-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HFKM6anchybPF5+HFZGORRZ1U0AIyVykvLweWDv2utbkLDxYYjeep0c2dvuLBmZy eh1JtFogvzHlxHjb/KHrhA== 0000931763-99-000586.txt : 19990226 0000931763-99-000586.hdr.sgml : 19990226 ACCESSION NUMBER: 0000931763-99-000586 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONDEV LAND FUND III LTD CENTRAL INDEX KEY: 0000850421 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 592943405 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 033-28493-A FILM NUMBER: 99549543 BUSINESS ADDRESS: STREET 1: 2487 ALOMA AVENUE CITY: WINTER PARK STATE: FL ZIP: 32792 BUSINESS PHONE: 4076791748 MAIL ADDRESS: STREET 1: P O BOX 1748 CITY: WINTER PARK STATE: FL ZIP: 32790-1748 10-K 1 FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 1998 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Act of 1934 For the Fiscal Year Ended Commission File Number December 31, 1998 #33-28493-A Condev Land Fund III, Ltd. -------------------------- (Exact Name of Registrant as specified in its charter) Florida #59-2943405 ------------------------------- ------------------------------- (State or other jurisdiction (IRS Employer ID #) of incorporation or organization) 2479 Aloma Avenue Winter Park, Florida 32792 - ------------------------------- --------------- (Address of principal executive (Zip Code) offices) Registrant's telephone number, including area code (407) 679-1748 -------------- Securities registered pursuant to Section 12(b) of the Act: None ---- Securities registered pursuant to Section 12(g) of the Act: None ---- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No_______ ------- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] State the aggregate market value of the voting stock held by non-affiliates of the Registrant: Not Applicable -------------- CONDEV LAND FUND III, LTD. Table of Contents
Page No. -------- Part I Item 1. Business 1 Item 2. Properties 2 Item 3. Legal Proceedings 2 Item 4. Submission of Matters to a Vote of Security Holders 2 Part II Item 5. Market for Registrant's Common Equity and Related Security Holder Matters 3 Item 6. Selected Financial Data 3 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 3 Item 8. Financial Statements and Supplementary Data 6 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 24 Part III Item 10. Directors and Executive Officers of the Registrant 24 Item 11. Executive Compensation 24 Item 12. Security Ownership of Certain Beneficial Owners and Management 24 Item 13. Certain Relationships and Related Transactions 25 Part IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 26 Signatures 27 Annual Report to Limited Partners 28
PART I Item 1. Business: -------- Condev Land Fund III, Ltd. (the "Partnership") is a Florida limited partnership formed on February 15, 1989 under the Florida Revised Uniform Partnership Act. The Partnership was formed for the purpose of acquiring and holding for investment pre-development land in Central Florida. The Partnership registered with the Securities and Exchange Commission and sold to investors a total of 9,784 units of limited partnership interest at an initial offering price of $250 per unit. The Partnership had collected $2,446,000 in Limited Partnership capital as of December 31, 1989. As provided under the terms of the Partnership Agreement the Partnership was to be in existence until December 31, 1996. In accordance with the Florida Limited Partnership Law and the Partnership Agreement, after December 31, 1996 the Partnership has been in liquidation with no change in the status of the limited partners or general partner. Since the Partnership is in liquidation, the primary objective of the Partnership is to sell properties at current market prices and distribute the net proceeds to partners. To this end, the General Partner is constantly monitoring area developments which are likely to effect the salability of each property. This includes area commercial and residential development, comparable sales transactions, road and highway improvements, requests for zoning or comprehensive land use changes, and changes in the availability of utilities. The General Partner or its representatives attend county commission meetings, planning and zoning hearings and community information meetings as part of this endeavor. Properties are priced after consideration is given to all of these factors. In addition to trying to sell the portfolio properties, the Partnership must manage the properties in the best interest of the partners. This includes traditional property maintenance such as insuring the property against liability, paying and appealing for adjustment, when appropriate, real estate taxes, mowing and trash removal. It also entails reacting promptly to area developments to insure that vested development rights are preserved or marketability of the property is enhanced. In some cases, it is necessary to retain consultants to assist with this effort. In other cases, expenditure of partnership reserves is required to keep the property properly positioned for sale. Properties are marketed through a combination of direct advertising, including "For Sale" signs located on each property, constant contact with the local, national and international brokerage communities, and direct contact with potential purchasers. Extensive marketing materials and relevant development information is maintained and constantly updated for use by potential buyers. The Partnership has no employees. Messrs. Robert N. Gardner and Joseph J. Gardner are the general partners of Condev Associates, a Florida general partnership, which is the General Partner of the Partnership (the "General Partner"). Item 2. Properties: ---------- Since its inception, the Partnership has purchased two properties for investment in the Central Florida area. Part of one parcel was sold during 1994. There were no sales of land during 1995 and 1997, and another part of one property was sold during 1996. As of December 31, 1998, the partnership owned or had an investment in two properties. The following is a summary of all properties acquired by the Partnership: Parcel 1: -------- On May 31, 1991, Condev Osceola Joint Venture purchased two parcels of land aggregating 8.6 acres within the Kyng's Heath commercial subdivision on S.R. 535 near its intersection with Highway 192 in Osceola County, Florida. The property is zoned tourist-commercial in Osceola County, Florida. At the time of closing, the