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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 (Fee Required)
For the fiscal year ended December 31, 1996
[*] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange act of 1934 (No Fee Required). For the transition from
_________to____________
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COMMISSION FILE NO. 0-19933
TMP INLAND EMPIRE IV, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0341829
(State or other jurisdiction of (I.R.S.
incorporation or organization) Employer Identification No.)
801 N. PARKCENTER DRIVE, SUITE 235 92705
SANTA ANA, CALIFORNIA (Zip Code)
(Address of principal executive office)
(714) 836-5503
(Registrant's telephone number, including area code)
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Securities to be registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which
to be so registered each class is to be registered
------------------- ------------------------------
<S> <C>
N/A N/A
</TABLE>
Securities to be registered pursuant to Section 12 (g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes X No.
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PART I
ITEM 1(A). BUSINESS
INTRODUCTION
TMP INLAND EMPIRE IV, LTD., a California Limited Partnership (the
"Partnership"), is a California limited partnership formed in June, 1989, of
which TMP Investments, Inc., a California corporation, and TMP Properties, a
California general partnership, are the General Partners (the "General
Partners"). The Partnership was formed to acquire, from nonaffiliated person,
parcels of unimproved real property (the "Properties") located primarily in
Riverside and San Bernardino Counties, California. Some of the Properties are or
will be planned, zoned and mapped for single family residential purposes, while
others are or will be planned, zoned and mapped for commercial or industrial
uses. Actions by the Partnership to obtain the desired general/specific plan,
zoning and parcel/tract map changes by or approvals of governmental entities,
and to subdivide and site plan, are commonly referred to as "pre-development."
The Properties will be held for investment, appreciation, and ultimate
sale and/or improvement of all or a portion thereof either alone or in
conjunction with a joint venture partner. If the Properties or portions thereof
are developed, the Partnership intends to hold and manage the same for the
production of income until such time that they determine a sale would be in the
best interest of he Partnership and its limited partners (the "Limited
Partners"). Upon the sale of the last Property, the payment of all debts and the
distribution of any remaining proceeds, less necessary reserves, to those
persons entitled thereto pursuant to the Partnership's Agreement of Limited
Partnership (the "Partnership Agreement"), the Partnership will be dissolved.
TMP Inland Empire IV. Ltd., a California Limited Partnership, has been
formed under the Revised Limited Partnership Act of the State of California. The
rights and obligations of the Partners in the Partnership are governed by the
Partnership's Agreement of Limited Partnership (the "Partnership Agreement").
The following statements concerning the Partnership Agreement are qualified in
their entirety by reference to the Partnership Agreement, which is being filed
as an Exhibit to this Form 10K.
DESCRIPTION OF LIMITED PARTNERSHIP UNITS. The Partnership Agreement
authorizes the issuance and sale of Limited Partnership Units for all cash in
multiples of $1,000 per Unit. A total of 8,500 Limited Partnerships Units are
outstanding and it is not anticipated that any additional Limited Partnership
Units will be issued in the future. Outstanding Units are fully paid and
nonassessable.
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THE RESPONSIBILITIES OF THE GENERAL PARTNERS. The General Partners have
the exclusive management and control of all aspects of the business of the
Partnership. In the course of their management, the General Partners may, in
their absolute discretion, acquire, mortgage, encumber, hold title to, pledge,
sell, release, or otherwise dispose of real property and interests therein when
and upon such terms as they determine to be in the best interest of the
Partnership and employ such persons, including, under certain circumstances,
Affiliates of the General Partners, as they deem necessary for the efficient
operation of the Partnership. It is provided, however, that the Limited Partners
holding, in aggregate, more than 50% of the then outstanding Units must consent
to the sale of substantially all of the assets of the Partnership other than a
sale occurring in the ordinary course of the Partnership's business. The General
Partners shall receive only such compensation as is provided in the Partnership
Agreement.
LIABILITIES OF LIMITED PARTNERS/NONASSESSABILITY OF INTERESTS. A Limited
Partner's capital contributed to the Partnership is subject to the risks of the
Partnership's business. Except as specifically provided in the Partnership
Agreement, he is not permitted to take any part in the management or control of
the business and he may not be assessed for additional capital contributions.
Assuming that the Partnership is operated in accordance with the terms of the
Partnership Agreement, a Limited Partner will not be liable for the liabilities
of the Partnership in excess of his capital contribution and share of his
undistributed profits. Notwithstanding the foregoing, a Limited Partner is
liable for any Distributions made to him if, after such Distributions, the
remaining assets of the Partnership are not sufficient to pay its then
outstanding liabilities, exclusive of liabilities of Limited Partners on account
of their contributions, and liabilities for which recourse is limited to
specific Partnership assets.
The Partnership Agreement provides that the Limited Partners shall not be
bound by, or be personally liable for, the expenses, liabilities, or obligations
of the Partnership.
TERM AND DISSOLUTION. The Partnership will continue for a maximum period
ending December 31, 2019, but may be dissolved at an earlier date, if certain
contingencies occur. Prior to dissolution, Limited Partners may not withdraw
from the Partnership but may, under certain circumstances, assign their Units to
others. (See "Transferability of Units," below.) The contingencies whereby the
Partnership may be dissolved are as follows:
1. The withdrawal, adjudication of bankruptcy, dissolution, or death of
a General Partner, unless the remaining General Partner agrees to
continue the business of the Partnership, or if there is no
remaining General Partner, all the Limited Partners agree to
continue the business of the Partnership and elect, by unanimous
consent, one or more new General Partners to continue the
Partnership's business;
2. A Majority Vote of the total outstanding Units in favor of
dissolution and termination of the Partnership; or
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3. The removal of a General Partner, unless the remaining General
Partner agrees to continue the business of the Partnership, or if
there is no remaining General Partner, a majority of the Limited
Partners agree to continue the business of the Partnership and
elect, by a Majority Vote of the total outstanding Units, one or
more new General Partners to continue the Partnership business.
VOTING RIGHTS OF LIMITED PARTNERS. The voting rights of the Limited
Partners are set forth in Section 6 of the Partnership Agreement. The Limited
Partners have the right to vote upon the following matters affecting the basic
structure of the Partnership:
1. Amendment of the Partnership Agreement (except for amendments which
do not affect the rights of the Limited Partners);
2. Removal of a General Partner;
3. Admission of a General Partner;
4. The sale of all, or a substantial part, of the assets of the
Partnership other than in the ordinary course of business;
5. The election to continue the business of the Partnership and the
appointment of a successor General Partner after the withdrawal,
adjudication of bankruptcy, death, or dissolution of the sole
remaining General Partner;
6. The election to continue the business of the Partnership and
appointment of a successor General Partner after the removal of the
sole remaining General Partner; or
7. Termination and dissolution of the Partnership, other than after
sale of all of the Properties and receipt of all amounts due on any
seller carryback financing.
A majority Vote of the Limited Partnership shall be required for the
matters set forth above to pass and become effective, except for the matters
specified in Item 5, which shall require the unanimous consent of the Limited
Partners.
The General Partners may at any time call a meeting of the Limited
Partners or for a vote, without a meeting, of the Limited Partners on matters on
which they are entitled to vote, and shall call for such meeting or vote
following receipt of written request therefor of Limited Partners holding 10% or
more of the total outstanding Units.
Each Limited Partnership Unit shall have equal voting rights.
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TRANSFERABILITY OF UNITS. Holders of Units shall have the right to assign
one or more whole Units by written instrument the terms of which are not in
contravention of any of the provisions of the Partnership Agreement.
An assignee of record shall be entitled to receive Distributions from the
Partnership attributable to the Units acquired by reason of such assignment from
and after the effective date of the assignment of such Units to him; however,
the Partnership and the General Partners shall be entitled to treat the assignor
of such Units as the absolute owner thereof in all respects, and shall incur no
liability for allocations of Net Income, Net Loss, or Distributions, or
transmittal of reports and notices required to be given to Limited Partners
which made in good faith to such assignor until such time as written instrument
of assignment has been received by the Partnership and recorded on its books.
The effective date of an assignment of Units (of which assignment the
Partnership has actual notice) on which the Assignee shall be deemed an Assignee
of record shall not be later than the first day of the fiscal quarter following
the date set forth on the written instrument of assignment.
