10-K 1 junrpt.txt ALL STATE PROPERTIES LP 10-K 6-30-02 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended Commission File No. June 30, 2002 0-12895 ALL-STATE PROPERTIES L.P. (Exact name of Registrant as specified in its charter) Delaware 59-2399204 (State or other jurisdiction or (I.R.S. Employer incorporation or organization) Identification No.) Mailing address: P.O. Box 5524 Fort Lauderdale, FL 33310-5524 5500 N.W. 69th Avenue, Lauderhill, Florida 33319 (Address of principal executive offices) (Zip Code) Registrant?s Telephone number, including area code (954) 572-2113 Securities registered pursuant to Section 12(b) of the Act: Title of Class Name of Each Exchange on Which Registered None Not Applicable Securities registered pursuant to Section 12(g) of the Act: Title of Class Limited partnership units Indicate by check mark whether the Registrant (1) 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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO The aggregate market value of the limited partnership units held by non-affiliates of Registrant is not ascertainable. (See Page II-1) PART I ITEM 1. BUSINESS (a) General Development of Business All-State Properties L.P. (a limited partnership) (the Partnership) was organized under the Revised Uniform Limited Partnership Act of Delaware on April 27, 1984 to conduct the business formerly carried on by a predecessor corporation, All-State Properties, Inc. (the Corporation). The terms Company and Registrant refer to the Partnership or the Corporation or both of them as the context requires. Pursuant to a Plan of Liquidation adopted by shareholders of the Corporation on September 30, 1984, the Corporation transferred substantially all of its assets to the Partnership, and the Corporation distributed such limited partnership interests to its shareholders. Registrant?s principal business has been land development and the construction and sale of residential housing in Broward County, Florida. However, it has substantially completed its land development activities and the sale of residential housing. Its present activities are: (i) Through a 36.12% owned Florida limited liability corporation, Tunicom LLC (?Tunicom?)(formerly known as Unicom Partnership Ltd.),Registrant was engaged in the operation of an adult rental apartment project on 78.2 acres of land. (See Item 1(b)(1)(i)(a) and Note 2 to financial statements.) (ii) Through a real estate joint venture, City Planned Communities (CPC), owned 50% by the Company and 50% by Newnel Partnership Registrant was engaged in the development and sale of commercial and residential land. (See Note 2 to financial statements.) (iii) Through a 99% owned Florida limited partnership, Wimbledon Development Ltd. (Wimbledon), Registrant sold a condominium development. See Item 1(b)(1)(i)(b). (b)(1) NARRATIVE DESCRIPTION OF BUSINESS (i) (a) Adult Rental Apartment Project In April, 1987, CPC sold approximately 78 acres of land to Tunicom for the purpose of constructing a 324- unit adult apartment rental project on the land. Registrant holds a 36.12% limited partnership interest in Tunicom. (See Note 2 to financial statements) I-2 The monthly rentals ranged from $2,800 per month for the one-bedroom units to $3,100 per month for the two- bedroom units, and included food service, maid service and electricity. The facility was 98-percent leased and occupied. The property was self-managed. A management fee of 4% of total income was paid to the partners assuming the managerial responsibility. The management arrangement was approved by HUD. (See Item 11.) On July 28, 1995, Tunicom LLC. (Tunicom), successfully concluded a reassignment and reinstatement of its mortgage note in the amount of $27,638,955.87 from the Department of Housing and Urban Development (HUD) to the Government National Mortgage Association (GNMA). The reinstated, reinsured mortgage had a maturity date of January 1, 2029 and accrued interest at the rate of eight (8%) percent per annum, which included a 0.25% servicing fee. In addition, Tunicom used to pay one-half of one percent per annum mortgage insurance premium. Tunicom had accrued unpaid interest and other liabilities related to the mortgage in a total amount of $3,896,730. The total adjusted accrued interest and closing costs paid at the closing equaled $1,502,183. This resulted in a saving of $2,394,547, which saving was amortized over the remaining life of the mortgage. The saving resulted from the difference between the accrual at the original note rate and the borrowing rate charged by HUD. On June 25, 1997, Tunicom signed a Letter of Intent with CareMatrix Corporation (AMEX) which Letter became effective July 18, 1997. Prior to that date Tunicom, through its partners representing a majority interest in the partnership (the Company abstaining) voted to approve the transaction. The documents memorializing the transaction were executed on August 13, 1997 with an effective date of July 1, 1997, but dependent upon the completion of due diligence and the payment of $4,500,000 to Tunicom. On September 24, 1997, CareMatrix made the required payment and the initial phase of the transaction was completed. Tunicom used the proceeds for transaction costs ($325,000), partnership obligations ($1,400,000), and distributed $2,650,000 to certain partners to partially repay funds they invested in Tunicom. The $4,500,000 payment made by CareMatrix to Tunicom represented an option payment, in consideration for which CareMatrix was granted the option to purchase the facility in three years on June 30, 2000. The purchase price was 8.75 times the net operating income before depreciation for the year ended June 30, 2000, plus the then outstanding mortgage balance and other adjustments, less the $4,500,000 option payment. I-3 In the interim, CareMatrix leased the facility, retaining the sums of $518,700-the first year; $775,000-the second year; and $875,000-the third year out of cash flow each year and after payment of amounts due in connection with the facility's mortgage insured by the U.S. Department of Housing and Urban Development ("HUD"). The HUD-approved management company, SRR Management Corp., managed the facility at a rate approved by HUD of 4% of collections. Prior to the closing, the Optionee assigned its option to acquire Forest Trace. On August 16, 2000, the transaction was consummated and closed with F.C. Forest Trace L.L.C., the present owner. The purchase price was $47,159,295, including the outstanding principal balance plus accrued interest on the existing mortgage in the amount of $26,720,254,which was satisfied at closing. After giving effect to various adjustments, prorations and credits, including the deposit of $4,500,000 previously accounted for, the seller received net proceeds of $16,379,732. After payment of a brokerage commission in the amount of $232,190 and bonuses in the amount of $200,000 to key employees of Forest Trace, none of whom were employees of the Company, $15,000,000 was distributed to partners. The remaining balance of $947,542 was being held subject to true-up on November 15, 2000 of net operating income from the facility for the four months ending October 31, 2000. The Company?s share of the $15,000,000 distribution was $4,665,012. (See Item 7). Of the amount distributed to the Company, $769,038 was used to pay liabilities and $2,638,324 was used to pay the Company?s outstanding debentures together with accrued interest thereon. The balance in the amount of $1,257,650 was retained by the Company, and together with its share of the $947,542 being held, determined the amount of a distribution to the unit owners of $.40 a unit on May 8, 2001. In a related transaction, the partners of Tunicom formed a new limited partnership called Newall Assisted Living Ltd. ("Newall"), which entered into a joint venture as a 50% partner with a company related to CareMatrix. The new entity, Newall-Chancellor 69th Avenue Associates, was formed to build a 120-unit assisted living facility on 4.2 acres of land to be purchased from Tunicom at a price to be agreed upon. Chancellor agreed to provide all the necessary financing to erect and open the assisted living facility. The CareMatrix entity has defaulted under its obligations to Newall Chancellor 69th Avenue Associates (the ?joint venture?). Newall Assisted Living Ltd., one of the two partners in the joint venture and the entity in which the Company is a partner, is pursuing its rights under the applicable Agreement while at the same time attempting to find a different partner with which to develop and operate the assisted living facility. I-4 (i) (b) Condominium Units In November, 1986, Registrant formed Wimbledon Development Ltd., a Florida limited partnership, for the purpose of constructing up to 48 units on six acres of land. Two buildings on two acres of land were completed and all sixteen (16) units sold. The remaining four acres were sold. In June 1999, control of the condominium association was turned over to the unit owners by Wimbledon Development Ltd., the developer. All required funds for reserves and deferred maintenance were delivered to the new condominium board. Wimbledon Development Ltd., its general partner and the Registrant, its limited partner, were issued releases with respect to all matters pertaining to the condominium. (See Item 3, Legal Proceedings) (ii) Registrant has no plans for any new products. (iii) Registrant purchased building materials which are available from many sources. (iv) Registrant holds no patents, trademarks, etc. (v) No part of Registrant?s business is subject to significant seasonal variation. (vi) Registrant?s only present source of working capital is the cash distributions made to it by Tunicom. (vii) The apartment rental market is not dependent upon a single or a few customers, but instead relies on a wide customer base. The Tunicom units were rented to upper income retirees. (viii) No portion of Registrant?s business involved government contracts. (ix) The adult rental apartment market in South Florida is highly competitive. Martinez & Associates, consultants retained by Tunicom and specializing in housing for the elderly, identified nine facilities in the Fort Lauderdale area as being competitive with the Tunicom complex. However, the Tunicom project offered larger units and made available more two-bedroom units than its competitors. (x) Registrant incurs no research and development expenses. I-5 (xi)In the development and sale of their properties, Registrant, Tunicom and Wimbledon are required to comply with applicable zoning and environmental regulations. It is believed that the compliance with environmental regulations will have no material effect upon capital expenditures, earnings or competitive position of Registrant in future periods (xii) Registrant (including Wimbledon) employs two part-time people. Tunicom employed 87 people full time and 43 people part time, engaged in the operation of the retirement facility. (d) Tunicom had no foreign operations or export sales. ITEM 2. PROPERTIES The Company had outstanding 4% subordinated convertible debentures that became due September 30, 1989. The payment of the interest and principal on the Debentures was subordinate to payment of certain senior debt which remained outstanding. Consequently, the Registrant had been prohibited from paying the Debentures since maturity. On August 23, 2000, the Debentures and accrued interest thereon were paid. (See Notes 5 and 12) ITEM 3. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders of Registrant during the fourth quarter of the fiscal year covered by this report. ITEM 4. LEGAL PROCEEDINGS None. I-6 PART II ITEM 5. MARKET FOR THE REGISTRANT?S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS (a) In June, 1988, Registrant advised its unit holders that in order to avoid classification as a publicly traded limited partnership under the Internal Revenue Code, it would facilitate the transfer of units privately commencing July 1, 1988. There were no trades made through the Registrant?s matching service for the years ended June 30, 1993 through June 30, 2001. The Company has no knowledge of other transactions. Therefore, no bid and asked prices could be ascertained. (b) As of June 30 2002, there were 1,348 holders of record of 3,108,518 limited partnership interests, excluding individual participants in security nominee or street names, but including shares escheated to various states. Pursuant to the Plan of Liquidation and Dissolution of All-State Properties, Inc. and the Limited Partnership Agreement of All-State Properties L.P. upon the dissolution of the Corporation, stockholders automatically received one unit of partnership interest for each share of stock held and became record holders of limited partnership units. However, until the stockholders submitted their stock certificates for exchange and had taken other necessary steps, they would not become limited partners. As of June 30, 2002, 103 of the 1,451 record holders of limited partnership interests holding 9,547 units had not submitted their stock certificates for exchange. (c)(d) The Company never paid cash dividends on its common stock while it was a corporation. The Partnership declared cash distributions cumulatively totaling $0.85 per unit through August 31, 1989 and distributed $.40 per unit on May 8, 2001. II-1 ALL-STATE PROPERTIES L.P (A LIMITED PARTNERSHIP) (NOTE 1A) SELECTED FINANCIAL DATA AS OF AND FOR THE YEARS ENDED JUNE 30

