<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 March 31, 2000
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 33-0368324
(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 March 31, 2000 and December 31, 1999, Statements of
Operations for the three months ended March 31, 2000 and 1999, Statements of
Cash Flows for the three months ended March 31, 2000 and 1999.
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 months ended March 31, 2000 and 1999 (b) the financial
position at of March 31, 2000 and (c) the cash flows for the three months ended
March 31, 2000 and 1999. Interim results are not necessarily indicative of
results for a full year.
The balance sheet presented as of December 31, 1999 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.
2
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Balance Sheets
March 31, December 31,
2000 1999
(unaudited)
----------- ------------
Assets
<S> <C> <C>
Cash $ 4,921 $ 2,552
Note Receivable (Note 8) 18,731 27,303
Prepaid Expenses 730 730
Investment in Unimproved Land, net(Note 1) 4,954,031 4,931,409
------------ ------------
Total Assets $ 4,978,413 $ 4,961,994
============ ============
Liabilities and Partners Capital
Accounts Payable & Accrued Expenses $ 5,253 $ 1,985
Due to Affiliates (Note 5 and 6) 457,985 418,118
Property Taxes Payable (Note 9) 161,817 148,135
Franchise Tax Payable 1,600 800
Commission Payable to Affiliate (Note 6) 5,400 5,400
Note Payable (Note 7) 125,000 125,000
------------ ------------
Total Liabilities 757,055 699,438
General Partners (46,967) (46,555)
Limited Partners: 10,000 Equity Units
Authorized and Outstanding 4,268,325 4,309,111
------------ ------------
Total Partners Capital 4,221,358 4,262,556
------------ ------------
Total Liabilities and Partners Capital $ 4,978,413 $ 4,961,994
============ ============
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Statements of Operations
(Unaudited)
Three Months Ended
March 31 March 31
2000 1999
-----------------------
Income
<S> <C> <C>
Interest $ 428 $ 1,310
------------ ----------
Total Income 428 1,310
------------ ----------
Expenses
Accounting & Financial Reporting 16,046 8,910
Outside Professional Services 9,690 5,884
General & Administrative 3,808 5,075
Interest 11,282 8,469
------------ ----------
Total Expenses 40,826 28,338
------------ ----------
Loss Before Taxes (40,398) (27,028)
State Franchise Tax 800 800
------------ -----------
Net Loss $ (41,198) $ (27,828)
============ ===========
Allocation of Net Loss (Note 4):
General Partners, in the Aggregate: $ (412) $ (278)
============ ===========
Limited Partners, in the Aggregate: $ (40,786) $ (27,550)
============ ===========
Limited Partners, per Equity Unit: $ (4.08) $ (2.75)
============ ===========
</TABLE>
See Accompanying Notes to Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
TMP INLAND EMPIRE V, LTD
A California Limited Partnership
Statement of Cash Flows
(unaudited)
Three Months Ended
March 31 March 31
2000 1999
--------------------------
Cash Flows from Operating Activities:
<S> <C> <C>
Net Loss $ (41,198) $ (27,828)
Adjustments to Reconcile Net Loss to Net Cash
Provided By Operating Activities:
Increase in Due to Affiliates 39,867 41,016
Decrease (Increase) in Prepaid Expenses 0 3,268
(Decrease) Increase in Accrued Expenses 3,268 (791)
Increase in Franchise Tax Payable 800 0
Increase in Property Taxes Payable 13,682 13,322
------------ -----------
Net Cash Provided By Operating Activities 16,419 28,987
Cash Flows from Investing Activities:
Increase in Investment in Unimproved Land (22,622) (31,697)
------------- -----------
Net Cash Used In Investing Activities (22,622) (31,697)
Cash Flows from Financing Activities:
Payments received from Note Receivable 8,572 9,960
------------ -----------
Net Cash Provided By financing activities 8,572 9,960
------------ -----------
Increase (Decrease) in Cash 2,369 7,250
Cash, Beginning of Period 2,552 445
------------ -----------
Cash, End of Period $ 4,921 $ 7,695
============ ===========
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Taxes $ 0 $ 800
============ ===========
Cash Paid for Interest $ 47,730 $ 4,062
============ ===========
</TABLE>
5
<PAGE>
See Accompanying Notes to
Financial Statements TMP
INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(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 expense and property taxes). These costs are
added to the cost of the properties and are deducted from the sales prices to
determine gains, if any, 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 entity is treated as a 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.
6
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(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 ("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 2000 or 1999.
7
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(Unaudited)
Note 5 - Agreements with PacWest Inland Empire, LLC (PacWest)
In March 1998, the General Partners entered into an agreement (the Financing
Agreement) with PacWest, a Delaware Limited Liability Company, whereby PacWest
paid a total of $300,000 to the General Partners 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.
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
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.
