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 September 30, 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)
104 Armour Road, North Kansas City, Missouri 64116
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 303-4500
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 [ ]
<PAGE>
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 10
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
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30,
2000
ASSETS:
INVESTMENT PROPERTIES $ 6,652,000
RESTRICTED DEPOSITS 119,000
CASH 622,000
OTHER ASSETS
Rents and other receivables -----
Prepaid expenses, deposits and other 21,000
Debt issuance costs, net of accumulated
amortization of $363,000 53,000
--------
TOTAL ASSETS $ 7,467,000
=========
See notes to consolidated financial statements.
3
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED BALANCE SHEET (UNAUDITED) - CONT'D
September 30,
2000
LIABILITIES AND PARTNERS' DEFICIT
Mortgage payable $ 7,839,000
Accounts payable and accrued expenses 101,000
Accrued management fees - General Partners 19,000
Accrued Interest 60,000
Unearned revenue 2,000
Tenant security deposits 75,000
-----------
TOTAL LIABILITIES 8,096,000
-----------
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;
9,595 units outstanding)
Capital contribution 3,879,000
Partnership deficit (4,465,000)
-----------
(586,000)
--------
TOTAL PARTNERS' DEFICIT (629,000)
--------
TOTAL LIABILITIES & PARTNERS' DEFICIT $ 7,467,000
=============
See notes to consolidated financial statements.
4
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
REVENUES
Rents $ 504,000 $ 488,000 $ 1,503,000 $ 1,377,000
Other Income 61,000 39,000 129,000 82,000
----------- ----------- ----------- -----------
565,000 527,000 1,632,000 1,459,000
----------- ----------- ----------- -----------
OPERATING AND ADMINISTRATIVE EXPENSES
Property operating expenses 207,000 150,000 487,000 396,000
General and administrative expenses 50,000 44,000 140,000 119,000
Professional fees 2,000 14,000 34,000 69,000
Management fees 30,000 29,000 97,000 86,000
Depreciation and amortization 112,000 113,000 338,000 338,000
----------- ----------- ----------- -----------
401,000 350,000 1,096,000 1,008,000
----------- ----------- ----------- -----------
NET OPERATING INCOME 164,000 177,000 536,000 451,000
----------- ----------- ----------- -----------
NON-OPERATING INCOME (EXPENSES)
Interest expense (176,000) (178,000) (531,000) (535,000)
Interest income 6,000 3,000 14,000 8,000
----------- ----------- ----------- -----------
(170,000) (175,000) (517,000) (527,000)
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (6,000) $ 2,000 $ 19,000 $ (76,000)
=========== =========== =========== ===========
ALLOCATION OF INCOME (LOSS)
General Partner -- -- -- (1,000)
Limited Partners $ (6,000) $ 2,000 $ 19,000 (75,000)
----------- ----------- ----------- -----------
Partnership income (loss) per
limited partnership unit $ (.62) $ .21 $ 1.96 $ (7.85)
=========== =========== =========== ===========
Weighted average LP units outstanding 9,655 9,685 9,675 9,685
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 19,000 $ (76,000)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 338,000 338,000
Changes in assets and liabilities:
Rent and other receivables -- 2,000
Prepaid expenses, deposits and other 6,000 13,000
Accounts payable and accrued expenses 16,000 91,000
Unearned revenue (3,000) (23,000)
Tenant security deposits 3,000 8,000
-------- ----------
Net cash provided by operating activities 379,000 353,000
-------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of and improvement to investment
property (57,000) (40,000)
Restricted Reserve Funds (3,000) (48,000)
---------- ----------
Net cash used in investing activities (60,000) (88,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (55,000) (51,000)
---------- ----------
Net cash used in financing activities (55,000) (51,000)
---------- ----------
INCREASE IN CASH AND 264,000 214,000
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 358,000 130,000
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 622,000 $ 344,000
========== ==========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. III
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 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-QSB and Item 310(b)
of Regulation S-B. 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 nine month period ended September 30,
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:
September 30,
2000
Real Estate Mortgages:
Greenhills Bicycle Club Apartments $7,839,000
Interest expense totaled $531,000 and $535,000 during the first nine months of
2000 and 1999, respectively.
7
<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:
Nine Months Ended
September 30,
2000 1999
---- ----
Property Management Fee $ 78,000 76,000
Partnership Management Fee 19,000 10,000
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 $19,000 of expense
through September 30, 2000 for the partnership management fees. The Partnership
incurred partnership management fee expense of $10,000 for the nine months ended
September 30, 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 Nine Months Ended
September 30,
2000 1999
---- ----
Interest Paid $ 531,000 535,000
Noncash Financing Activities
Repurchase of 90 Limited Partnership Units
included in accounts payable $ 19,000 ---
8
<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 nine months ended September 30, 2000 increased by
$173,000 (11.9%) when compared to the same period in 1999. The increase is
primarily due to an increase in rental income rates of $54,000, a decrease in
vacancy loss of $51,000, a decrease in concessions of $21,000, and an increase
in other income of $47,000. Of the $47,000 increase, $27,000 is due to insurance
proceeds, for the repair of siding damaged in a storm, exceeding the expense of
the repairs.
Property operating expenses for the first nine months of 2000 increased $91,000
(23.0%) compared to the same period in 1999. The increase is primarily due to an
increase in repairs and maintenance of $36,000 and real estate taxes of $42,000.
General and administrative expenses increased by $21,000 (17.6%) compared to the
first nine months of 1999. Of the total increase, $13,000 relates to an increase
in office payroll and bonus. The remainder was due to increases in a number of
expense categories, none of which was significant.
Professional service expenses for the nine months ended September 30, 2000
decreased $35,000 (50.7%) compared to the same period in 1999. The majority of
the decrease in fees was due to a decrease in accounting and legal fees of
$22,000 and $9,000, respectively. Accounting and legal fees were higher in 1999,
due to the final transition in management of the Partnership, which occurred
during 1998 and 1999.
Liquidity and Capital Resources
During the first nine months of 2000, $379,000 of cash was provided by
operations, $60,000 was used for investing activities, which consisted primarily
of purchases of and improvements to investment property. $55,000 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.
Effective August 31, 2000, the Partnership purchased 90 units of the Partnership
for $211 per unit, in accordance with the Partnership Agreement. This reduced
the total number of units outstanding from 9,685 to 9,595.
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.
10
<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: November 1, 2000
11
