UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of
The Securities Exchange Act of 1934
for the Quarterly Period ended September 30, 1998
Commission File No. 0-19963
TMP INLAND EMPIRE IV, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0341829
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
801 North Parkcenter Drive, Suite 235
Santa Ana, California 92705
(Address of principal executive office) (Zip Code)
(714) 836-5503
(Registrant's telephone number, including area code)
-------------------------------
Indicate by check mark whether Registrant has [1] filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the registrant was required
to file such reports) and [2] has been subject to such filing requirement for
the past 90 days.
Yes [ X ] No [ ]
<PAGE>
TMP INLAND EMPIRE IV, LTD.
INDEX
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements
Balance Sheets as of September 30, 1998 (unaudited)
and December 31, 1997 3
Statements of Operations for the Three Months
and Nine Months ended September 30, 1998 and 1997 (unaudited) 4,5
Statements of Cash Flows for the Nine Months ended 6
September 30, 1998 and 1997(unaudited)
Notes to Financial Statements (unaudited) 7,8
Item 2. Management's Discussion and Analysis of Financial Condition 9,10
and Results of Operations
PART II OTHER INFORMATION
-------
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
Balance Sheets
September 30,
1998 December 31,
(unaudited) 1997
----------- ------------
<S> <C> <C>
Assets
------
Cash $ 4,772 $ 75,651
Due from Affiliates 8,923 ---
Investment In Unimproved Land(Note 1) 2,410,784 2,350,715
---------- ----------
Total Assets $2,424,479 $ 2,426,366
========== ==========
Liabilities and Partners' Capital
Accounts Payable & Accrued Liabilities $ 6,518 $ 1,900
Franchise Tax Payable 800 800
Property Taxes Payable 97,703 124,047
Commission Payable (Note 3) 70,560 70,560
Note Payable 190,000 190,000
Due to Affiliates 203 963
Due to Manager (Note 1) 101,729 ---
---------- ----------
Total Liabilities 467,513 388,270
--------- ----------
Partners' Capital (Deficit)
General Partners (56,145) (55,334)
Limited Partners, 8,500 units
(at $1,000/unit)
authorized, issued and outstanding 2,013,111 2,093,430
--------- ---------
Total Partners' Capital 1,956,966 2,038,096
--------- ---------
Total Liabilities and Partners'Capital $2,424,479 $2,426,366
========== ==========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
Statements of Operations
(Unaudited)
<CAPTION>
Three Months ended
September 30, September 30,
1998 1997
---------------------------------
<S> <C> <C>
Land Sales $ --- $ ---
Cost of Land Sales --- (1,400)
--------- -----------
Gross Loss From Land Sales --- 1,400
Interest and Other Income --- 569
--------- -----------
Total Profit --- 1,969
General & Administrative. Expense 44,114 4,895
---------- -----------
Net Loss $ (44,114) $ (2,926)
=========== ===========
Allocation of Net Loss (Note 2)
General Partners: $ (441) (29)
=========== ===========
Limited Partners: $ (43,673) $ (2,897)
=========== ===========
Limited Partners, per unit $ (5.14) $ (.34)
=========== ==========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
Statements of Operations
(Unaudited)
Six Months ended
September 30, September 30,
1998 1997
----------------------------
<S> <C> <C>
Land Sales $ 0 $ 127,000
Cost of Land Sales 0 243,555
------- ----------
Gross Loss From Land Sales 0 (116,555)
Interest and Other Income 392 1,283
------- ----------
Total Profit (Loss) 392 (115,272)
General & Administrative Expense 81,522 29,922
------- ----------
Net Loss $ (81,130) $(145,194)
=========== ==========
Allocation of Net Loss (Note 2)
General Partners: $ (811) $ (1,452)
=========== ==========
Limited Partners: $ (80,319) $(143,742)
=========== ==========
Limited Partners, per unit $ (9.45) $ (16.91)
=========== ==========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
<TABLE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TMP Inland Empire IV, Ltd.
