a decrease in payroll charges,
accounting fees, and rent expenses. Property management fees decreased in 1995
as a result of slight decreases in billed revenues in the second and third
quarters of 1995.
<PAGE>
Inflation
Inflation has not had a material impact on Registrant's operations or financial
condition during the last three years and is not expected to have a material
impact in the future.
<PAGE>
Item 8. Financial Statements and Supplementary Data
HIGH CASH PARTNERS, L.P.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
INDEX
Independent Auditor's Report
Independent Auditors' Report
Financial statements - years ended
December 31, 1996, 1995 and 1994
Balance sheets
Statements of operations
Statement of partners' equity
Statements of cash flows
Notes to financial statements
Schedule III:
Real estate and accumulated depreciation
All other financial statement schedules are omitted because they are not
applicable or the required information is shown on the financial statements or
notes thereto.
<PAGE>
To the Partners of
High Cash Partners, L.P.
Greenwich, Connecticut
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheets of High Cash Partners, L.P. (a
limited partnership) as of December 31, 1996 and 1995, and the related
statements of operations, partners' equity and cash flows for the years then
ended. Our audits also included the financial statement schedule listed in the
Index at Item 14(a)2. These financial statements and the financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on the financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of High Cash Partners, L.P. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
Hays & Company
February 21, 1997
New York, New York
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners of
High Cash Partners, L.P.
We have audited the accompanying statements of operations, partners' equity and
cash flows of High Cash Partners, L.P. (a Delaware limited partnership) for the
year ended December 31, 1994. Our audit also included the financial statement
schedule listed in the Index at Item 14(a)2 as it relates to the year ended
December 31, 1994. These financial statements and the financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of High Cash Partners, L.P.
for the year ended December 31, 1994 in conformity with generally accepted
accounting principles. Also, in our opinion, such financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
March 16, 1995
Deloitte & Touche
<PAGE>
<TABLE>
<CAPTION>
HIGH CASH PARTNERS, L.P.
BALANCE SHEETS
December 31,
------------------------------
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Real estate, net ............................ $ 22,465,506 $ 22,869,017
Cash and cash equivalents ................... 1,774,565 1,407,276
Other assets ................................ 93,509 117,583
Tenant receivables .......................... 78,929 156,608
Prepaid insurance premiums .................. 73,394 42,357
Prepaid real estate taxes ................... -- 59,393
------------ ------------
$ 24,485,903 $ 24,652,234
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgage loan payable ....................... $ 6,500,000 $ 6,500,000
Deferred interest payable ................... 9,191,865 7,530,719
Distributions payable ....................... 305,007 305,007
Accounts payable and accrued expenses ....... 125,520 90,330
Due to affiliates ........................... 78,817 80,870
Tenants' security deposits payable .......... 55,259 55,659
------------ ------------
Total liabilities ..................... 16,256,468 14,562,585
------------ ------------
Commitments and contingencies (Notes 3, 4, 5 and 8)
Partners' equity
Limited partners' equity (96,472 units issued
and outstanding) ...................... 8,387,322 10,228,934
General partners' deficit ................... (157,887) (139,285)
------------ ------------
Total partners' equity ................ 8,229,435 10,089,649
------------ ------------
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIGH CASH PARTNERS, L.P.
STATEMENTS OF OPERATIONS
Year ended December 31,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Revenues
Rental income ..................... $ 2,562,666 $ 2,556,124 $ 2,426,071
Other income ...................... 1,640 4,900 3,010
Interest income ................... 72,716 71,206 48,329
----------- ----------- -----------
2,637,022 2,632,230 2,477,410
----------- ----------- -----------
Costs and expenses
Mortgage loan interest ............ 1,661,146 1,482,544 1,325,946
Operating ......................... 604,082 595,487 544,908
Depreciation and amortization ..... 478,846 476,282 461,663
Partnership management fees ....... 301,475 301,475 271,328
Administrative .................... 152,073 141,545 148,231
Property management fees .......... 79,584 76,995 83,197
----------- ----------- -----------
3,277,206 3,074,328 2,835,273
----------- ----------- -----------
Net loss ................................. $ (640,184) $ (442,098) $ (357,863)
=========== =========== ===========
Net loss attributable to
Limited partners .................. $ (633,782) $ (437,677) $ (354,284)
General partners .................. (6,402) (4,421) (3,579)
----------- ----------- -----------
$ (640,184) $ (442,098) $ (357,863)
=========== =========== ===========
Net loss per unit of limited partnership
intinterest6(96,472iunitstoutstanding) $ (6.57) $ (4.54) $ (3.67)
=========== =========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIGH CASH PARTNERS, L.P.