SELECTED CASH FLOW AND AND OPERATING STATEMENT DATA 2 0 0 2 2 0 0 1 2 0 0 0 1 9 9 9 1 9 9 8 REVENUE: Equity in net earnings (Loss) of real estate partnerships $ (13,438) $ 6,872,555 $ 683 $ (23,295) $ (34,380) Other income 7,624 59,564 6,082 7,364 49,763 Total $ (5,814) $ 6,932,119 $ 6,765 $ (15,931) $ 15,383 Income (Loss) before Extraordinary Items $ (84,877) $ 6,843,331 $ (174,197) $ (235,948) $ (151,977) Net Income (Loss) $ (84,877) $ 6,843,331 $ (174,197) $ (235,948) $ (151,977) Per Share/Unit - fully diluted: Net income (Loss) be- fore Extraordinary Items $ (0.03) $ 2.19 $ (.05) $ (.08) $ (.05) Net Income (Loss) $ (0.03) $ 2.19 $ (.05) $ (.08) $ (.05) SELECTED BALANCE SHEET DATA Total Assets $ 344,842 $ 658,146 $ 6,526 $ 21,635 $ 6,993 Notes, mortgages and con- struction loans $ - $ - $ 612,077 $ 573,225 $ 430,600 4% convertible debentures, due 1989 including accrued interest $ - $ - $ 2,628,518 $ 2,563,433 $ 2,498,349 Total $ 344,842 $ 658,146 $ 3,240,595 $ 3,136,658 $ 2,928,949 Cash Dividends Declared Per Share/Unit $ NONE $ 0.40 $ NONE $ NONE $ NONE

See notes to financial statements. II-2 CITY PLANNED COMMUNITIES, (A PARTNERSHIP) AND TUNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) SELECTED FINANCIAL DATA AS OF AND FOR THE YEARS ENDED JUNE 30

SELECTED INCOME STATEMENT DATA 2 0 0 2 2 0 0 1 2 0 0 0 1 9 9 9 1 9 9 8 Sales and rental of real estate $ - $ 21,705,571 $ - $ - $ - Lease Income - - 5,744,412 5,352,291 4,755,196 Interest and other income 1,356 2,226,737 13,832 18,818 114,134 Total Revenues $ 1,356 $ 23,932,308 $ 5,758,244 $ 5,371,109 $ 4,869,330 Net Income(Loss) Before Extra- ordinary Items $ (39,927) $ 22,636,326 $ 419,267 $ 307,173 $ 140,884 Net Income(Loss) $ (39,927) $ 22,636,326 $ 419,267 $ 307,173 $ 140,884 SELECTED BALANCE SHEET DATA Total Assets $ 866,154 $ 763,142 $ 30,119,840 $ 30,597,154 $ 30,948,582 Partners' Cash Distributions $ - $ 16,417,256 $ 848,936 $ 1,572,000 $ 5,001,156 NOTE: Information shown is from the combined financial statements of City Planned Communities and Tunicom LLC.

