<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report under Section 13 or 15 (d) of
The Securities Exchange Act of 1934
For the Quarterly Period ended September 30, 1999
Commission File No. 0-19916
TMP INLAND EMPIRE V, LTD
A CALIFORNIA LIMITED PARTNERSHIP
(Name of small business issuer as specified in its charter)
CALIFORNIA 33-0341829
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
801 North Parkcenter Drive, Suite 235
Santa Ana, California 92705
(Address of principal executive offices, including Zip Code)
(714) 836-5503
(Issuer's telephone number, including area code)
Check whether the issuer [1] filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 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 [ ]
Transitional Small Business Disclosure Format:____Yes__X__No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following financial statements are filed as a part of this form 10-QSB:
Balance Sheets as of September 30, 1999 and December 31, 1998, Statements of
Income for the three and nine months ended September 30, 1999 and 1998,
Statements of Cash Flows for the nine months ended September 30, 1999 and 1998.
The interim financial statements presented have been prepared by the Partnership
without audit and in the opinion of the management, reflect all adjustments of a
normal recurring nature necessary for a fair statement of (a) the results of
operations for the three and nine months ended September 30, 1999 and 1998 (b)
the financial position at of September 30, 1999 and (c) the cash flows for the
nine months ended September 30, 1999 and September 30, 1998. Interim results are
not necessarily indicative of results for a full year.
The balance sheet presented as of December 31, 1998 has been derived from the
financial statements that have been audited by the Partnership's independent
public accountants. The financial statements and notes are condensed as
permitted by Form 10-QSB and do not contain certain information included in the
annual financial statements and notes of the Partnership. The financial
statements and notes included herein should be read in conjunction with the
financial statements and notes included in the Partnership's Form 10-KSB.
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Balance Sheets
September 30, December 31,
1999 1998
(unaudited) ______
-------------
Assets
<S> <C> <C>
Cash $ 4,659 $ 445
Note Receivable (Note 8) 35,726 60,133
Prepaid Expenses 730 3,268
Investment in Unimproved Land, net (Note 1) 4,874,664 4,787,077
------------ ------------
Total Assets $ 4,915,779 $ 4,850,923
============ ============
Liabilities and Partners Capital
Accounts Payable $ 2,738 $ 2,776
Due to Affiliates (Note 5 and 6) 357,960 226,737
Property Taxes Payable (Note 9) 129,873 116,753
Franchise Tax Payable 800 800
Commission Payable to Affiliate (Note 6) 5,400 5,400
Note Payable (Note 7) 125,000 125,000
------------ ------------
Total Liabilities 621,771 477,466
General Partners (46,241) (45,446)
Limited Partners: 10,000 Equity Units
Authorized and Outstanding 4,340,249 4,418,903
------------ ------------
Total Partners Capital 4,294,008 4,373,457
------------ ------------
Total Liabilities and Partners Capital $ 4,915,779 $ 4,850,923
============ ============
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Statements of Income
(unaudited)
Three Months Ended
September 30 September 30
1999 1998
------------ ------------
<S> <C> <C>
Income
Interest $ 722 $ 1,280
------------ ------------
Total Income 722 1,280
------------ ---------
Expenses
Accounting & Financial Reporting 4,626 12,350
Outside Professional Services 5,418 12,967
General & Administrative 4,273 21,413
Interest 9,518 966
------------ ------------
Total Expenses 23,835 47,696
------------ ------------
Loss Before Taxes (23,113) (46,416)
State Franchise Tax 0 0
------------ ------------
Net Loss $ (23,113) $ (46,416)
============ ============
Allocation of Net Loss (Note 4):
General Partners, in the Aggregate: $ (231) $ (464)
============ ============
Limited Partners, in the Aggregate: $ (22,882) $ (45,952)
============ ============
Limited Partners, per Equity Unit: $ (2.29) $ (4.60)
============ ============
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Statements of Income
(unaudited)
Nine Months Ended
September 30 September 30
1999 1998
------------ ------------
<S> <C> <C>
Income
Interest $ 2,593 $ 2,208
------------ ------------
Total Income 2,593 2,208
------------ ---------
Expenses
Accounting & Financial Reporting 23,747 24,409
Outside Professional Services 18,041 25,231
