<PAGE>
The registrant is filing restated 1994-1997 financial statements. These
restatements reflect changes discussed in Note 7 to the consolidated financial
statements.
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of
The Securities Exchange Act of 1934
For the Quarterly Period ended September 30, 1998
Commission File No. 0-19963
TMP LAND MORTGAGE FUND, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0451040
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
801 North Parkcenter Drive, Suite 23
Santa Ana, California 92705
(Address of principal executive office) (Zip Code)
(714) 836-5503
(Registrant's telephone number, including area code)
------------------------------
Indicate by check mark whether Registrant has [1] filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and [2] has been subject to such filing requirement for
the past 90 days.
Yes [X ] No [ ]
<PAGE>
2
TMP LAND MORTGAGE FUND, LTD
INDEX
PART IFINANCIAL INFORMATION Page
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 1998
(unaudited) and December 31, 1997 3
Consolidated Statements of Operations for the
Three and Nine Months
ended September 30, 1998 and 1997 (unaudited) 4-5
Consolidated Statements of Cash Flows for the Nine Months ended
September 30, 1998 and 1997 (unaudited) 6-7
Notes to Consolidated Financial Statements (unaudited) 8-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-16
PART II OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
SIGNATURES 18
2
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Balance Sheets
September 30,
1998 December 30,
(unaudited) 1997
----------- ------------
Assets
------
<S> <C> <C>
Cash $ 419,343 $ 960,479
Other Receivables 13,661 125,337
Prepaid Expenses 27,938 0
Due from Affiliates (net of unamortized
discount of $152,680 and $103,136,
respectively) 298,059 182,603
Investments in Unconsolidated Affiliates
(Note 5) 606,840 607,590
Investment in Unimproved Land (net of
valuation allowance of $4,023,109 and
$3,983,798, respectively) (Note 2 & 4) 11,402,096 10,687,386
------------ ------------
Total Assets $ 13,187,937 $ 12,563,395
============ =============
Liabilities and Partners' Capital
---------------------------------
Accounts Payable $ 124,465 $ 74,594
Due to Affiliates 0 29,294
Due to Manager (Note 1) 3,090 0
Property Taxes Payable 4,653,488 4,206,068
Accrued Expenses (Note 6) 800 800
Construction Loan 374,794 0
----------- ------------
Total Liabilities 5,156,597 4,310,756
----------- ------------
Minority Interest 460,094 309,533
Partners' Capital
General Partners (81,490) (77,771)
Limited Partners, 20,000 equity units
authorized; 15,715 units outstanding
as of September 30, 1998 and December 31, 1997 7,652,736 8,020,877
----------- ------------
Total Partners' Capital 7,571,246 7,943,106
---------- ------------
Total Liabilities and Partners' Capital $ 13,187,937 $ 12,563,395
============ =============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
September 30, September 30,
1998 1997
------------- -------------
Income
- ------
<S> <C> <C>
Gain on Sale of Property $ 0 $ 554,335
Interest Income 9,849 13,698
Loss on Investments (453,509) (24,767)
Other Income 1,800 900
--------------- -----------
Total Income (441,860) 544,166
--------------- -----------
Expenses
- --------
Loss on Decline in Market Value of Property 26,066 425
Discount on Due to Affiliates 0 0
Loss on Contribution of Property 91,947 0
Loss on Investments in Unconsolidated
Affiliates 4,564 0
Joint Venture Expense 0 3,863
Professional Services 11,917 2,148
Interest Expense 138 0
Operating Expenses 14,874 42,693
--------------- -----------
Total Expenses 149,506 49,129
--------------- -----------
Net Income before Minority Interest (591,366) 495,037
Minority Interest (102) (362)
--------------- -----------
Net Income (Loss) $ (591,468) $ 494,675
================ ============
Allocation of Net Income (Loss)
General Partners $ (5,915) $ 4,947
=============== ============
Limited Partners $ (585,553) $ 489,728
=============== ============
Limited Partners, per unit $ (37.26) $ 31.16
=============== ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Statements of Operations
(Unaudited)
Nine Months Ended
September 30, September 30,
1998 1997
------------- -------------
Income
- ------
<S> <C> <C>
Gain on Sale of Land $ 0 $ 554,335
Interest Income 34,143 32,622
Loss on Investments (189,477) (68,416)
