<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995.
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 33-82722C
GMI 94, LLC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
WISCONSIN 39-1794734
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1217 SOUTH GRANDVIEW BOULEVARD, WAUKESHA, WISCONSIN 53188
(Address of principal executive office) (ZIP Code)
Issuer's telephone number, including area code: (414) 521-2500
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT: None
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
UNITS OF MEMBERSHIP
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 / /
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained this form, and no disclosure will be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or an
amendment to this Form 10-KSB. [ ]
The issuer's revenues for the year ended December 31, 1995 were $176,559.
The aggregate market value of the units of membership held by
non-affiliates of the issuer as of April 30, 1996 was $1,252,425, representing
their original cost. There is no trading market for the Units.
As of April 30, 1996, the issuer had outstanding 500.97 units of
membership, its only class of securities.
DOCUMENTS INCORPORATED BY REFERENCE
No documents are incorporated by reference into Part III of this Annual
Report on Form 10-KSB.
Transitional Small Business Disclosure Format (Check one):
Yes / / No /x/
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PART I
ITEM 1. DESCRIPTION OF BUSINESS.
GENERAL
GMI 94, LLC., a Wisconsin limited liability company ("Company"), of which
GMI Rental and Lease, Inc., a Wisconsin corporation ("GMI"), is the Managing
Member, is engaged in the business of renting, leasing, servicing and selling
truck-mounted work equipment ("Equipment"), including (i) aerial devices which
hydraulically elevate one or more persons in an insulated or non-insulated
environment to perform tasks with work heights ranging from 28 to 70 feet; and
(ii) digger-derricks which hydraulically perform utility construction and
maintenance work, including digging holes, setting poles and handling
materials. The Company rents (typically for terms of less than one year),
leases, services and sells its Equipment directly; its customers are
principally electrical utility and telephone companies, governmental bodies and
agencies, construction firms and other industrial concerns. In addition, the
Company utilizes the services of a nation-wide network of 40 independent
dealers, developed by its Managing Member, who also rent, lease and service the
Company's Equipment.
SERVICES
The Company is engaged in the following business activities:
Rental and Lease. The Company rents or leases to its customers a variety
of Equipment in a diversified market. The concept of renting or leasing
equipment is generally well accepted by most of the Company's market segments.
Although the reasons for renting or leasing are numerous, the primary reasons
include budget constraints and the ability to avoid the capital requirements of
ownership, the ability to meet special project and seasonal requirements,
providing a means of processing equipment breakdowns and planned equipment
refurbishments, the high cost of new equipment, and the ability to avoid new or
replacement equipment lead times. The Managing Member has established a niche
in the rental and lease business by providing reliable equipment at competitive
rates which provides a means of entry for the Company. Generally, the Company
will purchase a mix of new and pre-owned Equipment from a variety of nationally
recognized manufacturers with whom the Managing Member has established a
relationship. Previously owned Equipment may be purchased from unrelated
firms, the Managing Member and its affiliates, or other entities to which the
Managing Member provides service.
Service and Parts Sales. The Managing Member's service department is
located in Waukesha, Wisconsin, and provides service to the Company's fleet as
well as to Equipment owned by customers and Equipment owned by Managing Member,
and Funds or other entities to which it provides management assistance. The
service department operates both in-house and on the road providing
repair/maintenance services as well as sales of replacement parts. The service
department is expected to typically install and mount equipment on purchased
truck chassis for approximately 50% of the Company's new purchases. The
Managing Member will typically provide this installation and mounting service
for equipment owned by the Company, as well as for equipment owned by others.
The Managing Member also provides overhaul service of existing equipment and
warranty work for certain manufacturers through its service department. Its
service department provides maintenance, overhaul and warranty work throughout
Wisconsin, the Upper Peninsula of Michigan, and the Illinois counties bordering
Wisconsin. Servicing of the Managing Member's fleet outside this geographic
area is normally handled through the Managing Member's network of dealers
across the country. The Managing Member's service department staff is
comprised of a service manager and three mechanics, all of whom are employed at
the Waukesha, Wisconsin, facility.
Sale of Equipment. Truck-mounted equipment purchased for the Company's
rental or lease fleet is expected to have an effective rental life of five to
seven years. The limiting factor is the age of the truck chassis, not the
equipment mounted on it. Aerial devices and digger-derrick units generally
have a useful life between fifteen to twenty years. On a regular basis, the
Managing Member will provide a list of equipment (generally 5 years or older)
to its dealers as "available for sale." Historically, the Managing Member has
sold used equipment for prices generally ranging from 75% to 80% of its
original purchase price. The market for used equipment (or after-market) is
very diversified and includes
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contractors, small municipalities and other commercial entities. This
after-market continues to be active because of the cost of new equipment.
Equipment Management. The Managing Member or an affiliate has managed
equipment owned by unrelated parties for which it had the responsibility to
rent, lease, service and sell equipment of the type involved in this program
and was paid a management fee in connection with its performance of those
management services. While it may undertake similar work in the future, the
last such assignment terminated by its terms in 1995, and the Managing Member
does not presently have any plans to seek similar independent work.
EQUIPMENT.
As of April 30, 1996 the Company owned 38 items of Equipment. The types
of Equipment that the Company rents, leases, services and sells are as follows:
Aerial Devices. Aerial devices (often referred to as "cherry pickers")
are designed in varying sizes (or working heights) to hydraulically place one
or more persons in the air in an insulated/non-insulated environment to perform
various tasks. These aerial devices have the additional capability of lifting
tools and equipment. Working heights for these aerial devices range from 28
feet to 70 feet above ground depending on the specific model. Additionally,
some models may be telescopic or articulated, and some may be equipped with one
or two person buckets or platforms. The aerial devices are mounted on a truck
chassis manufactured by Ford, Navistar, or GMC. The aerial devices themselves
are manufactured by Altec Industries, Hydra-Tech, Inc., Reach Equipment, Time
Manufacturing, and other nationally recognized manufacturers. The installation
of the aerial device (i.e., mounting on truck chassis) is handled by the
manufacturer or an authorized representative. The average cost per new aerial
unit typically ranges from $22,000 to $70,000, plus delivery charges; used
aerial devices (assuming equipment ranging in age from 10 years to 20 years)
generally sell for approximately 75% to 85% of original cost, plus delivery
charges.