Partnership acquired a 90% interest in Condev Osceola Joint Venture. The purchase price of this property was $1,740,000 or $4.64 per square foot. During the third quarter of 1994, an international investment group purchased four parcels of land totaling approximately 9.4 acres adjacent to this parcel. As part of this transaction, 1 Condev Osceola Joint Venture sold a small corner of its adjoining property to this group to accommodate a realignment of a road serving both properties. The total purchase price for the 28,607 square feet sold was $175,000, or $6.12 per square foot. The Partnership's share of this sale was 90%, or $144,000. In November, 1994 a total of $44,028 was distributed to limited partners representing return of capital and profits on the sale of this parcel. The remaining proceeds were used to pay closing costs and to augment the Partnership's cash position. On August 28, 1996, Condev Osceola Joint Venture concluded the sale of a 5.08 acre part of this parcel. The purchase price was $1,250,000, or approximately $5.65 per square foot. The buyer made a cash payment at closing of $350,000 and issued its promissory note in the amount of $900,000 to the Joint Venture. The Joint Venture retained a mortgage on the land until the note was repaid. After closing expenses and real estate commissions paid to outside brokers, the net cash received by the Joint Venture was $266,000. Of this amount, $225,032 was distributed to limited partners of Condev Land Fund III, Ltd., and $25,000 was distributed to limited partners in Condev Osceola, Ltd., the other 10% investor in the Joint Venture. The balance of $15,968 was retained in the Joint Venture to provide for future anticipated costs and expenses. Upon repayment of the $900,000 note on April 2, 1997, the Partnership received its share in the amount of $810,000 and distributed $799,940 to limited partners. The Joint Venture continues to own 2.94 acres of land in the Kyng's Heath subdivision. Parcel 2: -------- On August 6, 1993, the Partnership purchased a 10-acre parcel of commercially zoned land fronting on the east side of U.S. Highway 27 in Lake County, Florida for $400,000. The site is approximately 1.5 miles north of the U.S. 192 and U.S. 27 intersection. The southwest corridor of Orlando is an area that continues to experience rapid gain in employment, population and household growth and commercial development. Based on developments in the immediate area of this property, it is clear that the Partnership will be in a better competitive position to sell the property if sewer and water service is available to the property limits. Accordingly, the General Partner has engaged an engineering firm to design the improvements and file for permits for the extendion of such service to the property. The Partnership has obtained the necessary development permits and construction has started. If all goes as scheduled, construction should be completed by April 1999. The costs of these improvements will be reimbursed to the Partnership by buyers of the property. Item 3. Legal Proceedings: ----------------- As of December 31, 1998, the Partnership was not subject to any pending legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders: --------------------------------------------------- No matter was submitted to Unit Holders for a vote during the fourth quarter of the year ended December 31, 1998. 2 PART II Item 5. Markets for Registrant's Common Equity and Related Security Holder Matters: -------------------------------------------------------------------------- (a) There has not been a public secondary market and it is not anticipated that a public secondary market for the Units will develop. In September, LP Investors, LLC, an investment company based in Atlanta, Georgia, exercised their rights as a limited partner and requested a list of all beneficial owners and the number of units owned by each. As required by the Partnership Agreement, this information was provided. LP Investors paid a fee of $100 to the Partnership in reimbursement of the Partnership's costs associated with providing the list. LP Investors subsequently wrote to each beneficial owner offering to purchase their units for $43.75 per unit, less the $25 transfer fee charged by the Partnership. Neither the Partnership, the General Partner, nor any of its officers, employees or affiliates is in any way connected with this offer (b) As of December 31, 1998, there were approximately 276 holders of record of the Units of the Partnership. (c) There are no regularly scheduled distributions to limited partners. Distributions are made subsequent to sale of Partnership properties after provision has been made for adequate reserves to cover anticipated future expenses of the Partnership. Limited partners received cash distributions totaling $-0-, $799,940, and $225,032 during the years ended December 31, 1998, 1997 and 1996. Item 6. Selected Financial Data: ----------------------- Year Ended December 31, -----------------------
1998 1997 1996 1995 1994 ----------- ----------- ---------- ----------- ---------- Revenue $ 5,535 $ 7,853 $ 56,995 $ 7,457 $ 76,218 Net Income (Loss) (25,864) (41,881) 38,476 ( 30,888) 63,976 Total Assets 1,008,650 1,035,001 1,876,335 2,064,061 2,093,779 Partners' Capital 1,008,650 1,034,514 1,876,335 2,062,891 2,093,779
The above selected financial data should be read in conjunction with the financial statements and related notes appearing elsewhere in this annual report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of -------------------------------------------------------------------------- Operations: ---------- Year 2000 --------- The Partnership is heavily dependent upon a computer system to accurately maintain limited partner records, including name and address information, number of units owned, and distribution historical records. The Partnership is utilizing a system which was specially designed for the Partnership in 1990, and it is possible that the system will be affected by the date change which will occur at the end of 1999. The Partnership has engaged a computer consultant to evaluate the potential problems, and make system changes if necessary so the operation of the Partnership will not be affected by the date change. Testing on the system is expected to be completed by March, 1999. It is anticipated that the cost of evaluating the current system and bringing it up to date to be year 2000 compliant