Investment Income 50,000 550,048
Other Income 3,600 2,700
Total Income (101,734) 1,071,289
Expenses
- --------
Loss on Decline in Market Value of Property 39,311 5,186
Discount on Due to Affiliates 73,268 0
Professional Services 21,940 14,628
Operating Expenses 41,953 42,693
California Franchise Tax 1,600 800
Loss on Contribution of Property 91,947 0
Joint Venture Expense 0 13,142
Total Expenses 270,019 76,449
Net Income (Loss) Before Minority Interest (371,753) 994,840
Minority Interest (107) (822)
Net Income (Loss) $ (371,860) $ 994,018
Allocation of Net Income (Loss)
General Partners $ (3,719) $ 9,940
================ ============
Limited Partners $ (368,141) $ 984,078
================ ============
Limited Partners, per unit $ (23.43) $ 62.62
================ ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Income (Loss) $ (371,860) $ 994,018
Adjustments to Reconcile Net Income (Loss) to
Net Cash Used in Operating Activities:
Loss on Decline of Market Value of
Property 39,311 5,186
Gain on Sale of Land 0 (554,335)
Gain on Sale of Investment 0 (550,048)
Amortization on Due from Affiliates (23,724) (15,182)
Loss on Investments 189,477 68,416
Discount on Due from Affiliates 73,268 0
Loss on Contribution of Property 91,947 0
Minority Interest in Income (Loss)
of Subsidiary 107 822
Changes in assets and liabilities:
Increase (Decrease) in Accounts Payable 49,871 (1,842)
Increase in Due from Affiliates (165,000) 0
Increase in Accrued Expenses 0 24,941
(Increase) Decrease in Other Receivables 111,676 (71,897)
Increase in Prepaid Expenses (27,938) 0
Decrease in Due to Affiliates (29,294) 0
Increase in Due to Manager 3,090 0
-------------- ------------
Net Cash Used in Operating Activities (59,069) (99,921)
-------------- ------------
Cash Flows from Investing Activities:
Proceeds from Sale of Land 0 1,950,000
Proceeds from Sale of Investment 0 1,725,096
Increase in Land Development Costs (776,441) (308,006)
Increase in Minority Interest 150,454 66,558
Increase in Capitalized Carrying Costs (462,147) (139,652)
Decrease (Increase) in Investments in
Unconsolidated Affiliates 231,273 (241,856)
-------------- ------------
Net Cash Provided by (Used in)
Investing Activities (856,861) 3,052,140
-------------- ------------
Cash Flows From Financing Activities:
Proceeds from Construction Loan 374,794 0
Distributions to Partners 0 (2,232,365)
-------------- ------------
Net Cash Used in Financing Activities 374,794 (2,232,365)
-------------- ------------
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
6
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Consolidated Statements of Cash Flows, continued
(Unaudited)
<S> <C> <C>
Net Increase (Decrease) in Cash (541,136) 719,854
Cash, Beginning of Period 960,479 361,515
-------------- -----------
Cash, End of Period $ 419,343 $ 1,081,369
=============== =============
</TABLE>
Supplemental Schedule of Non-Cash Investing and Financing Activities:
- ---------------------------------------------------------------------
Non-cash investing and financing activities during the nine months ended
September 30, 1998 consists of the Partnership capitalizing property taxes for
foreclosed properties of $447,380 as well as carrying costs of $42,147. A
valuation allowance of $39,311 was recorded to reduce the net carrying value of
the properties to their fair market values.
See Accompanying Notes to Consolidated Financial Statements
7
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Notes to Consolidated Financial Statements
(Unaudited)
The accompanying unaudited interim financial statements include all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary to present fairly the financial position of TMP Land
Mortgage Fund, Ltd. as of September 30, 1998 and the results of its operations,
and cash flows for the three and nine months then ended in accordance with
generally accepted accounting principles for interim financial information.
NOTE 1 - The Partnership and its Significant Accounting Policies
TMP Land Mortgage Fund, Ltd. (the Partnership) was organized in accordance with
the provisions of the California Uniform Limited Partnership Act for the purpose
of acquiring, developing and operating real property. The general partners in
the Partnership are William O. Passo, Anthony W. Thompson, and Scott E. McDaniel
of TMP Properties, a California General Partnership and TMP Investments Inc.
(the General Partners).