A California Limited Partnership
Statement of Cash Flows
(Unaudited)
Nine Months ended
September 30, September 30,
1998 1997
------------------------------------
<S> <C> <C>
Net Loss $ (81,130) $ (145,194)
Adjustments to Reconcile Net Loss to Net
Cash Used In Operating Activities:
Due to changes in:
Due to Manager 101,729 ---
Due to/from Affiliates (760) ---
Prepaid Assets (8,923) ---
Accounts Payable 4,618 1,895
Property Taxes Payable (26,344) 35,316
------------ -----------
Net Cash Used In Operating Activities (10,810) (107,983)
------------ -----------
Investment in Unimproved Land (60,069) ---
Proceeds from sale of property --- 168,582
----------- ----------
Net Cash Provided by (Used In)
Investing Activities (60,069) 168,582
------------- -----------
Net Increase (Decrease) In Cash (70,879) 60,599
Cash at the Beginning of the Period 75,651 32,971
------------- -----------
Cash at the End of the Period $ 4,772 $ 93,570
============= ===========
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE>
TMP Inland Empire IV, Ltd.
A California Limited Partnership
Notes to the Financial Statements
(Unaudited)
The accompanying unaudited interim financial statements include all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary to present fairly the financial position of the
Partnership as of September 30, 1998 and the results of its operations, and cash
flows for the three and nine months then ended in accordance with generally
accepted accounting principles for interim financial information.
NOTE 1 - The Partnership and its Significant Accounting Policies
TMP Inland Empire IV, Ltd.(the Partnership) was organized in accordance with the
provisions of the California Uniform Limited Partnership Act for the purpose of
acquiring, developing and operating real property. The general partners in the
Partnership are William O. Passo, Anthony W. Thompson, Scott E. McDaniel of TMP
Properties, a California General Partnership and TMP Investments Inc.
(the General Partners).
On March 12, 1998, the General Partners of the Partnership entered into an
agreement (the Financing Agreement) with PacWest Inland Empire, LLC (PacWest), a
Delaware limited liability company, whereby PacWest paid the General Partners of
the Partnership and ten other related partnerships a total of $300,000 and
agreed to pay up to a total of 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.
On April 1, 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 Preferred Partnership
Services, Inc. and other entities to perform certain of the financial,
accounting, and investor relations services for the Partnership.
In addition, PacWest has agreed to provide certain additional liquidity to this
partnership as further discussed in the MD&A section of this report. As of
September 30, 1998, the Partnership has a payable of $101,729 to PacWest related
to these agreements.
The following is a summary of the Partnership's significant accounting policies:
Basis of Presentation - The Partnership prepares its financial statements on the
accrual basis of accounting.
Investment in Unimproved Land - The Partnership's land is stated at the lower of
actual cost or net realizable value. All costs associated with the acquisition
of a property are capitalized. In addition, the Partnership capitalizes interest
and property taxes as carrying costs.
Income Taxes - The entity is treated as a partnership for income tax purposes
and any income or loss is passed through and taxable at the partner level.
Accordingly, no provision for federal income taxes is provided.
NOTE 2 - 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.
During each of the nine month periods ended September 30, 1998 and 1997,
profits, losses and cash distributions were allocated 99 percent to the limited
partners and one percent to the General Partners.
NOTE 3 - Note Payable
At September 30, 1998 and 1997, the Partnership had a note payable secured by
partnership land. The note bears interest at 12 percent per annum and matures
February 1, 1999. The Partnership has requested a one year extension.
NOTE 4 - Commission Payable
At September 30, 1998 and 1997, the Partnership had a payable to a related party
for services rendered relating to sales of properties in 1989 and 1990.
NOTE 5 - Property Taxes Payable
Property taxes payable at September 30, 1998 is comprised of property taxes
payable from the following prior years:
<TABLE>
<CAPTION>
<S> <C> <C>
1995 $ 6,310
1996 27,784
1997 63,609
----------
$97,703
==========
</TABLE>
If property taxes remain delinquent for five years, then the taxing authority
can foreclose on the property. Management plans to take necessary steps to
prevent foreclosures.
NOTE 4 - Restatement and Reissuance of 1997 Financial Statements
In compliance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of" (SFAS 121), the 1996 financial statements reported an expense
for the decline in fair value of unimproved land of $3,254,195. The 1997
financial statements originally issued with the auditor's report dated January
28, 1998 reported $1,741,509 of income due to appreciation in the fair value of
this same land. Current clarification reveals that SFAS 121 does not provide for
recording appreciation in the fair value of an asset even in view of a
previously recorded decline in value. Therefore, the 1997 financial statements
were restated on August 3, 1998 to reflect the reversal of this appreciation in
the fair value of land.
In addition, certain carrying costs of land that had been previously capitalized
have been reclassified as current expenses in the amount of $4,895 and $29,922
for the three and nine months ended September 30, 1997.
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 discussion and analysis contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of
the Securities Act of 1933, which are subject to the "safe harbor" created by
that section. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions or variations of such
works are intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this report.