General & Administrative 12,437 31,601
Interest 27,017 2,186
------------ ------------
Total Expenses 81,242 83,427
------------ ------------
Loss Before Taxes (78,649) (81,219)
State Franchise Tax 800 800
------------ ------------
Net Loss $ (79,449) $ (82,019)
============ ============
Allocation of Net Loss (Note 4):
General Partners, in the Aggregate: $ (795) $ (820)
============ ============
Limited Partners, in the Aggregate: $ (78,654) $ (81,199)
============ ============
Limited Partners, per Equity Unit: $ (7.87) $ (8.12)
============ ============
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE V, LTD
A California Limited Partnership
Statement of Cash Flows
(unaudited)
Nine Months Ended
September 30 September 30
1999 1998
------------ ------------
Cash Flows from Operating Activities:
<S> <C> <C>
Net Loss $ (79,449) $ (82,019)
Adjustments to Reconcile Net Loss to Net Cash
Provided By Operating Activities:
Increase in Due to Affiliates 131,223 126,387
Decrease (Increase) in Prepaid Expenses 2,538 (6,942)
(Decrease) Increase in Accounts Payable (38) 4,364
Increase in Property Taxes Payable 13,120 23,234
------------ ------------
Net Cash Provided By Operating Activities 67,394 65,024
Cash Flows from Investing Activities:
Increase in Investment in Unimproved Land (87,587) (117,726)
------------ ------------
Net Cash Used In Investing Activities (87,587) (117,726)
Cash Flows from Financing Activities:
Payments received from Note Receivable 24,407 23,291
------------ ------------
Net Cash Provided By financing activities 24,407 23,291
------------ ------------
Increase (Decrease) in Cash 4,214 (29,411)
Cash, Beginning of Period 445 32,509
------------ ------------
Cash, End of Period $ 4,659 $ 3,098
============ ============
Supplemental Disclosure of Cash Flow
Information:
Cash Paid for Taxes $ 800 $ 800
============ ============
Cash Paid for Interest $ 3,854 $ 4,479
============ ============
</TABLE>
<PAGE>
See Accompanying Notes to Financial Statements
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
For the Nine Months Ended September 30, 1999
(Unaudited)
Note 1 - General and Summary of Significant Accounting Policies
General - TMP Inland Empire V, Ltd. (the Partnership) was organized in 1989 in
accordance with the provisions of the California Uniform Limited Partnership Act
for the purpose of acquiring, developing and operating real property in the
Inland Empire area of Southern California.
Accounting Method - The Partnership's policy is to prepare its financial
statements on the accrual basis of accounting.
Investment in Unimproved Land - Investment in unimproved land is stated at the
lower of cost or fair value. All costs associated with the acquisition of a
property are capitalized. Additionally, the Partnership capitalizes all direct
carrying costs (such as interest and property taxes). These costs are added to
the cost of the properties and are deducted from the sales prices to determine
gains when properties are sold.
Syndication Costs - Syndication costs (such as commissions, printing, and legal
fees) totaling $1,081,818 represent costs incurred to raise capital and,
accordingly, are recorded as a reduction in partners' capital (see Note 3).
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the 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 these estimates.
Concentration - All unimproved land parcels held for investment are located in
the Inland Empire area of Southern California. The eventual sales price of all
parcels is highly dependent on the real estate market condition in that
geographical area. The Partnership attempts to mitigate any potential risk by
continually monitoring the market conditions and holding the land parcels
through any periods of declining market conditions.
Income Taxes - The Partnership is treated as a general and limited partnership
for income tax purposes and accordingly any income or loss is passed through and
taxable to the individual partners. Accordingly, there is no provision for
federal income taxes in the accompanying financial statements. However, the
minimum California Franchise Tax payable annually by the Partnership is $800.
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
For the Six Months Ended September 30, 1999
(Unaudited)
Note 2 - Organization of the Partnership
The Partnership was originally formed with TMP Properties (A California General
partnership) and TMP Investments, Inc. (A California Corporation) as the general
partners. The partners' of TMP Properties are William O. Passo, Anthony W.
