<PAGE>
U.S SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Quarterly Period ended March 31, 2000
Commission File No. 0-19933
TMP INLAND EMPIRE IV, LTD.
A CALIFORNIA LIMITED PARTNERSHIP
(Name of small business issuer as specified in its charter)
CALIFORNIA 33-0341829
(State or other jurisdiction (I.R.S.Employer Identification No.)
of incorporation or organization)
801 North Parkcenter Drive, Suite 235
Santa Ana, California 92705
(Address of principal executive offices, including Zip Code)
(714) 836-5503
(Issuer's telephone number, including area code)
Check whether the issuer [1] filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and [2] has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Transitional Small Business Disclosure Format:____Yes__X__No
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The following financial statements are filed as a part of this Form 10-QSB:
Balance Sheets as of March 31, 2000 and December 31, 1999, Statements of
Operations for the three months ended March 31, 2000 and 1999, Statements of
Cash Flows for the three months ended March 31, 2000 and 1999.
The interim financial statements presented have been prepared by the Partnership
without audit and in the opinion of the management, reflect all adjustments of a
normal recurring nature necessary for a fair statement of (a) the results of
operations for the three months ended March 31, 2000 and 1999 (b) the financial
position at March 31, 2000 and (c) the cash flows for the three months ended
March 31, 2000 and 1999. Interim results are not necessarily indicative of
results for a full year.
The balance sheet presented as of December 31, 1999 has been derived from the
financial statements that have been audited by the Partnership's independent
public accountants. The financial statements and notes are condensed as
permitted by Form 10-QSB and do not contain certain information included in the
annual financial statements and notes of the Partnership. The financial
statements and notes included herein should be read in conjunction with the
financial statements and notes included in the Partnership's Form 10-KSB.
2
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<TABLE>
<CAPTION>
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
Balance Sheets
March 31, December 31,
2000 1999
(unaudited)
----------- ------------
Assets
<S> <C> <C>
Cash $ 63,822 $ 3,427
Investment in Unimproved Land, net (Note 1) 2,688,033 2,617,203
------------ ------------
Total Assets $ 2,751,855 $ 2,620,630
============ ============
Liabilities and Partners Capital
Accounts Payable $ 4,130 $ 0
Due to Affiliates (Note 5and 6) 412,955 508,663
Property Taxes Payable (Note 8) 47,696 34,575
Franchise Tax Payable 1,600 800
Commission Payable to Affiliate (Note 6) 70,560 70,560
Notes Payable (Note 7) 440,000 190,000
------------ ------------
Total Liabilities 976,941 804,598
------------ ------------
General Partners (57,966) (57,555)
Limited Partners; 8,500 Equity
Units Authorized and Outstanding 1,832,880 1,873,587
------------ ------------
Total Partners' Capital 1,774,914 1,816,032
------------ ------------
Total Liabilities and Partners' Capital $ 2,751,855 $ 2,620,630
============ ============
</TABLE>
See Accompanying Notes to Financial Statements
3
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<TABLE>
<CAPTION>
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
Statements of Operations
(Unaudited)
Three Months Ended
March 31 March 31
2000 1999
------------ ------------
Income
<S> <C> <C>
Interest $ 0 $ 0
------------ -------------
Total Interest Income 0 0
Expenses
Accounting & Financial Reporting 11,813 5,725
Outside Professional Services 10,606 6,536
General & Administrative 3,507 4,193
Interest 14,392 12,422
------------ ------------
Total Expenses 40,318 28,876
------------ ------------
Loss Before Taxes (40,318) (28,876)
State Franchise Tax 800 800
------------ ------------
Net Loss $ (41,118) $ (29,676)
============ ============
Allocation of Net Loss (Note 4):
General Partners, in the Aggregate: $ (411) $ (297)
============ ============
Limited Partners, in the Aggregate: $ (40,707) $ (29,379)
============ ============
Limited Partners, per Equity Unit: $ (4.79) $ (3.46)
============ ============
</TABLE>
See Accompanying Notes to Financial Statements
4
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<TABLE>
<CAPTION>
TMP INLAND EMPIRE IV, LTD
A California Limited Partnership
Statement of Cash Flows
(unaudited)
Three Months Ended
March 31 March 31
2000 1999
-------- --------
Cash Flows from Operating Activities:
<S> <C> <C>
Net Loss $ (41,118) $(29,676)
Adjustments to Reconcile Net Loss to net cash
Provided By (Used In) Operating Activities:
Increase (Decrease) in Due to Affiliates (95,708) 63,015
Decrease in Prepaid Expenses 0 3,374
Decrease in Property Taxes Payable 13,121 13,569
Increase in Franchise Tax Payable 800 0