Digger-Derricks. Digger-derrick devices are units designed to
hydraulically perform utility line construction and maintenance work, i.e.,
digging holes, setting poles and handling heavy materials. Some models can
also be equipped to elevate one or more persons in the air to perform utility
line work. The various digger-derrick models have lift capacities ranging from
12,000 to 22,000 pounds and sheave heights of 45-50 feet. The digger-derrick
units are mounted on a truck chassis manufactured by Ford, GMC or Navistar.
The Managing Member's service department may install and mount the
digger-derrick units on the truck chassis, or the installation and mounting may
be handled directly by the manufacturer. The average cost per completed
digger-derrick unit ranges from $65,000 to $95,000, plus delivery charges.
The Managing Member or an affiliate may from time to time provide delivery
services for rates which are competitive in the area where the service is
performed. See "Certain Relationships and Related Transactions - Conflicts of
Interest."
The value of the Equipment at the end of the term of the Company (December
31, 2004, unless extended for up to two additional years in the discretion of
the Managing Member, unless sooner terminated) cannot be determined with
certainty at the present time as such value is dependent on various factors
such as obsolescence, market factors, condition of the Equipment and other
business and economic considerations. The value of the Equipment at the end of
the program is anticipated to be set by sale. Equipment of the type dealt with
in this offering normally retains a lengthy useful life. When it does suffer
physical deterioration, it may be subject to refurbishment or upgrading.
However, it is also expected that manufacturers will continue to introduce new
models that may affect the future value of the Equipment. Accordingly, it is
possible that by the time the Company terminates, there will be significantly
more advanced equipment available at relatively low prices, and new generations
of equipment may render the Equipment economically undesirable, even if it has
been enhanced by additional features. Prices have maintained some stability
for this type of equipment but there can be no assurance that they will remain
stable in the future and any increase or decrease may affect either positively
(in the event of an increase) or negatively (in the event of a decline) the
residual value.
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The ability to re-market the Equipment will also be dependent in part upon
competitive factors such as the pricing and leasing practices of manufacturers
and competing rental and lease companies. The marketing of equipment is a very
competitive field and, in seeking a new lease or sale, the Managing Member or
an alternate re-marketing agent will be competing with equipment manufacturers,
banks, finance companies and leasing companies, as well as with future programs
of the type offered hereby, by others entities to the extent any are managed in
the future by the Managing Member or in respect of equipment which is owned
directly by the Managing Member. See "Certain Relationships and Related
Transactions - Conflicts of Interest."
MARKETS
Electrical Utility Industry. This industry includes investor-owned
utility companies, rural electric cooperatives and municipal electric
utilities.
Telephone Utility Industry. This industry includes the Bell System
companies and independent telephone companies.
Government Market. This market includes city, county, state and federal
government agencies, such as highway and transportation departments, electrical
departments, recreation and forestry departments, and military installations
and facilities.
Construction Contracting Market. This market includes electric,
telephone, building and lighting contractors.
Industrial Market. This market includes cable-TV operators and
contractors, oil refineries and petro-chemical installations, and manufacturing
plants.
The following chart represents a breakdown of fiscal year 1995 rental
revenue derived by the Managing Member from the indicated market segments:
<TABLE>
<CAPTION>
Market Segment % of Rental Revenue
-------------- -------------------
<S> <C>
Electrical Utility 41%
Governmental 25%
Telephone Utility 19%
Industrial Market 12%
Other 3%
</TABLE>
The foregoing chart representing rental revenue represents the approximate
percentage distribution of business from all of its operations in the
aggregate, including any entity for which it provides management service, and
from rental of equipment owned by the Managing Member in which it has sold
income participations to independent investors. Accordingly, it may not
represent the distribution of business in any particular entity to which it
renders service or be representative of any particular group of equipment owned
by it such as that equipment in respect of which it has sold an income
participation (i.e. the 92A and 93A Income Funds). See "Results of Prior
Programs."
No assurance can be given that the Company will experience a comparable
distribution of utilization. Past experience provides no assurance of future
performance. See "Risk Factors."
Rental or lease arrangements between the Company and its customers are
generally short-term in nature, ranging from 30 to 120 days. Although an
exception, some rental or lease arrangements with the industrial market may be
on a long-term basis (a term of one year or more). Customers are billed on a
monthly basis (regardless of rental/lease term), and the Company recognizes
income at the time of billing. At the end of the rental/lease term, the
Company is responsible, at its cost, for transporting the Equipment to its next
lease destination. All rental and lease arrangements are designed to ensure
proper liability and casualty insurance coverages. The Company is expected to
follow similar arrangements, with similar distributions of customers.
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MARKETING AND PROMOTION
The Company uses a multi-faceted approach to market its rental and lease
program. This marketing approach is used nationally for the Company rental and
lease program as well as regionally through regional dealers of the Managing
Member. The Company essentially utilizes the same marketing techniques in
placing Equipment for rental or lease as the Managing Member uses for Equipment
which it owns directly, or which is owned by other entities to which it
provides management services.
Through its Managing Member, the Company utilizes the services of a
nation-wide network of 40 independently owned dealers which its Managing Member
has developed. A list of the the current dealers and their locations is
available at the offices of the Company for inspection during normal business
hours upon reasonable advance notice. Each dealer markets rental and lease
services exclusively for the Managing Member and its affiliates or entities to
which the Managing Member provides management services. The dealers also
provide service support for the related equipment fleet and are actively
involved with the resale of items of its equipment. The Managing Member
continuously pursues the appointment of additional dealers to provide better
market coverage. The Managing Member also makes a concerted effort to have
more continued direct contact with its existing dealers via weekly telephone
and facsimile fleet availability reports and personal visits. The Company
utilizes the Managing Member's dealer network to originate rental and lease
opportunities.