STATEMENT OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
General Limited Total
Partners' Partners' Partners'
Deficit Equity Equity
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1994 ............... $ (106,905) $ 13,434,625 $ 13,327,720
Net loss - 1994 ........................ (3,579) (354,284) (357,863)
Distributions to partners
($12.50 per limited partner unit) (12,180) (1,205,900) (1,218,080)
------------ ------------ ------------
Balance, December 31, 1994 ............. (122,664) 11,874,441 11,751,777
Net loss - 1995 ........................ (4,421) (437,677) (442,098)
Distributions to partners
($12.52 per limited partner unit) (12,200) (1,207,830) (1,220,030)
------------ ------------ ------------
Balance, December 31, 1995 ............. (139,285) 10,228,934 10,089,649
Net loss - 1996 ........................ (6,402) (633,782) (640,184)
Distributions to partners
($12.52 per limited partner unit) (12,200) (1,207,830) (1,220,030)
------------ ------------ ------------
Balance, December 31, 1996 ............. $ (157,887) $ 8,387,322 $ 8,229,435
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIGH CASH PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
Year ended December 31,
---------------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net loss ........................................... $ (640,184) $ (442,098) $ (357,863)
Adjustments to reconcile net loss to net cash
provided by operating activities
Deferred interest expense ............... 1,661,146 1,482,544 1,325,946
Depreciation and amortization ........... 478,846 476,282 461,663
Stepped lease rentals ................... 10,346 13,180 (12,082)
Changes in assets and liabilities
Tenant receivables ........................... 77,679 (127,993) 22,055
Other assets ................................. (13,048) (20,912) (10,311)
Prepaid real estate taxes .................... 59,393 (611) (1,670)
Prepaid insurance premiums ................... (31,037) 3,857 (31,110)
Accounts payable and accrued expenses ........ 35,190 18,817 (14,459)
Due to affiliates ............................ (2,053) (5,625) 74,352
Tenants' security deposits payable ........... (400) 1,983 2,250
----------- ----------- -----------
Net cash provided by operating activities 1,635,878 1,399,424 1,458,771
----------- ----------- -----------
Cash flows from investing activities
Additions to real estate ........................... (48,559) (17,000) (153,681)
----------- ----------- -----------
Cash flows from financing activities
Distributions to partners .......................... (1,220,030) (1,218,081) (1,402,254)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents ................................... 367,289 164,343 (97,164)
Cash and cash equivalents, beginning of year .............. 1,407,276 1,242,933 1,340,097
----------- ----------- -----------
Cash and cash equivalents, end of year .................... $ 1,774,565 $ 1,407,276 $ 1,242,933
=========== =========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1 ORGANIZATION
High Cash Partners, L.P. (formerly High Income Partners L.P. - Series
87) (the "Partnership") was formed in May, 1986, pursuant to the
Delaware Revised Uniform Limited Partnership Act, for the purpose of
acquiring and operating real estate. The Partnership will terminate on
December 31, 2030 or sooner, in accordance with the terms of the
Amended and Restated Agreement of Limited Partnership (the "Limited
Partnership Agreement"). The Partnership filed a Form S-11 registration
statement with the Securities and Exchange Commission which became
effective on June 29, 1988, covering an offering of 400,000 limited
partnership units (subject to an increase if the Underwriter exercised
its right to sell an additional 200,000 units) at $250 per unit.
The Partnership's public offering terminated on June 29, 1990 at which
time the Partnership had accepted subscriptions for 77,901 limited
partnership units (including those units sold to the initial limited
partner) for aggregate net proceeds of $17,284,566 (gross proceeds of
$19,475,250 less organization and offering costs aggregating
$2,190,684). The Partnership received $2,500 and $1,000 for
contributions to the Partnership from the initial limited partner and
the general partners, respectively. The Partnership had committed 100%
of its net proceeds available for investment to the Sierra Marketplace
acquisition, a retail shopping center.
The Partnership sold 18,571 unregistered limited partnership units to
Integrated Resources, Inc. ("Integrated") the former parent of the
Managing General Partner of the Partnership, for aggregate net proceeds
of $4,120,441 (gross proceeds of $4,642,750 less organization and
offering costs aggregating $522,309). Simultaneously, Integrated sold
these units to the Partnership's three bank creditors. The sale of the
aforementioned units, effective January 1, 1991, was part of a
transaction which enabled the Partnership to repay its unsecured loans
on December 19, 1990.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Leases
The Partnership accounts for its leases under the operating method.
Under this method, revenue is recognized as rentals become due, except
for stepped leases where revenue is recognized on a straight-line basis
over the life of the lease.
Depreciation
Depreciation is computed using the straight-line method over the
estimated useful life of the property, which is approximately 40 years.
The cost of the property represents the initial cost of the property to
the Partnership plus acquisition and closing costs. Repairs and
maintenance are charged to operations as incurred.
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Write-down for impairment
A write-down for impairment is recorded based upon a quarterly review
of the property in the Partnership's portfolio. Real estate property is
carried at the lower of depreciated cost or estimated fair value. In
performing this review, management considers the estimated fair value
of the property based upon the undiscounted future cash flows, as well
as other factors such as the current occupancy, the prospects for the
property and the economic situation in the region where the property is
located. Because this determination of estimated fair value is based
upon future economic events, the amounts ultimately realized upon a
disposition may differ materially from the carrying value.
A write-down is inherently subjective and is based upon management's
best estimate of current conditions and assumptions about expected
future conditions. The Partnership may provide for write-downs in the
future and such write-downs could be material. A write-down for
impairment was not required for the years ended December 31, 1996, 1995
and 1994.
Financial statements
The financial statements include only those assets, liabilities and
results of operations which relate to the business of the Partnership.
Cash and cash equivalents
For the purpose of the statements of cash flows, the Partnership
considers all short-term investments which have original maturities of
three months or less to be cash equivalents.
Substantially all of the Partnership's cash and cash equivalents are
held at one financial institution.
Fair value of financial instruments
The fair value of financial instruments is determined by reference to
market data and other valuation techniques as appropriate. The
Partnership's financial instruments include cash and cash equivalents
and a mortgage loan payable. Unless otherwise disclosed, the fair value
of financial instruments approximates their recorded values.
Net loss and distributions per unit of limited partnership interest
Net loss and distributions per unit of limited partnership interest are
computed based upon the number of units outstanding (96,472) during the
years ended December 31, 1996, 1995 and 1994.
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
No provisions have been made for federal, state and local income taxes,
since they are the personal responsibility of the partners.
The income tax returns of the Partnership are subject to examination by
federal, state and local taxing authorities. Such examinations could
result in adjustments to Partnership losses, which changes could effect
the income tax liability of the individual partners.
Reclassifications
Certain reclassifications have been made to the financial statements
shown for the prior years in order to conform to the current year's
classifications.