On March 12, 1998, the General Partners of the Partnership entered into an
agreement (the Financing Agreement) with PacWest Inland Empire, LLC (PacWest), a
Delaware limited liability company, whereby PacWest paid the General Partners a
total of $300,000 and agreed to pay up to a total of an additional $300,000 for
any deficit capital accounts for the Partnership and ten other related
partnerships in exchange for the rights to distributions from the General
Partners; referred to as a "distribution fee" as defined by the Financing
Agreement.
On April 1, 1998, PacWest entered into a management, administrative and
consulting agreement (the Management Agreement) with the General Partners to
provide the Partnership with overall management, administrative and consulting
services. PacWest currently contracts with Preferred Partnership Services, Inc.
and other entities to perform certain of the investor relations, financial, and
accounting services for the Partnership.
In addition, PacWest has agreed to provide certain additional liquidity to the
Partnership as further discussed in the MD&A section of this report. As of
September 30, 1998, the Partnership has a payable of $3,091 to PacWest related
to these agreements.
The following is a summary of the Partnership's significant accounting policies:
Basis of Presentation - The Partnership prepares its financial statements on the
- --------------------
accrual basis of accounting.
Principles of Consolidation - The consolidated financial statements include the
- ---------------------------
accounts of the Partnership and its majority-owned investments, TMP Homes
Remington, LLC (Remington) and TMP Homes Flowerfield-Sun City, LLC (Sun City).
All significant intercompany accounts and transactions have been eliminated in
consolidation.
8
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - The Partnership and its Significant Accounting Policies, Continued
Income Taxes - The entity is treated as a partnership for income tax purposes
- ------------
and any income or loss is passed through and taxable at the partner level.
Accordingly, no provision for federal income taxes is provided.
NOTE 2 - Restatement and reissuance of 1994 - 1997 Financial Statements
In 1992, the Partnership made two loans totaling $3,500,000 to PR Equities,
Ltd., a California Limited Partnership. The loans were secured by first trust
deeds on residential property located in San Jacinto, California. In 1994, the
Partnership foreclosed on the properties securing these loans and continues to
own these properties. In accordance with generally accepted accounting
principles, assets acquired through foreclosure should be recorded at the lower
of cost or fair value less costs of disposal at the date of foreclosure. The
1994-1997 financial statements originally issued reported this property at the
amount of the outstanding mortgage balances due on these loans at the time of
foreclosure, which did not represent their fair value less costs of disposal.
Management has subsequently determined that a valuation allowance for these
properties should have been established for approximately $3.8 million at the
date of foreclosure in 1994. The valuation allowance should have been adjusted
each year thereafter such that the only value for these properties is the
capitalized direct carrying costs that represent the total accumulated property
taxes and Mello-Roos bond assessments. Therefore, the consolidated financial
statements for 1994 through 1997 have been restated to record the valuation
allowance and to adjust these properties to their fair value for those years.
In addition, management has determined that the amount of property taxes payable
as recorded in June, 1994, and subsequent periods, were understated by
approximately $368,000. Accordingly, the consolidated financial statements for
those periods have been restated for this understatement by adjusting the
carrying value of the land and the property taxes payable in the appropriate
fiscal years.
In accordance with generally accepted accounting principles, the financial
statements of majority-owned investments are required to be consolidated. The
1995, 1996, and 1997 financial statements originally issued did not properly
account for the consolidation of all significant majority-owned investments.
Therefore, the financial statements of these material majority owned entities
have been consolidated with the financial statements of the Partnership's and
have been restated for fiscal years 1995, 1996, and 1997 to reflect the
consolidation and related minority interests of $310,000 for Remington and Sun
City as of December 31, 1997 and $460,000 at September 30, 1999.
In November, 1996, the Partnership entered into a non-interest bearing note for
$286,000. In accordance with generally accepted accounting principles, the note
should have been discounted at the
9
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 2 - Restatement and reissuance of 1994 - 1997 Financial Statements,
continued
date of execution and interest accreted over the period of the note for
$127,000. The consolidated financial statements have been restated for this
discount and accretion of interest.
NOTE 3 - Allocation of Profits, Losses and Cash Distributions
Profit, losses, and cash distributions are allocated ninety-nine percent to the
limited partners and one percent to the general partners until the limited
partners have received an amount equal to their capital contributions plus a
cumulative, non-compounded return of eight percent per annum based on their
adjusted capital account balances, at which time, remaining profits, losses and
cash distributions are allocated seventy-six percent to the limited partners and
twenty-four percent to the general partners. Distributions of cash from
operations, if any, are made monthly within 30 days after the end of the month.