The Company also derives rental and lease opportunities through direct
mail and telemarketing programs by which the Managing Member markets directly
to customers for rental and lease services. The Managing Member has been
working to expand these marketing programs and to increase its present contact
base of 6,000 to 8,000.
On an ongoing basis, the Managing Member participates in market targeted
updates and promotions, including sales in the after-market. Materials in
these updates, promotions and sales are expected to assist the Company in the
marketing of its Equipment for rental and lease applications.
UTILIZATION
The Company's objective is to maintain a 75% utilization rate for its
Equipment. Since historical trends applicable to the Managing Member indicate
that approximately 6%-8% of units are committed for future rental and 8%-10% of
the units are in maintenance, the maximum possible utilization rate of the
Company's Equipment fleet is expected to be in the range of 82% to 86%
utilization. Utilization rates shown below represent the experience of the
Managing Member for all equipment for which it provides management services,
including that which is owned by independent entities to which it provides
management services by contract or equipment which it owns, including that as
to which it has sold income participations to independent investors. The
Managing Member's utilization performance for recent months has been as
follows:
<TABLE>
<CAPTION>
1994 1995
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<S> <C> <C> <C>
July 74.5% January 69.8%
August 76.7% February 58.1%
September 80.5% March 60.8%
October 78.4% April 64.9%
November 83.6% May 65.7%
December 78.6% June 73.8%
July 73.9%
No assurance can be given that the Company August 72.5%
will experience a comparable distribution September 69.3%
of utilization. Past experience provides October 79.6%
no assurance of future performance. November 75.2%
See "Risk Factors." December 66.3%
</TABLE>
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THE LEASES
Some of the more important provisions of the "Leases" (both rental and
lease agreements) utilized by the Company are described below.
Net Lease. Rentals on longer term leases may be in addition to, and
completely net of, all expenses of operation and maintenance of the Equipment.
However, the Company may assume some operating costs, such as oil and/or
gasoline, on short-term rentals. The customer may also pay all taxes relating
to operation of the Equipment, as described below, and all costs and expenses
incurred in the use and operation of the Equipment, as described under
"Maintenance." However, the Company may assume some operating costs on
short-term rentals.
Title. Both rental and longer term leases typically expressly provide
that nothing therein conveys to the lessee any interest in or right to the
Equipment other than the right of usage and quiet enjoyment under the Leases.
All Equipment bears markings or other identification of the Company as the
owner. It has the right to inspect the Equipment at any time, subject to the
lessee's security procedures.
Initial and Extended Terms. The terms of rental or lease may vary
sharply, with rental typically running from 30 to 120 days, and leases possibly
extending for years. Provision may be made for extension of a term, and in
some longer term leases, the customer may be granted a purchase option.
Liens and Taxes. Each lessee under rental and longer term lease
agreements is required to keep the Equipment free from liens, legal process or
encumbrances and to indemnify the lessor Company from any loss caused thereby.
All taxes, such as sales taxes, of any kind whatsoever, except for income or
franchise taxes of the lessor, are typically required to be paid by each
lessee. In any case where the lessee fails to pay any taxes payable by lessee
and the lessor elects to pay them, the amount paid by the lessor becomes
additional rental immediately payable by the lessee.
Default. Events of the Lessees' default under the Leases include (i)
non-payment of rent, (ii) breach by the lessee of any warranty under the
Leases, (iii) default in the performance of any agreement under the Leases, and
(iv) insolvency or bankruptcy of the lessee. Upon the event of default, the
Company may terminate the Leases immediately upon giving oral or written notice
to the lessee. The Leases provide for the surrender of the Equipment on notice
of default and reserves to the Company all other legal remedies.
Casualty Loss. The lessees bear the entire risk of loss, theft or damage
to the Equipment.
Remedies of the Lessor. The courts have imposed on lessors an obligation
to "mitigate damages" in the event of a lessee's failure to cure a default.
Under this doctrine, the lessor must exercise good judgment and follow
acceptable commercial practice in disposing of or in re-leasing leased
Equipment, and must offset such receipts against its claim. Casualty losses
may be cured by return of the Equipment to its prior condition or by
replacement with substantially similar equipment, but the obligations to pay
rent do not abate upon the occurrence of any casualty.
Warranty. Leases typically contain a specific disclaimer of warranties by
the lessor (i.e. the Company) under which each lessee acknowledges that the
lessor is not responsible for the Equipment function or performance and that
the lessee will look only to the manufacturer (and not to the Company) for any
liability or damages arising from the Equipment, including consequential
damages. While the disclaimer of warranties may be binding as between the
lessee and the Company, it may not be binding against a third party who may
have incurred injury from the use of the Company's Equipment.
Maintenance. The lessees are responsible for maintaining the Equipment in
good operating condition and repair, to use it for the purposes its
manufacturer intended, and to return the Equipment at the end of each term in
such condition, subject only to normal wear and tear. The lessees generally
pay all operating costs, and are required to maintain insurance on the
Equipment.
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RE-MARKETING OF EQUIPMENT
Under the Operating Agreement, the Managing Member has the exclusive right
to re-market the Equipment. Re-marketing includes the sale, re-leasing or
refinancing of the Equipment upon the expiration or other termination of the
Leases. The responsibilities of the Managing Member in re-marketing will be to
(i) analyze the market for the Equipment, (ii) analyze the comparable
profitability of a lease, re-lease or sale of the Equipment; (iii) locate and
negotiate with potential lessees or purchasers and otherwise use its best
efforts in re-marketing the Equipment; and (iv) arrange all necessary
documentation and secure the execution of such documents in order to consummate
the lease, re-lease or sale of the Equipment.