will be less than $1,000. The Partnership's computer records are backed up on a weekly basis, so all of the stored information is available from a secondary source. Even if the system were to be completely shut down by the date change at the end of 1999, the data necessary to continue operation of the Partnership is available and could readily be adapted to a new system which is year 2000 compliant, so no significant interruption in the operations of the Partnership is anticipated. January 1, 1998 through December 31, 1998: ----------------------------------------- During 1998, the Partnership continued to manage the portfolio properties and direct its efforts towards positioning the remaining two properties for sale. The areas in which the properties are located continue to mature, and sales prospects are encouraging at this time. 3 For the year ended December 31, 1998, the Partnership had total revenue of $5,535, consisting primarily of interest earned on cash and cash equivalents during the year. This compares to total revenues of $7,853 for the year ended December 31, 1997. There were no sales of property by either the Partnership or the Joint Venuure during 1998 or 1997. Operating expenses totaled $19,623 for 1998 compared to $18,227 for 1997. Most of these expenses relate to the management and administration of the Partnership. Equity in the loss of Condev Osceola Joint Venture decreased from $31,507 in 1997 to $11,776 in 1998. The 1997 loss included a one-time consulting fee of $47,175 relating to the partial sale of property, partially offset by interest income relating to the same sale in the amount of $25,000. Total Assets at December 31, 1998 were $1,008,650 compared to $1,035,001 at December 31, 1997. As previously mentioned, there were no sales of property and no distributions to limited partners during 1998. Assets can be expected to decline as properties are sold and the proceeds are distributed to limited partners. Liquidity remained at a satisfactory level. Cash and cash equivalents at December 31, 1998 were $67,118 as compared to $90,357 a year earlier. Financial projections - 1999 ---------------------------- The business of the Partnership is to own, manage and sell, as market conditions permit, pre-development land in the central Florida area. Due to the nature of the commercial real estate market in the central Florida area, it is difficult to project when individual properties will sell or when the entire portfolio will be liquidated. Because of these uncertainties, the General Partner has established reserves to fund real estate taxes, costs associated with maintaining the properties and other required services such as partnership administration, accounting and legal. The reserve will be replenished from future land sales as needed. For 1999, the General Partner estimates that approximately $15,500 will be required to pay real estate taxes on the properties held by the Partnership and Condev Osceola Joint Venture. In addition, the General Partner estimates that property associated holding costs will total approximately $8,000 during 1999 and the costs of administration, legal and accounting will require approximately $9,000. These three categories of expense, totaling $32,500, will be paid from Partnership reserves which were $67,118 as of December 31, 1998. Assuming no sales of property during 1999, the Partnership has adequate reserves to cover approximately two (2) years of operating expenses. The General Partner estimates that one property will be sold in 1999, generating net proceeds to the partnership of approximately $690,000. If this estimation proves to be accurate, there will a distribution of most of the net proceeds to partners during 1999. The General Partner regards the present level of reserves adequate to fund future expenses. The General Partner expects to place the one remaining Partnership property under contract in 1999 which is estimated to close during 2000. It is estimated that it will require another two (2) years to complete the sale of properties held by the Partnership or by the joint venture in which the Partnership is a participant. January 1, 1997 through December 31, 1997: ----------------------------------------- During 1997, the Partnership continued to manage the portfolio properties and direct its efforts towards selling the remaining two properties. For the year ended December 31, 1997, the Partnership had total revenue of $7,853, consisting primarily of interest earned on cash and cash equivalents during the year. This compares to total revenues of $56,995 for the year ended December 31, 1996. The 1996 figure includes $50,650 in net income from the Partnership's joint venture, Condev Osceola Joint Venture, the owner of parcel #2. See Item 2, Properties. There were no sales of property by either the Partnership or the Joint Venture during 1997. Operating expenses totaled $18,227 for 1997 compared to $18,519 for 1996. Most of these expenses relate to the management and administration of the Partnership. However, the equity in the loss of Condev Osceola Joint Venture was $31,507 for 1997. The reason for this loss was a consulting expense in the amount of $47,170 relating to the collection and subsequent payoff of a mortgage note held by the Joint Venture. This consulting expense was partially offset by interest income on the same mortgage note in the amount of $25,000. As mentioned in the preceding paragraph, Condev Osceola Joint Venture had a profit in 1996. Total Assets at December 31, 1997 were $1,035,001 compared to $1,876,335 at December 31, 1996. This represents a decrease of $841,334, and was primarily caused by the distribution of $799,940 to limited partners following repayment of the mortgage note held by Condev Osceola Joint Venture, plus reported operating losses. Assets will continue to decline as properties are sold 4 and the proceeds are distributed to limited partners. Liquidity remained at a satisfactory level. Cash and cash equivalents at December 31, 1997 stood at $90,357 as compared to $101,678 a year earlier. January 1, 1996 through December 31, 1996: ----------------------------------------- The Partnership continued to manage the portfolio properties and to attempt to present the properties to potential purchasers. For the year ended December 31, 1996, the Partnership reported total revenue of $56,995. This included $50,650 equity in income of joint venture. This compares