Increase in Accounts Payable 4,130 0
------------ ---------
Net Cash Provided By (Used In) Operating
Activities (118,775) 50,282
Cash Flows from Investing Activities:
Increase in Investment in Unimproved Land (70,830) (49,333)
------------ ---------
Net Cash Used in Investing Activities (70,830) (49,333)
------------ ---------
Cash Flows from Financing Activities:
Borrowings from Note Payable 250,000 0
------------ ---------
Net Cash Provided By Financing Activities 250,000 0
------------ ---------
Increase in Cash 60,395 949
Cash, Beginning of Period 3,427 982
------------ ---------
Cash, End of Period $ 63,822 $ 1,931
============ =========
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Taxes $ 0 $ 800
============ =========
Cash Paid for Interest $ 63,645 $ 5,700
============ =========
</TABLE>
See Accompanying Notes to Financial Statements
5
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TMP INLAND EMPIRE IV, LTD
a California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(Unaudited)
Note 1 - General and Summary of Significant Accounting Policies
General - TMP Inland Empire IV, Ltd. (the Partnership) was organized in 1989 in
accordance with the provisions of the California Uniform Limited Partnership Act
for the purpose of acquiring, developing and operating real property in the
Inland Empire area of Southern California.
Accounting Method - The Partnership's policy is to prepare its financial
statements on the accrual basis of accounting.
Investment in Unimproved Land - Investment in unimproved land is stated at the
lower of cost or fair value. All costs associated with the acquisition of a
property are capitalized. Additionally, the Partnership capitalizes all direct
carrying costs (such as interest expense and property taxes). These costs are
added to the cost of the properties and are deducted from the sales prices to
determine gains, if any, when properties are sold.
Syndication Costs - Syndication costs (such as commissions, printing, and legal
fees) totaling $928,614 represent costs incurred to raise capital and,
accordingly, are recorded as a reduction in partners' capital (see Note 3).
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
Concentration - All unimproved land parcels held for investment are located in
the Inland Empire area of Southern California. The eventual sales price of all
parcels is highly dependent on the real estate market condition in that
geographical area. The Partnership attempts to mitigate any potential risk by
continually monitoring the market conditions and holding the land parcels
through any periods of declining market conditions.
Income Taxes - The entity is treated as a partnership for income tax purposes
and accordingly any income or loss is passed through and taxable to the
individual partners. Accordingly, there is no provision for federal income taxes
in the accompanying financial statements. However, the minimum California
Franchise Tax payable annually by the Partnership is $800.
6
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TMP INLAND EMPIRE IV, LTD
a California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(Unaudited)
Note 2 - Organization of the Partnership
The Partnership was originally formed with TMP Properties (A California general
partnership) and TMP Investments, Inc. (A California Corporation) as the general
partners ("General Partners"). The partners' of TMP Properties are William O.
Passo, Anthony W. Thompson and Scott E. McDaniel. William O. Passo and Anthony
W. Thompson were the shareholders of TMP Investments, Inc. until October 1,
1995, when they sold their shares to TMP Group, Inc. and then became the
shareholders of TMP Group, Inc.
The Partnership originally acquired nine separate parcels of unimproved real
property in Riverside and San Bernardino Counties, California. The properties
were to be held for investment, appreciation, and ultimate sale and/or
improvement of all or portion thereof, either alone or in conjunction with a
joint venture partner. One parcel was sold in 1989, another parcel was sold in
1990, a third parcel was sold in 1995, and a fourth parcel was sold in 1997.
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 since its formation. As described in Note 1,
syndication costs have been recorded as a reduction in partners' capital.
Note 4 - Allocation of Profits, Losses and Cash Distributions
Profits, losses, and cash distributions are allocated 99 percent to the limited
partners and one percent to the General Partners until the limited partners have
received an amount equal to their capital contributions plus a cumulative,
non-compounded return of six percent per annum based on their adjusted capital
account balances. At that point, remaining profits, losses and cash
distributions are allocated 85 percent to the limited partners and 15 percent to
the General Partners. There were no distributions in 2000 or 1999.