COMPETITION
The Managing Member's (and hence the Company's) main national competitors
are Utility Equipment Leasing Corp., Waukesha, Wisconsin; Global, Birmingham,
Alabama; and Baker Equipment Leasing Corp., Richmond, Virginia. The Managing
Member also has several regional competitors around the country, primarily HERC
(Hertz Equipment Rental Corp.), Parsipanny, New Jersey; Matlock Leasing,
Philadelphia, Pennsylvania; and Mirk Equipment Leasing, Columbus, Ohio. In
addition, the Managing Member rents to its own customers Equipment of the same
type which is expected to be owned and rented by the Company to its customers
and consequently may be considered to be in competition with the Company in
some respects. In the past, the Managing Member has also rendered rental
management services under a management contract to two independent partnerships
which are not its affiliates. The Managing Member has adopted certain
standards to regulate the rental or leasing of Equipment when both the Company
and the Managing Member, or a firm for which the Managing Member renders rental
or leasing management services, may both provide Equipment.
During a portion of 1995, the Managing Member of the Company had provided
management services to Wellington Equipment Income Limited Partnerships II and
X, two limited partnerships formed by Wellington Management Corporation, a
Wisconsin corporation, as general partner. The Managing Member is not
affiliated with the general partner of these partnerships, and the Managing
Member owns no equity interest in these partnerships. The duties of the
Managing Member under its contract with the partnerships required it to provide
services in locating rental or lease customers, in servicing the rental
agreements, and in managing the service of the related equipment, as well as in
assisting in disposing of the equipment. These contracts terminated by their
terms on July 17, 1995 and were not renewed. The Managing Member does not
anticipate entering into any new similar management contracts with Wellington
Management Corporation or any of its affiliates.
The Managing Member also owns equipment in its own name which it leases to
customers. Some of these items of equipment are subject to income
participation agreements (i.e. the 92A and 93A Income Funds) in which the
Managing Member sold to independent investors in 1992 and 1993 an income
participation in the rental revenue generated by them and a portion of the net
revenue gained upon resale of the related Equipment. See "Certain
Relationships and Related Transactions."
FACILITIES
FLG Equipment, Inc. ("FLG") owns the building which houses the Managing
Member's corporate headquarters and service department. The Company shares
these facilities. FLG is an affiliated corporation, owned 100% by Frank L.
Gruning, the President of the Company and GMI. FLG also owns certain
truck-mounted work equipment, which consists only of trash loaders, cranes and
specialty equipment, none of which is directly competitive with the Managing
Member's or the Company's rental/lease business. Under the Operating
Agreement, the Managing Member provides the Company with all of its general
management and administration services through personnel and facilities of the
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Managing Member. Since personnel of the Managing Member are expected to
perform all such services, the only facilities expected to be required are
those of the Managing Member, for whose use no additional charge is made to the
Company.
The office and maintenance facilities of the Company are located at 1217
South Grandview Boulevard, Waukesha, Wisconsin 53188.
EMPLOYEES
The Company currently has no employees, apart from its two officers; such
persons receive no cash compensation or other benefits directly from the
Company. Company operations are conducted by the staff of the Managing Member.
The Managing Member currently has 13 full-time employees. Its service
staff consists of a service manager and three mechanics. Its management and
administrative staff consists of the president, an office manager, a fleet
administrator and a rental coordinator. The Managing Member may hire and train
additional personnel as required in light of the growth and expansion of the
Company's business.
ITEM 2. PROPERTIES.
The Company owns no real estate. As of April 30, 1996 it owned 38 items
of Equipment, including aerial devices and digger derrick units.
ITEM 3. LEGAL PROCEEDINGS.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.
There is no trading market for the Units of Membership. Transfers are
restricted in order to preserve the pass-through tax treatment afforded by the
Internal Revenue Code of 1986, as amended, to entities such as the Company,
which are taxed as associations taxable as partnerships and which are not
"publicly traded partnerships" as defined in the Code. The consent of the
Managing Member is required for admission of a new Member following assignment
of a Unit of Membership by any Member. To date, there have been no assignments
of Units of Membership known to the Managing Member and no requests for
admission of new Members.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with the Financial Statements and
Notes thereto. Since the Company's Registration Statement was effective on
January 25, 1995, there is no comparative data for the previous year.
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RESULTS OF OPERATIONS
The conditions for satisfaction of Escrow requirements were met on April 26,
1995 when Subscriptions were accepted for $100,000 of Units of Membership. The
Managing Member then began to acquire equipment to place in the program
utilizing proceeds of the Offering. As of December 31, 1995 the Company owned
32 vehicles which included aerial devices and digger derrick units for a total
cost of $1,115,844. Subsequently, it purchased another six items of Equipment,
bringing the total through April 30, 1996 to 38 items, including aerial devices
and digger-derricks. Equipment costs for individual items of equipment acquired
ranged in price from $18,000 to $50,000. Approximately two thirds of the units
were purchased from Wellington Management Corporation. The Managing Member had
been the equipment manager for two Wellington equipment income limited
partnerships - "Wellington II" and "Wellington X", which were not affiliates of
the Company or its Managing Member. This transaction terminated the Managing
Member's equipment management relationship with Wellington Management
Corporation. The acquisition price of the equipment was 85% of original cost.
In the judgment of the Managing Member, this acquisition represented a unique
and favorable opportunity to obtain well-maintained equipment that was already
in place and rented at a price, and on terms and conditions, that were no less
favorable to the Company than would be charged by an unrelated party for
comparable equipment in the place and at the time that the sale occured. The
Managing Member also reduced its owned fleet size by the sale of items of
Equipment to the Company as well as by sales of Equipment to other persons and
outside customers.
Due to the timing of the sale of Units of Membership, it was necessary to enter
into a short term loan agreement to finance the purchase of some Equipment to
generate sufficient revenues to pay the quarterly distributions to Members.