NOTE 4 - Properties Held for Sale
Since its organization, the Partnership had made twelve land loans. As of
September 30, 1998, three of these loans had been repaid in full, and nine of
the loans defaulted. The Partnership foreclosed on the properties that were
collateral for the defaulted loans. Properties held for sale are carried at the
lower of the Partnership's cost or net realizable value. The Partnership's cost
in properties held for sale represents the balances of the defaulted loans plus
carrying costs incurred since foreclosure, primarily interest and property
taxes. All costs associated with the acquisition of property are capitalized
(See Note 2).
NOTE 5 - Investments in Unconsolidated Affiliates
The Partnership has a 75% membership interest in three entities that were
organized for the purpose of acquiring, owning and developing certain parcels of
land into single family home developments throughout Southern California. These
entities are known as TMP Remington, LLC, Flowerfield-Sun City, LLC, and
Flowerfield-San Jacinto, LLC. All of the assets and liabilities of the entities
are reflected in the Partnership's accounts.
During the nine months ended September 30, 1998, the Partnership contributed
property to Sun City LLC (Sun City) as part of their investment. This property
had a carrying value of $511,947, but at the time of the contribution the fair
market value of the property was estimated at $420,000. Accordingly, a loss on
contribution of $91,947 was recorded.
The Partnership also has a 20% membership interest in Peppertree Park, LLC
(Peppertree), which was formed to acquire certain property in San Diego,
10
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 5 - Investments in Unconsolidated Affiliates, continued
California which is comprised of 192 unimproved single family residential
building lots. Peppertree's plans for the property include the development of
the land and the construction of single family residences to be marketed and
sold. The Partnership's 20% membership interest is stated at its cost of
approximately $500,000.
NOTE 6 - Property Taxes Payable
As of September 30, 1998, approximately $4,600,000 of total property taxes
payable is owed on the PR Equities/Flowerfield-San Jacinto property (Note 2).
11
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis provides information that the
Partnership's management believes is relevant to an assessment and understanding
of the Partnership's results of operations and financial condition. This
discussion should be read in conjunction with the financial statements and
footnotes that appear elsewhere in this report.
This discussion and analysis contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of
the Securities Act of 1933, which are subject to the "safe harbor" created by
that section. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions or variations of such
works are intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this report.
Additionally, statements concerning future matters such as the features,
benefits and advantages of the Partnerships properties regarding matters that
are not historical are forward-looking statements. Such statements are subject
to certain risks and uncertainties and the Partnership's actual future results
could differ materially from those projected in the forward-looking statements.
The Partnership assumes no obligation to update the forward-looking statements.
Readers are urged to review and consider carefully the various disclosures made
by the Partnership in this report, which attempts to advise interested parties
of the risks and factors that may affect the Partnership's business, financial
condition and results of operations.
The Partnership was formed principally to make short-term loans to unaffiliated
parties secured by first trust deeds on unimproved properties, primarily in the
Inland Empire area of Southern California and in some instances, in other areas
of Southern California, and to provide cash distributions to the limited
partners, primarily from interest earned on the mortgage loans. The Partnership
is not a mutual fund or any other type of investment company within the meaning
of, and is not subject to regulations under, the Investment Company Act of 1940.
Since its formation, the Partnership had received and accepted subscriptions of
15,715 units, representing total subscription proceeds in the amount of
$15,715,000. All proceeds were committed to mortgage loan investments made by
the Partnership and to working capital reserves. During 1992, the Partnership
funded five mortgage loans, four loans were funded in 1993 and three loans were
funded in 1994 for a total of twelve loans.
As a consequence of adverse changes in market conditions and other economic and
business factors, nine of the twelve loans went into default. The Partnership
foreclosed on the properties secured by the defaulted loans and is in the
process of developing and/or selling these properties.
As of September 30, 1998, the following activity has occurred on properties
which the Partnership or one of its affiliates owns or has owned:
12
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, Continued
PR Equities (Flowerfield-San Jacinto Property)
The Partnership foreclosed on the property securing these loans during 1994 and
now owns the property. The current outstanding payments due as a result of the
regular tax and Mello-Roos tax assessments against the partnership's lots taken
back in foreclosure is approximately $4,600,000. This debt, plus the continuing
property tax accrual makes the property difficult to sell in the current real
estate market. The city of San Jacinto received an appraisal of the property in
the Community Facilities District during the first week of July 1996. The low
land values reflected in the appraisal confirmed the General Partners' opinion
that the bonds should be restructured, with the overall bonded indebtedness and
the annual debt service reduced.