to total revenue of $7,457 for the year ended December 31, 1995. The 1996 equity income resulted from the sale of 5.08 acres by the Joint Venture. Refer to Item 2, Properties, Parcel 1 for details. The change in interest income reflects varying cash levels during the two years. Operating expenses totaled $18,519 for the year ended December 31, 1996, compared to $16,904 for the year ended December 31, 1995. The 1996 figure does not include $1,124 in net expenses incurred in Condev Osceola Joint Venture because the joint venture reported a profit for the year. The profit relates to the sale of the part of Parcel 1 mentioned above and interest on the related purchase money mortgage. Total expenses for the Joint Venture, consisting primarily of real estate taxes were essentially unchanged from the previous year. The net profit reported for the year ended December 31, 1996 was $38,476, compared to a loss of $30,888 for the year ended December 31, 1995. At year-end 1996, total assets of the Partnership were $1,876,335, compared with $2,064,061 at year-end 1995. This decline reflects the property sale and related distribution to limited partners during 1996. The Partnership had no liabilities at December 31, 1996. Partners capital decreased from $2,062,891 at December 31, 1995 to $1,876,335 at December 31, 1996, again the result of Partnership profits offset by distributions to limited partners during the year. 5 Item 8. Financial Statements and Supplementary Data: ------------------------------------------- I. Condev Land Fund III, Ltd. ----------------------------
Page INDEPENDENT AUDITORS' REPORT 7 FINANCIAL STATEMENTS Balance sheets 8 Statements of operations 9 Statements of partners' capital 10 Statements of cash flows 11 Notes to financial statements 12 - 16 II. Condev Osceola Joint Venture --------------------------------- INDEPENDENT AUDITORS' REPORT 17 FINANCIAL STATEMENTS Balance sheets 18 Statements of operations 19 Statements of partners' capital 20 Statements of cash flows 21 Notes to financial statements 22 - 25
6 INDEPENDENT AUDITORS' REPORT ---------------------------- The Partners Condev Land Fund III, Ltd. Winter Park, Florida We have audited the accompanying balance sheets of Condev Land Fund III, Ltd. (a Florida Limited Partnership) as of December 31, 1998 and 1997, and the related statements of operations, partners' capital and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the General Partner. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the 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 audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Condev Land Fund III, Ltd. as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. OSBURN, HENNING AND COMPANY Orlando, Florida January 15, 1999 7 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) BALANCE SHEETS December 31, 1998 and 1997
1998 1997 ---------- ---------- ASSETS Cash and cash equivalents $ 67,118 $ 90,357 Accounts receivable - 2,494 Land, at cost (Note 2) 405,467 405,467 Investment in joint venture (Note 3) 533,596 534,372 Organization costs, less accumulated amortization of $2,190 in 1998 and $2,190 in 1997 2,311 2,311 ---------- ---------- $1,008,650 $1,035,001 ========== ========== LIABILITIES AND PARTNERS' CAPITAL Liabilities Accounts payable $ - $ 487 ---------- ---------- Partners' capital (deficit): General partner (996) (738) Limited partners 1,009,646 1,035,252 ---------- ---------- Total partners' capital 1,008,650 1,034,514 ---------- ---------- $1,008,650 $1,035,001 ========== ==========
The Notes to Financial Statements are an integral part of these statements. 8 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) STATEMENTS OF OPERATIONS Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996 --------- --------- -------- Revenue: Interest income $ 3,660 $ 6,053 $ 4,570 Other income 1,875 1,800 1,775 Equity in income of joint venture (Note 3) - - 50,650 -------- -------- ------- 5,535 7,853 56,995 -------- -------- ------- Expenses: Professional fees 8,700 7,000 7,000 Other expenses 8,058 8,452 9,264 Taxes and permits 2,865 2,775 2,255 Equity in loss of joint venture (Note 3) 11,776 31,507 - -------- -------- ------- 31,399 49,734 18,519 -------- -------- ------- Net income (loss) $(25,864) $(41,881) $38,476 ======== ======== =======
The Notes to Financial Statements are an integral part of these statements. 9 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) STATEMENTS OF PARTNERS' CAPITAL Years Ended December 31, 1998, 1997 and 1996
General Limited Partner Partners Total -------- ----------- ----------- Balances (deficit), December 31, 1995 $(186) $2,063,077 $2,062,891 Distributions to partners (Note 4) - (225,032) (225,032) Net income (loss) (133) 38,609 38,476 ----- ---------- ---------- Balances (deficit), December 31, 1996 (319) 1,876,654 1,876,335 Distributions to partners (Note 4) - (799,940) (799,940) Net income (loss) (419) (41,462) (41,881) ----- ---------- ---------- Balances (deficit), December 31, 1997 (738) 1,035,252 1,034,514 Net income (loss) (258) (25,606) (25,864) ----- ---------- ---------- Balances (deficit), December 31, 1998 $(996) $1,009,646 $1,008,650 ===== ========== ==========
The Notes to Financial Statements are an integral part of these statements. 10 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) STATEMENTS OF CASH FLOWS Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (25,864) $ (41,881) $ 38,476 Adjustments to reconcile net income (loss) to net cash (used in) operating activities: Equity in (income) loss of joint venture 11,776 31,507 (50,650) Amortization - - 2,075 (Increase) decrease in accounts receivable 2,494 (2,494) - Increase (decrease) in accounts payable (487) 487 (1,170) -------- --------- --------- Net cash (used in) operating activities (12,081) (12,381) (11,269) -------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in joint venture (11,000) (9,000) (9,099) Distributions from joint venture - 810,000 225,000 Capitalized land related costs (158) - - -------- --------- --------- Net cash provided by (used in) investing activities (11,158) 801,000 215,901 -------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to partners - (799,940) (225,032) -------- --------- --------- Net increase (decrease) in cash and cash equivalents (23,239) (11,321) (20,400) CASH AND CASH EQUIVALENTS, BEGINNING 90,357 101,678 122,078 -------- --------- --------- CASH AND CASH EQUIVALENTS, ENDING $ 67,118 $ 90,357 $ 101,678 -------- ========= =========