The Company borrowed $597,979 on July 31, 1995 from M & I Northern Bank,
Brookfield, WI. The note was for a six month term with an interest rate of
$9.75%. The loan was repaid with funds generated from the Offering, with the
final payment made on November 16, 1995.
Rental revenues were $176,559 for the year as a result of having the equipment
in service for approximately one-half of the year. Revenues for 1996 are
expected to show marked improvement and to be sufficient to cover expenses and
distributions as the Equipment will be in service for the entire year.
Members were paid quarterly distributions on July 26, 1995 and again on October
6, 1995, each time in an amount equal to a 10% annualized rate of Member
capital contributions. On October 1, 1995 the Company distribution rate was
enhanced when the Managing Member increased the Priority Distribution from 10%
to 12%. This was done to increase potential investor interest and
participation in the program.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1995, 483.16 units of membership had been sold resulting in
the receipt of $1,207,900 in gross proceeds from the Offering.
Net cash provided by operating activities was $99,148, and $597,979 was
generated by a short term loan agreement with M & I Northern Bank to finance
the purchase of Equipment.
During 1996 the Company expects to meet its liquidity requirements through its
initial working capital and through net cash provided by its operating
activities.
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SUBSEQUENT EVENTS
After December 31, 1995 an additional $44,525 of Units of Membership were sold
bringing the total net offering proceeds to $1,252,425 and the total number of
Units sold to 500.97. The Offering terminated as of January 26, 1996.
On January 10, 1996 the Company paid a Priority Distribution to Members in an
amount equal to a twelve percent (12%) annualized rate. On April 10, 1996 the
Company also paid a Priority Distribution to Members in an amount equal to a
twelve percent (12%) annualized rate.
On April 15, 1996 the Company entered into a loan agreement with M & I Northern
Bank to borrow up to $300,000 to finance the purchase of six additional pieces
of Equipment. The rate for the four year term note is 275 basis points over
comparable U.S. Treasury instruments, fixed at the time of take-down. On April
15, 1996 the Company borrowed $150,000 on this line and the rate was fixed at
nine percent (9%). The remaining $150,000 will be used to complete the
installation of equipment in mid-June 1996. At present the Company does not
anticipate incurring any additional indebtedness.
ITEM 7. FINANCIAL STATEMENTS.
Financial Statements are filed as a part of this report at the end of Part
III hereof beginning at page F-1, Index to Consolidated Financial Statements
and are incorporated herein by this reference.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
OFFICERS
The officers of the Company are as follows:
Name Age Position(s)
---- --- -----------
Frank L. Gruning 54 President
Donna M. Gall 54 Treasurer and Secretary
FRANK L. GRUNING has been the President of the Company since its inception
in July, 1994. In addition (since 1982), he has been the President and a
director of GMI Rental & Lease, Inc., the Managing Member of the Company. From
1970 to 1982, Mr. Gruning was Vice President and General Manager of Utility
Equipment Leasing Corporation, Waukesha, Wisconsin.
DONNA M. GALL has been the Treasurer and Secretary of the Company since
its inception in July, 1994. In addition (since 1982), she has been an
Administrative Assistant and Office Manager for GMI Rental & Lease, Inc., the
Managing Member of the Company. From 1974 to 1982, Ms. Gall was employed by
Utility Equipment Leasing Corporation, Waukesha, Wisconsin as accounting
supervisor.
10
<PAGE> 11
The officers of the Company are appointed by, and serve at the pleasure
of, the Managing Member, pursuant to authority granted to it under the
Operating Agreement. In it early stage of development, Mr. Gruning and Ms.
Gall devoted approximately 70% of their time, respectively, to the conduct of
the Company's business, but in the future the time devoted by them will vary
depending on the day to day requirements of operations. Other staff personnel
of the Managing Member perform most day to day routine work that is required to
be performed to conduct the operations of the Company.
MANAGING MEMBER
GMI Rental & Lease, Inc., a Wisconsin corporation which is the Managing
Member of the Company ("GMI"), was founded by Frank L. Gruning in 1982. In
each of its fiscal years since inception, the Managing Member has achieved
positive cash flow from its operations; however, due to non-cash charges for
depreciation and amortization, the Managing Member reported a net loss for its
fiscal years ended May 31, 1982, 1990, 1992 and 1994. The Managing Member's
annual sales have grown to over $1 million; and its owned and managed truck
fleet is over 100 vehicles. In 1990, the Managing Member began to expand its
business through the use of investment programs. In 1990, an equipment limited
partnership was organized by an independent firm as general partner and
successfully funded, which employed the Managing Member as a manager. A
similar second partnership was later completed. In 1992, GMI formed an
investment "Fund" which received an assignment of income and residual value
from equipment. In 1993, it formed a similar larger Fund.
The Company is managed by the Managing Member pursuant to the terms of the
Operating Agreement and a Management Agreement. The Members may meet annually
to receive a report on the operations of the Company, however, principally due
to the costs involved, the Managing Member currently anticipates no such
meetings will be held. The Managing Member will serve as Manager until the
termination of the Company or until the Managing Member resigns or is removed
by the Members (only as provided in the Management Agreement) at a meeting of
the Members.
ITEM 10. EXECUTIVE COMPENSATION.
In its capacity as a Member of the Company (and not as Manager), GMI will
share in the Company's profits, losses and cash distributions. See
"Allocations and Distributions to Members." In addition, GMI will receive
certain additional fees and compensation. None of the fees and compensation to
be paid to GMI has been or will be negotiated at arm's length. See "Certain
Relationships and Related Transactions - Conflicts of Interest."
The following fees and compensation are required to be paid by the Company
to GMI (or any successor Manager or Managing Member), in its capacity as
Manager:
- A management fee ("Management Fee") equal to 5% of gross rental receipts
to compensate it for providing ongoing management of Company lease and
rental activities; and
- An administration fee ("Administration Fee") equal to 3% of gross rental
receipts for performing administration services for the Company.