The city was forced by the terms of the bonds to schedule a sale of the property
for delinquent bond assessments. The buyer would be required to pay the full
unpaid assessment, penalties, and interest as well as assume the full amount of
the remaining assessment. The sale occurred in April 1997 but there was no buyer
for the property; therefore, the Partnership continues to own this land.
During the third quarter of 1997, the bonds were purchased at a deep discount
and the General Partners believe that the land will ultimately be foreclosed
upon by the new bondholder(s).
Based on the circumstances surrounding this property, the Partnership recorded a
valuation allowance for a decline in market value of $4,023,109 to reduce the
carrying amount of the property to its net realizable value.
See restatement and reissuance of financial statements in Note 2 of the
Partnership's consolidated financial statements.
Environmental Development/Remington Property
This land was acquired through foreclosure from Environmental Development and is
being developed into a 181-lot subdivision through TMP Remington, LLC. All
entitlements on the property are complete and a construction loan is in process.
Sunset Crossing Property
This property consists of 42.48 commercial acres located in Banning, California.
The Partnership's initial goals for this property involve the preparation of a
new site plan which would allow a lot-line adjustment in order to sell the
corner of the parcel to a gas station or fast food restaurant, and create new
interest for a major retailer to consider this site. As those efforts achieve
results, the property may be offered for sale. It is not the intention of the
Partnership to be involved in developing this property.
13
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, Continued
Fox Olson #1/Newport/Bradley Property
This property consists of 10.84 commercial acres located in Sun City California.
Formerly owned by Fox-Olson and acquired by the Partnership through foreclosure,
this property is listed for sale at $1.5 million. TMP has received an offer for
$1.2 million and intends to counter the offer at $1.5 million, which is its
current book value. This property is adjacent to the 45 lots also acquired
through foreclosure from Fox-Olson (Flowerfield Sun-City), which are being
developed as a 45-home sub-division as discussed below.
Fox Olson #2/Flowerfield-Sun City Investment Property
As discussed above, this property was acquired through foreclosure. A
construction loan is in place and grading commenced in April 1998. In August
1998, the Partnership contributed this property to the Flowerfield-Sun City,
LLC. In accordance with the LLC's operating agreement, the agreed-upon market
value of the property was credited to the Partnership's capital account in
Flowerfield-Sun City, LLC. The carrying amount of the contributed land exceeded
its market value by approximately $91,000 and was therefore recorded as a loss
during the quarter ended September 30, 1998. The Partnership's investment in
this LLC is carried at the lower of cost or net realizable value and is included
in investments in unconsolidated affiliates on the accompanying consolidated
balance sheet.
Peppertree Park Investment Property
In satisfaction of its $2 million loan to Peppertree Land Company, the
Partnership was repaid $1.5 million dollars of principal, together with $138,000
of accrued interest and charges, in July 1996. The remaining $500,000 was
contributed by the Partnership to the capital of Peppertree Park, LLC as a
membership interest in Peppertree Park LLC. Peppertree Park, LLC owns property
that is being developed into single-family residential housing units. The first
phase of that project has been sold to a homebuilder and the proceeds were used
to pay off the initial development loan. As future phases are sold, proceeds
should be available to the Partnership as a return on its investment of
approximately 20% per annum pursuant to the terms of the operating agreement of
Peppertree Park, LLC.
LaMonte Loan
The Partnership acquired a 6.5-acre commercial property through foreclosure on
this loan in April 1996. During September 1997, the property was sold for a
profit of approximately $550,000.
14
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, Continued
Results of Operations
Partnership revenues during the three and nine month periods ended September 30,
1998 and 1997 consisted primarily of interest income, investment income and the
sale of the LaMonte property in September 1997 as discussed above.
Investing activities for the nine month period ended September 30, 1998 used
approximately $626,000 mainly due to an increase in investments in
unconsolidated affiliates while the nine month period ended September 30, 1997
provided approximately $993,000 due to property sales and property
contributions. In addition, the Partnership recorded a loss on investment in
unconsolidated affiliates of approximately $5,000 and $13,000 for the nine-month
periods ended September 30, 1998 and 1997.
