SECURITIES AND EXCHANGE COMMISSION
Form 10-Q
| þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2004. |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM JANUARY 1, 2004 TO JUNE 30, 2004. |
Commission File number: 0-17680 (formerly 33-20255)
SOUTHEAST ACQUISITIONS II, L.P.
| Delaware | 23-2498841 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 3011 Armory Drive, Suite 310 Nashville, Tennessee 37204 |
||
| (Address of Principal Executive Offices) |
Issuer’s Telephone Number: 615-834-0872
Indicate by check mark whether the registrant (a) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (b) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12-b2). Yes o No þ
PART I — FINANCIAL INFORMATION
Item 1 — Financial Statements
The unaudited financial statements of Southeast Acquisitions II, L.P. (the “Partnership”) at June 30, 2004 are attached hereto as Exhibit A.
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Background
The Partnership was formed to acquire, own and realize appreciation in the following properties by holding them for investment and eventual sale (each a “Property”, collectively the “Properties”): 353 acres of undeveloped land in Henry County, Georgia; 91 acres of undeveloped land near Greenville, South Carolina; and l35 acres of undeveloped land in Rutherford County, Tennessee. However, there can be no assurance that the Partnership’s objectives will be realized. At June 30, 2004 there remains approximately 45 acres of Rutherford County, Tennessee property.
Results of Operations for Second Quarter of 2004 Compared with Second Quarter of 2003
The Partnership activities for the second quarter of 2004 and the second quarter of 2003 were focused on the sale of Partnership property. There were no sales in the second quarter of 2004 or the second quarter of 2003. Income during the second quarter of 2004 consisted of interest income of $202 as compared to $621 during the same quarter of 2003. The decrease in interest earned during the second quarter of 2004 compared to the second quarter of 2003 is the result of having a lower cash reserve. At the end of the second quarter of 2004 the Partnership had a pending sales contract which closed on July 28th, 2004. The sales price was for $995,000. As part of the contract the Partnership agreed to give the purchaser a $30,000 underground storm detention allowance and a $20,000 landscaping allowance. The storm detention allowance and landscaping allowance were both credited to the Purchaser at closing.
Expenses in the second quarter of 2004 included general and administrative expenses of $7,766 versus $5,662 in the second quarter of 2003. The increase was primarily due to an increase in professional fees. The Partnership paid $2,252 to consultants for infrastructure for water, sewer and an access drive for the Rutherford County Property. In addition, the Partnership paid $300 for the second quarter 2004 estimated Tennessee franchise and excise taxes, as compared to $400 that was paid for the same quarter of 2003. Real estate taxes in the second quarter of 2004 were $403 compared with $23 in the second quarter of 2003. The 2004 real estate taxes were higher because two parcels of land were reclassified as commercial property, which subsequently resulted in higher taxes. Insurance in the second quarter of 2004 was $53, as compared to $58 that was paid in the second quarter of 2003. During the second quarter of 2004 the Partnership paid $304 for Delaware franchise and excise tax, as compared to $100 that was paid during the same quarter of 2003.
Inflation did not have any material impact on operations during 2004 and it is not expected to materially impact future operations.
Liquidity and Capital Resources
The Partnership had cash reserves of $93,727 at June 30, 2004, which will be used to cover the following estimated annual costs: accounting fees of $16,500, legal fees of $5,000, insurance costs of $211, property taxes of $1,163, Tennessee franchise taxes of $1,200 and other administrative costs of $21,000. In the General Partner’s opinion, the Partnership’s reserves will be sufficient to cover costs during the liquidation mode. However, if additional expenses are incurred or if the Property cannot be sold within the next year, the reserves may be inadequate to cover the Partnership’s operating expenses. If the reserves are exhausted, the Partnership may have to dispose of some or all of the Property or incur indebtedness on unfavorable terms.
Item 3. Controls and Procedures
(a) Within the ninety day period prior to the date of this report, we carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-14(c) under the Securities Exchange Act of 1934). Based upon that evaluation, our management, including our principal executive officer and our principal financial officer, concluded that the design and operation of these disclosure controls and procedures were effective to timely alert them to any material information relating to the company that must be included in our periodic SEC filings.
(b) There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out this evaluation.
PART II — OTHER INFORMATION
Item 1 — Legal Proceedings
None
Item 2 — Changes in Securities
There were no changes in the Partnership’s securities during the second quarter of 2004.
Item 3 — Defaults Upon Senior Securities
There was no default in the payment of principal, interest, a sinking or purchase fund installment or any other default with respect to any indebtedness of the Partnership. The Partnership has issued no preferred stock; accordingly, there have been no arrearages or delinquencies with respect to any such preferred stock.
Item 4 — Submission of Matters to a Vote of Security Holders
No matters were submitted to the Partners for a vote during the second quarter of 2004.