Note 5 - Agreements with PacWest Inland Empire, LLC (PacWest)
In March 1998, the General Partners entered into an agreement (the Financing
Agreement) with PacWest, a Delaware Limited Liability Company, whereby PacWest
paid a total of $300,000 to the General Partners and ten other related
partnerships (the TMP Land Partnerships). In addition, PacWest agreed to pay up
to an additional $300,000 for any deficit capital accounts for the TMP Land
Partnerships in exchange for the rights to the General Partners' distributions;
referred to as a "distribution fee" as defined by the Financing Agreement.
7
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TMP INLAND EMPIRE IV, LTD
a California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(Unaudited)
In addition, PacWest has agreed to loan and/or secure a loan for the TMP Land
Partnerships in the amount of $2,500,000. Loan proceeds will be allocated among
the TMP Land Partnerships, based on partnership needs, from recommendations made
by PacWest, and under the approval and/or direction of the general partners. A
portion of these funds will be loaned to the Partnership at 12% simple interest
beginning April 1, 1998. The borrowings are secured by the Partnership's
properties, and funds will be loaned, as needed, in the opinion of the general
partners. These funds are not to exceed 50% of the 1997 appraised value of the
properties, and will primarily be used to pay for on-going property maintenance,
pay down existing debt, pay back property taxes and appropriate entitlement
costs.
As of March 31, 2000 the TMP Land Partnerships have been funded approximately
$2,981,000 by PacWest. An addendum to the Financing Agreement which states
PacWest shall be entitled to increase the aggregate amount of the loan by
written agreement is currently being approved by both the General Partners and
PacWest. Upon signing of this addendum, PacWest, can, at their option and with
the written agreement of the General Partners, make additional advances and the
aggregate amount of cash loaned to the TMP Land Partnerships is not limited to a
maximum of $2,500,000.
Pursuant to the Financing Agreement, PacWest has acquired the General Partners'
unsubordinated 1% interest in the Partnership and assumed responsibility for all
partnership administration while not replacing any of the General Partners.
In April 1998, PacWest entered into the Management Agreement with the General
Partners to provide the Partnership with overall management, administrative and
consulting services. PacWest currently contracts with third party service
providers to perform certain of the financial, accounting, and investor
relations' services for the Partnership. PacWest will charge a fee for its
administrative services equal to an amount not to exceed the average
reimbursements to the General Partners for such services over the past five
years. As of March 31, 2000 and December 31, 1999, the Partnership has a payable
of $412,752 and $508,460, respectively, including interest, due to PacWest
related to the aforementioned agreements.
Note 6 - Related Party Transactions
Syndication costs (see Notes 1 and 3) netted against partners' capital
contributions include $850,000 of selling commissions paid in prior years to TMP
Capital Corp. for the sale of partnership units of which a portion was then paid
to unrelated registered representatives. William O. Passo and Anthony W.
Thompson were the shareholders of TMP Capital Corp. until October 1, 1995, when
they sold their shares to TMP Group, Inc.
Investment in unimproved land includes acquisition fees of $365,000 paid in
prior years to TMP Properties, TMP Investments, Inc., and the General Partners,
for services rendered in connection with the acquisition of the properties.
8
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TMP INLAND EMPIRE IV, LTD
a California Limited Partnership
Notes to the Financial Statements
March 31, 2000
(Unaudited)
As of March 31, 2000 the Partnership had a payable of $203 to the General
Partners and an affiliated company.
At March 31, 2000 and December 31,1999, $70,560 is payable to Regal Realty, a
company wholly owned by Scott E. McDaniel, for services rendered relating to
sales of properties prior to 1990. Mr. McDaniel is a partner of TMP Properties
and he was a shareholder of TMP Investments, Inc. until September 1993 when he
sold his shares to Mr. Passo and Mr. Thompson. Ultimate payment of this amount
is contingent on the limited partners receiving an amount equal to their capital
contributions plus a cumulative, non-compounded return of 6% per annum on their
adjusted capital contributions. As of March 31, 2000 the limited partners had
not received and do not expect to receive such a return and therefore this
amount is not currently due.
See Note 5 regarding information on management of the Partnership during 2000.
Note 7 - Note Payable
On March 1, 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 was due on February 1, 1999, but was extended
until June 1, 2001. Fees for the refinance of the note were paid by the
Partnership in the amount of approximately $8,800. Interest accrues at 12
percent per annum payable in monthly installments of $1,900 starting March 1,
1996. As of March 31, 2000, $91,327 of interest has been capitalized to
investment in unimproved land.