Expenses for the three and nine months ended September 30, 1998 and 1997
represent legal, accounting and related expenses that vary from quarter to
quarter based on certain activities in the Partnership. In addition, expenses in
1998 reflect fees charged to the Partnership pursuant to the Management
Agreement described in Note 1 for various management and administrative
services. In the nine-month period ended September 30, 1997 approximately
$1,396,000 of expenses related to the sale of the LaMonte property were also
included in expenses. The Partnership also recorded losses on the decline in
market value of property during the three and nine month periods ended September
30, 1998 and 1997 due to increases during those periods in the valuation
allowance for the PR Equities property discussed above.
Liquidity and Capital Resources
Management believes there is sufficient cash to meet anticipated Partnership
cash needs for the next 12 months. However, management does not plan to pay the
Mello-Roos taxes on the PR Equities Property unless the bonds can be
restructured under more favorable terms. As discussed in Note 1, PacWest has
agreed to loan and/or secure a loan for the TMP Land Partnerships in the amount
of $2,500,000. Loan proceeds will be allocated to eleven (11) TMP Land
Partnerships, based on partnership needs, from recommendations made by PacWest,
and under the approval and/or direction of the General Partners. A portion of
these funds will be loaned to the Partnership at 12% simple interest over a 24
month period beginning April 1, 1998. The loan is secured by the Partnership's
properties and funds will be borrowed, as they are needed at the discretion of
the General Partners. These borrowings are not to exceed 50% of the 1997
appraised value of the properties, and will primarily be used to pay for
on-going property maintenance, pay down existing debt, back property taxes and
appropriate entitlement costs.
PacWest, at their option, can make additional advances with the agreement of the
General Partners; however, the aggregate amount of cash loaned to all TMP
partnerships is limited to a maximum of $2,500,000.
15
<PAGE>
TMP Land Mortgage Fund, LTD.
A California Limited Partnership
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS, Continued
TMP Properties and TMP Investments, Inc. will remain as general partners,
however, PacWest has acquired the General Partner's unsubordinated 1% interest
in the Partnership and assumed responsibility for all partnership
administration. PacWest will charge a fee for its administrative services equal
to an amount not to exceed the average reimbursements to the general partner for
such services over the past five years.
Distributions to the partners began August 1, 1992, and continued monthly
through May 1995. On September 1, 1995, the General Partners suspended
distributions due to the default and subsequent foreclosure on several of the
mortgage loans. During 1997, the Partnership made two distributions from the
proceeds of the property sales in 1997.
As the Partnership properties are sold, cash will be used to first pay back
PacWest loans, then other creditors, then to accrued but unpaid the Partnership
indebtedness.
Sale proceeds in excess of the amount necessary to pay Partnership indebtedness
shall be split as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
PacWest Property Partnership
3% FlowerField, Remmington, and Peppertree 97%
13% San Jacinto, Sun City and Sunset Crossing 87%
</TABLE>
Year 2000 Compliance
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. Beginning in the year
2000, these date codes fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and/or software used by organizations may need to upgraded to comply
with the "Y2K" requirements. There is significant uncertainty in the software
and information services industries concerning the potential effects associated
with such compliance. While the Partnership believes that its systems are
compatible with Y2K applications, there can be no assurance that all Partnership
systems will function properly in all operating environments and on all
platforms. The failure to comply with Y2K requirements by systems not designed
by the Partnership may also have a material adverse effect on the Partnership's
business, financial condition and results of operations. The Partnership is
currently developing and implementing a plan to identify and address potential
difficulties associated with Y2K issues and does not expect to expend any
significant funds as a result of these issues.
16
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
17
<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.
Date: JUNE 11, 1999
TMP Land Mortgage Fund, Ltd.
A California Limited Partnership
By: TMP Investments, Inc., as General Partner
By: /S/ WILLIAM O PASSO
-------------------------------------------
William O. Passo, President
By: /S/ ANTHONY W THOMPSON
-------------------------------------------
Anthony W. Thompson, Exec. VP
By: /S/ RICHARD HUTTON JR
-------------------------------------------
Richard Hutton, Jr., Controller
By: TMP Properties, a California General
Partnership as General Partner
By: /S/ WILLIAM O PASSO
-------------------------------------------
William O. Passo, General Partner
By: /S/ ANTHONY W THOMPSON
-------------------------------------------
Anthony W. Thompson, General Partner
By: /S/ SCOTT E MCDANIEL
------------------------------------------
Scott E. McDaniel, General Partner
18