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.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The Managing General Partner of the Partnership, Resources High Cash,
Inc., was until November 3, 1994, a wholly-owned subsidiary of
Integrated, at which time, pursuant to the consummation of Integrated's
Plan of Reorganization, substantially all the assets of Integrated, but
not the stock of the Managing General Partner, were sold to Presidio
Capital Corp. ("Presidio"). Presidio is also the parent of other
corporations that are, or may be in the future, engaged in businesses
that may be in competition with the Partnership. Accordingly, conflicts
of interest may arise between the Partnership and such other
businesses.
Effective April 1, 1991, Integrated purchased, in an arms-length
transaction from an unaffiliated third party, 8,361 limited partnership
units. Effective January 1, 1995 pursuant to the consummation of
Integrated's Plan of Reorganization, these units were transferred to
XRC Corp. For the years ended December 31, 1996, 1995 and 1994
Integrated and/or XRC Corp. earned quarterly distributions from those
units of $104,680, $104,680 and $104,513, respectively.
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
(continued)
Wexford Management Corp. had been engaged to perform management and
administrative services to Presidio, XRC Corp. and its direct and
indirect subsidiaries as well as the Partnership. Wexford Management
Corp. was engaged to perform similar services for other entities which
may be in competition with the Partnership. Effective January 1, 1996,
Wexford Management Corp., formerly Concurrency Management Corp.,
assigned its agreement to provide management and administrative
services to Presidio and its subsidiaries to Wexford Management LLC
("Wexford"). During 1996, amounts paid to Wexford for management and
administrative services provided to the Partnership amounted to
$46,226.
In December, 1994, Fourth Group Partners notified the Partnership of
its withdrawal as Associate General Partner. The withdrawal became
effective on February 28, 1995. Upon the effective date of the
withdrawal, Presidio AGP Corp., a Delaware corporation, which is a
subsidiary of Presidio, became the Associate General Partner.
Affiliates of the General Partners are also engaged in businesses
related to the acquisition and operation of real estate. An affiliated
partnership, Resources Accrued Mortgage Investors 2 L.P. ("RAM 2"),
whose managing general partner is also owned by Presidio, made a zero
coupon first mortgage loan to the Partnership and conflicts could arise
with respect to such loan (Note 5).
The Partnership has entered into a supervisory management agreement
with Resources Supervisory Management Corp. ("Resources Supervisory"),
an affiliate of the Managing General Partner, to perform certain
functions related to the management of the property. A portion of the
property management fees payable to Resources Supervisory were paid to
an unaffiliated management company which was engaged for the purpose of
performing the management functions for certain properties. For the
years ended December 31, 1996, 1995 and 1994, Resources Supervisory was
entitled to receive $79,584, $76,995 and $83,197, respectively, of
which $65,364, $56,666 and $61,095, respectively, was paid to the
unaffiliated management company.
For managing the affairs of the Partnership, the Managing General
Partner is entitled to receive a partnership management fee in an
annual amount equal to a percentage of the gross offering proceeds as
follows: 1/8% until the third anniversary date of the offering; 1%
until the sixth anniversary and 1.25% thereafter. For the years ended
December 31, 1996, 1995 and 1994, the Managing General Partner was
entitled to a partnership management fee of $301,475, $301,475 and
$271,328, respectively.
The General Partners are allocated 1% of the net income or losses of
the Partnership and are also entitled to receive 1% of distributions.
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
4 REAL ESTATE
Real estate assets represent the Partnership's sole acquisition, Sierra
Marketplace, a community marketplace located in Reno, Nevada which was
purchased by the Partnership on February 10, 1989, and is summarized as
follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Land ................................... $ 8,868,859 $ 8,868,859
Building and improvements .............. 17,065,377 17,016,818
----------- -----------
25,934,236 25,885,677
Less accumulated depreciation .......... 3,468,730 3,016,660
----------- -----------
$22,465,506 $22,869,017
=========== ===========
</TABLE>
The land, building and improvements are collateralized by the mortgage
payable.
During 1996 and 1995, three tenants each accounted for in excess of 10%
of the Partnership's rental revenues. Such tenants accounted for
approximately 20.8%, 19.5% and 16.9% during 1996 and 20.6%, 19.3% and
16.7% during 1995 with leases expiring in the years 2008, 2003 and
2008, respectively.
Minimum future rental payments receivable, excluding operating
escalations and other charges, due from tenants pursuant to the terms
of existing noncancelable leases as of December 31, 1996 are
approximately as follows:
<TABLE>
<CAPTION>
<S> <C>
Year ending December 31,
1997 $ 2,025,000
1998 1,837,000
1999 1,454,000
2000 1,363,000
2001 1,270,000
Thereafter 7,055,000
-----------
$15,004,000
===========
</TABLE>
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
5 MORTGAGE LOAN PAYABLE
The mortgage loan payable represents a zero coupon first mortgage loan
held by RAM 2, a public limited partnership sponsored by affiliates of
the General Partners. The mortgage loan bears interest at the rate of
11.22% per annum, compounded monthly. The principal balance, along with
deferred interest thereon, which is estimated to aggregate $24,966,653,
is due on February 28, 2001. The mortgage loan may not be prepaid,
except in the event of condemnation or casualty, until after the
expiration of the tenth year of the mortgage loan and then may be
prepaid, in whole only, for the remainder of the term without penalty
or premium.
In accordance with the terms of the mortgage, additional interest may
be payable equal to 23.9% of the appreciation in the value of the
property after payment of a specified return to the Partnership.
The maximum annual rate of interest, including the additional interest,
is not to exceed 16% compounded annually and is due on the earlier of
the maturity date or the date the mortgage loan is prepaid.
