SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter period ended March 31, 2000
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________________ To _____________________
Commission file number 33-24235
SECURED INVESTMENT RESOURCES FUND, L.P. III
(Exact name of small business issuer as specified in its charter)
Missouri 48-6291172
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 Main St., Ste 2100 Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 421-4670
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
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SECURED INVESTMENT RESOURCES FUND, L.P. III
INDEX
Page
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS:
Balance Sheet 3-4
Statements of Operations 5
Statements of Cash Flows 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS 9
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 10
ITEM 2. CHANGES IN SECURITIES 10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10
ITEM 5. OTHER INFORMATION 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 11
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31, 2000
ASSETS:
INVESTMENT PROPERTIES $ 6,802,000
RESTRICTED DEPOSITS 117,000
CASH 451,000
OTHER ASSETS
Rents and other receivables --
Prepaid expenses, deposits and other 36,000
Debt issuance costs, net of accumulated
amortization of $332,000 in 2000 84,000
------
TOTAL ASSETS $ 7,490,000
=========
See notes to consolidated financial statements.
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<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - CONT'D
March 31, 2000
LIABILITIES AND PARTNERS' DEFICIT
Mortgage payable $ 7,876,000
Accounts payable and accrued expenses 82,000
Accrued management fees - General Partners 22,000
Accrued Interest 60,000
Unearned revenue 2,000
Tenant security deposits 74,000
------
TOTAL LIABILITIES 8,116,000
---------
PARTNERS' DEFICIT
General Partners (4 units authorized and outstanding)
Capital contributions 2,000
Partnership deficit (45,000)
-------
(43,000)
-------
Limited Partners (60,000 units authorized;
9,685 units outstanding)
Capital contribution 3,915,000
Partnership deficit (4,498,000)
----------
(583,000)
--------
TOTAL PARTNERS' DEFICIT (626,000)
--------
TOTAL LIABILITIES & PARTNERS' DEFICIT $ 7,490,000
=========
See notes to consolidated financial statements.
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<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31, March 31,
2000 1999
REVENUES
Rents $ 496,000 $ 442,000
Other Income 25,000 19,000
------ ------
521,000 461,000
-------- -------
OPERATING AND ADMINISTRATIVE EXPENSES
Property operating expenses 132,000 117,000
General and administrative expenses 45,000 38,000
Professional fees 22,000 29,000
Management fees 32,000 30,000
Depreciation and amortization 113,000 112,000
--------- --------
344,000 326,000
--------- --------
NET OPERATING INCOME 177,000 135,000
------- --------
NON-OPERATING INCOME (EXPENSES)
Interest expense (178,000) (178,000)
Interest income 4,000 1,000
------------ ----------
(174,000) (177,000)
---------- ---------
NET INCOME (LOSS) $ 3,000 $ (42,000)
=========== ==========
ALLOCATION OF INCOME (LOSS)
General Partner ---- ----
Limited Partners $ 3,000 $ (42,000)
-------- ----------
Partnership income (loss) per
limited partnership unit $ .31 $ (4.34)
===== =========
See notes to consolidated financial statements
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<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
Three Months Ended
March 31 March 31
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 3,000 $ (42,000)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 113,000 112,000
Changes in assets and liabilities:
Rent and other receivables -- 2,000
Prepaid expenses, deposits and other (9,000) (7,000)
Accounts payable and accrued expenses 19,000 44,000
Accrued interest 1,000 --
Unearned revenue (2,000) (21,000)
Tenant security deposits 1,000 (2,000)
--------- ---------
Net cash provided by operating activities 126,000 86,000
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of and improvement to investment
property (15,000) (15,000)
Restricted Reserve Funds -- 41,000
--------- ---------
Net cash provided by (used in) investing activities (15,000) 26,000
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (18,000) (16,000)
--------- ---------
Net cash (used in) financing activities (18,000) (16,000)
--------- ---------
INCREASE IN CASH AND 93,000 96,000
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 358,000 130,000
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 451,000 $ 226,000
========= =========
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2000 AND MARCH 31, 1999
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31, 2000
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2000. For further information, refer to the financial
statements and footnotes thereto included in the Partnership's annual report on
Form 10-K for the year ended December 31, 1999.
NOTE 2--MORTGAGES PAYABLE
Non-recourse mortgage debt consists of the following:
March 31,
2000
Real Estate Mortgages:
Greenhills Bicycle Club Apartments $7,876,000
Interest expense totaled $178,000 and $178,000 during the first three months of
2000 and 1999, respectively.