See notes to combined financial statement. II-3 ITEM 7. MANAGEMENT?S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ALL-STATE PROPERTIES L.P. YEAR ENDED JUNE 30, 2002 COMPARED TO YEAR ENDED JUNE 30, 2001 FINANCIAL CONDITION The net income for the year ended June 30, 2002 represents the results of operations due to the administration of the Company and its lone remaining asset, an interest in approximately five acres of real estate. The Company?s major asset was sold during the fiscal year ended June 30, 2001. In consideration of cash advances made and services rendered by certain individuals to Tunicom, Tunicom agreed to distribute 26.76%,(including 5% to the general partner of the Company) of any of its cash that becomes available for distribution to those individuals. The balance of any cash that became available for distribution up to $13,351,210 would be distributed to the Company and Newnel Partnership for the benefit of CPC. After $13,351,210 was disbursed, remaining cash would be distributed 26.76% to the aforementioned individuals and the remainder as follows: 1.34% to F. Trace, Inc., the former general partner of Tunicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances to Tunicom on behalf of the company 45.73% to the Company 100.00% Subsequently, of the holders of the 26.76%, individuals receiving 23.27% were admitted as limited partners of Tunicom, with the 3.49% remaining as non-partner distributees. Restating the above to reflect the admission of the aforesaid individuals as limited partners, the cash flow available for distribution after the payment of the $13,351,210 will be distributed as follows: 3.49% to the non-partner distributees As to the partners: 1.00% to F. Trace, Inc., the former general partner of Tunicom 23.27% to the newly admitted limited partners 36.12% to Newnel Partnership 36.12% to the Company (including 3.60% given to certain individuals who made cash advances to Tunicom on behalf of the Company) 100.00% II-4 The amount of the distribution to be received by the Company is the same under both of the above calculations. In addition, CPC assigned 9.00% of any of its cash that becomes available for distribution to certain individuals for funds advanced by them to CPC. Certain individuals advanced funds to the Company. In consideration of those advances, the Company assigned to those individuals 10.23% of distributions received by it from CPC, after deducting the amounts necessary to repay the funds advanced by them. II-5 ITEM 7. MANAGEMENT?S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ALL-STATE PROPERTIES L.P. YEAR ENDED JUNE 30, 2001 COMPARED TO YEAR ENDED JUNE 30, 2000 FINANCIAL CONDITION The net income for the year ended June 30, 2001 increased due to the sale of its partnership asset as explained in Note 12 to the financial statements. Expenses likewise decreased as a result of liabilities being paid. In consideration of cash advances made and services rendered by certain individuals to Tunicom, Tunicom agreed to distribute 26.76% (including 5% to the general partner of the Company) of any of its cash that becomes available for distribution to those individuals. The balance of any cash that became available for distribution up to $13,351,210 would be distributed to the Company and Newnel Partnership for the benefit of CPC. After $13,351,210 was disbursed, remaining cash would be distributed 26.76% to the aforementioned individuals and the remainder as follows: 1.34% to F. Trace, Inc., the former general partner of Tunicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances to Tunicom on behalf of the Company 45.73% to the Company 100.00% Subsequently, of the holders of the 26.76%, individuals receiving 23.27% were admitted as limited partners of Tunicom, with the 3.49% remaining as non-partner distributees. Restating the above to reflect the admission of the aforesaid individuals as limited partners, the cash flow available for distribution after the payment of the $13,351,210 will be distributed as follows: 3.49% to the non-partner distributees As to the partners: 1.00% to F. Trace, Inc., the former general partner of Tunicom 23.27% to the newly admitted limited partners 36.12% to Newnel Partnership 36.12% to the Company (including 3.60% given to certain individuals who made cash advances to Tunicom on behalf of the Company) 100.00% II-6 The amount of the distribution to be received by the Company is the same under both of the above calculations. In addition, CPC assigned 9.00% of any of its cash that becomes available for distribution to certain individuals for funds advanced by them to CPC. Certain individuals advanced funds to the Company. In consideration of those advances, the Company assigned to those individuals 10.23% of distributions received by it from CPC, after deducting the amounts necessary to repay the funds advanced by them. II-7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CITY PLANNED COMMUNITIES AND TUNICOM PARTNERSHIP LTD. YEAR ENDED JUNE 30, 2002 COMPARED TO YEAR ENDED JUNE 30, 2001 The net income for the year ended June 30, 2002 represents the results of operations due to the administration of the Company and its lone remaining asset, an interest in approximately five acres of real estate. The Company?s major asset was sold during the fiscal year ended June 30, 2001. In consideration of cash advances made and services rendered by certain individuals to Tunicom, Tunicom agreed to distribute 26.76% (including 5% to the general partner of the Company) of any of its cash that becomes available for distribution to those individuals. The balance of any cash that becomes available for distribution up to $13,351,210 would be distributed to the Company and Newnel Partnership for the benefit of CPC. After $13,351,210 was disbursed, remaining cash would be distributed 26.76% to the aforementioned individuals and the remainder as follows: 1.34% to F. Trace, Inc., the former general partner of Tunicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances to Tunicom on behalf of the Company 45.73% to the Company 100.00% Subsequently, of the holders of the 26.76%, individuals receiving 23.27% were admitted as limited partners of Tunicom, with the 3.49% remaining as non-partner distributees. Restating the above to reflect the admission of the aforesaid individuals as limited partners, the cash flow available for distribution after the payment of the $13,351,210 will be distributed as follows: 3.49% to the non-partner distributees As to the partners: 1.00% to F. Trace, Inc., the former general partner of Tunicom 23.27% to the newly admitted limited partners 36.12% to Newnel Partnership 36.12% to the Company (including 3.60% given to certain individuals who made cash advances to Tunicom on behalf of the Company) 100.00% II-8 The amount of the distribution to be received by the Company is the same under both of the above calculations. In addition, CPC assigned 9.00% of any of its cash that becomes available for distribution to certain individuals for funds advanced by them to CPC. Certain individuals advanced funds to the Company. In consideration of those advances, the Company assigned to those individuals 10.23% of distributions received by it from CPC, after deducting the amounts necessary to repay the funds advanced by them. II-9 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CITY PLANNED COMMUNITIES AND TUNICOM PARTNERSHIP LTD. YEAR ENDED JUNE 30, 2001 COMPARED TO YEAR ENDED JUNE 30, 2000 The net income for the year ended June 30, 2001 as compared to the year ended June 30, 2000 reflects the sale of assets as described in Note 8 to the financial statements. In consideration of cash advances made and services rendered by certain individuals to Tunicom, Tunicom agreed to distribute 26.76% (including 5% to the general partner of the Company) of any of its cash that becomes available for distribution to those individuals. The balance of any cash that became available for distribution up to $13,351,210 would be distributed to the Company and Newnel Partnership for the benefit of CPC. After $13,351,210 was disbursed, remaining cash would be distributed 26.76% to the aforementioned individuals and the remainder as follows: 1.34% to F. Trace, Inc., the former general partner of Tunicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances to Tunicom on behalf of the Company 45.73% to the Company 100.00% Subsequently, of the holders of the 26.76%, individuals receiving 23.27% were admitted as limited partners of Tunicom, with the 3.49% remaining as non-partner distributees. Restating the above to reflect the admission of the aforesaid individuals as limited partners, the cash flow available for distribution after the payment of the $13,351,210 will be distributed as follows: 3.49% to the non-partner distributees As to the partners: 1.00% to F. Trace, Inc., the former general partner of Tunicom 23.27% to the newly admitted limited partners 36.12% to Newnel Partnership 36.12% to the Company (including 3.60% given to certain individuals who made cash advances to Tunicom on behalf of the Company) 100.00% II-10 The amount of the distribution to be received by the Company is the same under both of the above calculations. In addition, CPC assigned 9.00% of any of its cash that becomes available for distribution to certain individuals for funds advanced by them to CPC. Certain individuals advanced funds to the Company. In consideration of those advances, the Company assigned to those individuals 10.23% of distributions received by it from CPC, after deducting the amounts necessary to repay the funds advanced by them. II-11 ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP)(NOTE 1A) YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED I N D E X PAGE Independent Auditor?s Report II-13 FINANCIAL STATEMENTS: Balance Sheets II-14 Statements of Operations II-15 Statements of Changes in Partners? Capital (Deficit) II-16 Statements of Cash Flows II-17/18 Notes to Financial Statements II-19/24 SUPPLEMENTAL INFORMATION: Exhibits indicating the Computation of Earnings per Unit IV-5 Selected Financial Data II-2 II-12 FREEMAN, BUCZYNER & GERO ONE SOUTHEAST THIRD AVENUE SUITE 2120 MIAMI, FLORIDA 33131 305-375-0766 INDEPENDENT AUDITOR?S REPORT To the Partners All-State Properties, L.P. Lauderhill, Florida We have audited the accompanying balance sheets of All-State Properties L.P. as of June 30, 2002, and 2001 and the related statements of operations, partners? capital and cash flows for each of the three years in the period ended June 30, 2002. These financial statements are the responsibility of the partnership?s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 provided 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 All-State Properties L.P. at June 30, 2002 and 2001 and the results of their operations and their cash flows for each of three years in the period ended June 30, 2002 in conformity with accounting principles generally accepted in the United States of America. We have also previously audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheets as of June 30, 2000, 1999, 1998, and the related statements of operations, partners? capital, and cash flows for the years ended June 30, 2000, 1999, and 1998 (none of which are presented herein); and we expressed unqualified opinions on those financial statements. In our opinion, the information set forth in the selected financial data for each of the five years in the period ended June, 30 2002, appearing on page II-2, and the exhibit indicating the computation of earnings per unit, appearing on page IV-5, are fairly stated, in all material respects, in relation to the financial statements from which it has been derived. September 12, 2002 II-13 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) BALANCE SHEETS JUNE 30, 2002 AND 2001 (AUDITED) A S S E T S JUNE 30 2 0 0 2 2 0 0 1 Cash $ 34,348 $ 402,042 Other assets $ 1,210 $ 1,210 Undistributed earnings in partnerships ? related parties (Notes 1, 2 and 10) 309,664 254,894 Total Assets $ 345,222 $ 658,146 LIABILITIES AND PARTNERS? CAPITAL LIABILITIES: Partnership distributions payable (Note 7) $ 11,934 $ 314,451 Deferred revenue ? related party 68,207 - Accounts payable and other liabilities (Note 6) 24,173 12,039 $ 104,314 $ 326,490 COMMITMENTS AND CONTINGENCIES (Notes 2,9 and 10) PARTNERS? CAPITAL: Partners? capital (3,772,419 units authorized, 3,118,065 units outstanding) (Notes 5 and 7) $ 430,145 $ 515,299 Notes receivable-officers/ partners including accrued interest of $49,379 in 2002 and $43,785 in 2001 (Note 3) (189,237) (183,643) $ 240,908 $ 331,656 TOTAL LIABILITIES AND PARTNERS? CAPITAL $ 345,222 $ 658,146 See accompanying summary of accounting policies and notes to financial statements. II-14 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF OPERATIONS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED 2 0 0 2 2 0 0 1 2 0 0 0 REVENUES (Note 8): Income (Loss) from real estate partnership - related parties (Note 2) $ (13,438) $ 6,872,555 $ 683 Interest income (Note 3) 7,624 59,564 6,082 $ (5,814) $ 6,932,119 $ 6,765 COST AND EXPENSES: General and administrative expenses(Note 1E) $ 79,340 $ 70,128 $ 46,270 Interest (Notes 1E and 4) - 18,660 134,692 Total $ 79,340 $ 88,788 $ 180,962 NET INCOME (LOSS) $ (85,154) $ 6,843,331 $ (174,197) NET INCOME OR (LOSS) PER PARTNERSHIP UNIT (Note 1F) $ (0.03) $ 2.19 $ (0.05) CASH DISTRIBUTIONS PER UNIT $ NONE $ 0.40 $ NONE See accompanying summary of accounting policies and notes to financial statements. II-15 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF CHANGES IN PARTNERS? CAPITAL (DEFICIT) YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED

NOTES TOTAL RECEIVABLE PARTNERS NUMBER GENERAL LIMITED OFFICERS/ CAPITAL OF UNITS PARTNER PARTNERS PARTNERS (DEFICIT) BALANCE - June 30, 1999 $ 3,118,065 $ 2 $ (4,383,983) $ (224,376) $ (4,608,359) Net (Loss) - - (174,197) - (174,197) Net increase in notes receivable- partners - - - (5,673) (5,673) BALANCE - June 30, 2000 $ 3,118,065 $ 2 $ (4,558,180) $ (230,049) $ (4,788,229) Net income - - 6,843,331 - 6,843,331 Net decrease in notes receivable- partners - - - $ 46,406 46,406 Partners distributions - - (1,769,852) - (1,769,852) BALANCE ? June 30, 2001 $ 3,118,065 $ 2 $ 515,299 $ (183,643) $ 331,656 Net (Loss) - - (85,154) - (85,154) Net increase in notes receivable- partners - - - (5,594) (5,594) Partners distribution - - - - - BALANCE - June 30, 2002 $ 3,118,065 $ 2 $ 430,145 $ (189,237) $ 240,908

See accompanying summary of accounting policies and notes to financial statements. II-16 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED YEARS ENDED JUNE 30, 2 0 0 2 2 0 0 1 2 0 0 0 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Note 1G) Cash Flows from Operating Activities: Interest and other income received $ 2,030 $ 105,970 $ 1,079 Cash paid for general and administrative expenses (55,273) (101,408) (33,425) Interest paid - $ (1,187,175) (42,710) Payment for shares escheated (314,451) - - Net Cash (Used) Provided by Operating Activities $ (367,694) $(1,182,613) $ (75,056) Cash Flows from Financing Activities: Proceeds(payment) from notes payable - net $ - $ (508,461) $ 24,359 Proceeds (payments) on note-related party - net - (145,537) 17,237 Payment of debentures - (1,643,198) - Net Cash Provided (Used) by Financing Activities $ - $ (2,297,196) $ 41,596 Cash Flows from Investing Activities: Distribution to partners $ - $ (1,707,897)$ - Distribution from partner- ship - 5,584,432 18,351 Net Cash Provided (Used) by Investing Activities $ - $ 3,876,535 $ 18,351 See accompanying summary of accounting policies and notes to financial statements. II-17 (1 of 2) ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED 2 0 0 2 2 0 0 1 2 0 0 0 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (367,694) $ 396,726 $ (15,109) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 402,042 5,316 20,425 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 34,348 $ 402,042 $ 5,316 See accompanying summary of accounting policies and notes to financial statements. II-17 (2 of 2) ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED YEARS ENDED JUNE 30, 2 0 0 2 2 0 0 1 2 0 0 0 Reconciliation of net income(Loss) to net cash (used) provided by operating activities: Net Income (Loss) $ (85,154) $ 6,843,331 $ (174,197) Adjustments to reconcile net (Loss) to net cash (used) provided by operating activities: (Profit) Loss from real estate partnership ? related parties $ 13,438 $(6,872,555) $ (683) Changes in assets and liabilities: Increase (Decrease) in accrued interest - notes payable - (103,616) 14,493 Increase (Decrease)in accrued interest-related party notes (net) - (79,579) 13,074 (Increase) decrease in notes receivable-partners (5,594) 46,406 (5,673) Increase (decrease) in 4% Convertible subordinated debenture accrued interest - (985,320) 65,084 (Decrease) increase in liabilities 12,134 (31,280) 12,846 (Decrease) in partnership distributions payable (302,518) - - Total Adjustments $ (282,540) $ (8,025,944) $ 99,141 NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES $ (367,694) $ (1,182,613) $ (75,056) NON-CASH INVESTING AND FINANCING ACTIVITIES: Deferred Revenue $ 68,207 - - Undistributed earnings in partnerships ? related parties $ (54,769) - - Income (loss) from real estate partnership ? related parties $ (13,438) - - See accompanying summary of accounting policies and notes to financial statements. II-18 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Organization and Operations All-State Properties L.P. (a limited partnership) (the Company) was organized under the Revised Uniform Limited Partnership Act of Delaware on April 27, 1984 to conduct the business formerly carried on by a predecessor corporation, All-State Properties, Inc. (the Corporation). Pursuant to a Plan of Liquidation adopted by shareholders of the Corporation on September 30, 1984, the Corporation transferred substantially all of its assets to All-State Properties L.P., and the Corporation distributed such limited partnership interests to its shareholders. The Company?s principal business has been land development and the construction and sale of residential housing in Broward County, Florida. However, it has substantially completed its land development activities and the sale of residential housing. Its present activities are: Through a 36.12% owned Florida limited liability corporation, Tunicom LLC (Tunicom)(formerly known as Unicom Partnership Ltd.) the Company was engaged in the operation of a 324-unit adult rental apartment project that was sold during the year ended June 30, 2001. Through a 50% owned real estate joint venture, City Planned Communities (CPC), The Company was engaged in the development and sale of commercial and residential land. City Planned Community was liquidated on July 1, 2001. It also was involved in the construction and sale of residential condominiums through a 99% owned limited partnership interest in Wimbledon Development Ltd. As of June 30, 2000, all the land and condominiums owned by Wimbledon have been sold (Note 1A). B. Revenue Recognition The Company recognizes income from its investment in real estate partnerships utilizing the equity method, and interest is recognized as earned with the passage of time. II-19 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Income (Loss) Per Partnership Unit Income (loss) per partnership unit is computed by dividing the net income (loss) by the weighted average number of units outstanding. No effect was given to the convertible debentures that were dilutive and were repaid in 2001. (See Note 5). D. Cash and Cash Equivalents For the purposes of the statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents. E. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F. Principles of Consolidation The accompanying financial statements include the accounts of the Company and of Wimbledon Development Ltd, a 99%-owned limited partnership. All intercompany transactions and balances have been eliminated in consolidation. G. Limited Partnership The accompanying financial statements include only those assets, liabilities and results of operations, which relate to the business of All?State Properties, L.P. The financial statements do not include any assets, liabilities, revenues, or expenses attributable to the partners? individual activities. II-20 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 2 - EQUITY (DEFICIENCY) IN PARTNERSHIPS AND NOTE RECEIVABLE The Company owned a 50% interest in City Planned Communities (a general partnership) (CPC) and a 36.12% limited partnership interest in a Tunicom LLC (formerly known as Unicom Partnership Ltd.)