Item 5 — Other Information
None
Item 6 — Exhibits and Reports on Form 8-K
None
Exhibits (numbered in accordance with Item 601 of Regulation S-K)
| Exhibit Numbers |
Description |
Page Number |
||
31.1
|
Certification Pursuant to section 302 of the Sarbanes-Oxley Act of 2002. | |||
32.1
|
Certification Pursuant to 18 U.S.C. section 1350, as adopted to section 906 of the Sarbanes-Oxley Act of 2002. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following person on behalf of the Registrant and in the capacities and on the date indicated.
| Signature |
Title |
Date |
||
/s/ Richard W. Sorenson
|
President, | August 16, 2004 | ||
| Southern Management | ||||
Richard W. Sorenson
|
Group, LLC |
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
BALANCE SHEETS
| JUNE 30, | DECEMBER 31, | |||||||
| 2004 | 2003 | |||||||
| (Unaudited) |
|
|||||||
ASSETS |
||||||||
Land held for sale |
$ | 369,365 | $ | 369,365 | ||||
Cash and cash equivalents |
93,727 | 128,583 | ||||||
Accounts receivable |
735 | 734 | ||||||
Prepaid expense |
7,835 | — | ||||||
Deferred costs |
3,099 | — | ||||||
| $ | 474,761 | $ | 498,682 | |||||
LIABILITIES AND PARTNERS’ EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 13,270 | $ | 19,820 | ||||
Partners’ equity: |
||||||||
General partner |
47,609 | 47,783 | ||||||
Limited partners (9,650 units
outstanding) |
413,882 | 431,079 | ||||||
| 461,491 | 478,862 | |||||||
| $ | 474,761 | $ | 498,682 | |||||
See notes to financial statements.
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF OPERATIONS AND PARTNERS’ EQUITY
(UNAUDITED)
| FOR THE THREE MONTHS | FOR THE SIX MONTHS | |||||||||||||||
| ENDED JUNE 30 |
ENDED JUNE 30 |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
REVENUES: |
||||||||||||||||
Interest income |
202 | 621 | 444 | 1,306 | ||||||||||||
EXPENSES: |
||||||||||||||||
General and administrative |
7,766 | 5,662 | 16,360 | 11,722 | ||||||||||||
Real estate taxes |
403 | 23 | 829 | 46 | ||||||||||||
Insurance |
53 | 58 | 125 | 115 | ||||||||||||
Delaware franchise & excise tax |
304 | 100 | 304 | 100 | ||||||||||||
Tennessee franchise & excise tax |
300 | 400 | 197 | 959 | ||||||||||||
| 8,826 | 6,243 | 17,815 | 12,942 | |||||||||||||
NET INCOME (LOSS) |
(8,624 | ) | (5,622 | ) | (17,371 | ) | (11,636 | ) | ||||||||
Partners’
equity, Beginning of period |
470,115 | 521,279 | 478,862 | 527,293 | ||||||||||||
Capital distribution |
— | — | — | — | ||||||||||||
Partners’ equity, End of period |
$ | 461,491 | $ | 515,657 | $ | 461,491 | $ | 515,657 | ||||||||
Weighted average number
of limited partnership
units outstanding |
9,650 | 9,650 | 9,650 | 9,650 | ||||||||||||
Income (loss) from operations
per limited partnership
interest |
$ | (0.89 | ) | $ | (0.58 | ) | $ | (1.80 | ) | $ | (1.21 | ) | ||||
See notes to financial statements.
EXHIBIT A
SOUTHEAST ACQUISITIONS II, LP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
| FOR THE SIX MONTHS | ||||||||
| ENDED JUNE 30 |
||||||||
| 2004 |
2003 |
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Interest income received |
$ | 444 | $ | 1,306 | ||||
Cash paid for operating expenses |
(35,300 | ) | (24,789 | ) | ||||
Net cash used in
operating activities |
(34,856 | ) | (23,483 | ) | ||||
Cash, beginning of period |
128,583 | 176,824 | ||||||
Cash, end of period |
$ | 93,727 | $ | 153,341 | ||||
RECONCILIATION OF NET LOSS TO NET CASH USED IN
OPERATING ACTIVITIES: |
||||||||
Net loss |
$ | (17,372 | ) | $ | (11,636 | ) | ||
Adjustments to reconcile net loss to net
cash used in operating activities: |
||||||||
Decrease in accounts payable and accrued expenses |
(6,550 | ) | (11,732 | ) | ||||
Increase in prepaid expenses |
(7,835 | ) | (115 | ) | ||||
Increase in deferred costs |
(3,099 | ) | — | |||||
Net cash used in operating
activities |
$ | (34,856 | ) | $ | (23,483 | ) | ||
See notes to financial statements.
SOUTHEAST ACQUISITIONS II, LP
(A Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2004
(Unaudited)
| A. | ACCOUNTING POLICIES | |||
| The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included in the Partnership’s Form 10-K for the year ended December 31, 2003. In the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to summarize fairly the Partnership’s financial position and results of operations. The results of operations for the six-months ended June 30, 2004 may not be indicative of the results that may be expected for the year ending December 31, 2004. | ||||
| B. | RELATED PARTY TRANSACTIONS | |||
| The General Partner and its affiliates have been actively involved in managing the Partnership’s operations. Compensation earned for these services in the first six months were as follows: | ||||
| 2004 |
2003 |
|||||||
Reimbursements |
$ | 1,419 | $ | 811 | ||||