Any assignment, sale, exchange or other transfer in contravention of any
of the provisions of the Partnership Agreement shall be void and ineffectual,
and shall not bind or be recognized by the Partnership.
An Assignee may only be substituted as a Limited Partner in the place of
the assignor Limited Partner with the prior consent of the General Partners. Any
substituted Limited Partner must agree to be bound by the provisions of the
Partnership Agreement.
BOOKS AND RECORDS. At all times during the term of the Partnership, the
General Partners will keep true and accurate books of account of all the
financial activities of the Partnership. These books of account are kept open
for inspection by the Limited Partners or their representatives at any
reasonable time. The General Partners may make such elections for federal and
state income tax purposes as they deem appropriate and the fiscal year of the
Partnership is the calendar year unless changed by the General Partners with the
consent of the Commissioner of Internal Revenue.
DISTRIBUTIONS, NET INCOME AND NET LOSS
ALLOCATION OF NET INCOME AND NET LOSS FROM OPERATIONS. Until such time
that all Limited Partners have received allocations of Net income from the
Partnership equal to a 6% cumulative, but not compounded, preferred return on
adjusted Capital Contributions (the "Preferred Return"), Net Income shall be
allocated 99% to all Limited Partnership Units, which will be further allocated
among such Units on a pro rata basis, and 1% to the General Partners. Until such
time that all Limited Partners have received Distributions equal to their
Capital Contributions plus their Preferred Return, Net Losses shall be allocated
99% to all Limited Partnership Units, allocated among them on a pro rata basis,
and 1% to the General Partners. Thereafter, Partnership Net Income, Net Loss,
and all items of Partnership deduction and credit shall be allocated 15% to the
General Partners and 85% to all Limited Partners, pro rata, according to the
number of Units owned. The foregoing allocations are subject to certain
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), as
set forth in Section 4.5 of the Partnership Agreement.
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ALLOCATION OF PROFITS AND LOSSES ON SALES OF PROPERTY. Profits and Losses
on Sales of Property are allocated as set forth in Section 4.5(f) and 4.5(g),
respectively, of the Partnership Agreement.
DISTRIBUTIONS. Distributions of Distributable Cash from Operations, if
any, will be made annually within 90 days after the end of the Partnership's
fiscal year and shall be allocated 99% to the Limited Partners and 1% to the
General Partners until the Limited Partners have received cumulative
Distributions in an amount equal to their Capital Contributions plus their
unpaid Preferred Return, after which time Distributions of Distributable Cash
from Operations shall be allocated 85% to the Limited Partners and 15% to the
General Partners. Except for Distributions on Dissolution described in Section
8.2 of the Partnership Agreement, Distributions of Cash from Sale or Refinancing
of Partnership Properties shall be distributed to the Partners at such times as
the General Partners shall determine in the same manner as Distributions of
Distributable Cash from Operations. The General Partners have the right to
refuse Cash from the Sale of Refinancing of Partnership Properties to pay seller
financed debt without making a Distribution to Partners; provided, however, that
sufficient funds, if available, shall be distributed to the Limited Partners to
pay any resulting state or federal income tax, assuming that all such Limited
Partners are in a 28% tax bracket.
INVESTMENT OBJECTIVES; RISKS
In general, the investment objectives of the Partnership may be summarized
as follows:
(a) Preservation and return of the Partners' capital.
(b) Capital appreciation.
(c) Added value through pre-development activity (zoning, subdivision,
site planning, engineering).
(d) Cash flow after return of capital.
(e) Minimization of risk by maintaining minimum partnership debt.
The General Partners are, at all times, guided by a policy of realizing
profit intended to result in gain for the Limited Partners upon ultimate
disposition of the Properties. There can, however, be no assurance or guarantee
that the decisions made by the General Partners will result in the realization
of any profit.
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The Partnership is subject to the risks generally incident to the
ownership of real estate, including the uncertainty of cash flow to meet fixed
or variable obligation; adverse changes in national economic conditions; changes
in the investment climate for real estate investment; lack of geographic
diversification; adverse changes in local market conditions, such as changes in
the supply of, or demand for competing properties in an area; changes in
interest rates and the availability of permanent mortgage funds, which may
render the sale or refinancing of a property difficult or unattractive; changes
in real estate tax rate and other operating expenses, governmental rules
(including, without limitations, zoning laws and fiscal policies); known and
unknown environmental conditions on the property and acts of God that may result
in uninsured losses (including, without limitation, earthquakes and floods).
The purchase of property to be developed or constructed is subject to more
risks than is involved in the purchase of property with an operating history. In
the event the General Partners decide to develop the Properties, the Partnership
will be subject to the risk that there may be unanticipated delays in, or
increases in costs of, development and construction as a result of factors
beyond the control of the General Partners. These factors may include, among
others, strikes, adverse weather, material shortages, and increases in the cost
of labor and materials. Such factors can result in the increased cost of a
project and corresponding depletion of the Partnership's working capital and
reserves, or loss of the Partnership's investment as a result of foreclosure by
a construction or other lender. Additional risks may be incurred where the
Partnership makes periodic progress payments or other advances to the builders
prior to completion of the construction. It should also be noted that the
development of unimproved real property is a time-consuming process which often
involves governmental approval of site and development plans, environmental
studies and reports, traffic studies, and similar items.
The Partnership may enter into joint ventures in order to accomplish the
development of the Properties. Such transactions may create risks not otherwise
present, such as the joint venturer's investment objectives may be inconsistent
with the investment objectives of the partnership.
If the Partnership develops the Properties, either alone or in conjunction
with joint venture partners, construction arrangements will be made at that
time. As of the date of this Form 10K, no arrangements have been entered into or
negotiated with any person for the development of any of the Properties.
If the Partnership requires a loan to finance pre-development or
development activities, or to pay off or refinance an existing loan on a given
property, the availability and cost of such a loan is uncertain due to money
market fluctuations. The General Partners are unable to predict the effects of
such fluctuations on the Partnership. Money market conditions which may exist if
and when the Partnership seeks to obtain any financing with respect to the
Partnership for development or other purposes may make such financing difficult
or costly to obtain and may have an adverse effect on the Partnership's ability
to develop the Properties. Additionally, such conditions may also adversely
affect the ability of the Partnership to sell the Properties when a sale is
determined to be in the best interests of the Partnership, and may affect the
terms of any such sale.
The Partnership's investment objectives must be considered speculative and
there is no assurance that the Partnership will fulfill them.
SELLING POLICY
The Partnership seeks to sell all Properties for all cash. However, if the
General Partners deem it to be in the best interests of the Partnership and its
Limited Partners, the Partnership will sell one or more of the Properties in
exchange for receiving part of the purchase price in cash at the time of sale
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and receiving the balance of the purchase price on a deferred basis. The
deferred amount will be evidenced by an interest-bearing promissory note secured
by a first trust deed on the Property sold. However, the Partnership does not
intend to carry back any promissory notes unless it obtains a first priority
lien against the Property sold.
COMPETITION
It is anticipated that the Partnership will encounter considerable
competition in the pre-development, development, operation, and eventual sale of
the Properties. Even under the most favorable marketing conditions, there is no
guarantee that the Properties can be pre-developed, developed, operated, or
sold, and if sold, that such sale will be made upon terms favorable to the
Partnership. Similarly, there is no guarantee that the Partnership will be able
to conduct profitable operations on the Properties, if and when they are
developed.
GOVERNMENTAL POLICIES
The Partnership's pre-development and development plans for the
Properties, as well as the value of the Properties, are dependent in large part
on governmental action. The following is a partial list of some, but not all, of
the potential problems which could arise due to governmental action or inaction.
ZONING/PLANS/MAPS/PERMITS. Certain of the parcels are not zoned for the
uses anticipated by the Partnership. Applications have been or will be made to
change the zoning for certain of those parcels.. As described under Item 2,
"Properties," some Properties have already been rezoned, but no assurances can
be given that all such rezoning changes will be approved. Zoning changes are
dependent on, among other things, whether or not such change would be consistent
with the General and Specific Plan for a given area. Further, final parcel/tract
maps have not been approved for all Properties, nor have any grading or building
permits been obtained. In the event that such Properties do not receive the
zoning desired by the General Partners, or if final maps are not approved or
permits not obtained, the value of those parcels to the Partnership and to
others may be reduced and the investment results of the Partnership may be
adversely affected.