(Note 12). The beneficial owners of Tunicom LLC were substantially the same as the beneficial owners of City Planned Communities. Tunicom LLC acquired land from City Planned Communities and constructed an adult apartment rental community. In June, 1995, the partners of CPC agreed to contribute $13,351,210 in notes, loans and accrued interest to Tunicom?s capital, and they received a preferred distribution position. In 2001, through the sale of substantially all the assets of Tunicom (Note 12), funds were generated to repay the preferred capital contributions in full. The Company discontinued applying the equity method to its investment in Tunicom LLC (Tunicom) in 1988 when the investment account was reduced to zero. The Company resumed applying the equity method in 2001 after its share of the net income from Tunicom exceeded the share of net losses that were not recognized in the amount of approximately $6,000,000. The Company?s share of Tunicom?s income (loss) was $(13,438) in 2002, $6,876,756 in 2001 and $150,945 in 2000. The Company?s equity (deficiency) in the partnership and the percentage of the equity (deficit) in the partnerships to the total assets of the Company as of June 30, is as follows, CITY TUNICOM PLANNED PARTNERSHIP COMMUNITIES LTD. (NOTE 10) (NOTE 12) COMBINED 2002 $ - $ 309,664 $ 309,664 2002 - 90.00% 90.00% 2001 $ (68,208) $ 323,102 $ 254,894 2001 (10.00%) 49.00% 39.00% II-21 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 2 - EQUITY (DEFICIENCY) IN PARTNERSHIPS AND NOTE RECEIVABLE (Continued) In consideration of cash advances in the amount of $13,351,210 made and services rendered by certain individuals to Tunicom, Tunicom agreed to distribute to these individuals 26.76% (including 5% to the general partner of the Company) of any of its cash that becomes available for distribution. In accordance with the distribution agreements of Tunicom and CPC, and after the distribution of $13,351,210 was made in 2001, the Company received a distribution of approximately $5,800,000 and is presently entitled to receive 36.12% of future distributions. As a result of prior years cash advances made to Tunicom by certain individuals on behalf of the Company, The Company agreed to give these individuals 3.60% of its share of the 36.12%. The Company also assigned 10.23% of its share of distributions from CPC to individuals in consideration of funds advanced by them to the Company. NOTE 3 - NOTES RECEIVABLE - PARTNERS The Company received cash and notes receivable from the former treasurer and the general partner of the Company as a result of the exercise of options to acquire shares of common stock, which were subsequently exchanged for limited partnership units. The notes bear interest at 4% per annum and are non- recourse; however, the Company has a lien on and a security interest in the units. All cash distributions are to be applied first to accrued interest, and then as a reduction of principal until paid in full. The notes and interest receivable have no maturity dates and are reflected as a reduction of the equity of the Company. NOTE 4 - 4% CONVERTIBLE SUBORDINATED DEBENTURES In August 2000, the debentures and accrued interest were repaid from the proceeds received from Tunicom LLC?s sale of its adult rental project. (See Note 13). II-22 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 5 - INCOME TAXES The partnership is not subject to income taxes. Instead, the partners are required to include in their income tax return their share of the Company?s income or loss as adjusted to reflect the effects of certain transactions which are accorded different accounting treatment for federal income tax purposes. The partnership?s approximate income (losses) for tax reporting purposes for the years ended June 30, 2002, 2001 and 2000 was $(85,000), $6,400,000 and $(190,000), respectively, which approximates income (losses) of ($0.03), $2.06, and ($0.06) per unit, respectively, based on 3,118,065 outstanding partnership units. NOTE 6 - ACCOUNTS PAYABLE AND OTHER LIABILITIES: Account payable and other liabilities at June 30 consist of the following: 2 0 0 2 2 0 0 1 Fees 14,981 4,499 Other 9,192 7,540 $ 24,173 $ 12,039 NOTE 7 - PARTNERS? CAPITAL (DEFICIT) As of June 30, 2002, there are 103 shareholders holding 9,547 shares of the predecessor corporation that have not converted their stock certificates into limited partnership units. The limited partnership, from inception through June 30, 2002, has declared accumulated distributions of $1.25 per each partnership unit outstanding. The partnership distributions payable represent the Company?s liability if the stock certificates are converted into partnership units. During the year ended June 30, 2002, the Company escheated accumulated distributions in the amount of $314,451 to the various states. The Company did not declare any distributions to its unit owners during the year June 30, 2002. NOTE 8 - RESTRUCTURED FINANCING A note arising from a debt restructure in 1993 including accrued interest became due on December 31, 2000 and was paid. II-23 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 9 ? LEGAL PROCEEDINGS The limited partnership in which the Company is the limited partner was named as a defendant in a lawsuit seeking all damages allowable under the Florida Wrongful Death Act. A motion to dismiss the limited partnership was filed and granted by the circuit court judge. Plaintiffs appealed the order dismissing the limited partnership in this litigation. In March 2001, the appellate court affirmed the lower court?s final order of dismissal with prejudice, which resulted in Wimbledon Development Ltd. successfully defending against the lawsuit. NOTE 10 - TUNICOM LLC ? OPERATIONS On August 16, 2000, Tunicom sold the adult rental retirement facility, including the real property and certain tangible and intangible assets, for a purchase price of $47,159,295. After giving effect to a deposit of $4,500,000 previously accounted for, the existing mortgage in the amount of $26,720,254 and various adjustments, Tunicom received net proceeds of $16,379,732. Tunicom distributed $16,200,000 to its partners and All-State Properties, L.P.?s share was approximately $5,800,000, which was used to pay the Company?s outstanding debentures and accrued interest in the amount of $2,638,324 and liabilities in the amount of $769,038. Total revenue includes additional income in the amount of $5,150,666 from real estate partnerships resulting from the realization of a $4,407,944 (All-State Properties? share) allowance for loss that had been previously deducted against the investment in Tunicom and the balance from the adjustment of the Company?s equity in the partnerships. II-24 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINED FINANCIAL STATEMENTS JUNE 30, 2002 AUDITED C O N T E N T S PAGE Independent Auditor?s Report II-26 Combined Financial Statements: Balance Sheets II-27 Statements of Operations II-28 Statements of Partners? Capital (Deficit) II-29 Statements of Cash Flows II-30/32 Notes to Financial Statements II-33/37 Supplemental Information: Explanation of eliminations to combining financial statements II-38 Combining Balance Sheets II-39/42 Combining Statements of Operations II-43/45 Combining Statements of Partners? Capital (Deficit) II-46 Combining Statements of Cash Flows II-47/55 Selected Financial Data II-3 II-25 FREEMAN, BUCZYNER & GERO ONE SOUTHEAST THIRD AVENUE SUITE 2120 MIAMI, FLORIDA 33131 305-375-0766 INDEPENDENT AUDITOR'S REPORT To The Partners City Planned Communities and Tunicom LLC Lauderhill, Florida We have audited the accompanying combined balance sheets of City Planned Communities (liquidated July 1, 2001) and Tunicom LLC (F.K.A. Unicom Partnership, Ltd. ? Note 8) as of June 30, 2002 and 2001 and the related statements of operations, partners? capital and cash flows for each of the three years in the period ended June 30, 2002. These financial statements are the responsibility of the partnership?s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 provided a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of City Planned Communities and Tunicom LLC (F.K.A. Unicom Partnership, Ltd.) as of June 30, 2002 and 2001, and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2002, in conformity with accounting principles generally accepted in the United States of America. We have also previously audited, in accordance with auditing standards generally accepted in the United States of America, the combined balance sheets as of June 30, 2000 and 1999, and the related statements of operations, partners? capital, and cash flows for the years ended June 30, 2000, 1999, and 1998 (none of which are presented herein); and we expressed unqualified opinions on