Additionally, the terms of the mortgage loan require the Partnership to
provide RAM 2 with a current appraisal of the property upon RAM 2's
request. If it is determined, based upon the requested appraisals, that
the sum of (i) the principal balance of the mortgage loan plus all
other then outstanding indebtedness secured by the property and (ii)
all accrued and unpaid interest in excess of 5% per annum of the
principal balance of such mortgages, exceeds 85% of the appraised
value, an amount equal to such excess shall become immediately due and
payable to RAM 2. In the event that RAM 2 insisted upon such payment,
the Partnership might not have the liquidity to make such payment. In
such event, the Partnership would attempt to negotiate terms for such
payment (which could include the reduction or elimination of cash
distributions to the partners), but could be forced to sell the
property or seek other relief, including protection under the
bankruptcy laws, and in any event might ultimately lose its investment
in the property.
6 DISTRIBUTIONS PAYABLE
Distributions payable are as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------
1996 1995
--------- ---------
<S> <C> <C>
Limited partners $ 301,957 $ 301,957
General partners 3,050 3,050
--------- ---------
$ 305,007 $ 305,007
========= =========
</TABLE>
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
6 DISTRIBUTIONS PAYABLE Continued)
Distributions were paid in the quarters subsequent to December 31, 1996
and 1995, respectively.
7 DUE TO AFFILIATES
The amounts due to affiliates are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------
1996 1995
-------- ---------
<S> <C> <C>
Partnership Management Fee $ 75,368 $ 75,369
Supervisory Management Fee 3,449 5,501
--------- ---------
$ 78,817 $ 80,870
========= =========
</TABLE>
Amounts due to affiliates were paid in the quarters subsequent to
December 31, 1996 and 1995, respectively.
8 STATUS OF INTEGRATED
On February 13, 1990, Integrated, then the sole shareholder of the
Managing General Partner, filed a voluntary petition for reorganization
under Chapter 11 of the United States Bankruptcy Code. While the
Integrated bankruptcy did not directly affect the Partnership's
operations, it has resulted in certain changes.
On August 8, 1994, the Bankruptcy Court confirmed a Plan of
Reorganization (the "Steinhardt Plan") proposed by Steinhardt
Management Company, Inc. and the Official Committee of Subordinated
Bondholders and on November 3, 1994, the Steinhardt Plan was
consummated. Presidio purchased substantially all of the assets of
Integrated but not the stock of the Managing General Partner. The
assets not purchased by Presidio in connection with the consummation of
the Steinhardt Plan, including the stock of the Managing General
Partner, were transferred to XRC Corp. ("XRC"). XRC, a Delaware
Corporation, was at the time it was created, a newly formed subsidiary
of Integrated and, following the consummation of the Steindhardt Plan,
is owned 12% by IR Partners, a general partnership and 88% by former
creditors of Integrated.
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
8 STATUS OF INTEGRATED (continued)
Subject to the rights of the Limited Partners under the Limited
Partnership Agreement, XRC will control the Partnership through its
ownership of the shares of the Managing General Partner and, as of
February 28, 1995, the Associate General Partner. XRC is managed by
Presidio Management Company, LLC ("Presidio Management"), a company
controlled by a director of Presidio and XRC. Presidio Management is
responsible for the day to day management of XRC and, among other
things, has authority to designate directors of the Managing General
Partner. In March 1996, Presidio Management assigned its agreement for
the day-to-day management of XRC to Wexford.
XRC has elected new directors for the Managing General Partner and
Resources Supervisory. However, one executive remains the same and
certain of Integrated's former employees who performed services for the
Partnership are now employees of Wexford, which provides administrative
services to XRC and the Partnership.
9 RECONCILIATION OF NET LOSS AND NET ASSETS PER FINANCIAL STATEMENTS TO
TAX BASIS
The Partnership files its tax return on an accrual basis. The
Partnership has computed depreciation for tax purposes using the
Modified Accelerated Cost Recovery System, which is not in accordance
with generally accepted accounting principles. A reconciliation of net
loss per financial statements to the tax basis of accounting is as
follows:
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Net loss per financial statements ..... $(640,184) $(442,098) $(357,863)
Tax depreciation in excess of financial
statement depreciation ................ (87,846) (89,976) (100,464)
--------- --------- ---------
Net loss per tax basis ................ $(728,030) $(532,074) $(458,327)
========= ========= =========
</TABLE>
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
9 RECONCILIATION OF NET LOSS AND NET ASSETS PER FINANCIAL STATEMENTS TO
TAX BASIS (continued)
The differences between the Partnership's net assets per financial
statements and the tax basis of accounting are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1996 1995
------------ -------------
<S> <C> <C>
Net assets per financial statements ...... $ 8,229,435 $ 10,089,649
Cumulative tax depreciation in excess
of financial statement depreciation ...... (679,037) (591,191)
Syndication costs ........................ 2,712,993 2,712,993
------------ ------------
Net assets per tax basis ................. $ 10,263,391 $ 12,211,451
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HIGH CASH PARTNERS, L.P.
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
COSTS CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED AT
PARTNERSHIP ACQUISITION CLOSE OF PERIOD
------------------------ ------------------- ----------------------------------
BUILDING BUILDING
AND AND
ENCUM- IMPROVE IMPROVE CARRYING IMPROVE
DESCRIPTION BRANCES LAND MENTS MENTS COSTS LAND MENTS TOTAL
- ----------- ------- ---- ----- ----- ----- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sierra Marketplace
Retail Shopping Center
Reno, Nevada $15,691,865 $ 8,868,859 $16,494,467 $ 570,910 $ - $ 8,868,859 $17,065,377 $25,934,236
----------- ----------- ----------- ----------- ----- ----------- ----------- -----------
<CAPTION>
HIGH CASH PARTNERS, L.P.