On March 24, 2000, the Partnership borrowed $250,000 from a private party. The
note is secured by a deed of trust on a parcel of land owned by the Partnership.
The note is due on May 1, 2003. Interest at 13.5% per annum payable in monthly
installments of $2,863.54 starting April 1, 2000. As of March 31, 2000 $844 of
interest has been capitalized to investment in unimproved land.
Note 8 - Property Taxes Payable
A portion of the property taxes payable of $47,696 relates to property taxes due
for various periods from 1994 to 1997 for which the Partnership has entered into
a payment plan. The plan calls amounts to be paid starting in April 2000, and
every April for the next three subsequent years. The additional liability
relates to current property taxes due in April 2000. Approximate amounts due on
the payment plan are as follows:
<TABLE>
<CAPTION>
<S> <C>
April 10, 2000 $14,789
April 10, 2001 6,596
April 10, 2002 6,595
April 10, 2003 6,595
------
$34,575
</TABLE>
These amounts will increase annually as interest accrues at a monthly rate of
1.5% on the remaining balance.
9
<PAGE>
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
March 31, 2000
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following discussion and analysis provides information that the
Partnership's management believes is relevant to an assessment and understanding
of the Partnership's results of operations and financial condition. This
discussion should be read in conjunction with the financial statements and
footnotes, which appear elsewhere in this report.
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, which are subject to the "safe harbor" created
by that section. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions or variations of such
words are intended to identify forward-looking statements, but are not the
exclusive means of identifying forward-looking statements in this report.
Additionally, statements concerning future matters such as the features,
benefits and advantages of the Partnership's property regarding matters that are
not historical are forward-looking statements. The Partnership's actual future
results could differ materially from those projected in the forward-looking
statements. The Partnership assumes no obligation to update the forward-looking
statements.
Readers are urged to review and consider carefully the various disclosures made
by the Partnership in this report, which attempts to advise interested parties
of the risks and factors that may affect the Partnership's business, financial
condition and results of operations.
Results of Operations
The following discussion should be read in conjunction with the attached
financial statements and notes thereto and with the Partnership's audited
financial statements and notes thereto for the fiscal year ended December 31,
1999.
During the period from inception (June 7, 1989) through December 31, 1989, the
Partnership was engaged primarily in the sale of Units 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,
1995-1999, consisted primarily of interest income and income from the forfeiture
by potential buyers of non-refundable escrow deposits. In 1996 the Partnership
experienced a loss due to the write-down in value of the Partnership land. The
decline in land value was due mainly to the downturn in Southern California's
real estate market.
The Partnership's management believes that inflation has not had a material
effect on the Partnership's results of operations or financial condition.
Fiscal Quarters Ended March 31, 2000 and 1999
There was no revenue of the Partnership during the three-month periods ended
March 31, 2000 and 1999. No properties were sold during the periods presented.
10
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TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
March 31, 2000
Investing Activities used approximately $71,000 for the three months ended March
31, 2000 and $49,000 for the three months ended March 31, 1999, most of which
was used to pay development and carrying costs of the unimproved land held for
investment.
Total expenses for the three months ended March 31, 2000 compared with the three
months ended March 31, 1999, increased by approximately $11,000 due primarily to
increases in Accounting & Financial Reporting, Outside Professional Services and
Interest Expense. Interest Expense increased by $1,970 pursuant to the Financing
Agreement with PacWest entered into April 1, 1998. Accounting & Financial
Reporting increases are directly related to the timing and the costs incurred to
prepare audit and file the appropriate financial information for the
Partnership. In accordance with the Management Agreement, reimbursement of
certain outside consultant expenses charged to the Partnership by PacWest, were
incurred during the three-month period ended March 31, 2000 and not in the same
period ended March 31, 1999. These charges amounted to approximately $3,400 and
are primarily responsible for the increase in Outside Professional Services of
$4,070. The remaining $670 increase is related to the timing and payment of
certain insurance expenses based on new contract negotiations.
Due to Affiliates increases as the Partnership pays its' operating costs. As
discussed above, and pursuant to the Financing Agreement, all funds required to
pay for operating costs are received from PacWest. Upon receipt of the $250,000
from a third party note payable, the Partnership reduced the obligation due to
PacWest and paid $165,000, which included both interest and principal amounts
due.