Thompson and Scott E. McDaniel. William O. Passo and Anthony W. Thompson were
the shareholders of TMP Investments, Inc. until October 1, 1995, when they sold
their shares to TMP Group, Inc. and then became the shareholders of TMP Group,
Inc.
The Partnership originally acquired ten separate parcels of unimproved real
property in Riverside and San Bernardino Counties, California. The properties
were to be held for investment, appreciation, and ultimate sale and/or
improvement of all or portion thereof, either alone or in conjunction with a
joint venture partner. A portion of one parcel was sold in 1992 and the proceeds
were retained for working capital. During 1993, the Partnership foreclosed on
property underlying a note receivable and subsequently sold the property. During
1995, the Partnership sold a portion of one parcel and received a note for
$141,000.
The partnership agreement provides for two types of investments: Individual
Retirement Accounts (IRA) and others. The IRA minimum purchase requirement was
$2,000 and all others were a minimum purchase requirement of $5,000. The maximum
liability of the limited partners is the amount of their capital contribution.
Note 3 - Partners Contributions
The Partnership offered for sale 10,000 units at $1,000 each to qualified
investors. As of December 31, 1990, all 10,000 units had been sold for total
limited partner contributions of $10,000,000. There have been no contributions
made by the general partners since its formation. As described in Note 1,
syndication costs have been recorded as a reduction in partners' capital.
Note 4 - Allocation of Profits, Losses and Cash Distributions
Profits, losses, and cash distributions are allocated 99 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 six percent per annum based on their adjusted capital
account balances. At that point, remaining profits, losses and cash
distributions are allocated 85 percent to the limited partners and 15 percent to
the general partners.
There were no distributions in 1999 or 1998
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
For the Six Months Ended September 30, 1999
(Unaudited)
Note 5 - Agreements with PacWest
In March 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 a total of $300,000 to the
general partners of the Partnership and ten other related partnerships (the TMP
Land Partnerships). In addition, PacWest agreed to pay up to an additional
$300,000 for any deficit capital accounts for these 11 partnerships in exchange
for the rights to the general partners' distributions; referred to as a
"distribution fee" as defined by the Financing Agreement. Pursuant to a
management, administrative, and consulting agreement (the Management Agreement),
PacWest has acquired the general partners' unsubordinated 1% interest in the
Partnership and assumed responsibility for all partnership administration while
not replacing any of the general partners.
In addition, 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 among
the 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 borrowings are secured by
the Partnership's properties, and funds will be loaned, as needed, in the
opinion of the general partners. These funds 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, can, at their option, make additional advances with the agreement of
the general partners; however, the aggregate amount of cash loaned to the TMP
Land Partnerships is limited to a maximum of $2,500,000.
In April 1998, PacWest entered into the Management Agreement with the general
partners of the Partnership to provide the Partnership with overall management,
administrative and consulting services. PacWest currently contracts with third
party service providers to perform certain of the financial, accounting, and
investor relations' services for the Partnership. PacWest will charge a fee for
its administrative services equal to an amount not to exceed the average
reimbursements to the general partners for such services over the past five
years. As of September 30, 1999, the Partnership has an amount due of
approximately $358,000 to PacWest related to the aforementioned agreements.
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
For the Six Months Ended September 30, 1999
(Unaudited)
Note 6 - Related Party Transactions
Syndication costs (see Notes 1 and 3) netted against partners' capital
contributions include $1,000,000 of selling commissions paid in prior years to
TMP Capital Corp. for the sale of partnership units of which a portion was then
paid to unrelated registered representatives. William O. Passo and Anthony W.
Thompson were the shareholders of TMP Capital Corp. until October 1, 1995, when
they sold their shares to TMP Group, Inc.
Investment in unimproved land includes acquisition fees of $617,562 paid in
prior years to TMP Properties, TMP Investments, Inc., and the general partners,
for services rendered in connection with the acquisition of the properties.
At September 30, 1999, $5,400 is payable to Regal Realty, a company wholly owned
by Scott E. McDaniel, for services rendered relating to sales of properties
prior to 1990. Mr. McDaniel is a partner of TMP Properties and he was a
shareholder of TMP Investments, Inc. until September 1993 when he sold his
shares to Mr. Passo and Mr. Thompson. Ultimate payment of this amount is
contingent on the limited partners receiving an amount equal to their capital
contributions plus a cumulative, non-compounded return of 6% per annum on their
adjusted capital contributions. As of September 30, 1999 the limited partners
had not received and do not expect to receive such a return and therefore this
amount is not currently due.