Additionally, statements concerning future matters such as the features,
benefits and advantages of the Partnerships properties regarding matters that
are not historical are forward-looking statements. Such statements are subject
to certain risks and uncertainties and the Partnership's actual future results
could differ materially from those projected in the forward-looking statements.
The Partnership assumes no obligation to update the forward-looking statements.
readers are urged to review and consider carefully the various disclosures made
by the Partnership in this report, which attempts to advise interested parties
of the risks and factors that may affect the Partnership's business, financial
condition and results of operations.
The Partnership had nine properties at September 30, 1998 that were 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 winding
up the Partnership operations, to the partners.
Results of Operations
Partnership revenues during the three and nine month periods ended September 30,
1998 and 1997 consisted primarily of interest income. No properties were sold
during the third quarters of 1998 and 1997. There was one property sold during
the second quarter of 1997.
Investing Activities used approximately $60,000 for the nine months ended
September 30, 1998 mainly for carrying costs of the land held for investment.
For the nine months ended September 30, 1997, proceeds of approximately $169,000
were generated from the property sale mentioned above.
General and administrative expenses for the three and nine months ended
September 30, 1997 and 1998 represent legal, accounting and related expenses
which vary from quarter to quarter based on certain activity in the Partnership.
In addition, in 1998 they reflect fees charged to the Partnership pursuant to
the Management Agreement described in Note 1 for various management and
administrative services.
Liquidity and Capital Resources
Management believes the Partnership has insufficient cash to meet the
anticipated cash requirements of the Partnership for the next 12 months.
Management has withheld the payment of certain expenses, such as property taxes.
As discussed in Note 1, PacWest has agreed to loan and/or secure a loan for TMP
Land Partnerships in the amount of $2,500,000. Loan proceeds will be allocated
to eleven (11) TMP Land Partnerships, based on partnership needs, from
recommendations made by PacWest, and under the approval and/or direction of the
General Partners. A portion of these funds will be loaned to TMP Inland Empire
IV, Ltd., at 12% simple interest over a 24 month period beginning April 1, 1998,
secured by the Partnership's properties, as funds are needed in the opinion of
the General Partners. These funds are not to exceed 50% of the 1997 appraised
value of the properties, and will primarily be used to pay for on-going property
maintenance, pay down existing debt, back property taxes and appropriate
entitlement costs.
PacWest, at their option, can make additional advances with the agreement of the
General Partners; however, the aggregate amount of cash loaned to all TMP
partnerships is limited to a maximum of $2,500,000.
TMP Properties and TMP Investments, Inc. will remain as general partners,
however, PacWest has acquired the General Partner's unsubordinated 1% interest
in the Partnership and assumed responsibility for all partnership
administration. PacWest will charge a fee for its administrative services equal
to an amount not to exceed the average reimbursements to the general partner for
such services over the past five years.
As the Partnership properties are sold, cash will be used to first pay back
PacWest loans, then other creditors, then to accrued but unpaid the Partnership
indebtedness.
Sale proceeds in excess of amounts necessary to pay the Partnership indebted-
ness shall be split 86% to the Partnership and 14% to PacWest.
The General Partners believe that ultimately, this arrangement will benefit the
Partnership and the limited partners. Without the cash infusion from PacWest,
the Partnership stands to lose some or all of its properties either due to
foreclosure resulting from the inability to pay outstanding loans or for failure
to pay property taxes.
Year 2000 Compliance
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. Beginning in the year
2000, these date codes fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and/or software used by organizations may need to upgraded to comply
with the "Y2K" requirements. There is significant uncertainty in the software
and information services industries concerning the potential effects associated
with such compliance. While the Partnership believes that its systems are
compatible with Y2K applications, there can be no assurance that all Partnership
systems will function properly in all operating environments and on all
platforms. The failure to comply with Y2K requirements by systems not designed
by the Partnership may also have a material adverse effect on the Partnership's
business, financial condition and results of operations. The Partnership is
currently developing and implementing a plan to identify and address potential
difficulties associated with Y2K issues and does not expect to expend any
significant funds as a result of these issues.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
<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: (date)
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
By: TMP Investments, Inc., as General Partner
By: _______________________________________
William O. Passo, President
By: _______________________________________
Anthony W. Thompson, Exec. VP
By: TMP Properties, a California General Partnership
as General Partner
By: _______________________________________
William O. Passo, General Partner
By: _______________________________________
Anthony W. Thompson, General Partner
By: _______________________________________
Scott E. McDaniel, General Partner