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<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 2--MORTGAGES PAYABLE--CONT'D.
Mortgage payable, bank, original balance of $8,100,000 payable in monthly
installments of $65,000 including principal and interest. Due August 2001 with
interest at 9%; collateralized by investment property.
The carrying value for the above mortgage payable approximates fair value.
NOTE 3--RELATED PARTY TRANSACTIONS
Maxus Properties, Inc. receives property management fees of 5% of the monthly
gross receipts for providing property management services. Maxus Properties,
Inc. also performs various professional services for the Partnership, primarily
tax accounting, audit preparation, SEC 10-Q and 10-K preparation and investor
services.
Amounts paid by the Partnership to Maxus Properties, Inc. are as follows:
Three Months Ended
March 31,
2000 1999
---- ----
Property Management Fee 26,000 25,000
Partnership Management Fee 6,000 5,000
The General Partners are entitled to receive a Partnership management fee equal
to 5% of total operating cash flows (as defined) for managing the normal
operations of the Partnership. The Partnership incurred $6,000 of expense
through March 31, 2000 for the partnership management fees. The Partnership
incurred partnership management fee expense of $5,000 for the three months ended
March 31, 1999.
NOTE 4--CASH DISTRIBUTIONS
No distributions have been made since July 1990. Future distributions, if any,
will be made from excess cash flow not needed for working capital purposes.
NOTE 5 -- ADDITIONAL CASH FLOW INFORMATION
Additional Cash Payment Information Three Months Ended
March 31,
2000 1999
---- ----
Interest Paid 177,000 179,000
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
This 10-QSB contains forward-looking information (as defined in the Private
Securities Litigation Reform Act of 1995) that involves risk and uncertainty,
including trends in the real estate investment market, projected leasing and
sales, and future prospects for the Partnership. Actual results could differ
materially from those contemplated by such statements.
Results of Operations
Total revenues for the first three months of 2000 increased $60,000 (13.1%) when
compared to the same period in 1999. The majority of the increase is due to an
increase in rental income of $54,000. The increase is primarily due to an
increase in occupancy that resulted in $29,000 of increased rental revenue. An
additional $27,000 was due to increased rental rates and decreased rent
concessions.
Property operating expenses for the first three months of 2000 increased $15,000
(12.7%) compared to the same period in 1999. Of the total increase, $13,000 was
due to an increase in repairs and maintenance expense.
Professional service expense decreased $7,000 (23.7%) compared to the first
three months of 1999. The majority of the decrease in fees was due to a decrease
in accounting and legal fees. Accounting and legal fees were higher in 1999, due
to the final transition in management of the Partnership, which occurred during
1998 and 1999.
Management fee expense for the first three months increased by $2,000 (5.5%)
compared to the same period in 1999. The increase was due to increased rental
revenue.
Liquidity and Capital Resources
During the first three months of 2000, $126,000 of cash was provided by
operations and $15,000 was used for investing activities, which consisted of
purchases of and improvements to investment property. $18,000 was used for
financing activities, which consisted of principal payments on long term debt.
Based upon the above, the General Partners feel that adequate working capital is
available to maintain the solvency of this entity. In addition, the General
Partners also anticipate that 2000 cash flow from operations will remain
consistent because of strong occupancy and stabilized expenses.
The General Partners have determined it prudent not to reestablish the cash
distributions until such time that adequate working capital and capital
improvements reserves are in place.
-9-
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
None.
Item 5. OTHER INFORMATION
None
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
None.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SECURED INVESTMENT RESOURCES FUND, L.P. III
A Missouri Limited Partnership
(Registrant)
By: Nichols Resources, Ltd.
as General Partner
/s/ Christine A. Robinson
Christine A. Robinson
President (Principal Financial and
Chief Accounting Officer)
Date: May 5, 2000
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<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS UNAUDITED SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS FOR SECURED INVESTMENT RESOURCES FUND, L.P. III AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000839638
<NAME> SECURED INVESTMENT RESOURCES FUND, L.P. III
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MARCH-31-2000
<CASH> 451,000
<SECURITIES> 0
<RECEIVABLES> 47,000
<ALLOWANCES> (47,000)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 11,272,000
<DEPRECIATION> 4,470,000
<TOTAL-ASSETS> 7,490,000
<CURRENT-LIABILITIES> 0
<BONDS> 7,876,000
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,490,000
<SALES> 0
<TOTAL-REVENUES> 521,000
<CGS> 0
<TOTAL-COSTS> 522,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 178,000
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,000
<EPS-BASIC> .31
<EPS-DILUTED> 0
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