Approximately $7,000 of property service fees were paid by an affiliated
partnership, TMP Inland Empire VI, Ltd. on behalf of the Partnership during the
six-month period ended June 30, 1999. This obligation is included in Due to
Affiliates on the Balance Sheet as of September 30, 1999.
See Note 5 regarding information on management of the Partnership during 1999.
Note 7 - Note Payable
The Partnership borrowed $125,000 from a private mortgage company. The note is
secured by a deed of trust on a parcel of land owned by the Partnership in
Victorville, California. The note was originally due on August 1, 1999, but the
Partnership paid an extension fee of approximately $5,400 to extend the due date
of the note until August 2, 2002. The interest rate was reduced from 13% to 12%
per annum and is payable in monthly installments of $1,250. As of September 30,
1999, $57,239 of interest has been paid and capitalized to investment in
unimproved land.
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
For the Six Months Ended September 30, 1999
(Unaudited)
Note 8 - Note Receivable
The Partnership sold a parcel of land in 1995 and as part of the sale proceeds
received a note for $141,000. The note is secured by a deed of trust and is due
on September 1, 2002. Interest accrues at 7 percent per annum, and monthly
payments of principal and interest of $3,000 began in August 1996. During the
nine month period ended September 30, 1999, approximately $2,600 of interest was
received on this note receivable.
Note 9 - Property Taxes Payable
A portion of the property taxes payable of $129,873 relates to property taxes
due for various periods from 1994 to 1997 for which the Partnership has entered
into a payment plan. The plan calls for payment of 25% of the balance due to be
paid in April 2000, and 33%, 50% and 100% in subsequent years. The additional
liability relates to current property taxes that will be paid in December 1999.
Approximate amounts due on the payment plan are as follows:
<TABLE>
<CAPTION>
<S> <C>
April 10, 2000 $ 29,544
April 10, 2001 29,544
April 10, 2002 29,544
April 10, 2003 28,121
--------
$116,753
========
</TABLE>
These amounts will increase annually as interest accrues at a rate of 1.5% on
the remaining balance.
Note 10 - Year 2000 Issue (unaudited)
Like other organizations and individuals around the world, the Partnership could
be adversely affected if the computer systems it uses and those used by the
Partnership's major customers and vendors do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Issue." Management is assessing its computer
systems and the systems compliance issues of its major service providers. Based
on information available to management, the Partnership's major customers and
vendors are taking steps that they believe are reasonably designed to address
the Year 2000 Issue with respect to computer systems that they use. At this
time, however, there can be no assurance that these steps will be sufficient,
and the failure of a timely completion of all necessary procedures could have a
material adverse effect on the Partnership's operations. Management will
continue to monitor the status of, and its exposure to, this issue.
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
For the Nine Months Ended September 30, 1999
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, which appear elsewhere in this report.
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, 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
words 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 Partnership's property regarding matters that are
not historical are forward-looking statements. Such statements are subject to
certain risks and uncertainties, including without limitation those discussed in
"Risk Factors" sections of this report. 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.
Results of Operations
The following discussion should be read in conjunction with the attached
financial statements and notes thereto and with the Partnership's audited
financial statements and notes thereto for the fiscal year ended December 31,
1998.
During the period from inception (November 16, 1989) through December 31, 1990,
the Partnership was engaged primarily in the sale of Units of Limited
Partnership Interest and the investment of the subscription proceeds to purchase
parcels of unimproved real property. The Partnership sold the Kletka/Adelanto
for a gross profit, net of all acquisition, carrying and selling costs, of
$109,346. The sales price was $225,000, with the Partnership carrying a first
trust deed of $155,000 with a maturity date of July 30, 1992. In July 1992, the
Partnership extended the maturity date of the note to July 30, 1993 in exchange
<PAGE>
for a $15,000 principal reduction on the note. In July 1993, the Partnership
foreclosed on the note and subsequently resold the property in August 1993 for
$105,000. The resale resulted in a loss of $75,291, net of all carrying and
selling costs. In total, the Partnership realized a profit of $34,055 on the
sale and resale of the Kletka/Adelanto (Adelanto 10) property.