those financial statements. In our opinion, the information set forth in the selected financial data for each of the five years in the period ended June, 30 2002, appearing on page II-3, and the explanation of eliminations to combining financial statements and related combining balance sheets and statements of operations, partners? capital and cash flows, appearing on pages II-44 through II-61, are fairly stated, in all material respects, in relation to the financial statements from which it has been derived. September 12, 2002 II-26 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINED BALANCE SHEETS JUNE 30, 2002 AND 2001 AUDITED A S S E T S 2 0 0 2 2 0 0 1 Property and equipment, at cost (Notes 1B, 4, 5 and 7) $ - $ -* Land and development costs (Note 1C) $ 723,410 $ 533,292* $ 723,410 $ 533,292 Cash 112,719 165,722 Deferred management fees - related party (Notes 1A ,3 and 7) - 34,103 Prepaid expenses 30,025 30,025* TOTAL ASSETS $ 866,154 $ 763,142 LIABILITIES AND PARTNERS? CAPITAL (DEFICIT) LIABILITIES: Accounts payable and accrued expenses (Note 2) $ 8,835 $ 5,041 $ 8,835 $ 5,041 COMMITMENTS AND CONTINGENCIES (Notes 3, 5, and 6) - - PARTNERS? CAPITAL (Notes 3 & 5) 857,319 758,101 TOTAL LIABILITIES AND PARTNERS? CAPITAL $ 866,154 $ 763,142 * Reclassified for comparative purposes. See accompanying summary of accounting policies and notes to financial statements. II-27 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINED STATEMENTS OF OPERATIONS YEARS ENDED JUNE 30, 2002, 2001, AND 2000 AUDITED 2 0 0 2 2 0 0 1 2 0 0 0 REVENUES: Net sale of assets ? (Note 7) $ - $ 21,705,571 $ - Interest and other income 1,356 50,487 13,832 Lease income ?(Note 5) - - 5,744,412 Forgiveness of interest (Note 4 and 7) - $ 2,226,737 $ - $ 1,356 $23,982,795 $ 5,758,244 EXPENSES: General and adminis- trative (Note 3) $ 34,933 $ 982,114 $ 1,396,899 Taxes and insurance 6,350 92,046 624,761 $ 41,283 $ 1,074,160 $ 2,021,660 NET INCOME (LOSS) BEFORE DEPRECIATION, AMORTIZATION AND INTEREST: $ (39,927) $ 22,908,635 $ 3,736,584 OTHER EXPENSES: Interest (Note 1D) $ - $ 272,309 $ 2,259,354 Depreciation and amortization - - 1,057,963 - $ 272,309 $ 3,317,317 NET INCOME (LOSS) $ (39,927) $ 22,636,326 $ 419,267 See accompanying summary of accounting policies and notes to financial statements. II-28 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINED STATEMENTS OF PARTNERS? CAPITAL (DEFICIT) YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED 2 0 0 2 2 0 0 1 2 0 0 0 PARTNERS? CAPITAL (DEFICIT)- Beginning $ 758,101 $ (5,460,970) $ (5,603,863) Distributions (Notes 4 & 6B) - (16,417,255) (848,936) Liquidation of City Planned Communities$ 136,415 - - Contributions (Notes 4 & 6B) 2,730 - 572,562 Net income (Loss) (39,927) 22,636,326 419,267 PARTNERS? CAPITAL (DEFICIT) - Ending $ 857,319 $ 758,101 $ (5,460,970) See accompanying summary of accounting policies and notes to financial statements. II-29 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINED STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED 2 0 0 2 2 0 0 1 2 0 0 0 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activities: Interest received $ 1,356 $ 144,191 $ 1,428 Cash paid - interest - (407,180) (2,319,213) Cash paid - suppliers, employees and admini- strative expenses (34,759) (1,482,450) (2,024,381) Net sales of property - 43,214,691 5,677,155 Net Cash (Used) Pro- vided by Operat- ing Activities $ (33,403) $ 41,469,252 $ 1,334,989 Cash Flows from Investing Activities: Capital expenditures - net $ (19,600) $ - $ (160,480) Tenant security de- posits - - (30,508) Partners' (distribu- tions)contributions - net - (16,417,256) (276,374) Net Cash Provided (Used) by Invest- ing Activities $ (19,600) $ (16,417,256) $ (467,362) Cash Flows from Financ- ing Activities: Cash received (paid) - related party $ - 200,611 $ (554,617) Cash received (paid) notes & mortgages - (26,751,910) (174,867) Net Cash (Used) Pro- vided by Financing Activities $ - $ (26,551,299) $ (729,484) See accompanying summary of accounting policies and notes to financial statements. II-30 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINED STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED 2 0 0 2 2 0 0 1 2 0 0 0 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (53,003) $ (1,499,303) $ 138,143 CASH AND CASH EQUIVA- LENTS-BEGINNING OF YEAR 165,722 1,665,025 1,526,882 CASH AND CASH EQUIVA- LENTS-END OF YEAR $ 112,719 $ 165,722 $ 1,665,025 See accompanying summary of accounting policies and notes to financial statements. II-31 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINED STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED 2 0 0 2 2 0 0 1 2 0 0 0 Reconciliation of net income to net cash provided (used)by operating activities: Net income (Loss) $ (39,927) $ 22,636,326 $ 419,267 Adjustments to reconcile net income (Loss) to net cash provided (used) by operating activities: Decrease in property, plant & equipment $ - $ 24,496,319 $ - Depreciation and amortization - - 1,057,963 Increase (decrease) in accrued interest notes payable - (134,871) (59,858) (Increase) decrease in prepaid expense - 159,596 1,509 Decrease (increase) in other assets and ac- counts receivable 2,730 - 60,314 (Decrease) increase in accounts payable and accrued expenses 3,794 (1,165,326) (144,206) (Increase) decrease in deferred management fee - 597,440 - Decrease in deferred profit - (2,987,200) - Decrease in un- amortized interest - (2,212,612) - Decrease notes re- ceivables - 79,579 - Total Adjustments $ 6,524 $ 18,832,925 $ 915,722 NET CASH (USED) PROVIDED BY OPERATING ACTIVI- TIES $ (33,403) $ 41,469,251 $ 1,334,989 NON-CASH INVESTING AND FINANCING ACTIVITIES: Land and development costs $ (170,518) - - Deferred management fees- Related party $ 34,103 - - Partners? capital $ 136,415 - - See accompanying summary of accounting policies and notes to financial statements. II-32 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Organization, Operations and Principles of Combination 1. City Planned Communities (Hereafter CPC) The Partnership was formed in 1968 and was engaged in the business of land sales in Broward County, Florida. The two fifty percent partners of CPC were All-State Properties L.P. (a limited partnership) and NLI Partners, Ltd. (a limited partnership). The partnership was liquidated on July 1, 2001. 2. Tunicom LLC (Hereafter Tunicom) The limited liability corporation (formerly known as Unicom Partnership, Ltd.) was formed on October 27, 1986 to acquire land from CPC for the purpose of constructing and operating a 324 unit rental project in Broward County, Florida, which operated as an adult apartment rental complex (AARC). Effective July, 1997, Tunicom leased its property and in August 2000 the rental property was sold (Note 6). 3. Basis for Combination All-State Properties L.P. and entities under common control with the partners of NLI Partners, Ltd. have a 93% limited partnership interest in Tunicom. Accordingly, the beneficial owners of Tunicom are substantially the same as those of CPC. Therefore, the financial statements of CPC and Tunicom are being presented on a combined basis to offer a more complete presentation of the related entities. All intercompany transactions have been eliminated in combination. In 1987, Tunicom purchased 78 acres of land from CPC. Due to the related ownership and control of the two entities and in accordance with prescribed accounting standards, CPC deferred the gross profit of approximately $3,158,000 from this sale and a related management fee expense of $631,000. In 2001 when substantially all the property was sold, CPC recognized deferred income of $2,987,000 and a management fee of $597,000. The balance of the deferred revenue of approximately $170,000 and the related management fee expense of $34,000 were eliminated upon liquidation of CPC in July 2001 and assumed by the partners. II-33 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Organization, Operations and Principles of Combination (Continued) 4. Cash and Cash Equivalents For purposes of the statements of cash flows, the Company considers all unrestricted cash with maturities of three months or less to be cash equivalents. Bank Repurchase Agreements totaling $78,982 and $1,584,666 were included in cash as of June 30, 2001 and 2000, respectively. 5. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. B. Property and Equipment (Note 6) 1. The building that was sold in August 2000 was depreciated using the straight-line method over an estimated useful life of 40 years for financial statement purposes, whereas the modified accelerated cost recovery system (MACRS) method over 27-1/2 years was used for tax presentation. Since the company is a partnership, income or losses are reported by the partners. Accordingly, no tax effect resulted from the temporary differences. 2. Furniture and equipment that were sold in August 2000 were depreciated using MACRS for both tax and financial statement presentation. Differences between this method and other accelerated depreciation methods were not material. 3. China, glassware, silverware and utensils that were sold in August 2000 were represented by a base inventory. Additional acquisitions were expensed when purchased. The base inventory changed if material variances occurred. C. Land and Development Cost Land is recorded at cost and includes costs capitalized in connection with the development of real estate. II-34 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued) D. Interest During the years ended June 30, 2001 and 2000, total interest incurred of $272,309, $2,259,354, respectively was charged to operations. E. Income Tax Reporting For income tax purposes, CPC reports on the cash basis of accounting while Tunicom reports on the accrual basis. Both utilize the accrual basis of accounting for financial reporting purposes. No provision is made in the financial statements for income taxes since such taxes are the responsibility of the partners and not the partnerships. F. Partnership and Limited Liability Corporation The accompanying combined financial statements includes only those assets, liabilities and results of operations, which relates to the businesses of City Planned Communities, a Partnership, and Tunicom LLC, a limited liability corporation. The financial statements do not include any assets, liabilities, revenues, or expenses attributable to the partners? and members? individual activities. NOTE 2 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses at June 30, 2002 and 2001 consist of the following: 2 0 0 2 2 0 0 1 Accounts payable $ 2,723 $ 1,641 Real estate taxes 5,500 3,400 $ 8,223 $ 5,041 NOTE 3 - TRANSACTIONS WITH RELATED PARTIES Management Agreements The operations of Tunicom?s adult apartment rental complex was managed by an individual who is the general partner of All-State Properties L.P. The agreement with the individual?s management company called for an assignment of a 5% interest of all available cash flows for services rendered. The agreement was terminated when the facility was sold in August 2000. (See Note 5A) II-35 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 4 - MORTGAGE LOAN PAYABLE The mortgage, bearing interest at 8% per annum was insured by the Department of Housing and Urban Development (HUD) and was payable in monthly installments of $198,051. As a result of the mortgage modification in 1985, $2,498,809 in accrued interest was forgiven. This amount was recorded as a deferred interest adjustment and was being amortized over the remaining term of the mortgage. The unamortized balance of the interest forgiveness was recognized in full upon sale of the property. (See Note 8) NOTE 5 - COMMITMENTS AND CONTINGENCIES A. Management Contract (See Note 3) On July 1, 1997, the tenant of the facility appointed a management company that is owned by a partner of the Partnership. The management company was paid a fee equal to 4% of the monthly revenue. The management agreement was terminated upon sale of the rental property in August 2000. B. Distributions Presently, the cash flow that becomes available for distribution will be distributed as follows: 3.49% to the non-partner distributees As to the partners: 1.00% to F. Trace, Inc. the former general partner of Tunicom 23.27% to the newly admitted limited partners 36.12% to Newnel Partnership 36.12% to the Company (including 3.60% given to certain individuals who made cash advances to Tunicom on behalf of the the Company) 100.00% II-36 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED NOTE 5 - COMMITMENTS AND CONTINGENCIES (Continued) B. Lease Agreement On July 1, 1997, the Partnership entered into an agreement with an intended purchaser who leased the facility for a three-year period after which time the purchaser was able to purchase the property or cancel the option and forfeit their deposit. The agreement called for the tenant to pay the Partnership a base rent equal to the monthly principal and interest on the outstanding HUD financing plus the amounts necessary for payment of the various escrows related to the HUD financing. The tenant retained $812,712, $1,175,000 and $1,275,000, respectively, during the three year period, and the Partnership was paid all other remaining revenue from the facility that exceeded a certain threshold. On March 10, 2000 the intended purchaser assigned its interest, rights and option to purchase the property to an unrelated company. The Assignee purchased the property on August 16, 2000 (Note 8). NOTE 6 - PENSION PLAN During year ended June 30, 1995, Tunicom Partnership implemented a 401-K pension plan. Employees were eligible to participate in the plan if they have been employed by the Partnership for one year, work at least 20 hours per week, work a total of at least 1000 hours per year and were at least 21 years of age. The employer did not make a matching contribution. NOTE 7 ? SALE OF THE ADULT RENTAL RETIREMENT FACILITY In connection with the sale of the adult rental retirement facility which closed on August 16, 2000, Tunicom LLC (?Tunicom?) (a limited liability corporation), was formed on August 14, 2000 as the successor to Unicom Partnership, Ltd. (?Unicom?). Tunicom succeeded to all of the assets and the liabilities of Unicom. On August 16, 2000, Tunicom sold the adult rental retirement facility, including the real property and certain tangible and intangible assets, for a purchase price of $47,159,295. After giving effect to the deposit of $4,500,000 previously accounted for, the existing mortgage in the amount of $26,720,254 and various adjustments, Tunicom LLC received net proceeds of $16,379,732. Tunicom distributed $16,200,000 to its partners and All-State Properties, L.P.?s share was approximately $5,800,000. II-37 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) EXPLANATION OF ELIMINATIONS TO COMBINING FINANCIAL STATEMENTS JUNE 30, 2002, 2001 AND 2000 AUDITED The combining financial statements for City Planned Communities (CPC) (liquidated July 1, 2001) and Tunicom LLC, (Tunicom) are presented as supplemental information to the combined financial statements. All significant transactions between CPC and Tunicom have been eliminated. Descriptions of the eliminations are as follows: (a) Cost of land purchased by Tunicom from CPC in 1987 has been adjusted to reflect the carrying value of property, computed as follows: Land cost $ 250,578 Land development cost 571,704 Closing cost 20,000 Carrying value of property $ 842,282 Selling price (4,000,000) Adjustment to land and construction in progress and deferred profit $ (3,157,718) Amount realized on sale of property in 2001 2,987,200 $ (170,518) II-38 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING BALANCE SHEETS JUNE 30, 2002 AUDITED