The Notes to Financial Statements are an integral part of these statements. 11 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) NOTES TO FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies Organization ------------ Condev Land Fund III, Ltd. (the Partnership) was formed on February 15, 1989 pursuant to the provisions of the Florida Revised Uniform Limited Partnership Act for the purpose of acquiring and holding unimproved land in Central Florida for investment. The Partnership was formed with an initial capital contribution of $1,000 from the general partner, Condev Associates, and the issuance of 9,784 units of limited partnership interest at $250 per unit. The terms of the partnership agreement provided that the Partnership will continue in existence until December 31, 1996. However, the Partnership's operations will continue until all investments of the Partnership are sold and proceeds distributed to the partners. Use of Estimates ---------------- In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and revenues and expenses for the period. Actual results could differ significantly from those estimates. Organization Costs ------------------ The Partnership has capitalized all organization costs. Upon sale of land, each parcel is allocated a portion of these costs based on the ratio of total acquisition cost to the net proceeds of the offering available to purchase properties for investment. The accompanying statements of operations include $-0-, $-0-, $2,075 of organization costs amortization for the years ended 1998, 1997 and 1996, respectively, from sales of land by the joint venture in which the Partnership has an investment. For tax purposes, the Partnership is amortizing organization costs over five years. Land ---- Land, held for investment, is stated at the lower of cost or fair value. Land is assessed for impairment when the Partnership believes that events or changes in circumstances indicate that its carrying amount may not be recoverable. Costs that clearly relate to land development projects are capitalized. Interest costs, real estate taxes and insurance are capitalized while development is in progress. When development is complete, these costs are expensed. CONTINUED ON NEXT PAGE 12 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) NOTES TO FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies - (Continued) Investments in Joint Ventures ----------------------------- Investments in joint ventures are accounted for using the equity method. Income Taxes ------------ The Partnership functions as a conduit for income tax purposes. As such, the Partnership files an information tax return on which it allocates its revenue and expenses among the partners as required by the partnership agreement. The partners are required to report such items on their respective income tax returns. Cash and Cash Equivalents ------------------------- The Partnership considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. At December 31, 1998, cash and cash equivalents include $64,509 invested in Nations Government Money Market Daily Shares Note 2. Land At December 31, 1998 and 1997, land consisted of a ten-acre parcel, zoned commercial, in Lake County, Florida. Note 3. Investment in Joint Venture The Partnership owns a 90% interest (which was acquired in 1991) in Condev Osceola Joint Venture (a Florida joint venture) (the Joint Venture) whose purpose is to acquire and hold one parcel of land, comprised of approximately 2.9 acres located in Osceola County, Florida, for investment purposes. The remaining 10% interest is owned by Condev Osceola, Ltd., an affiliate of the Partnership's general partner. The Partnership's investment in the Joint Venture as of December 31, and its equity in income (loss) of the Joint Venture for the years then ended are as follows:
EQUITY IN INCOME YEAR INVESTMENT (LOSS) ---- ---------- --------- 1998 $ 533,596 $(11,776) 1997 $ 534,372 $(31,507) 1996 $1,366,879 $ 50,650
CONTINUED ON NEXT PAGE 13 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) NOTES TO FINANCIAL STATEMENTS Note 3. Investment in Joint Venture - (Continued) During the year ended December 31, 1996, the Joint Venture sold a parcel of land at a gain of $57,526. Accordingly, the equity in income of joint venture includes a gain on sale of land of $51,774 and a loss from operations of the Joint Venture of $(1,124). A summary of the assets, liabilities, and venturers' capital of Condev Osceola Joint Venture as of December 31, 1998 and 1997 is as follows:
1998 1997 --------- --------- Assets ------ Cash $ 4,032 $ 4,032 Note receivable 1,222 - Investment in land 589,715 589,715 -------- -------- $592,884 $593,747 ======== ======== Liabilities and Venturers' Capital ---------------------------------- Venturers' capital $592,884 $593,747 ======== ========
The Joint Venture had revenue of $-0-, $25,000, and $75,926 during the years ended December 31, 1998, 1997 and 1996, respectively, and net income (loss) of $13,085, $(35,008), and $56,278, respectively. Note 4. Allocations and Distributions to Partners Operations (excluding land sales) --------------------------------- Pursuant to the partnership agreement, cash flow and profits and losses from operations are allocated and distributed 99% to the limited partners and 1% to the general partner. No distributions attributable to cash flow were made during the years ended December 31, 1998, 1997 or 1996. CONTINUED ON NEXT PAGE 14 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) NOTES TO FINANCIAL STATEMENTS Note 4. Allocations and Distributions to Partners - (Continued) Land sales ---------- With respect to disposition of parcels of land, the allocations and distributions shall be made as follows: 1. To the limited partners, an amount equal to the Partnership's cost of the parcel disposed of; 2. To the limited partners, an amount equal to real estate taxes, and organization and syndication expenses allocable to the parcel disposed of; 3. To the limited partners, an amount equal to 10% per year non-compounded return on such distributions minus previous distributions of cash flows; 4. To the general partner and limited partners, 20% and 80%, respectively, of the net cash proceeds after the above distributions. For purposes of making the above described computations, the Partnership books will be deemed to close as of the month-end closest to the date of