Other revenues received during the fiscal years ended December 31, 1994-1998,
consisted primarily of interest income earned on funds held, and income from the
forfeiture by potential buyers of non-refundable escrow deposits.
In 1995, the Partnership sold 29 acres of the "Victorville 40" property for a
loss of $561,841. The sale generated cash of $69,327 and a note for $141,000.
Interest income from the note will provide some of the cash requirements of the
Partnership.
The Partnership recognized a loss in 1996 due to the write-down in value of the
Partnership land. The decline in land value was due mainly to the downturn in
Southern California's real estate market.
In compliance with Statement of Financial Accounting Standards No. 121-
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Disposed of (SFAS 121), the 1996 financial statements reported an expense for
the decline in fair value of unimproved land of $3,922,730. The 1997 financial
statements originally issued with the auditor's report dated January 28, 1998
reported $1,82,361 of income due to appreciation in fair value of land. Pursuant
to additional review by management and the predecessor accounting firm, it was
determined that SFAS 121 does not provide for recording appreciation in fair
value of a real estate asset. Therefore, the predecessor independent accounting
firm restated the 1997 financial statements on August 3, 1998 to reverse the
appreciation in fair value of land.
The Partnership's management believes that inflation has not had a material
effect on the Partnership's results of operations or financial condition.
Fiscal Quarters Ended September 30, 1999 and 1998
Partnership revenues during the six periods ended September 30, 1999 and 1998
consisted primarily of interest income. No properties were sold during the
periods presented.
Investing activities for the nine months ended September 30, 1999 and 1998 used
approximately $88,000 and $118,000 of cash, respectively; mainly to pay
development and carrying costs of the land held for investment. Financing
activities for the nine months ended September 30, 1999 and 1998 provided
approximately $24,000 and $23,000, respectively from the payments received on
the note receivable.
Total expenses for the three months ended September 30, 1999 compared with the
<PAGE>
three months ended September 30, 1998, decreased by approximately $24,000, or
50%, due primarily to the decrease in Accounting and Financial Reporting,
Outside Professional Services and General & Administrative Expenses. These
decreases were partially offset by an increase in Interest Expense of
approximately $8,600 or 90% pursuant to the Financing Agreement with PacWest
entered into April 1, 1998. Continuity and experience with the internal
accounting staff and external accountant reviews is the explanation for the
decrease in Accounting and Financial Reporting. Outside Professional Services
decrease is due to certain insurance and investor relation expenses incurred
during 1998 yet not in 1999. General and Administrative costs decreased during
the period by $17,140 due to certain services provided during the period ended
September 30, 1998 by PacWest pursuant to the Management Agreement that were not
necessary during the same period in 1999.
Total expenses for the nine months ended September 30, 1999 compared with the
three months ended September 30, 1998, decreased by approximately $2,000, or 3%,
due primarily to the decrease in Accounting and Financial Reporting, Outside
Professional Services and General & Administrative Expenses. These decreases
were partially offset by an increase in Interest Expense of approximately
$24,800 or 92% pursuant to the Financing Agreement with PacWest entered into
April 1, 1998 and therefore only six months of interest expense was incurred
during the nine month period ended September 30, 1998. Continuity and experience
with the internal accounting staff and external accountant reviews is the
explanation for the decrease in Accounting and Financial Reporting. Outside
Professional Services decrease is due to certain insurance and investor relation
expenses incurred during 1998 yet not in 1999. General and Administrative costs
decreased during the period by $19,164 due to certain services provided during
the period ended September 30, 1998 by PacWest pursuant to the Management
Agreement that were not necessary during the same period in 1999.
A decrease of $2,538 was incurred relating to Prepaid Expenses due to the
requirement of certain vendors requesting prepayment of their fees during 1998
for 1999 services. No such request was made during the period ended September
30, 1999.
Due to Affiliates increases as the Partnership pays its' operating costs. As
discussed above, and pursuant to the Financing Agreement, all funds required to
pay for operating costs are received from PacWest.