Schedule III - REAL ESTATE AND ACCUMULATED DEPRECIATION (continued)
DECEMBER 31, 1996
LIFE ON WHICH
DEPRECIATION IN
DATE OF LATEST INCOME
ACCUMULATED CONSTRUC- DATE STATEMENTS
DESCRIPTION DEPRECIATION TION ACQUIRED IS COMPUTED
- ----------- ------------- --------- -------- ----------------
<S> <C> <C> <C> <C>
Sierra Marketplace
Retail Shopping Center Straight-line method
Reno, Nevada $ 3,468,730 10/88 2/89 40 years
------------- ----- ---- --------
<CAPTION>
Year ended December 31,
-------------------------------------------------
1994 1995 1996
------------- ------------- --------------
<S> <C> <C> <C>
(A) RECONCILIATION OF REAL ESTATE OWNED
Balance at beginning of year $ 25,714,996 $ 25,868,677 $ 25,885,677
Additions during year
Purchases 153,681 17,000 48,559
------------- ------------- -------------
Balance at end of year $ 25,868,677 $ 25,885,677 $ 25,934,236
------------- ------------- -------------
<PAGE>
<CAPTION>
Year ended December 31,
-------------------------------------------------
1994 1995 1996
------------- ------------- --------------
<S> <C> <C> <C>
(B) RECONCILIATION OF ACCUMULATED DEPRECIATION
Balance at beginning of year $ 2,130,682 $ 2,567,522 $ 3,016,660
Additions during year
Depreciation 436,840 449,138 452,070
------------- ------------- -------------
Balance at end of year $ 2,567,522 $ 3,016,660 $ 3,468,730
------------- ------------- -------------
Note: The aggregate cost for income tax purposes is $25,934,236 at December 31,
1996.
</TABLE>
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of Registrant
Registrant has no officers or directors. The Managing General Partner manages
and controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters affecting its business. The
Associate General Partner, in its capacity as such, does not devote any material
amount of its business time and attention to Registrant's affairs.
Based on a review of Forms 3 and 4 and amendments thereto furnished to
Registrant pursuant to Rule 16a-3(e) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), during its most recent fiscal year and Forms 5
and amendments thereto furnished to Registrant with respect to its most recent
fiscal year and written representations received pursuant to Item 405(b)(2)(i)
of Regulation S-K, none of the Managing General Partner, directors or officers
of the Managing General Partner or beneficial owners of more than 10% of the
Units failed to file on a timely basis reports required by Section 16(a) of the
Exchange Act during the most recent fiscal or prior fiscal years. However,
written representations were not received from the partners of the former
Associate General Partner.
As of March 1, 1997, the names and ages of, as well as the positions held by,
the officers and directors of the Managing General Partner were as follows:
<TABLE>
<CAPTION>
Has served as a Director and/or
Officer of the Managing General
Name Age Positions Held Partner since
- --------------------------- ----------- -------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
Frederick Simon 42 Director and President February 1996
- --------------------------- ----------- -------------------------------------------- ----------------------------------------
Robert Holtz 29 Director and Vice President November 1994, February 1996
- --------------------------- ----------- -------------------------------------------- ----------------------------------------
Mark Plaumann 41 Director and Vice President March 1995
- --------------------------- ----------- -------------------------------------------- ----------------------------------------
Jay L. Maymudes 36 Vice President, Secretary and Treasurer November 1994
- --------------------------- ----------- -------------------------------------------- ----------------------------------------
Arthur H. Amron 40 Vice President and Assistant Secretary November 1994
- --------------------------- ----------- -------------------------------------------- ----------------------------------------
Frank Goveia 50 Vice President May 1986
- --------------------------- ----------- -------------------------------------------- ----------------------------------------
</TABLE>
All of the directors will hold office until the next annual meeting of
stockholders of the Managing General Partner and until their successors are
elected and qualified.
There are no family relationships between any executive officer and any other
executive officer or director of the Managing General Partner.
<PAGE>
Frederick Simon was a Senior Vice President of Wexford Management Corp. from
November 1995 to December 1995. Since January 1996, Mr. Simon has been a Senior
Vice President of Wexford. He is also a Vice President of Resurgence Properties
Inc. ("Resurgence"), a company engaged in diversified real estate activities.
From January 1994 through November 1995, Mr. Simon was an independent real
estate investor. From 1984 through 1993, Mr. Simon was Executive Vice President
and a Partner of Greycoat Real Estate Corporation, the United States arm of
Greycoat PLC, a London stock exchange real estate investment and development
company.
Robert Holtz has been a Vice President and Secretary of Presidio since its
formation in August 1994 and a Vice President and Assistant Secretary of
Resurgence since its formation in March 1994. Since January 1, 1996, Mr. Holtz
has been a Senior Vice President and member of Wexford and was a Vice President
of Wexford Management Corp. from May 1994 to December 1995. From 1989 through
May 1994, Mr. Holtz was employed by, and since 1993 was a Vice President of,
Bear Stearns Real Estate Group, Inc., where he was responsible for analysis,
acquisitions and management of the assets owned by Bear Stearns Real Estate and
its clients.
Mark Plaumann has served as Director and Vice President of Presidio since March
1995. Mr. Plaumann has been a Senior Vice President of Wexford since January
1996. From February 1995 through December 1995, Mr. Plaumann had been a Senior
Vice President of Wexford Management Corp. Mr. Plaumann was employed by Alvarez
and Marsel, Inc. as a Managing Director from February 1990 through January 1995,
by American Healthcare Management Inc. from February 1985 to January 1990 and by
Ernst & Young from January 1973 to February 1985.