GROWTH INITIATIVES. Many counties and cities in California have been
subject to so called "slow growth" initiatives which could seriously affect the
ability to timely develop properties located within a county or city passing
such an initiative. Although no such initiatives are currently pending, such an
initiative could adversely affect the use or value of those of the Properties
located within such county or city.
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PROPERTY TAX REFORM AND RENT CONTROL. Statewide property tax reform has
reduced real property taxes in California. However, subsequently enacted
statewide implementing legislation may cause real property taxes in California
to increase at a more rapid rate than previously experienced and legislation
enacted in certain municipalities in response to the statewide reform requires
owners of real property to pass through property tax savings to residential and
certain commercial tenants by various means, including rent reduction. It is
also possible that legislation at the state or local level may be enacted in
California which include some form of rent control applicable to the
Partnership. In addition, certain fees and charges associated with the
acquisition and ownership of real property in California have been increased to
offset decreases in local revenue resulting from the property tax reduction.
OTHER GOVERNMENTAL INTERVENTION. There can be no assurance that there will
be no governmental intervention with respect to the Properties that would
adversely affect the use or value of the Properties. For example, building
moratoriums, changes in general or specific plans, down-zoning of the Properties
or unanticipated environmental regulation or similar considerations could impair
the value of the Properties, either to the partnership or to others.
ENVIRONMENTAL
The Partnership may be required in certain instances to obtain
environmental impact, biological impact or other similar reports prior to
development of the Properties. Such reports may indicate conditions which make
it more expensive (or in rare cases, impossible) to develop a Property in a
manner anticipated by the Partnership, or may cause delays in the development of
a Property. If a Property is contaminated by hazardous materials, the
Partnership could incur substantial clean up costs under federal, state and
local laws which could adversely affect the investment results of the
Partnership.
The General Partners know of no environmental conditions on the Properties
that would adversely affect the investment results of the Partnership.
EMPLOYEES
The Partnership has no employees. Management of the Partnership is
provided by the General Partners. See Item 10 "Directors and Executive Officers"
for information about the General Partners.
ITEM 1(D). FOREIGN OPERATIONS
The Partnership has no foreign operations in foreign countries.
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ITEM 2. PROPERTIES
The Partnership acquired for cash, free of monetary encumbrances, a total
of nine (9) Properties, some of which consist of more than one parcel. All of
the Properties are in the area of Southern California known as the "Inland
Empire." While no fixed geographical boundary identifies the Inland Empire, the
General Partners consider the Inland Empire to include most of the western
portion of Riverside and San Bernardino counties and to be roughly bounded by
the cities of Corona on the west, the Coachella Valley (Palm Springs area) on
the east, the City of Victorville on the north and Murietta (formerly Rancho
California) on the south.
Included in this area are the communities of Perris, Sun City, Moreno
Valley, Riverside, Beaumont, San Jacinto, Palm Desert, Murietta (formerly Rancho
California) and Elsinore in Riverside County, and Fontana, Rialto, Rancho
Cucamonga, Ontario, San Bernardino Highlands and Chino in San Bernardino County.
The Properties are unimproved and presently produce no operating income.
It is possible that future economic conditions, governmental actions or other
factors may deter or prevent the Partnership from pre-developing or developing
any or all the Properties. In such event, the potential profitability, if any,
with respect to the Properties would be dependent upon appreciation of the
Properties and the Partnership's ability to refinance and sell the same. There
can be no assurance that the Properties, even if developed by the Partnership,
can be operated or ultimately sold for a profit.
The Partnership owns or has owned the following properties:
<TABLE>
<CAPTION>
Date Purchase Date Sales
Property Purchased Price Sold Price
- -------- --------- ----- ---- -----
<S> <C> <C> <C> <C>
Beaumont 320** 06-19-89 $ 625,000 * *
09-14-89 $ 720,000 * *
Victorville 10 08-15-89 $ 420,000 * *
Victorville 17 07-20-89 $ 700,000 * *
Victorville 25 08-10-89 $1,202,000 * *
Oleander 10 08-09-89 $ 295,000 * *
Elsinore 36.79** 07-10-89 $ 360,000 10-06-89 $1,152,000
07-28-89 $ 369,000 10-06-89 ***
Perris 6.44 06-20-89 $ 930,000 * *
Perris 77 10-31-89 $ 750,000 02-28-90 $1,200,000
Perris 1.93 12-05-89 $ 22,500 02-14-95 $ 23,000
</TABLE>
* These Properties were still owned by the Partnership as of December 31,
1996.
** Beaumont 320 and Elsinore 36.79 were each acquired in two separate
parcels.
*** The two parcels comprising Elsinore 36.79 were sold together for a total
sales price of $1,152,000.
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BEAUMONT 320 ACRES. The Partnership acquired from different sellers two
adjacent 160 acre parcels of rolling land (the Beaumont-Mudd and Beaumont-Gerwyn
parcels) totaling approximately 320 acres. The Property is located approximately
1-1/4 miles south of Interstate Highway 10 (the San Bernardino Freeway). Access
to the highway is over Highland Springs Avenue from the Property.
The Property is rectangular in shape and measures 1 mile by 1/2 mile. The
terrain varies from level meadows to rolling hills, and in some places steep
terrain. Electric power and telephone are currently to the Property. Water is
currently supplied by private well on the Property. The current zoning, W-2,
allows for one single family residential unit per 20,000 square feet of site
area. A specific plan, Environmental Impact Report and Kangaroo Rat Study were
approved, and the property has been annexed into the City of Beaumont with a R-1
zoning.
VICTORVILLE 10 PARCEL. This approximately 10 acre parcel is located at the
southwest corner of Seneca Road and Petaluma Road in west central Victorville,
about 1/2 mile north of Palmdale Road. Palmdale Road is designated as Highway 18
and connects Victorville to the high desert communities of Palmdale and
Lancaster. The Property is level, sandy loam, and relatively square. It is not
within a flood plain or earthquake zone. All utilities are available at the
Property and sewer has been brought to within 600 feet of the Property to
service a new apartment complex on Seneca Road.
The Property has been rezoned from D-S (desert suburban) to R-3,
permitting development of 20 units per acre. The city of Victorville approved a
site plan for a 200 unit apartment development on the site.
VICTORVILLE 17 PARCEL. This approximately 17 acre parcel is located on
Rodeo Road at its intersection with Pebble Beach Drive about 1/4 mile north of
Green Tree Lane. The Property is in an already developed part of east central
Victorville. The immediate neighborhood is made up of some lower income single
family homes, a mobile home community and golf course, and scattered apartment
complexes.
The Property is "L" shaped with 800 feet of frontage on Rodeo Road. It is
sloped and slightly rolling with a flood control channel on the north property
line. All utilities and sewer are in place to the Property. It is zoned R-3
(multi-family residential) with a tentative map approved for 55 4-plex lots (220
units).
VICTORVILLE 25 PARCEL. This approximately 25 acre Property is comprised of
two parcels of approximately 12.73 and approximately 12.6 acres respectively.
The site is located in the northwest portion of the City of Victorville. The
parcels are bounded on the south by Village Drive, the east by Heartherdale and
the west by Amargosa.
The 12.6 acre parcel is square in shape and is zoned C-2. This zoning will
permit commercial development such as office and professional, shopping or
retail uses. The 12.73 acre parcel is triangular in size and is zoned R-3, or
multi-family residential. This zoning will permit development of apartments or
condominiums as dense as fifteen units per acre.
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The Victorville 25 Property is approximately one mile from Interstate 15.
The immediate vicinity is a mixed-use neighborhood of new residential housing of
both single family homes and apartments, although development has slowed
dramatically since the 1990-1991 recession began.
Utilities are available to the site and Village Drive is the major traffic
corridor in the area.
OLEANDER 10. The Partnership acquired one approximately 10 acre parcel
south of Oleander Avenue and east of Decker Road, just 1/2 mile west of
Interstate Highway 215. This parcel was zoned rural agricultural and was
adjacent to hundreds of acres of I/P zoned land. The General Partners have
obtained rezoning from the County of Riverside to I/P. I/P provides for a wide
variety of residential and professional uses, including light manufacturing,
office buildings, restaurants, motel, and other commercial uses. Water, sewer
and power are currently accessible at the Property.