sale. The limited partners received distributions of $-0-, $799,940, and $225,032 during the years ended December 31, 1998, 1997 and 1996, respectively, attributable to net cash proceeds from sales of land held through Condev Osceola Joint Venture. Note 5. Related Party Transactions The partnership agreement permits the general partner or its affiliates to receive an acquisition fee or a real estate commission from sellers in an amount not to exceed 5% of the gross purchase price of land purchased by the Partnership, so long as the total acquisition fee, including that paid to unaffiliated parties, does not exceed 10% of the gross purchase price. No acquisition fees were paid during the years ended December 31, 1998, 1997 or 1996, as no properties were purchased. CONTINUED ON NEXT PAGE 15 CONDEV LAND FUND III, LTD. (A Florida Limited Partnership) NOTES TO FINANCIAL STATEMENTS Note 5. Related Party Transactions - (Continued) When properties are sold, an affiliate of the general partner may be paid real estate commissions in amounts customarily charged by others rendering similar services, with such commissions, plus commissions paid to nonaffiliates, not to exceed 10% of the gross sales price. No real estate commissions were paid during the years ended December 31, 1998, 1997 and 1996, with respect to sales, as no sales occurred. The general partner is obligated to loan up to $100,000 to the Partnership during its term to meet working capital requirements. No such loans were made to the Partnership during the years ended December 31, 1998, 1997 and 1996. The general partner earned certain fees for administration and management services provided, pursuant to the partnership agreement. Such fees amounted to $3,744 for the years ended December 31, 1998 and 1997 and $3,720 for the year ended December 31, 1996. 16 INDEPENDENT AUDITORS' REPORT ---------------------------- The Venturers Condev Osceola Joint Venture Winter Park, Florida We have audited the accompanying balance sheets of Condev Osceola Joint Venture (a Florida Joint Venture) as of December 31, 1998 and 1997, and the related statements of operations, venturers' capital, and cash flows for each of the three years in the period ended December 31, 1998. These financial statements are the responsibility of the Joint Venture's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the 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 audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Condev Osceola Joint Venture as of December 31, 1998 and 1997, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1998, in conformity with generally accepted accounting principles. OSBURN, HENNING & COMPANY Orlando, Florida January 15, 1999 17 CONDEV OSCEOLA JOINT VENTURE (A Florida Joint Venture) BALANCE SHEETS December 31, 1998 and 1997
1998 1997 --------- --------- ASSETS Cash $ 1,947 $ 4,032 Due from related party (Note 2) 1,222 - Land, at cost 589,715 589,715 --------- --------- $ 592,884 $ 593,747 ========= ========= LIABILITIES AND VENTURERS' CAPITAL Liabilities $ - $ - --------- --------- Venturers' capital 592,884 593,747 --------- --------- $ 592,884 $ 593,747 ========= =========
The Notes to Financial Statements are an integral part of these statements. 18 CONDEV OSCEOLA JOINT VENTURE (A Florida Joint Venture) STATEMENTS OF OPERATIONS Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996 ---------- --------- -------- Revenue: Gain on land sale $ - $ - $ 57,526 Interest income - 25,000 18,400 -------- -------- -------- - 25,000 75,926 -------- -------- -------- Expenses: Real estate taxes 10,260 10,266 18,343 Consulting expense - 47,170 - Other expenses 2,825 2,572 1,305 -------- -------- -------- 13,085 60,008 19,648 -------- -------- -------- Net income (loss) $(13,085) $(35,008) $ 56,278 ======== ======== ========
The Notes to Financial Statements are an integral part of these statements. 19 CONDEV OSCEOLA JOINT VENTURE (A Florida Joint Venture) STATEMENTS OF VENTURERS' CAPITAL Years Ended December 31, 1998, 1997 and 1996
Condev Land Condev Fund III, Ltd. Osceola, Ltd. Total --------------- -------------- ----------- Balances at December 31, 1995 $1,532,130 $170,237 $1,702,367 Contributions 9,099 1,011 10,110 Distributions (225,000) (25,000) (250,000) Net income (loss) 50,650 5,628 56,278 ---------- -------- ---------- Balances at December 31, 1996 1,366,879 151,876 1,518,755 Contributions 9,000 1,000 10,000 Distributions (810,000) (90,000) (900,000) Net income (loss) (31,507) (3,501) (35,008) ---------- -------- ---------- Balances at December 31, 1997 534,372 59,375 593,747 Contributions 11,000 1,222 12,222 Net income (loss) (11,776) (1,309) (13,085) ---------- -------- ---------- Balances at December 31, 1998 $ 533,596 $ 59,288 $ 592,884 ========== ======== ==========
The Notes to Financial Statements are an integral part of these statements. 20 CONDEV OSCEOLA JOINT VENTURE (A Florida Joint Venture) STATEMENTS OF CASH FLOWS Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $(13,805) $ (35,008) $ 56,278 Adjustments to reconcile net income (loss) to net cash (used in) operating activities: Gain on land sale - - (57,526) Decrease in due to related party - (988) - -------- --------- --------- Net cash (used in) operating activities (13,805) (35,996) (1,248) -------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from land sale, net of closing costs - - 269,826 Note receivable proceeds - 900,000 - -------- --------- --------- Net cash provided by investing activities - 900,000 269,826 -------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Capital contributions 11,000 10,000 10,110 Distributions to partners - (900,000) (250,000) -------- --------- --------- Net cash provided by (used in) financing activities 11,000 (890,000) (239,890) -------- --------- --------- Net increase (decrease) in cash (2,085) (25,996) 28,688 CASH, BEGINNING 4,032 30,028 1,340 -------- --------- --------- CASH, ENDING $ 1,947 $ 4,032 $ 30,028 ======== ========= =========