The following fees and compensation have been paid by the Company to GMI
in its individual capacity from proceeds of the Offering of Units of Membership
to the Members:
- An allowance equal to 3% of the gross proceeds from the sale of the
Units offered hereby to reimburse the Managing Member for its expenses
incurred in connection with the offering of the Units for sale
("Offering Expense Allowance"). Such allowance reimbursed GMI for the
costs and expenses associated with the offering which included, but were
not
11
<PAGE> 12
limited to, the following: legal and accounting fees, printing costs,
filing fees and advertising and promotional expenses. The Offering
Expense Allowance was paid on a non-accountable basis, although such
allowance was less than the actual costs and expenses incurred by GMI in
organizing the Company and offering Units for sale. GMI paid all
organizational and offering expenses (excluding underwriting commissions
and expense allowances) which in the aggregate exceed 3% of the gross
proceeds from the sale of Units without reimbursement from the Company.
- 2% of the gross proceeds from the sale of Units for services in
connection with the selection, negotiation and purchase of Equipment
("Initial Program Fee").
The following fees and compensation will be paid by the Company to GMI in
its individual capacity, and shall not be payable to any successor Manager or
Managing Member, unless otherwise agreed to and payable by the Company (which
shall be in addition to the amounts payable to GMI):
- 10% of the sales price of Equipment sold by GMI for the Company, as a
sales commission, when the Managing Member has provided sales services
and no other Person receives a commission on such sale ("GMI
Commission"). If the sale generates proceeds which are includable in
Cash Available for Distribution, it shall be paid currently. If the
sale generates Sales Proceeds, the right thereto shall be subordinate to
the Investor Members' receipt of their Residual Priority. See
"Allocations and Distributions to Members."
- 12% of the gross rental or lease payments received by the Company with
respect to any rental/lease of equipment when the Managing Member has
provided rental/lease services in connection with such Equipment and no
other dealer receives a commission on such rental/lease ("GMI Rental
Fee").
The Managing Member and other person performing sale or rental/lease services
in connection with particular items of Equipment for which they have jointly
performed services will be divided between the Managing Member and such other
person in the manner they determine by agreement between them.
Percentages of Net Profit and Loss allocated to the Managing Member, and
the Distributions due to it, do not change based upon the level of
capitalization of the Company. The Management Fee, the Administration Fee, and
the GMI Commission due upon sale of Equipment are fixed percentages which do
not vary with the size of the Company or the level of funding. Management fees
generally cover services in connection with identifying customers for the
rental or lease of the equipment, servicing of the rental agreements by
handling customer communications, and billing and collecting rent payments, as
well as management of the servicing of the Equipment. Administration fees
generally cover services relating to the internal operations of the Company,
such as internal accounting (but not fees paid to others such as outside
auditors), purchasing supplies, payment of sales and property taxes, and
services relating to the Members, such as handling communications with Members.
The Management Fees and Administrative Fees were set arbitrarily based upon an
estimate by the Managing Member of the approximate relative breakdown of time
and attention required to be performed by it over the life of the program to
perform each of these functions. The GMI Commission due upon disposition of
the Equipment is not due to the Managing Member when an unaffiliated dealer
performs such Equipment disposition services in which case a comparable fee
will be paid to such non-affiliate at market rates, but it may be due in part
to the Managing Member when it performs a portion of the service along with
another firm. These fees (Management, Administration, and GMI Commission) are
intended to cover the basic management and administration functions of the
business. Besides these fees, the Company's other principal expense before
calculation of Net Profit are the costs directly associated with ownership and
operation of equipment, such as insurance on its operation, gasoline, oil,
periodic maintenance, replacement of parts, and periodic costs of upgrading
(such as replacing a cab on a portable piece), and miscellaneous charges in
connection with operation of the business such as interest (if the Company
12
<PAGE> 13
obtains any loans), taxes (such as sales, use, and personal property taxes) and
outside accounting or audit fees, as well as noncash charges for amortization
and depreciation.
EXPENSE REIMBURSEMENT
All expenses of the Company will, to the extent practicable, be billed
directly to and paid by the Company. The Managing Member will be reimbursed
for the actual cost of goods and materials used by or for the Company and
obtained from unaffiliated persons. The Managing Member will be reimbursed for
the costs of expenses attributable to the operations of the Company reasonably
advanced by it. Any goods or services (other than for which it is already
compensated by the Management Fee and Administration Fee) provided by the
Managing Member shall be reimbursed at the lower of actual cost or the amount
for which such goods and services could have been obtained from unaffiliated
parties in the same geographic area, and no reimbursement shall be made for
services for which the Managing Member is entitled to separate fees. Excluded
from allowable reimbursement shall be salaries, fringe benefits, travel expenses
and other administrative items by its own personnel which is incurred or
allocated to the Managing Member in respect of the rental, leasing or sale of
Equipment or administration of the Company.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The Managing Member is a Wisconsin corporation which is wholly-owned by
Frank L. Gruning, its president.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
CERTAIN TRANSACTIONS
FLG Equipment, Inc. ("FLG") owns the building which houses the Managing
Member's corporate headquarters and service department and which will house the
Company's facilities when operations commence. FLG is an affiliated
corporation, owned by Frank L. Gruning, the President of the Company and the
President and a director of the Managing Member. FLG also owns certain
truck-mounted work equipment, which consists only of trash loaders, cranes and
other specialty equipment, none of which are directly competitive with the
Company's rental/lease business.
Drivers, Inc. ("Drivers") is an affiliated corporation which is
principally owned by Frank L. Gruning, the President of the Company and the
President and a director of the Managing Member, and by members of his family.
Drivers is in the business of delivering equipment of the type expected to be
owned by the Company and it may provide services for the Company in connection
with Equipment in this program at a market competitive price.