The Property is within the Perris Valley Comprehensive General Plan that
was adopted in 1983. The General Plan indicates that the subject parcel should
be developed for manufacturing or industrial use. Construction of industrial
buildings has occurred about one mile south of the Property.
The Property and its surroundings lie within the boundaries of the
Riverside County Community Facilities district, 88-8, which facilitates the
availability of utilities and access through proposed improvement projects
including off ramps to Cajalco Road.
PERRIS 6.44. This approximately 6.44 acre parcel is located at the
northeast corner of Perris Boulevard and Markham Street in the northern section
of the City of Perris. The area surrounding the Property is in transition from
rural vacant land to medium density residential, industrial and commercial. Both
have been dramatically slowed by the recession.
Zoning was recently changed to C-2 to allow commercial development.
Electricity, telephone and water are to the Property and sewer is within one
mile. However, septic tank use is also currently permitted.
ITEM 3. LEGAL PROCEEDINGS
There are no matters requiring disclosure under Item 3.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of Registrants security holders during
the fourth quarter of 1996.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
MARKET INFORMATION
As of December 31, 1996, there were approximately 827 holders of Limited
Partnership units. There is no other class of security outstanding or
authorized. To the General Partners knowledge, there has not been, and currently
there does not exist, any publicly established trading market for the Units.
Accordingly, there was no trading activity during the fiscal year ended December
31, 1995, or 1994. In 1996, 45 Units traded on the secondary market at between
$200 to $240 a unit.
CASH DISTRIBUTIONS
No cash distributions were made during the years ended December 31, 1996,
1995, or 1994.
A summary of the provisions of the Partnership Agreement regarding
distributions of cash and allocations of net income and losses is set forth in
Item 1 "Business" under the subcaption "Distributions, Net Income and Net Loss."
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ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes selected financial data of the Partnership
for the years ended December 31, 1996, 1995, 1994, 1993, or 1992, and should be
read in conjunction with the more detailed financial statements contained in
Item 8 below.
(UNAUDITED)
YEAR ENDED DECEMBER 31
(Not Covered By Auditor's Report)
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
--------------- --------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Income from Sale of Property $ 23,000 $ $ $
Less cost of Property sold (28,807)
---------------
Gross (loss) (5,807)
Interest Income $ 1,239 473 1,329 4,921 12,444
Other income 70,000
Total income (loss) $ 1,235 $ (5,334) $ 1,329 $ 4,921 $ 82,444
--------------- --------------- ------------ -------------- ------------
Net income (loss) $ (3,255,611) $ (570,578) $ (1,671) $ 1,921 $ 79,444
--------------- --------------- ------------ -------------- ------------
Net income (loss) per Unit* $ (379.18) $ (67.13) $ (.20) $ .23 9.35
--------------- --------------- ------------ -------------- ------------
Cash distribution per Unit* $ $ $ $ $
--------------- --------------- ------------ -------------- ------------
Total assets $ 2,472,971 $ 5,559,685 $ 6,066,564 $ 6,041,009 $ 6,039,289
=============== =============== ============ ============== ============
</TABLE>
*(Based on 8,500 Units outstanding at December 31, 1996, 1995, 1994, 1993,
and 1992.)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSES OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
During the period from inception (June 7, 1989) through December 31, 1989,
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 one Property during
1989 for a gross profit, net of all acquisition, carrying and selling costs, of
$272,129, and one Property in 1990 for a gross profit, net of all acquisition,
carrying and selling costs, of $315,081. Other revenues received during the
fiscal years ended December 31, 1996, 1995, 1994, 1993, and 1992, consisted
primarily of interest income and income from the forfeiture by potential buyers
of non-refundable escrow deposits. In 1996 and 1995, the Partnership experienced
a loss due to the write-down in value of the Partnership land. The decline in
land value is due mainly to the downturn in Southern California's real estate
market.
14
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
The partnership raised a total of $7,571,386, 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 nine Properties
for all cash at a total expenditure of $7,172,389, including carrying costs
(such as interest expense and property taxes). All costs associated with the
acquisition of the Properties, as well as carrying costs and administrative
expenses, are capitalized (i.e., added to the cost of the Properties) and are
deducted form the sales prices to determine gains (or losses) when the
Properties are sold.
The Partnership does not intend to acquire any additional Properties. The
remaining seven Properties are being held for resale. Upon sale, the Partnership
intends to distribute the sales proceeds, less any reserves needed for
operations, to the Partners.
The General Partners intend to meet currently anticipated cash
requirements by first using cash proceeds from a loan on hand; second, funds
from interest income; third, the sale of properties; and fourth, proceeds from a
loan secured by property.
The Partnership owns land in the Riverside and San Bernardino counties.
This region of Southern California experienced a significant economic recession
that has substantially eroded the value of all real estate in the area.
Lower home and commercial property prices has driven down the value of
vacant land, and in many instances has made new development financially
unfeasible. This has made it difficult to sell the Partnership land at anything
but liquidation prices. The general partners expect the economic recovery in
this region to be slow, and believe there are insufficient funds available to
meet anticipated cash requirements for the next 12 months. Management intends to
attempt to procure a loan for the Partnership secured by Partnership land; or,
in the alternative, to withhold payment of certain Partnership expenses such as
property taxes. In February 1996, the partnership procured a $190,000 loan
secured by Partnership land.
Management is also attempting to sell one or more of the remaining parcels of
land to meet anticipated cash requirements. There can be no assurance that
management will be successful in either procuring a loan or selling one or more
of the remaining parcels of land.
The Partnership has no current plans to develop any of the parcels, and it
is expected that no such plans would be undertaken unless adequate funding
therefor could be obtained, either from the sale or refinancing of parcels or
the forming of a joint venture.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements are filed as a part of this Form 10K:
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
For the fiscal years ended December 31, 1996, 1995 and 1994:
Independent Auditor's Report FS-1
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
Balance Sheets as of December 31, 1996 and 1995 FS-2
Statement of Income for the years ended December 31,
1996, 1995 and 1994 FS-3
Statement of Partners Capital for the years ended
December 31, 1996 1995, 1994 and 1993 FS-4
Statements of Cash Flow for the years ended December
31, 1996, 1995 and 1994 FS-5
Notes to Financial Statements FS-6
Financial Statement Schedules FS-10
</TABLE>
All other schedules are omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the Financial Statements and
Notes thereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The accounting firm of Balser, Horowitz, Frank & Wakeling ("BHF&W), whose
report is included elsewhere herein with respect to the Partnership's financial
statements for the fiscal years ended December 31, 1996 and 1995, has provided
accounting services to this Partnership and to other limited partnerships of
which the General Partners are the general partners, for many years.
16
<PAGE> 17
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The Partnership has no employees and no directors or executives officers.
Management of the Partnership is provided by the General Partners.
TMP Properties, a California general partnership, and TMP Investments,
Inc., a California corporation, are the General Partners of the Partnership. TMP
Properties was formed on July 14, 1978. TMP Properties' principal business has
been the acquisition of undeveloped land and the coordination of activities
necessary to add value to such land, primarily through the predevelopment
process. It has syndicated numerous private real estate limited partnerships,
and eleven public real estate limited partnerships. All of the properties
purchased by such partnerships were located in the State of California except
for one (an office building) which was located in Oklahoma City, Oklahoma. Each
of such limited partnerships involved a specified real property program in which
TMP Properties was the General Partner. The general partners of TMP Properties
are William O. Paso, Anthony W. Thompson and Scott E. McDaniel.
The individual partners of TMP Properties are listed below, together with
information regarding their employment experience and background.
TMP Investment Inc., a California corporation, was formed on December 12,
1984. TMP Investments Inc. has served in the capacity of a co-general partner in
all of the TMP sponsored programs since December 1984. In 1993, TMP Investments
Inc. began serving as sole general partner in all TMP sponsored partnerships.
TMP Investments Inc. has been and will continue to be engaged in asset
management, real estate accounting, budgetary services, and partnership
management on behalf of existing limited partnerships and limited partnerships
which it sponsors in the future. The shareholders of TMP Investments, Inc. were
William O. Passo, Anthony W. Thompson, and Scott E. McDaniel until September
1993, when Mr. McDaniel sold his share of TMP Investments Inc. to Mr. Passo and
Mr. Thompson.