The Partnership had five properties as of March 31, 2000 that are being held for
appreciation and resale. Upon the sale of each property, the Partnership intends
to distribute the sales proceeds, less any reserves needed for operations, to
the partners.
Liquidity and Capital Resources
The Partnership has raised a total of $7,571,386, net of syndication costs, from
the sale of 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. The Partnership capitalized the acquisition costs of
the property and direct carrying costs, such as interest expense and property
taxes. The Partnership does not intend to acquire any additional properties. The
remaining five properties are being held for resale. Upon sale, if any, the
Partnership intends to distribute the sales proceeds, less any reserves needed
for operations, to the partners.
The Partnership owns land in the Riverside and San Bernardino counties. That
region of Southern California experienced a significant economic recession that
has substantially eroded the value of real estate in that area. The region is
beginning to show some signs of recovery; however, the recovery has been very
slow.
On March 1, 1996, the Partnership procured a loan in the amount of $190,000,
secured by one of the properties. The note was due on February 1, 1999 and
management extended the note due date until June 2001.
On March 24, 2000, the Partnership borrowed $250,000 from a private party. The
note is secured by a deed of trust on a parcel of land owned by the Partnership.
The note is due on May 1, 2003. Interest at 13.5% per annum payable in monthly
installments of $2,863.54 starting April 1, 2000. As of March 31, 2000 $844 of
interest has been capitalized to investment in unimproved land.
11
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TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
March 31, 2000
In March 1998, the General Partners entered into the Financing Agreement with
PacWest, whereby PacWest paid a total of $300,000 to the General Partners and
ten other related partnerships (the TMP Land Partnerships). PacWest agreed to
pay up to an additional $300,000 for any deficit capital accounts for these 11
partnerships in exchange for the rights to distributions from the general
partners; referred to as a "distribution fee" as defined by the Financing
Agreement.
In addition, PacWest has agreed to loan and/or secure a loan for the TMP Land
Partnerships in the amount of $2,500,000. Loan proceeds will be allocated among
the TMP Land Partnerships, based on partnership needs, from recommendations made
by PacWest, and under the approval and/or direction of the General Partners. A
portion of these funds will be loaned to the Partnership at 12% simple interest
beginning April 1, 1998. The borrowings are secured by the Partnership's
properties, and the funds will be loaned, as needed, in the opinion of the
general Partners. These funds are not to exceed 50% of the 1997 appraised value
of the properties, and will primarily be used to pay for on-going property
maintenance, reduction of existing debt, property taxes in arrears, appropriate
entitlement costs and Partnership operations.
As of March 31, 2000 the TMP Land Partnerships have been funded approximately
$2,981,000 by PacWest. An addendum to the Financing Agreement which states
PacWest shall be entitled to increase the aggregate amount of the loan by
written agreement is currently being approved by both the General Partners and
PacWest. Upon signing of this addendum, PacWest, can, at their option and with
the written agreement of the General Partners, make additional advances and the
aggregate amount of cash loaned to the TMP Land Partnerships is not limited to a
maximum of $2,500,000.
Pursuant to the Financing Agreement, PacWest has acquired the General Partners'
unsubordinated 1% interest in the Partnership and assumed responsibility for all
partnership administration while not replacing any of the General Partners.
The Partnership is currently soliciting third party financing on one of the
properties for a total of $100,000 to $150,000.
In April 1998, PacWest entered into the Management Agreement with the General
Partners to provide the Partnership with overall management, administrative and
consulting services. PacWest currently contracts with third party service
providers to perform certain of the financial, accounting, and investor
relations services for the Partnership. PacWest is paid an annual fee of $18,960
for its administrative services.
12
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 15, 2000
TMP INLAND EMPIRE IV, LTD.
A California Limited Partnership
By: TMP Investments, Inc., a California Corporation as Co-General
Partner
\s\ William O. Passo
By:___________________________________
William O. Passo, President
\s\ Anthony W. Thompson
By:__________________________________
Anthony W. Thompson, Exec. VP
By: TMP Properties, a California General Partnership as Co-General
Partner
\s\ William O. Passo
By:___________________________________
William O. Passo, general Partner
\s\ Anthony W. Thompson
By:___________________________________
Anthony W. Thompson, general Partner
\s\ Scott E. McDaniel
By ____________________________________
Scott E. McDaniel
By: JAFCO, Inc., A California Corporation as Chief Accounting
Officer
\s\ John A. Fonseca
By ____________________________________
John A. Fonseca, President
13