NONCASH INVESTING ACTIVITY: During 1996, the Joint Venture sold a parcel of land, receiving $269,826 in cash and a $900,000 note receivable. The Notes to Financial Statements are an integral part of these statements. 21 CONDEV OSCEOLA JOINT VENTURE (A Florida Joint Venture) NOTES TO FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies Organization/Business Interest ------------------------------ On May 31, 1991, Condev Land Fund III, Ltd. (the Fund) and Condev Osceola, Ltd. (Osceola) (the Venturers), both of which are Florida Limited Partnerships in which Condev Associates is the general partner, entered into a joint venture agreement to form Condev Osceola Joint Venture (the Joint Venture). The Joint Venture owns one parcel of land totaling 2.9 acres in Osceola County, Florida, which is being held for investment purposes. Unless terminated earlier, as provided under the terms of the joint venture agreement, the Joint Venture will continue in existence until December 31, 1999. Use of Estimates ---------------- In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and revenues and expenses for the period. Actual results could differ significantly from those estimates. Funding ------- The Fund and Osceola are required to contribute 90% and 10%, respectively, to the capital of the Joint Venture from time to time as required for the Joint Venture's operations. It is the intent of the Venturers that all cash requirements of the Joint Venture shall come from the Venturers and, therefore, the Joint Venture shall not be required to borrow funds. Land ---- Land, held for investment, is stated at the lower of cost or fair value. Land is assessed for impairment when the Joint Venture believes that events or changes in circumstances indicate that its carrying amount may not be recoverable. Costs that clearly relate to land development projects are capitalized. Interest costs, real estate taxes and insurance are capitalized while development is in progress. When development is complete, these costs are expensed. CONTINUED ON NEXT PAGE 22 CONDEV OSCEOLA JOINT VENTURE (A Florida Joint Venture) NOTES TO FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies - (Continued) Allocation/Distributions ------------------------ Profits and losses shall be allocated 90% to the Fund and 10% to Osceola. Cash flow generated from the Joint Venture shall be distributed only at the discretion of Condev Associates. All such distributions shall be paid to the Venturers in the same percentages as profits and losses. Income Taxes ------------ The Joint Venture functions as a conduit for income tax purposes. As such, the Joint Venture files an information tax return on which it allocates its revenue and expenses among the Venturers as required by the joint venture agreement. The Venturers are required to report such items on their respective income tax returns. Note 2. Related Party Transactions The joint venture agreement permits the Venturers' general partner, or an affiliate of the general partner, to receive an acquisition fee or a real estate commission from sellers in an amount not to exceed 5% of the gross purchase price of land purchased by the Joint Venture, so long as the total acquisition fee, including that paid to unaffiliated parties, does not exceed 10% of the gross purchase price. No acquisition fees were paid during the years ended December 31, 1998, 1997 and 1996, as no properties were purchased. When properties are sold, an affiliate of the Venturers' general partner may be paid real estate commissions in the amounts customarily charged by others rendering similar services. Such commissions, plus commissions paid to nonaffiliates, are not to exceed 10% of the gross sales price. No real estate commissions were paid during the years ended December 31, 1998 and 1997, as no sales occurred. In connection with the sale of land during 1996, a total of 6.4% real estate commissions were paid to nonaffiliates. The amount due to related party at December 31, 1998 represents contributed capital due from Osceola. Note 3. Note Receivable During 1996, the Joint Venture sold land to Orlando Resort Development Group, Inc. for $1,250,000. The Joint Venture received cash and a mortgage note receivable of $900,000. The note receivable was paid in full during the year ended December 31, 1997. 23 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial ------------------------------------------------------------------------- Disclosure: ---------- There were no disagreements on accounting and financial disclosures required to be disclosed by Item 304 of Regulation S-K. PART III Item 10. Directors and Executive Officers of the Registrant -------------------------------------------------- (a) The Registrant does not have a Board of Directors. Condev Associates, A Florida general partnership consisting of Messrs. Robert N. Gardner and Joseph J. Gardner is the General Partner of the Partnership. (b), (c), (d) and (e) Robert N. Gardner and Joseph J. Gardner are brothers. The background and experience of the partners of the General Partner are as follows: Robert N. Gardner, age 64 has been president, a director and shareholder of ----------------- Condev Corporation and it's predecessors since 1961. A Florida licensed real estate broker and Class A Contractor, he serves on the boards of directors of Nations Bank of Central Florida, N.A., and Schroeder-Manatee, Inc. Joseph J. Gardner, age 61 has been an officer, director and shareholder of ----------------- Condev Corporation and its predecessors since 1961. Prior to joining Condev Corporation, he was employed in the land department of Continental Oil Company. Mr. Gardner is a director of Protection One, Inc. and is a licensed real estate broker. Condev Corporation, which has its offices located at the same address of the General Partner and Partnership, has been operating in the Florida real estate market since 1961. It has two active affiliates. PCD, Inc. is a development company specializing in horizontal land development. Condev Realty, Inc. is a Florida licensed real estate broker which concentrates on site acquisition, land assemblage and land investment. Item 11. (a), (b), (c) and (d) The Registrant has not paid and does not plan to pay any executive compensation to the General Partners or their affiliates (other than described in Item 13 below). Item 12. Security Ownership of Certain Beneficial Owners and Management: -------------------------------------------------------------- (a) The following is a list of persons who are known to the Registrant to be the beneficial owners of more than 5% of the total units outstanding as of December 31, 1998: NONE (b) The following is a list of units beneficially owned by all partners of the General Partner as of December 31, 1998: NONE (c) There are no arrangements known to the registrant, including any pledge by any person of security of the registrant or any of its parents or affiliates, the operation of which may at a subsequent date result in a change in control of the registrant. 