17
<PAGE> 18
WILLIAM O. PASSO, 55, is a Director and the President of TMP Investments
Inc. He practiced law for 18 years, has been a licensed real estate broker since
1974 and holds registered representative and general principals securities
licenses through the National Association of Securities Dealers, Inc. Mr. Passo
received his Juris Doctorate Degree from UCLA School of Law in 1967. He has been
a senior partner first of Passo, Yates, and Nissen until 1975, then of Passo &
Davis until March 1983 when he resigned from the partnership to take a leading
role in the management of the affairs of TMP Properties. Mr. Passo has been
involved in public and private real estate syndication since 1970, and has acted
as principal, investor, general partner, and counsel in real estate transactions
involving apartments, office buildings, and unimproved land. Mr. Passo is a
director and officer of William O. Passo, Inc., an officer of TMP Capital Corp.,
an NASD registered broker-dealer, and an officer of TMP Realty, a registered
real estate broker.
SCOTT E. MCDANIEL, 50, is a Director and Vice President of TMP Investments
Inc. He is a graduate of the U.S. Naval Academy at Annapolis, majoring in
engineering. Mr. McDaniel is a California licensed general contractor and has
been a licensed California real estate broker since 1976. He was the founder and
President of Scott E. McDaniel, Inc. (dba Regal Realty). Mr. McDaniel has
developed office complexes and industrial space in Southern California and has
personally brokered over $125 million of real estate since 1982. Through an
affiliated company, DeVille Construction Co. Inc., Mr. McDaniel has directed
general contracting operations in Southern California since 1982.
ANTHONY W. "TONY" THOMPSON, 50, is Director and Vice-President of TMP
Investments Inc. A graduate of Sterling College in 1969, with a Bachelors Degree
in Science and Economics, Mr. Thompson holds the professional designations of
Charter Life Underwriter and chartered Financial Consultant form the American
College. Mr. Thompson is a registered principal with the NASD and is a principal
in TMP Capital Corp., a NASD registered Broker Dealer. Mr. Thompson has been
involved in the securities and the real estate investment fields since 1970, and
a General Partner of TMP since its formation in 1978. Mr. Thompson's primary
responsibility is marketing TMP offerings through the broker dealer community.
ITEM 11. EXECUTIVE COMPENSATION
During the period since the formation of the Partnership (June 7, 1989)
through the fiscal year ended December 31, 1996, the Partnership paid fees to
the General Partners for various services in the amount of $81,473 of which
$12,245 was paid in the year ended December 31, 1996. In addition, the General
Partners received collectively $24,040 as their share of Partnership
distributions. (See Item 13. "Certain Relationships and Related Transaction".)
The Partnership has no officers or employees and, therefore, paid no other
compensation other than that paid to the General Partners as indicated above.
18
<PAGE> 19
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 1996, the Partnership had 8,500 units of Limited
Partnership interest (the "Units") issued and outstanding. To the knowledge of
the General Partners, no person beneficially owns more the 5% of the Units. The
following table set forth the number of Units beneficially owned as of December
31, 1996 by each officer, director and general partner of the General Partners
and by all such persons as a group.
<TABLE>
<CAPTION>
Number of Percent of
Name of Beneficial Owner Units Class
- ------------------------ --------- ----------
<S> <C> <C>
William O. Passo 15 0.176%
Anthony W. Thompson 10 0.117%
All officers, directors and 25 0.293%
general partners as a group
(2 persons, including the
above)
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH AFFILIATES
The following information summarizes the forms and amounts of compensation
(some of which involve cost reimbursements) paid either by the Partnership, or
others, to the General Partners and their affiliates since the formation of the
Partnership (June 7, 1989) through the fiscal year ended December 31, 1996. The
information under "Operating and Liquidation Stage" and "Summary of
Compensation" below also describes the amounts of compensation to be paid to the
General Partners and their affiliates in the future. None of these amounts were
determined by arm's-length negotiations. Reference is also made to the Notes to
the Financial Statements included elsewhere in this Form 10K for additional
information regarding transactions with affiliates.
19
<PAGE> 20
OFFERING AND ORGANIZATION STAGE OF PARTNERSHIP
<TABLE>
<CAPTION>
Amount Paid from
Form of Compensation Formation through
and Recipient Description of Payment December 31, 1996
- --------------------------------- -------------------------------------------------- ------------------
<S> <C> <C>
Selling Commission and Due Up to a maximum of 10% of gross proceeds, a $856,738
Diligence Reim-bursement (TMP minimum of which was reallocated to participating
Capital Corp.) Soliciting Dealers (which included TMP Capital
Corp.) from Units sold by them. Up to an
additional 0.5% paid to Soliciting Dealers (which
included TMP Capital Corp.) for due diligence
activities.
Reimbursement for Organizational Organizational Expenses paid to the General $91,091
Expenses (General Partners) Partners to reimburse them (without markup or
profit) for organizational costs actually
incurred such as advertising, mailing, printing
costs, clerical expenses, legal and accounting
fees.
Reimbursement for Property The General Partners were reimbursed (without $343,082
Expenses (General Partners) markup or profit) for all out of pocket expenses
directly related to the Properties, including the
purchase price of Properties acquired prior to
Partnership formation, out of pocket carrying
costs of such Properties (such as interest and
property taxes) including actual interest
incurred on all funds advanced for the benefit of
the Partnership, deposits, escrow extension
payments, appraisal fees, expenses of feasibility
and other studies performed by third parties
unaffiliated with the General Partners and
similar expenses, but not including the General
Partners' overhead, salaries, travel or like
expenses.
</TABLE>
20
<PAGE> 21
<TABLE>
<S> <C> <C>
Property Acquisition Fees (General For services rendered in connection with the
Partners or an affiliate) acquisition of the Properties acquired by the
Partnership, the General Partners, or an
affiliate, received acquisition compensation
(either denominated as such, or as a real estate
brokerage commission, or otherwise) in the
following amounts:
(i) Acquisition fees: $475,000
(ii) Real estate brokerage $217,033
commissions
</TABLE>
<TABLE>
<CAPTION>
Amount Paid from
Form of Compensation Formation through
and Recipient Description of Payment December 31, 1996
- --------------------------------- -------------------------------------------------- ------------------
<S> <C> <C>
Partnership Management Fee A Partnership Management Fee with respect to each $81,473
(General Partners) Property until a Property is sold or improvement
of the Property commences in an annual amount of
1/4 of 1% (.225%) of the cost of the property,
but not to exceed 2% of such cost in the
aggregate.
Leasing and Property Management For leasing an improved Property, or a portion $-0-
Fees (General Partners or an thereof, a commission equal to 7% for the first
affiliate) year's rent (net lease) or 6% of the first year's
rent (gross lease) decreasing to 2.5% (net lease)
or 2% (gross lease) of the rent for years eleven
through thirty. Upon development of the
Properties, or any of them, an amount up to 5% of
the gross revenues of the Properties for
supervision for the operation and maintenance of
the Properties. Such leasing and property
management fees shall not exceed the competitive
rates that would be charged by unaffiliated
persons.
Interest in Partnership Allocation 1% interest in all Partnership allocations of Net $24,040
of Each Material Item (General Income, Net Loss and Distributions of
Partners) Distributable Cash from Operations and of Cash
from Sale or refinancing of the Properties.
</TABLE>
21
<PAGE> 22
<TABLE>
<S> <C> <C>
Subordinated Participation A 15% interest in all Partnership allocations of $-0-
(General Partners) Net Income and Distributions of Distributable
Cash from Operations and of Cash from the Sale or
Refinancing of the Properties subordinated to a
return of all Limited Partners' Capital
Contributions plus a cumulative, non-compounded
return of 6% per annum on their Adjusted Capital
Contributions.
Subordinated Real Estate Real estate commissions with respect to the sale $-0-
Commission (General Partners or an of Properties which are equal to the lesser of:
Affiliate) (I) 3% of the gross sales price of a Properties;
equal to one-half the normal and competitive rate
charged by unaffiliated parties, but payment
shall be subordinated to a return of all Limited
Partners' Capital contributions, plus a
cumulative, noncompounded return of 6% per annum
on their Adjusted Capital Contributions.