The Managing Member or an affiliate has in the past provided management
services for two limited partnerships for the leasing of equipment of the type
owned by the Company, including rental, lease, service and disposition of the
equipment, although an independent firm was the managing general partner of
those partnerships. The agreements by which the Managing Member provided those
services to the partnerships has terminated by its terms and the Managing
Member has not renewed them. The Managing Member does not currently plan to
provide management service for any additional partnerships. The Managing Member
has also sponsored two investment Funds (described below) which involve an
assignment of residual value and a portion of operating revenue from equipment
similar to that which will be owned by the Company. The Managing Member
provides lease and rental services for the Funds. In addition, from time to
time, the Managing Member may own, lease and rent equipment for its own account
which are expected to be similar to the Equipment owned by the Company. See
"Business."
13
<PAGE> 14
The Company may purchase some of its Equipment either from the Managing
Member or from any entity or Fund for which it provides management services.
Any such sale will be at a price and on terms and conditions which are no less
favorable to the Company than would be charged by an unrelated party for
comparable equipment in the place and at the time that the sale occurs.
During 1992 and 1993, the Company placed 31 items of equipment into
operation under two rental programs for investors, known as GMI Income Fund 92A
and 93A. There has not been sufficient time or experience with these programs
to report meaningful operating results; however, the Company has made all
payments which were anticipated in their formation (providing approximately 12%
annual cash returns). See "Results of Prior Programs."
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits: Exhibit 27 (Article 5 Financial Data Schedule)
Reports on Form 8-K: No reports on Form 8-K were filed during the period
covered by this Report.
INDEX TO FINANCIAL STATEMENTS
Independent Auditor's Report .......................................... F-1
Financial Statements
Balance Sheet ...................................................... F-2
Statement of Operations ............................................ F-3
Statement of Member's Equity ....................................... F-4
Statements of Cash Flows ........................................... F-5
Notes to Financial Statements ...................................... F-6
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
GMI 94, LLC.
Date: May 22, 1996 By: /s/ Frank L. Gruning
-------------------------------
Frank L. Gruning, President
In accordance with Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Frank L. Gruning President (Principal Executive May 22, 1996
- - --------------------- Officer) and Director
Frank L. Gruning
/s/ Donna M. Gall Treasurer (Principal Financial May 22, 1996
- - --------------------- Officer) and Director
Donna M. Gall
14
<PAGE> 15
[CONLEY MCDONALD LETTERHEAD]
INDEPENDENT AUDITOR'S REPORT
The Members
GMI 94, LLC.
Waukesha, Wisconsin
We have audited the accompanying balance sheet of GMI 94, LLC. as of December
31, 1995, and the related statements of operations, members' equity and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 audit provides 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 GMI 94, LLC as of December 31,
1995, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.
/s/ Conley McDonald LLP
Brookfield, Wisconsin
February 1, 1996
F-1
<PAGE> 16
GMI 94, LLC.
<TABLE>
<CAPTION>
BALANCE SHEET
DECEMBER 31, 1995
- - --------------------------------------------------------------------------------
ASSETS
- - --------------------------------------------------------------------------------
<S> <C>
CURRENT ASSETS:
Cash $ 29,167
----------
PROPERTY AND EQUIPMENT: (Note 1)
Equipment 1,115,844
Less accumulated depreciation (139,481)
----------
976,363
----------
OTHER ASSETS - Organizational costs net of accumulated
amortization of $4,568 (Note 1) 20,350
----------
$1,025,880
==========
LIABILITIES AND MEMBERS' EQUITY
- - --------------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable managing member (Note 1) $ 21,195
Accrued priority distributions to investor members (Note 1) 27,057
----------
TOTAL CURRENT LIABILITIES 48,252
----------
Commitments (Note 3)
MEMBERS' EQUITY:
Managing member (3,664)
Investor members 981,292
----------
977,628
----------
$1,025,880
==========
</TABLE>
See Notes to Financial Statements.
F-2
<PAGE> 17
GMI 94, LLC.
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
- - ------------------------------------------------------------------------------
Rental revenue $ 176,559
-----------
EXPENSES:
Depreciation 139,481
Repairs and maintenance 16,101
Dealer commissions 22,906
Delivery expense 16,665
Management fees 8,337
Insurance 7,438
Administrative fees 5,002
Advertising 4,756
Amortization expense 4,568
Legal and professional expense 1,998
Other commissions -
Bank charges 1,665
Filing fees, licenses, and permits 1,162
Office expense 573
-----------
230,652
-----------
LOSS FROM RENTAL OPERATIONS (54,093)
OTHER INCOME AND EXPENSE:
Interest income 1,607
Interest expense (13,610)
Loss on sale of equipment (2,224)
-----------
(14,227)
------------
Net loss $ (68,320)
===========
</TABLE>
See Notes to Financial Statements.
F-3
<PAGE> 18
GMI 94, LLC.
<TABLE>
<CAPTION>
STATEMENT OF MEMBER'S EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
- - ---------------------------------------------------------------------------------------------------
Managing Investor
member member
equity equity Total
----------------------------------------------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 $ 10,000 $ 50 $ 10,050
Refund of initial investor member equity - (50) (50)
Issuance of 483.16 units - 1,207,900 1,207,900
Syndication costs - (132,868) (132,868)
Priority distributions - (39,084) (39,084)
Net loss (13,664) (54,656) (68,320)
----------------------------------------------------
BALANCE, DECEMBER 31, 1995 $ (3,664) $ 981,292 $ 977,628
====================================================
</TABLE>
See Notes to Financial Statements.
F-4
<PAGE> 19
GMI 94, LLC.
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
- - -------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (68,320)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 139,481
Amortization 4,568
Loss on sale of equipment 2,224
Changes in assets and liabilities:
(Decrease) increase in:
Accounts payable managing member 21,195
-----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 99,148
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,134,268)
Payment of organizational costs (24,918)
Proceeds from sale of equipment 16,200
Payment of syndication costs (132,868)
-----------
NET CASH USED BY INVESTING ACTIVITIES (1,275,854)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Refund of initial investor member's equity (50)
Proceeds from short term debt 597,979
Payments on short term debt (597,979)
Proceeds from sale of member units 1,207,900
Payment of priority distributions to investor members (12,027)
-----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,195,823
-----------
NET INCREASE IN CASH 19,117
CASH:
Beginning 10,050
-----------
Ending $ 29,167
===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash payments for interest $ 13,610
===========
</TABLE>
See Notes to Financial Statements.