Jay L. Maymudes has been the Chief Financial Officer, a Vice President and
Treasurer of Presidio since its formation in August 1994 and the Chief Financial
Officer and a Vice President of Resurgence since July 1994, Secretary of
Resurgence since January 1995 and Assistant Secretary from July 1994 to January
1995. Since January 1, 1996, Mr. Maymudes has been the Chief Financial Officer
and a Senior Vice President of Wexford and was the Chief Financial Officer and a
Vice President of Wexford Management Corp. from July 1994 to December 1995. From
December 1988 through June 1994, Mr. Maymudes was the Secretary and Treasurer,
and since February 1990 was the Senior Vice President of Dusco, Inc., a real
estate investment advisor.
Arthur H. Amron has been a Vice President of certain subsidiaries of Presidio
since November 1994. Since January 1996, Mr. Amron has been a Senior Vice
President and the General Counsel of Wexford. Also, from November 1994 to
December 1995, Mr. Amron was the General Counsel and, since March 1995, a Vice
President of Wexford Management Corp. From 1992 through November 1994, Mr. Amron
was an attorney with the law firm of Schulte, Roth and Zabel. Previously, Mr.
Amron was an attorney with the law firm of Debevoise & Plimpton.
Frank Goveia has been the Chief Operating Officer and a Senior Vice President of
Wexford since January 1996. From July 1994 to December 1995, Mr. Goveia was a
Vice President of Wexford Management Corp. Mr. Goveia was associated with
Integrated from February 1983 to November 1994, and was a Senior Vice President
since 1990, primarily involved in financial reporting and controls.
In December 1994, Fourth Group Partners notified Registrant of its withdrawal as
the Associate General Partner of Registrant. The withdrawal became effective,
after 60 days prior written notice to Limited Partners, on February 28, 1995.
Upon the effective date of such withdrawal, Presidio AGP became the Associate
General Partner.
<PAGE>
The following is the list of the officers and directors of Presidio AGP, the
Associate General Partner of Registrant:
<TABLE>
<CAPTION>
Has served as a Director and/or
Officer of the Managing General
Name Age Positions Held Partner since
- --------------------------- ----------- ---------------------------------------------- ---------------------------------
<S> <C> <C> <C>
Robert Holtz 29 Director and President March 1995
- --------------------------- ----------- ---------------------------------------------- ---------------------------------
Mark Plaumann 41 Director and Vice President March 1995
- --------------------------- ----------- ---------------------------------------------- ---------------------------------
Jay L. Maymudes 36 Vice President, Secretary and Treasurer March 1995
- --------------------------- ----------- ---------------------------------------------- ---------------------------------
Arthur H. Amron 40 Vice President and Assistant Secretary March 1995
- --------------------------- ----------- ---------------------------------------------- ---------------------------------
</TABLE>
See the biographies of the above named officers and directors in the preceding
section.
Many of the above officers and directors of the Managing General Partner and the
current Associate General Partner are also officers and/or directors of the
general partners of other public partnerships which are affiliated with Presidio
or of subsidiaries of Presidio.
Item 11. Executive Compensation
Registrant is not required to and did not pay remuneration to the officers and
directors of the Managing General Partner or of the new Associate General
Partner, nor to the partners of the former Associate General Partner. Certain
officers and directors of the Managing General Partner receive compensation from
the Managing General Partner, XRC and/or their affiliates (but not from
Registrant) for services performed for various affiliated entities, which may
include services performed for Registrant; however, the Managing General Partner
believes that any compensation attributable to services performed for Registrant
is not material. See Item 13, "Certain Relationships and Related Transactions."
Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 1, 1997, only the following persons were known by Registrant to be
the beneficial owners of more than 5% of Registrant's Units:
<TABLE>
<CAPTION>
% of Units
Limited Partner # of Units Owned Outstanding
<S> <C> <C>
- ----------------------------------------------------------------------------------
XRC Corp. (1) 8,361 8.7%
c/o Wexford Management LLC
411 West Putnam
Avenue Greenwich, CT 06830
- ----------------------------------------------------------------------------------
Equity Resources Fund XIV 8,998 9.3%
Limited Partnership (2)
14 Story Street
Cambridge, MA 02138
- ----------------------------------------------------------------------------------
<PAGE>
(1) Effective January 1, 1995, pursuant to the consummation of Integrated's
bankruptcy, the Units were transferred by Integrated to XRC. Integrated
had previously purchased all of the Units owned by First American
National Bank of Tennessee ("FANB Tennessee"), one of the three banks
that held a Short-Term Loan, on February 4, 1991, at a price of $45 per
Unit for an aggregate purchase price of $376,245. This transfer became
effective on April 1, 1991. FANB Tennessee originally purchased its
Units from Integrated pursuant to a settlement agreement dated as of
October 17, 1990 among Registrant, Integrated and the Banks (the
"Settlement Agreement").
(2) Equity Resources Fund XIV Limited Partnership purchased all of these
Units from FIB Washington on February 8, 1993. The transfer was
effective as of April 1, 1993. FIB Washington had originally purchased
all of these Units from Integrated pursuant to the Settlement Agreement
at a price of $203.75 per Unit for an aggregate purchase price of
$1,833,342.50.
</TABLE>
As of March 1, 1997, neither of the General Partners nor their directors and
officers was known by Registrant to beneficially own any Units of Registrant or
shares of XRC, the parent of the Managing General Partner.
As of March 1, 1997, there were 10,000,000 shares of outstanding common stock of
XRC (the "Shares"). The following table sets forth certain information known to
Registrant with respect to beneficial ownership of the Shares, U.S. $.01 par
value as of November 3, 1994 by each person who beneficially owns 5% or more of
the Shares $.01 par value. The shareholders of XRC are entitled to elect the
five members of XRC's Board of Directors.