24 Item 13. (a) and (b) Certain Relationships and Related Transactions ---------------------------------------------- The Partnership Agreement permits the General Partner or its affiliates to receive an acquisition fee or a real estate commission from sellers in an amount not to exceed 5% of the gross purchase price of land purchased by the Partnership so long as the total acquisition fee, including that paid to unaffiliated parties, does not exceed 10% of the gross purchase price. No acquisition fees were paid during 1998, 1997, or 1996 as no property was purchased. When properties are sold, under certain circumstances an affiliate of the General Partner may be paid real estate commissions in amounts customarily charged by others rendering similar services with such commissions, plus commissions paid to nonaffiliates not to exceed 10% of the gross sales price. No real estate commissions were paid to the General Partner or any affiliates during 1998, 1997 or 1996 with respect to sales. The General Partner is obligated to loan up to $100,000 to the Partnership during its term to meet working capital requirements. No such loans were made to the Partnership during the period ended December 31, 1998, 1997, or 1996. Pursuant to the Partnership agreement, the General Partner earned certain fees for administration and management services provided. Such fees amounted to $3,744 for the years ended December 31, 1998 and 1997 and $3,720 for the year ended December 31, 1996. (c) No management person is indebted to the Registrant. (d) Not applicable. 25 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K: ---------------------------------------------------------------- (a)(1) The following financial statements and supplementary data are included in Part II Item 8: I. Condev Land Fund III, Ltd. ----------------------------
Page Independent Auditor's Report 7 Financial Statements Balance Sheets - December 31, 1998 and 1997 8 Statements of Operations - Years ended December 31, 1998, 1997 and 1996 9 Statements of Partners' Capital - Years ended December 31, 1998, 1997 and 1996 10 Statements of Cash Flows - Years ended December 31, 1998, 1997 and 1996 11 Notes to Financial Statements 12-16 II. Condev Osceola Joint Venture -------------------------------- Independent Auditor's Report 17 Financial Statements Balance Sheets - December 31, 1998 and 1997 18 Statements of Operations - Years ended December 31, 1998, 1997 and 1996 19 Statements of Partners' Capital - Years ended December 31, 1998, 1997 and 1996 20 Statements of Cash Flows - Years ended December 31, 1998, 1997 and 1996 21 Notes to Financial Statements 22-23 (3) Exhibits included herein: 13 - Annual Report to Limited Partners 28
(b) Reports on Form 8-K No reports on Form 8-K have been filed by the Registrant during the last quarter of the period covered by this report. 26 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf of the undersigned, thereunto duly authorized. CONDEV ASSOCIATES, General Partner Date: February 24, 1999 By: /s/ Robert N. Gardner -------------------- ---------------------------- Robert N. Gardner, Partner Date: February 24, 1999 By: /s/ Joseph J. Gardner -------------------- ---------------------------- Joseph J. Gardner, Partner Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and the capacities and on the date indicated. CONDEV ASSOCIATES, General Partner /s/ Robert N. Gardner February 24, 1999 - --------------------------------- ------------------------ Robert N. Gardner, Partner Date /s/ Joseph J. Gardner February 24, 1999 - --------------------------------- ------------------------ Joseph J. Gardner, Partner Date 27 February 8, 1999 Condev Land Fund III, Ltd. 1998 Annual Report Enclosed is your Schedule K-1 (Form 1065) relating to the Fund's operations for the year ended December 31, 1998. If your investment is held by a custodian, the K-1 is for information purposes only. A copy of this form has been sent to your custodian. The financial statement, on the reverse side hereof, shows a net loss for the year ended December 31, 1998 of $25,864. This represents interest income from short term investments less the normal costs of operating the partnership and managing the portfolio properties. There were no sales of property during 1998. As of December 31, 1998, the net asset value (book value) per unit of limited partner interest was $103.19. The following is a brief description of the status of each of the partnership's two remaining properties: Kyng's Heath. This property is strategically located near the proposed World - ------------ Expo Center, which seems to be headed for development, although at a delayed pace from the initial announcements. In addition, Edwin Watts is developing the World Golf Center on the property which adjoins the Partnership's parcel. Both of these developments have generated numerous inquiries from prospective buyers, but we do not have a contract on the property at this time. U.S. Highway 27. This 10-acre commercially zoned parcel is located just north - --------------- of the recently opened Winn-Dixie Marketplace on US Highway 27 near U.S. Highway 192 in Lake County, Florida. Sewer and water utilities are being extended to the property with completion anticipated by April 15, 1999. This should enhance investor interest in the property. We continue to work towards a satisfactory contract with one potential purchaser who has submitted a letter of intent to purchase the property. We hope that these two parcels will be sold during 1999. If that is the case, there will be a final distribution to limited partners and the Partnership will be terminated. We appreciate the patience of the limited partners while we work to sell the remaining properties consistent with our objective of obtaining reasonable returns for the investors. Sincerely yours, CONDEV ASSOCIATES 28 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE
5 12-MOS 12-MOS DEC-31-1998 DEC-31-1997 JAN-01-1998 JAN-01-1997 DEC-31-1998 DEC-31-1997 67,118 90,357 0 0 0 2,494 0 0 0 0 0 0 405,467 405,467 0 0 1,008,650 1,035,001 0 487 0 0 0 0 0 0 0 0 1,008,650 1,034,514 1,008,650 1,035,001 0 0 5,535 7,853 0 0 0 0 31,399 49,734 0 0 0 0 (25,864) (41,881) 0 0 (25,864) (41,881) 0 0 0 0 0 0 (25,864) (41,881) 0 0 0 0
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