The Partnership had nine properties as of September 30, 1999 that are being held
for appreciation and resale. Upon the sale of each property, the Partnership
intends to distribute the sales proceeds, less any reserves needed for
operations, to the partners.
Liquidity and Capital Resources
The Partnership has raised a total of $8,918,182, net of syndication costs, from
the sale of limited partnership units. During the period from inception through
December 31, 1995, the Partnership acquired a total of fourteen properties for
<PAGE>
all cash at a total expenditure of $8,891,712. The Partnership capitalized the
acquisition costs of the property and direct carrying costs, such as interest
and property taxes. The Partnership does not intend to acquire any additional
properties. The remaining thirteen properties are being held for resale. Upon
sale, if any, the Partnership intends to distribute the sales proceeds, less any
reserves needed for operations, to the partners.
The Partnership procured a $125,000 loan in 1996 secured by certain partnership
property.
The Partnership owns land in the Riverside and San Bernardino counties. That
region of Southern California experienced a significant economic recession that
has substantially eroded the value of real estate in that area. The region is
beginning to show some signs of recovery; however, the recovery has been very
slow.
In March, 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 a total of $300,000 to
the general partners of the Partnership and ten other related partnerships (the
TMP Land Partnerships). PacWest agreed to pay up to an additional $300,000 for
any deficit capital accounts for these 11 partnerships in exchange for the
rights to distributions from the general partners; referred to as a
"distribution fee" as defined by the Financing Agreement.
In addition, 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 among
the 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 borrowings are secured by
the Partnership's properties, and the funds will be loaned, as needed, in the
opinion of the general partners. These funds 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, reduction of existing debt, property taxes in
arrears, appropriate entitlement costs and Partnership operations.
PacWest, can, at their option, make additional advances with the agreement of
the general partners. However, the aggregate amount of cash loaned to the TMP
Land Partnerships is limited to a maximum of $2,500,000.
In April 1998, PacWest entered into a management, administrative and consulting
agreement (the Management Agreement) with the general partners of the
Partnership to provide the Partnership with overall management, administrative
and consulting services. PacWest currently contracts with third party service
providers to perform certain of the financial, accounting, and investor
relations' services for the Partnership. PacWest is paid an annual fee of
$11,520 for its administrative services.
<PAGE>
Pursuant to the Financing Agreement, PacWest has acquired the general partners'
unsubordinated 1% interest in the Partnership and assumed responsibility for all
partnership administration while not replacing any of the General partners.
The Partnership has no current plans to develop any of the properties. The 10
acres in Rialto are listed for sale.
RISK FACTORS
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 code fields will need to accept four
digit entries to distinguish 21st century dates. As a result, computer systems
and/or software used by organizations may need to be 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 has
developed and implemented 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.
The Partnership utilizes a number of computer software programs and operating
systems across its organization including applications used in financial
business systems and various administrative functions. The Partnership has
established an action plan for addressing Year 2000 issues. As a general matter,
the Partnership is vulnerable to failures by third parties to address their own
Year 2000 issues. The Partnership relies heavily upon third parties for
financial services. There can be no assurance that the Partnership's suppliers
and other third parties will adequately address their Year 2000 issues, and any
such issues could have a material adverse affect upon the Partnership's
financial condition and results of operation.
The Partnership has not spent a material amount of financial resources to
remediate. Year 2000 problems and does not anticipate that it will spend a
material amount of financial resources to remediate Year 2000 problems in the
future. The costs of such remediation will be part of the Partnership's general
and administrative expenses.
<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: October 15, 1999
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
By: TMP Investments, Inc., A California Corporation as Co-General Partner
By: \s\ William O. Passo
-------------------------------------
William O. Passo, President
By: \s\ Anthony W. Thompson
-------------------------------------
Anthony W. Thompson, Exec. Vice President
By: TMP Properties, A California General Partnership as Co-General Partner
By: \s\ William O. Passo
-------------------------------------
William O. Passo, Partner
By: \s\ Anthony W. Thompson
-------------------------------------
Anthony W. Thompson, Partner
By: \s\ Scott E. McDaniel
-------------------------------------
Scott E. McDaniel Partner
By: JAFCO, Inc., A California Corporation as Chief Accounting Officer
By: \s\ John A. Fonseca
-------------------------------------
John A. Fonseca, President