<TABLE>
<CAPTION>
Beneficial Ownership
Name of Beneficial Owner Number of Shares Percentage Outstanding
- ---------------------------------- ------------------------------------------------------
<S> <C> <C>
IR Partners 1,200,000 (1) 12.0%
- ---------------------------------- ------------------------------------------------------
Thomas F. Steyer/Fleur A. Fairman 2,333,719 (2) 23.3%
- ---------------------------------- ------------------------------------------------------
John M. Angelo/Michael L. Gordon 1,196,804 (3) 11.9%
- ---------------------------------- ------------------------------------------------------
(1) IR Partners is a general partnership whose general partners are
Steinhardt Management Company Inc. ("Steinhardt Management"), certain of
its affiliates and accounts managed by it and Roundhill Associates.
Roundhill Associates is a limited partnership whose general partner is
Charles E. Davidson, the Chairman of the Board of Presidio. Pursuant to
Rule 13d-3 under the Exchange Act, each of Michael Steinhardt, the
controlling person of Steinhardt Management and its affiliates, and
Charles E. Davidson may be deemed to be beneficial owners of such
1,200,000 shares.
The address of IR Partners and Michael Steinhardt and his affiliates is
605 Third Avenue, 33rd Floor, New York, New York 10158; the address of
Charles E. Davidson is c/o Wexford Management LLC, 411 West Pentium
Avenue, Greenwich, CT 06830.
<PAGE>
(2) As the managing partners of each of Farallon Capital Partners, L.P.
("FCP"), Farallon Capital Institutional Partners, L.P. ("FCIP"), Farallon
Capital Institutional Partners II, L.P. ("FCIP II") and Tinicum Partners,
L.P. ("Tinicum"), (collectively, the "Farallon Partnerships"), may each
be deemed to own beneficially for purposes of Rule 13d-3 of the Exchange
Act the 1,397,318, 1,610,730, 607,980 and 241,671 shares held,
respectively, by each of such Farallon Partnerships.
Farallon Capital Management, LLC ("FCMLLC"), the investment advisor to
certain discretionary accounts which collectively hold 695,861 shares and
Enrique H. Boilini, David I. Cohen, Joseph F. Downes, Jason M. Fish,
Andrew B. Fremder, William F. Mellin, Steven L. Millham, Meridee A. Moore
and Thomas F. Steyer, as a managing member of FCMLLC (collectively, the
"Managing Members") may be deemed to be the beneficial owner of all of
the shares owned by such discretionary accounts. FCMLLC and each Managing
Member disclaims any beneficial ownership of such shares.
Farallon Partners, LLC ("FPLLC") (the general partner of FCP, FCIP, FCIP
II and Tinicum), and each of Fleur A. Fairman, Mr. Boilini, Mr. Cohen,
Mr. Downes, Mr. Fish, Mr. Fremder, Mr. Mellin, Mr. Millham, Ms. Moore and
Mr. Steyer, each as managing member of FPLLC (collectively, the "Managing
Members"), may be deemed to be the beneficial owner of all of the shares
owned by FCP, FCIP, FCIP II and Tinicum. FPLLC and each managing Member
disclaims any beneficial ownership of such shares.
(3) John M. Angelo and Michael L. Gordon, the general partners and
controlling persons of AG Partners, L.P., which is the general partner of
Angelo, Gordon & Co., L.P., may be deemed to have beneficial ownership
under Section 13(d) of the Exchange Act of the securities beneficially
owned by Angelo, Gordon & Co., L.P. and its affiliates. Angelo, Gordon &
Co., L.P., a registered investment advisor, serves as general partner of
various limited partnerships and as investment advisor of third party
accounts with power to vote and direct the disposition of Class A Shares
owned by such limited partnerships and third party accounts.
The address of Thomas F. Steyer and the other individuals mentioned in
footnote 1 to the table above (other than Fleur A. Fairman) is c/o
Farallon Capital Partners, L.P., One Maritime Plaza, San Francisco,
California 94111 and the address of Fleur A. Fairman is c/o Farallon
Capital Management, Inc., 800 Third Avenue, 40th Floor, New York, New
York 10022. The address of Angelo, Gordon and Co., L.P. and its affiliate
is 245 Park Avenue, 26th Floor, New York, NY 10167.
</TABLE>
<PAGE>
Item 13. Certain Relationships and Related Transactions
The General Partners and certain affiliated entities have, during the year ended
December 31, 1996, earned or received compensation or payments for services from
or with respect to Registrant as follows:
<TABLE>
<CAPTION>
Name of Recipient Capacity in Which Served Compensation
-------------------------------------------------- -------------------------------------------- ------------------
<S> <C> <C>
Resources High Cash, Inc. (1) Managing General Partner $ 313,555
-------------------------------------------------- -------------------------------------------- ------------------
Resources Supervisory Management Corp. (2) Affiliated Supervisory Management Company
-------------------------------------------------- -------------------------------------------- ------------------
Presidio AGP Corp. (3) Associate General Partner $ 120
-------------------------------------------------- -------------------------------------------- ------------------
(1) (i) $12,080 represents the Managing General Partner's share of adjusted
cash from operations and (ii) $301,475 represents a partnership
management fee earned by the Managing General Partner. Furthermore, under
Registrant's Partnership Agreement, .99% of the net income and net loss
of Registrant is allocated to the Managing General Partner. Pursuant
thereto, for the year ended December 31, 1996, $7,207 of Registrant's tax
loss was allocated to the Managing General Partner.
(2) This amount was earned pursuant to a supervisory management agreement
with Registrant for performance of certain functions related to property
management. The total fee earned by Resources Supervisory Management
Corp. was $79,584 of which $65,364 was paid to CB Commercial, the
unaffiliated property management company that performs services for
Resources Supervisory Management Corp.