As of March 31, 2000 the TMP Land Partnerships have been funded approximately
$2,981,000 by PacWest. An addendum to the Financing Agreement which states
PacWest shall be entitled to increase the aggregate amount of the loan by
written agreement is currently being approved by both the General Partners and
PacWest. Upon signing of this addendum, PacWest, can, at their option and with
the written agreement of the General Partners, make additional advances and the
aggregate amount of cash loaned to the TMP Land Partnerships is not limited to a
maximum of $2,500,000.
In April 1998, PacWest entered into the Management Agreement with the General
Partners 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
8
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(Unaudited)
not to exceed the average reimbursements to the General Partners for such
services over the past five years. As of March 31, 2000 and December 31, 1999,
the Partnership has a payable of approximately $457,985 and $418,118,
respectively, including interest, due to PacWest related to the aforementioned
agreements.
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 March 31, 2000, $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 March 31, 2000 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 amount was reimbursed by the
Partnership in August 1999.
See Note 5 regarding information on management of the Partnership during 2000.
9
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(Unaudited)
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. The
Partnership paid an extension fee of approximately $5,400 to extend the due date
of the note until August 1, 2002. The interest rate was reduced from 13% to 12%
per annum and is payable in monthly installments of $1,250. As of March 31,
2000, $64,739 of interest has been paid and capitalized to investment in
unimproved land.
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
in September 2000. Interest accrues at 7 percent per annum, and monthly payments
of principal and interest of $3,000 began in August 1996. During the three month
period ended March 31, 2000, approximately $428 of interest was received on this
note receivable.
Note 9 - Property Taxes Payable
A portion of the property taxes payable of $161,817 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 a payment to be paid in April 2000 and
for three payments in April in subsequent years. The additional liability
relates to current property taxes that are due to be paid April 2000.
Approximate amounts due on the payment plan are as follows:
<TABLE>
<S> <C>
April 10, 2000 $ 62,773
April 10, 2001 28,454
April 10, 2002 28,454
April 10, 2003 28,454
-------
$148,135
========
</TABLE>
These amounts will increase annually as interest accrues at a monthly rate of
1.5% on the remaining balance.
10
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
March 31, 2000
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. 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.
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,
1999.
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 ("Units") and the investment of the subscription proceeds
to purchase parcels of unimproved real property.
11
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
March 31, 2000
The Partnership revenues during the fiscal years ended December 31, 1996-1999,
consisted primarily of interest income earned on funds held, note receivable
interest payments and interest 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. In
addition, a nominal amount of interest income was earned on funds held during
1995.
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.
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 March 31, 2000 and 1999
Partnership revenues during the three-month periods ended March 31, 2000 and
1999 consisted primarily of interest income. No properties were sold during the
periods presented.
Investing activities for the three months ended March 31, 2000 and 1999 used
approximately $23,000 and $32,000 of cash, respectively; mainly to pay
development and carrying costs of the land held for investment. Financing
activities for the three months ended March 31, 2000 and 1999 provided
approximately $8,500 and $10,000, respectively from the payments received on the
note receivable.
Total expenses for the three months ended March 31, 2000 compared with the three
months ended March 31, 1999, increased by approximately $12,000 due primarily to
increases in Accounting & Financial Reporting, Outside Professional Services and
Interest Expense. Interest Expense increased by $2,813 pursuant to the Financing
Agreement with PacWest entered into April 1, 1998. Accounting & Financial
Reporting increases are directly related to the timing and the costs incurred to
prepare audit and file the appropriate financial information for the
Partnership. In accordance with the Management Agreement, reimbursement of
certain outside consultant expenses charged to the Partnership by PacWest, were
incurred during the three-month period ended March 31, 2000 and not in the same
period ended March 31, 1999. These charges amounted to approximately $3,300 and
are primarily responsible for the increase in Outside Professional Services of
$3,806.
12
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
March 31, 2000
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 March 31, 2000 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 Units. During the period from inception through December 31, 1995,
the Partnership acquired a total of fourteen properties for 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
nine 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 note was due in August 1999 and has been extended until August
2002.
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 entered into the Financing Agreement with
PacWest, whereby PacWest paid a total of $300,000 to the General Partners and
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
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
13
<PAGE>
TMP INLAND EMPIRE V, LTD.
A California Limited Partnership
March 31, 2000
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.
As of March 31, 2000 the TMP Land Partnerships have been funded approximately
$2,981,000 by PacWest. An addendum to the Financing Agreement which states
PacWest shall be entitled to increase the aggregate amount of the loan by
written agreement is currently being approved by both the General Partners and
PacWest. Upon signing of this addendum, PacWest, can, at their option and with
the written agreement of the General Partners, make additional advances and the
aggregate amount of cash loaned to the TMP Land Partnerships is not limited to a
maximum of $2,500,000.
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 is currently soliciting third party financing for a total of
$250,000.
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.
14
<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: May 15, 2000
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