</TABLE>
SUMMARY OF COMPENSATION. In summary, the Partnership paid securities
brokerage commissions for services performed by TMP Capital Corp. in the sale of
the Units in the amount of $56,738 (including due diligence fees) and reimbursed
the General Partners for expenses incurred in organizing the Partnership and
documenting the offering in the amount of $91,091. The General Partners also
received Property Acquisition Fees and real estate brokerage commissions in the
amounts set forth above, and were reimbursed for out of pocket expenditures made
in connection with the acquisition and carrying costs for the Properties or
studies related thereto. During the operating stage, the partnership will pay
the General Partners an annual Partnership Management Fee for managing the
Partnership equal to 1/4 of 1% of the cost of the Properties, payable annually
in advance with respect to each Property until such time as the Properties are
sold or improvement of the land commences; provided such fee, in the aggregate,
shall not exceed 2% of the cost of the Properties. At such time, if at all, that
the Properties, or any of them, are developed, the General Partners will receive
leasing commissions as described above, and a property management fee in an
amount up to 5% of the gross property revenues, but not to exceed the
competitive rate charged by nonaffiliated persons providing similar services.
The General Partners have a 1% interest in all allocations of Partnership Net
Income until the limited Partners have received allocations of Net Income equal
to a cumulative, noncompounded return of 6% on their Adjusted Capital
Contributions (the "Preferred Return"); and thereafter, the General Partners
will have a 15% interest in all Partnership allocations of Net Income,
Distributions of Distributable Cash from Operations, and Cash from Sale or
Refinancing of Partnership Property and the Limited partners will have an 85%
interest therein. Net Losses will be allocated to the Partners with positive
Capital Accounts, in accordance with the ratio of their positive Capital Account
balances until no Partner has a positive Capital Account; and thereafter, Net
Losses will be allocated 100% to the General Partners. If the General Partners
or an Affiliate provide a substantial amount of services with respect to the
sale of a Partnership Property, the General Partners or an Affiliate may receive
a real estate commission in an amount up to one-half of the amount of
competitive real estate commissions, not to exceed 3% of the sales price of such
Property. Both the 15% General Partners' participation and the Partners' real
estate commission on the sale are subordinated to a return of all Limited
Partners' Capital Contribution plus a cumulative, non-compounded return of 6%
per annum on their Adjusted Capital contributions.
22
<PAGE> 23
Thus, only after the Limited Partners have recovered their Capital
Contributions plus the cumulative 6% return discussed above, will the General
Partners' allocation of Distributions of Distributable Cash from Operations and
Cash from Sale or Refinancing of Partnership Property exceed a nominal 1%
ownership interest therein. Such allocation provides a built-in incentive for
the General Partners to seek the optimum performance from the Partnership's
Properties.
CONFLICTS OF INTEREST
The Partnership is subject to various conflicts of interest from its
relationship with the General Partners. These conflicts include, but are not
limited to:
CONFLICTS IN GENERAL. The interests for the Limited Partners may be
inconsistent with those of the General Partners or their Affiliates when the
General Partners must make policy decisions on behalf of the Partnership. The
General Partners, for instance, might not desire to sell a Property when a sale
would be advantageous to the Limited Partners because of the General Partner's
interest in Distributions of Distributable Cash from Operations and Net Proceeds
from the Sale or Refinancing of the Property. Subject, in certain circumstances,
to the approval of the holders of a majority or other specified voting
percentage of the Units, the General Partners will have the discretion as to
when to sell a Property or portion thereof. The timing of the sale of a Property
or any portion thereof and the terms on which such sale will be made may result
in a conflict of interest. Furthermore, the sale of a Property may result in the
recognition of substantial taxable gain to the General or Limited Partners in
different ratios depending upon the timing of such sale. Accordingly, the
decisions as to when to sell a Property may be advantageous to the General
Partners and disadvantageous to the Limited Partners, or vice versa. The General
Partners in any event will be compelled to make any decisions with respect to
the sale or retention of a Property based upon the best interests of the
Partnership and its Limited Partners because of the fiduciary duty which they
owe to the Limited Partners.
AVAILABILITY OF MANAGEMENT SERVICE. The Partnership will not have
independent management, as it will rely on the General Partners and affiliates
for all its management decisions. Other investment projects in which the General
Partners and affiliates participate, either individually or as a general
partner, real estate broker, or investment adviser, may compete with the
Partnership for the time and resources of the General Partners and their
affiliates. The General Partners will, therefore, have conflicts of interest in
allocating management time, services, and functions among the Partnership and
other existing partnerships and businesses, as well as any partnerships or
business entitles which may be organized in the future. Under the Partnership
Agreement, the General Partners are obligated to devote as much time as they, in
their sole discretion, deem to be reasonably required for the proper management
of the Partnership and its assets. The General Partners believe that they have
the capacity to discharge their responsibilities to the Partnership
notwithstanding participation in other investment programs and projects.
23
<PAGE> 24
INTERESTS IN OTHER ACTIVITIES. The General Partners, or any of their
affiliates, may engage for their own account, or for the account of others, in
other business ventures, whether real estate or otherwise, and neither the
Partnership nor any Limited Partner shall be entitled to any interest therein
solely by reason of any relationship with or to each other arising from the
Partnership.
RECEIPT OF COMPENSATION BY THE GENERAL PARTNERS. The payments to the
General Partners set forth above have not been determined by arm's-length
negotiations.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8K
(a) For a listing of financial statements, reference is made to Item 8
included in this Form 10K
(b) The Registrant filed no reports on Form 8K during the fourth quarter of
the fiscal year ended December 31, 1996
(c) Exhibits- Those Exhibits required by Item 601 of Regulation S-K which are
applicable to the Registrant are as follows:
(3),(4) and (10.1) Agreement of Limited Partnership and other material
agreements are incorporated by reference to Exhibits
(3),(4) and (10.1) to the Form 10 Registration
Statement, SEC File No. 0-19933 filed on March 19,
1992.
24
<PAGE> 25
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
Dated: March 20, 1997
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
By: TMP INVESTMENTS INC., a California corporation
as co-General Partner
By:____________________________________________
William O. Passo, President
By:_____________________________________________
Anthony W. Thompson, Executive Vice
President
By:______________________________________________
Michael C. Sun, Chief Financial Officer
and by TMP Properties, a California General Partnership,
as co-General Partner
By:______________________________________________
William O. Passo, General Partner
By:______________________________________________
Scott E. McDaniel, General Partner
By:______________________________________________
Anthony W. Thompson, General Partner
25
<PAGE> 26
TMP INLAND EMPIRE IV, LTD.
(A CALIFORNIA LIMITED PARTNERSHIP)
FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
<PAGE> 27
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Financial Statements
December 31, 1996 and 1995
Table of Contents
Independent Auditor's Report ....................................... 1
Balance Sheets...................................................... 2
Statements of Income................................................ 3
Statements of Partners' Capital..................................... 4
Statements of Cash Flows............................................ 5
Notes to Financial Statements....................................... 6-9
Supplementary Information........................................... 10-12
<PAGE> 28
[BALSER, HOROWITZ, FRANK & WAKELING LETTERHEAD]
Independent Auditor's Report
To the Partners
TMP Inland Empire IV, Ltd.
(A California Limited Partnership)
We have audited the accompanying balance sheets of TMP Inland Empire IV, Ltd. (A
California Limited Partnership) as of December 31, 1996 and 1995, and the
related statements of income, partners' capital, and cash flows for the years
ended December 31, 1996, 1995 and 1994. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TMP Inland Empire IV, Ltd. (A
California Limited Partnership) as of December 31, 1996 and 1995, and the
results of its operations and its cash flows for the years ended December 31,
1996, 1995 and 1994, in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information contained
in Schedule I is presented for purposes of additional analysis and is not a
required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is stated fairly in all material
respects in relation to the basic financial statements taken as a whole.