F-5
<PAGE> 20
GMI 94,LLC.
NOTES TO FINANCIAL STATEMENTS
- - ------------------------------------------------------------------------------
NOTE 1. Nature of Business and Significant Accounting Policies
Nature of business:
GMI 94, LLC (the "LLC") is a Wisconsin limited liability company organized in
July 1994 to engage in the business of renting, leasing, servicing and selling
truck(mounted work equipment. These rental agreements are generally
short(term, cancelable operating leases. The Company rents equipment
nationwide on credit terms established for each individual customer.
GMI Rental & Lease, Inc., a Wisconsin corporation, is the Managing Member. The
LLC was approved by the Securities Exchange Commission and the State of
Wisconsin on January 27, 1995 for sale of it units. The LLC had sold
sufficient shares to commence operation on April 26, 1995. These statements
reflect the short year of operations through December 31, 1995. The LLC is
scheduled to dissolve and cease operations on December 31, 2004.
A summary of the Company's significant accounting policies follows:
Equipment:
Equipment is stated at cost plus the acquisition fee paid to the managing
member for the negotiation and acquisition of the equipment, less accumulated
depreciation. Depreciation is calculated under 150% double declining balance
method over the estimated useful life of six years. Expenses which extend the
life or improve the efficiency of the asset are capitalized while repairs and
maintenance are charged to expense as incurred.
Organizational costs:
Organizational costs include legal and accounting fees, appraisal charges,
filing fees, printing and other costs of the Offering. These costs are being
amortized over 60 months.
Accounts payable managing member:
The Managing Member is responsible for the billing and collection of the LLC's
rental revenues and the payments of all operating expenses relating to the LLC.
This accounts payable represents the net amount due to the Managing Member
for operating expenses net of rental revenues, commissions due for the
acquisition of rental customers and the sale of equipment, management fees,
administrative fees, organizational costs and equipment acquisition fees after
all payments made and received during the year.
Accrued prioirty distributions to investor members:
The Prospectus requires that cash available for distribution will be
distributed quarterly. For the first three years the distributions will be
paid 100% to the investor members until they have received 10% per annum of
their capital investment. The 10% was amended to be 12% as of October 1, 1995.
After the first three years, distributions will be made 80% to the Investor
Members and 20% to the Managing Member. All of the accrued priority
distributions were paid in January 1996.
Personal assets and liabilities:
In accordance with the generally accepted method of presenting partnership
financial statements, the financial statements do not include the personal
assets and liabilities of the Members, including their obligation for income
taxes on their distributive shares of the net income of the LLC, nor any
provision for income tax expense.
F-6
<PAGE> 21
GMI 94,LLC.
NOTES TO FINANCIAL STATEMENTS
- - ------------------------------------------------------------------------------
NOTE 1. Nature of Business and Significnat Accounting Policies (continued)
Income taxes:
Provision for federal and state income taxes has not been reflected in the
accompanying financial statements since any income or loss of the LLC is
reportable separately by the members.
Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenditures during the reporting period.
Actual results could differ from those estimates.
NOTE 2. Related Party Transactions
Organizational costs of $24,918, syndication fees of $12,079 and equipment
acquisition fees of $24,158 have been paid or accrued to GMI Rental & Lease,
Inc. (GMI) the Managing Member of the LLC as required by the prospectus. The
company also purchased part of it's fleet of equipment from GMI for $345,000.
The LLC entered into a management agreement with GMI which can only be
terminated for good cause. The agreement requires payment of management fees
of 5% of rental revenue ($8,337 for 1995), and administrative fees of 3% of
rental revenue ($5,002 for 1995). Additionally, the LLC must pay GMI a
commission of 12% of rental revenue for lease agreements obtained by GMI, and a
10% commission for the sale of equipment when no other dealer is involved.
These commissions amounted to $6,287 and $1,800 respectively for 1995.
The net amount owed to GMI for all of the above plus operating expenses paid by
GMI in excess of rental revenues was $21,196 at December 31, 1995.
The LLC also purchased equipment from Wellington Equipment Income Limited
Partnerships, another partnership managed by GMI Rental & Lease, Inc. The
total of equipment purchased from Wellington was $743,557 in 1995.
NOTE 3. Commitments
The Securities and Exchange Commission requires that companies file quarterly
internal financial statements with management comments. These reports have not
yet been prepared and filed by the LLC.
NOTE 4. Subsequent Event
Subsequent to year end and prior to the issuance of our report, 17.81
additional units were sold resulting in $44,525 of additional investor member
contributions.
F-7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
FINANCIAL STATEMENTS OF THE REGISTRANT FOR ITS FISCAL YEAR ENDED DECEMBER 31,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL
STATEMENTS AND RELATED NOTES INCLUDED IN THE REPORT OF REGISTRANT ON FORM 10-KSB
FOR THE YEAR ENDED DECEMBER 31, 1995.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 29,167
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,167
<PP&E> 1,115,844
<DEPRECIATION> (139,481)
<TOTAL-ASSETS> 1,025,880
<CURRENT-LIABILITIES> 48,252
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 977,628<F1>
<TOTAL-LIABILITY-AND-EQUITY> 1,025,880
<SALES> 0
<TOTAL-REVENUES> 176,559
<CGS> 0
<TOTAL-COSTS> 230,652
<OTHER-EXPENSES> 14,227
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,610
<INCOME-PRETAX> (68,320)
<INCOME-TAX> 0
<INCOME-CONTINUING> (68,320)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (68,320)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>UNITS OF MEMBERSHIP IN REGISTRANT, A LIMITED LIABILITY COMPANY.
</FN>
</TABLE>