(3) This amount represents the Associate General Partner's share of adjusted
cash from operations. For the year ended December 31, 1996, $73 of
Registrant's tax loss was allocated to the Associate General Partner
pursuant to Registrant's Partnership Agreement (the Associate General
Partner is entitled to receive .01% of Registrant's net income or net
loss).
</TABLE>
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial Statements: See "Index to Financial Statements" in Item 8.
(a)(2) Financial Statement Schedules: See "Index to Financial Statements" in
Item 8.
(a)(3) Exhibits:
3. (a) Second Amended and Restated Partnership Agreement ("Partnership
Agreement") of Registrant, incorporated by reference to Exhibit 3D to
Amendment No. 2 to Registrant's Registration Statement on Form S-11
filed on June 24, 1988 (Reg. No. 33-6412) (hereinafter the "Form
S-11").
(b) Amended and Restated Certificate of Limited Partnership of
Registrant, incorporated by reference to Exhibit 3C to the
Form S-11.
(c) Amendment to Partnership Agreement, incorporated by
reference to Supplement No. 1 dated August 19, 1988 to
Registrant's Prospectus filed pursuant to Rules 424(b) and
424(c) (Reg. No. 33-6412).
10. (a) Management Services Agreement between Registrant and Resources
Property Management Corp., incorporated by reference to Exhibit 10B to
Amendment No. 2 to the Form S-11.
(b) Acquisition and Disposition Services Agreement among
Registrant, Realty Resources Inc., and Resources High
Cash, Inc., incorporated by reference to Exhibit 10.(b) of
Registrant's Report on Form 10-K for the year ended
December 31, 1988 (hereinafter the "1988 10-K").
(c) Agreement among Resources High Cash, Inc., Integrated
Resources, Inc. and Fourth Group Partners, incorporated by
reference to Exhibit 10.(c) of the 1988 10-K.
(d) Agreement of Purchase and Sale between Sierra Virginia,
Inc. and Nevada Corp., incorporated by reference to
Exhibit 10A to Registrant's Form 8 with respect to
Registrant's current report on Form 8-K dated February 10,
1989.
(e) Registered Note by Registrant to RAM 2 in connection with
the purchase of Sierra Marketplace, incorporated by
reference to Exhibit 10B to Registrant's Form 8 with
respect to Registrant's current report on Form 8-K dated
February 10, 1989, incorporated by reference to Exhibit
10(f) of Registrant's Report on Form 10-K for the year
ended December 31, 1989 (hereinafter the "1989 10-K").
<PAGE>
(f) Settlement Agreement, dated October 17, 1990 among
Registrant, Integrated, First Interstate Bank of Denver
N.A., First Interstate Bank of Washington, N.A. and First
American National Bank, Incorporated, incorporated by
reference to Exhibit 10(a) to Registrant's Current Report
on Form 8-K dated December 19, 1990.
(g) Supervisory Management Agreement dated as of November 1,
1991 between Registrant and Resources Supervisory
Management Corporation incorporated by reference to
Exhibit 10 (g) to Registrant's Report on Form 10-K for the
year ended December 31, 1991.
(h) Management Agreement dated as of November 1, 1991 among
Registrant, Resources Supervisory Management Corp. and CB
Commercial Real Estate Group, Inc., incorporated by
reference to Exhibit 10(h) to Registrant's Report on Form
10-K for the year ended December 31, 1991.
(i) Exclusive Leasing Listing Agreement dated as of January 1,
1993 between Resources Supervisory Management Corp. and CB
Commercial Real Estate Group, Inc., incorporated by
reference to Exhibit 10(i) to Registrant's Report on Form
10-K for the year ended December 31, 1993.
(j) First Amendment to Exclusive Leasing Listing Agreement
dated as of January 1, 1994 between Resources Supervisory
Management Corp. and CB Commercial Real Estate Group,
Inc., incorporated by reference to Exhibit 10(j) to
Registrant's Report on Form 10-K for the year ended
December 31, 1993.
(k) Second Amendment to Management Agreement dated as of
January 1, 1994 between Resources Supervisory Management
Corp. and CB Commercial Real Estate Group, Inc.,
incorporated by reference to Exhibit 10(k) to Registrant's
Report on Form 10-K for the year ended December 31, 1993.
(b) Report on Form 8-K:
Registrant filed the following reports on Form 8-K during the last
quarter of the fiscal year:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
HIGH CASH PARTNERS, L.P.
By: RESOURCES HIGH CASH, INC.,
Managing General Partner
Dated: March 29, 1997 By: /s/Frederick Simon
------------------
Frederick Simon
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Registrant and in
the capacities (with respect to the Managing General Partner) and on the dates
indicated.
Dated: March 29, 1997 By: /s/Frederick Simon
------------------
Frederick Simon
Director and President
(Principal Executive Officer)
Dated: March 29, 1997 By: /s/Mark Plaumann
----------------
Mark Plaumann
Director and Vice President
Dated: March 29, 1997 By: /s/Jay L. Maymudes
------------------
Jay L. Maymudes
Vice President
(Principal Financial Officer
and Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the financial
statements of the December 31, 1996 Form 10-K of High Cash Partners, L.P. and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,774,565
<SECURITIES> 0
<RECEIVABLES> 78,929
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,020,397
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,485,903
<CURRENT-LIABILITIES> 509,344
<BONDS> 15,691,865
0
0
<COMMON> 0
<OTHER-SE> 8,229,435
<TOTAL-LIABILITY-AND-EQUITY> 24,485,903
<SALES> 0
<TOTAL-REVENUES> 2,637,022
<CGS> 0
<TOTAL-COSTS> 1,137,214
<OTHER-EXPENSES> 478,846
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,661,146
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (640,184)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (640,184)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