/s/ Balser, Horowitz, Frank & Wakeling
BALSER, HOROWITZ, FRANK & WAKELING
An Accountancy Corporation
Santa Ana, California
January 23, 1997
<PAGE> 29
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Balance Sheets
December 31, 1996 and 1995
Assets
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash $ 32,971 $ 16,769
Investment in unimproved land, at lower of cost or
fair value 2,440,000 5,541,061
Organization costs (net of accumulated amortization
of $11,215 in 1996 and $9,360 in 1995) 0 1,855
----------- -----------
Total assets $ 2,472,971 $ 5,559,685
=========== ===========
Liabilities and Partners' Capital
Commissions payable $ 70,560 $ 70,560
Property taxes payable 69,417 90,925
Due to affiliates 405 0
Franchise tax payable 800 800
Note payable 190,000 0
----------- -----------
Total liabilities 331,182 162,285
----------- -----------
Partners' capital (deficit)
General partners (54,298) (21,742)
Limited partners; 8,500 equity units
authorized and outstanding 2,196,087 5,419,142
----------- -----------
Total partners' capital 2,141,789 5,397,400
----------- -----------
Total liabilities and partners' capital $ 2,472,971 $ 5,559,685
=========== ===========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
-2-
<PAGE> 30
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Statements of Income
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Income
Sale of property $ 0 $ 23,000 $ 0
Cost of sale 0 (28,807) 0
----------- ----------- -----------
Loss on sale of property 0 (5,807) 0
Interest income 1,239 473 1,329
----------- ----------- -----------
Total income or (loss) 1,239 (5,334) 1,329
----------- ----------- -----------
Expenses
Decline in fair value of unimproved land 3,254,195 562,244 0
Amortization 1,855 2,200 2,200
----------- ----------- -----------
Total expenses 3,256,050 564,444 2,200
----------- ----------- -----------
Income or (loss) before income taxes (3,254,811) (569,778) (871)
State Franchise tax 800 800 800
----------- ----------- -----------
Net income or (loss) $(3,255,611) $ (570,578) $ (1,671)
=========== =========== ===========
Allocation of net income or (loss):
General partners, in the aggregate $ (32,556) $ (5,706) $ (17)
=========== =========== ===========
Limited partners, in the aggregate $(3,223,055) $ (564,872) $ (1,654)
=========== =========== ===========
Limited partners, per equity unit $ (379.18) $ (66.46) $ (.20)
=========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
-3-
<PAGE> 31
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Statements of Partners' Capital
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
----------- ----------- -----------
<S> <C> <C> <C>
Partners' capital (deficit),
December 31, 1993 $ (16,019) $ 5,985,668 $ 5,969,649
Net (loss) for 1994 (17) (1,654) (1,671)
----------- ----------- -----------
Partners' capital (deficit),
December 31, 1994 (16,036) 5,984,014 5,967,978
Net (loss) for 1995 (5,706) (564,872) (570,578)
----------- ----------- -----------
Partners' capital (deficit)
December 31, 1995 (21,742) 5,419,142 5,397,400
Net (loss) for 1996 (32,556) (3,223,055) (3,255,611)
----------- ----------- -----------
Partners' capital (deficit)
December 31, 1996 $ (54,298) $ 2,196,087 $ 2,141,789
=========== =========== ===========
</TABLE>
See Accompanying Notes and Independent Auditor's Report
-4-
<PAGE> 32
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Statements of Cash Flows
For the Years Ended December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Cash flow from operating activities
Net income or (loss) $(3,255,611) $ (570,578) $ (1,671)
Adjustments to reconcile net income or (loss)
to net cash used in operating activities:
Amortization 1,855 2,200 2,200
(Increase) or decrease in development costs of property 0 78 (5,349)
(Increase) or decrease in carrying costs of property (153,134) (98,228) (94,363)
Loss on sale of property 0 5,807 0
Increase or (decrease) in property taxes payable (21,508) 64,321 26,604
Increase or (decrease) in due to affiliates 405 (622) 622
Decline in fair value of unimproved land 3,254,195 562,244 0
----------- ----------- -----------
Net cash (used in) operating activities (173,798) (34,778) (71,957)
----------- ----------- -----------
Cash flows from investing activities
Proceeds from sale of properties 0 23,000 0
----------- ----------- -----------
Net cash provided by investing activities 0 23,000 0
----------- ----------- -----------
Cash flows from financing activities
Proceeds from notes payable 190,000 0 0
----------- ----------- -----------
Net cash provided by financing activities 190,000 0 0
----------- ----------- -----------
Net increase or (decrease) in cash 16,202 (11,778) (71,957)
Cash, beginning of year 16,769 28,547 100,504
----------- ----------- -----------
Cash, end of year $ 32,971 $ 16,769 $ 28,547
=========== =========== ===========
Supplemental disclosures of cash flow information
Income taxes paid $ 800 $ 800 $ 800
=========== =========== ===========
Interest paid $ 20,837 $ 0 $ 0
=========== =========== ===========
</TABLE>
Other disclosures
For the years ended December 31, 1996, 1995 and 1994, the Partnership did not
enter into any non-cash investing or financing activities, nor did it have
any short-term, highly liquid investments.
See Accompanying Notes and Independent Auditor's Report
-5-
<PAGE> 33
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1996, 1995 and 1994
Note 1 - Summary of significant accounting policies
Accounting Method - The Partnership's policy is to prepare its
financial statements on the accrual basis of accounting.
Organization Costs - Organization costs include expenses incurred in
the formation of the Partnership that have been capitalized and are
being amortized over a period of 40 years prior to 1992 and 5 years
beginning in 1992.
Investment in Unimproved Land - Investment in unimproved land is stated
at lower of cost or fair value (see Note 6). All costs associated with
the acquisition of a property are capitalized. Additionally, the
Partnership capitalizes all 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
when properties are sold.
Syndication Costs - Syndication costs (such as commissions, printing,
and legal fees) totaling $928,614 represent costs incurred to raise
capital and, accordingly, are recorded as a reduction in partners'
capital (see Note 3).
Income Taxes - The entity is treated as a partnership for income tax
purposes and 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 due by the Partnership was $800 for
the years ended December 31, 1996 and 1995.
Cash and Cash Equivalents - For purposes of the statements of cash
flows, the Partnership considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be cash
equivalents.
Estimates - In preparing financial statements in conformity with
generally accepted accounting principles, management is required 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 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. The Partnership attempts to mitigate any potential
risk by monitoring the market condition and holding the land parcels
until the real estate market recovers.
See Independent Auditor's Report
-6-
<PAGE> 34
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1996, 1995 and 1994
Note 2 - Organization of the Partnership
On June 7, 1989, the Partnership was 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, 1993, 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 a portion thereof, either alone or in
conjunction with a joint venture partner. One parcel was sold in 1989,
another parcel was sold in 1990, and a third parcel was sold in 1995.
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 8,500 units at $1,000 each to
qualified investors. As of December 31, 1989, all 8,500 units had been
sold for total limited partner contributions of $8,500,000. There have
been no contributions made by the general partners. 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% to the limited
partners and 1% to the general partners until the limited partners have
received an amount equal to their capital contributions plus a
cumulative, non-compounded return of 6% per annum on their adjusted
capital contributions. At that point, the limited partners are
allocated 85% and the general partners 15% of profits, losses and cash
distributions. There were no distributions in 1996, 1995 or 1994.
See Independent Auditor's Report
-7-
<PAGE> 35
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1996, 1995 and 1994
Note 5 - Related party transactions
Syndication costs (see Note 1) netted against partners' capital
contributions include $850,000 in 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
approximately $365,000 paid in prior years to TMP Properties and TMP
Investments, Inc., the general partners, for services rendered in
connection with the acquisition of the properties.
The Partnership paid $12,245, $12,556 and $12,556 in partnership
management fees to the general partners for the years ended December
31, 1996, 1995 and 1994. The Partnership was also charged $9,314,
$8,260 and $10,112 during the years ended December 31, 1996, 1995 and
1994, respectively, by the general partner and an affiliated company of
the general partner for office, secretarial and advertising expenses.
At December 31, 1996 the Partnership had a payable of $405 to the
general partner and the affiliated company.
At December 31, 1996 and 1995, $70,560 in sales commissions was payable
to Regal Realty, a company wholly owned by Scott E. McDaniel, for
services rendered relating to sales of properties in 1990 and 1989. 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 such sales commissions 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 contribution.
Note 6 - Decline in the fair value of investment in unimproved land
As of December 31, 1996 and 1995, the total carrying amount of the
investment in unimproved land was reduced by $3,254,195 and $562,244,
respectively. This reduction represents the decline in fair values, as
determined by the general partners, and is due mainly to the downturn
in Southern California's real estate market and slow recovery.
See Independent Auditor's Report
-8-
<PAGE> 36
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1996, 1995 and 1994
Note 7 - Sale and related cost of property sold
The following summarizes property sold in 1995:
<TABLE>
<CAPTION>
Perris
2 Acres
-------
<S> <C>
Sale Price $ 23,000
--------
Cost of parcel 22,500
Acquisition fees 1,935
Carrying costs 4,372
Total costs 28,807
--------
Loss on sale of property $ (5,807)
========
</TABLE>
Note 8 - Notes payable
During February 1996, the Partnership borrowed $190,000 from a private
party. The note is secured by a deed of trust on a parcel of land owned
by the Partnership in Beaumont, California. The note is due on February
1, 1999. Interest accrues at 12% per annum payable in monthly
installments of $1,900 starting March 1, 1996. As of December 31, 1996,
$20,837 of interest had been paid and capitalized to land carrying
cost.
Note 9 - Property taxes payable
Property taxes payable at December 31, 1996 are as follows:
<TABLE>
<S> <C>
1994 $21,142
1995 20,491
1996 27,784
-------
$69,417
=======
</TABLE>
If the property taxes remain delinquent for five years, then the County can
foreclose on the property. Management plans to take the necessary action to
prevent foreclosures.
See Independent Auditor's Report
-9-
<PAGE> 37
Supplementary Information
<PAGE> 38
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Schedule I - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, For SEC Reporting Purposes)
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
COSTS CAPITALIZED
SUBSEQUENT
TO ACQUISITION
------------------------
Initial Carrying
Description of Assets Encumbrances Costs Improvements Costs
--------------------- ------------ ------- ------------ --------
<S> <C> <C> <C> <C>
Unimproved land - Perris, CA -0- $1,001,160 -0- $118,809
Unimproved land - Riverside, CA -0- 331,768 -0- 111,106
Unimproved land - Beaumont, CA -0- 732,567 $1,772 112,308
Unimproved land - Beaumont, CA -0- 821,842 3,577 109,197
Unimproved land - Victorville, CA -0- 451,297 -0- 59,115
Unimproved land - Victorville, CA -0- 769,718 -0- 121,121
Unimproved land - Victorville, CA -0- 1,322,099 -0- 188,983
---------- ------- --------
-0- $5,430,451 $5,349 $820,639
========= ========== ====== ========
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
Gross
amount
at which Estimated
Carried at Accumulated Date of Date Depreciable
Description of Assets Year-End Depreciation Construction Acquired Life
--------------------- ---------- ------------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
Unimproved land - Perris, CA $1,119,969 -0- n/a 6/23/89 n/a
Unimproved land - Riverside, CA 442,874 -0- n/a 8/9/89 n/a
Unimproved land - Beaumont, CA 846,647 -0- n/a 9/14/89 n/a
Unimproved land - Beaumont, CA 934,616 -0- n/a 6/19/89 n/a
Unimproved land - Victorville, CA 510,412 -0- n/a 8/17/89 n/a
Unimproved land - Victorville, CA 890,839 -0- n/a 7/14/89 n/a
Unimproved land - Victorville, CA 1,511,082 -0- n/a 8/10/89 n/a
----------
$6,256,439 -0-
========== ===
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Reconciliation of carrying amount
Beginning balance $6,103,305
Additions
Acquisitions $ -0-
Carrying costs 153,134
--------
Total additions 153,134
----------
6,256,439
Less allowance for decline
in fair value (3,816,439)
----------
Ending balance $2,440,000
==========
</TABLE>
<PAGE> 39
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Schedule I - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, For SEC Reporting Purposes)
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
COSTS CAPITALIZED
SUBSEQUENT
TO ACQUISITION
------------------------
Initial Carrying
Description of Assets Encumbrances Costs Improvements Costs
--------------------- ------------ ------- ------------ --------
<S> <C> <C> <C> <C>
Unimproved land - Perris, CA -0- $1,001,160 -0- $ 98,535
Unimproved land - Riverside, CA -0- 331,768 -0- 87,858
Unimproved land - Beaumont, CA -0- 732,567 $1,772 89,058
Unimproved land - Beaumont, CA -0- 821,842 3,577 87,796
Unimproved land - Victorville, CA -0- 451,297 -0- 49,935
Unimproved land - Victorville, CA -0- 769,718 -0- 102,420
Unimproved land - Victorville, CA -0- 1,322,099 -0- 151,903
---------- ------- --------
-0- $5,430,451 $5,349 $667,505
======== ========== ====== ========
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
Gross
amount
at which Estimated
Carried at Accumulated Date of Date Depreciable
Description of Assets Year-End Depreciation Construction Acquired Life
--------------------- ---------- ------------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
Unimproved land - Perris, CA $1,099,695 -0- n/a 6/23/89 n/a
Unimproved land - Riverside, CA 419,626 -0- n/a 8/9/89 n/a
Unimproved land - Beaumont, CA 823,397 -0- n/a 9/14/89 n/a
Unimproved land - Beaumont, CA 913,215 -0- n/a 6/19/89 n/a
Unimproved land - Victorville, CA 501,232 -0- n/a 8/17/89 n/a
Unimproved land - Victorville, CA 872,138 -0- n/a 7/14/89 n/a
Unimproved land - Victorville, CA 1,474,002 -0- n/a 8/10/89 n/a
--------- ---
$6,103,305 -0-
========= ===
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Reconciliation of carrying amount
Beginning balance $6,033,962
Additions
Carrying costs 98,228
-------
Total additions 98,228
----------
Deductions
Initial costs (24,435)
Carrying costs (4,372)
Reduction in development costs (78)
-------
(28,885)
----------
6,103,305
Less allowance for decline
in fair value (562,244)
----------
Ending balance $5,541,061
==========
</TABLE>
-11-
<PAGE> 40
TMP INLAND EMPIRE IV, LTD.
(A California Limited Partnership)
Schedule I - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, For SEC Reporting Purposes)
For the Year Ended December 31, 1994
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D
COSTS CAPITALIZED
SUBSEQUENT
TO ACQUISITION
------------------------
Initial Carrying
Description of Assets Encumbrances Costs Improvements Costs
--------------------- ------------ ------- ------------ --------
<S> <C> <C> <C> <C>
Unimproved land - Perris, CA -0- $1,001,160 -0- $ 86,168
Unimproved land - Riverside, CA -0- 331,768 -0- 64,956
Unimproved land - Beaumont, CA -0- 732,567 $1,772 75,720
Unimproved land - Beaumont, CA -0- 821,842 3,577 74,542
Unimproved land - Victorville, CA -0- 451,297 -0- 45,695
Unimproved land - Victorville, CA -0- 769,718 -0- 93,373
Unimproved land - Victorville, CA -0- 1,322,099 -0- 129,124
Unimproved land - Perris, CA -0- 24,435 -0- 4,149
--- ---------- ------- --------
-0- $5,454,886 $5,349 $573,727
======== ========== ====== ========
<CAPTION>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H COLUMN I
Gross
amount
at which Estimated
Carried at Accumulated Date of Date Depreciable
Description of Assets Year-End Depreciation Construction Acquired Life
--------------------- ---------- ------------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
Unimproved land - Perris, CA $1,087,328 -0- n/a 6/23/89 n/a
Unimproved land - Riverside, CA 396,724 -0- n/a 8/9/89 n/a
Unimproved land - Beaumont, CA 810,059 -0- n/a 9/14/89 n/a
Unimproved land - Beaumont, CA 899,961 -0- n/a 6/19/89 n/a
Unimproved land - Victorville, CA 496,992 -0- n/a 8/17/89 n/a
Unimproved land - Victorville, CA 863,091 -0- n/a 7/14/89 n/a
Unimproved land - Victorville, CA 1,451,223 -0- n/a 8/10/89 n/a
Unimproved land - Perris, CA 28,584 -0- n/a 12/5/89 n/a
--------- ---
$6,033,962 -0-
========= ===
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Reconciliation of carrying amount
Beginning balance $5,934,250
Additions
Development costs $ 5,349
Carrying costs 94,363
-------
Total additions 99,712
----------
Ending balance $6,033,962
==========
</TABLE>
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000885051
<NAME> TMP INLAND EMPIRE IV, LTD.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 32,971
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 2,440,000
<CURRENT-ASSETS> 2,472,971
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,472,971
<CURRENT-LIABILITIES> 331,181
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,141,790
<TOTAL-LIABILITY-AND-EQUITY> 2,472,971
<SALES> 265
<TOTAL-REVENUES> 265
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (735)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 3,254,195
<CHANGES> 0
<NET-INCOME> (3,254,930)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