CITY TUNICOM LLC COMBINED PLANNED BALANCE COMMUNITIES ELIMINATIONS SHEET ASSETS Property and equip- ment, at cost: Land and develop- costs $ - $ 723,410 $ - $ 723,410 $ - $ 723,410 $ - $ 723,410 Cash - 112,719 - 112,719 Deferred management fees - related party - - - - Other assets - 30,025 - 30,025 TOTAL ASSETS $ - $ 866,154 $ - $ 866,154

See accompanying summary of accounting policies and notes to financial statements. II-39 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING BALANCE SHEETS (CONTINUED) JUNE 30, 2002 AUDITED

CITY TUNICOM LLC COMBINED PLANNED BALANCE COMMUNITIES ELIMINATIONS SHEET LIABILITIES AND PARTNERS? CAPITAL LIABILITIES: Accounts payable and accrued expenses $ - $ 8,835 $ - $ 8,835 Tenant security deposits - - - - Deferred profit - - - - $ - $ 8,835 $ - $ 8,835 COMMITMENTS AND CONTINGENCIES - - - - PARTNERS? CAPITAL - 857,319 - 857,319 TOTAL LIABILITIES AND PARTNERS? CAPITAL $ - $ 866,154 $ - $ 866,154

See accompanying summary of accounting policies and notes to financial statements. II-40 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING BALANCE SHEETS JUNE 30, 2001 AUDITED

CITY TUNICOM LLC COMBINED PLANNED BALANCE COMMUNITIES ELIMINATIONS SHEET ASSETS Property and equip- ment at cost: Land and develop- ment costs $ - $ 703,810 $ (170,518)(a) $ 533,292* $ - $ 703,810 $ (170,518) $ 533,292 Cash - 165,722 - 165,722 Deferred management fees - related party 34,103 - - 34,103 Other assets - 30,025 - 30,025* TOTAL ASSETS $ 34,103 $ 899,557 $ (170,518) $ 763,142

* Reclassified for comparative purposes. See accompanying summary of accounting policies and notes to financial statements. II-41 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING BALANCE SHEETS (CONTINUED) JUNE 30, 2001 AUDITED

CITY TUNICOM LLC COMBINED PLANNED BALANCE COMMUNITIES ELIMINATIONS SHEET LIABILITIES AND PARTNERS? CAPITAL (DEFICIT) LIABILITIES: Accounts payable and accrued expenses $ - $ 5,041 $ - $ 5,041 Tenant security deposits - - - - Deferred profit 170,518 - (170,518) - $ 170,518 $ 5,041 $ (170,518) $ 5,041 COMMITMENTS AND CONTINGENCIES - - - - PARTNERS? CAPITAL (DEFICIT) (136,415) 894,516 - 758,101 TOTAL LIABILITIES AND PARTNERS? CAPITAL (DEFICIT) $ 34,103 $ 899,557 $ (170,518) $ 763,142

See accompanying summary of accounting policies and notes to financial statements. II-42 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF OPERATIONS JUNE 30, 2002 AUDITED

CITY TUNICOM LLC COMBINED PLANNED STATEMENT OF COMMUNITIES ELIMINATIONS OPERATIONS REVENUES: Interest and other income $ - $ 1,129 $ - $ 1,129 $ - $ 1,129 $ - $ 1,129 EXPENSES: General and administrative $ - $ 34,933 $ - $ 34,933 Taxes and insurance - 6,350 - 6,350 $ - $ 41,283 $ - $ 41,283 NET INCOME (LOSS) BEFORE DEPRECIATION, AMORTIZATION AND INTEREST $ - $ (40,154) $ - $ (40,154) NET(LOSS)INCOME $ - $ (40,154) $ - $ (40,154)

See accompanying summary of accounting policies and notes to financial statements. II-43 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF OPERATIONS JUNE 30, 2001 AUDITED

CITY TUNICOM LLC COMBINED PLANNED STATEMENT OF COMMUNITIES ELIMINATIONS OPERATIONS REVENUES: Net sale assets $ 16,134 $ 17,505,001 $ 2,987,200 $ 20,508,335 Interest and other income 1,758 48,729 - 50,487 Forgiveness of Interest - 2,226,737 - 2,226,737 Deferred profit on sale of land 2,987,200 - (2,987,200) - $ 3,005,092 $ 19,780,467 $ - $ 22,785,559 EXPENSES: General and administrative $ 604,640 $ 377,474 $ - $ 982,114 Taxes and insurance - 92,046 - 92,046 $ 604,640 $ 469,520 $ - $ 1,074,160 NET INCOME BEFORE DEPRECIATION, AMORTIZATION AND INTEREST $ 2,400,452 $ 19,310,947 $ - $21,711,399 OTHER EXPENSES: Interest $ - $ 272,309 $ - $ 272,309 NET (L0SS) INCOME $ 2,400,452 $ 19,038,638 $ - $ 21,439,090

See accompanying summary of accounting policies and notes to financial statements. II-44 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF OPERATIONS JUNE 30, 2000 AUDITED

CITY TUNICOM LLC COMBINED PLANNED STATEMENT OF COMMUNITIES ELIMINATIONS OPERATIONS REVENUES: Interest and other income $ 12,404 $ 1,428 $ - $ 13,832 Lease income - 5,744,412 - 5,744,412 $ 12,404 $ 5,745,840 $ - $ 5,758,244 EXPENSES: General and admini- strative (1,730) 1,398,629 - 1,398,899 Taxes and in- surance - 624,761 - 624,761 $ (1,730) $ 2,023,390 $ - $ 2,021,660 NET INCOME BEFORE DEPRECIATION, AMORTIZATION AND INTEREST $ 14,134 $ 3,722,450 $ - $ 3,736,584 OTHER EXPENSES: Interest $ 12,767 $ 2,246,587 $ - $ 2,259,354 Depreciation and amortization - 1,057,963 - 1,057,963 $ 12,767 $ 3,304,550 $ - $ 3,317,317 NET INCOME $ 1,367 $ 417,900 $ - $ 419,267

See accompanying summary of accounting policies and notes to financial statements. II-45 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF PARTNERS? CAPITAL (DEFICIT) YEARS ENDED JUNE 30, 2002, 2001 AND 2000 AUDITED

COMBINED STATEMENT CITY TUNICOM LLC OF PARTNERS' PLANNED CAPITAL COMMUNITIES ELIMINATIONS (DEFICIT) PARTNERS? CAPITAL (DEFICIT) - June 30, 1999 $ (2,893,540) $ (2,710,323) $ - $ (5,603,863) Net Income (Loss) - 2000 1,367 417,900 - 419,267 Distribution - (848,936) - (848,936) Contribution 572,562 - - 572,562 PARTNERS' CAPITAL (DEFICIT) - June 30, 2000 $ (2,319,611) $ (3,141,359) $ - $ (5,460,970) Net Income (Loss)2001 2,400,452 20,235,875 - 22,636,327 Distribution (217,256) (16,200,000) - (16,417,256) PARTNERS? CAPITAL (DEFICIT)- June 30, 2001 $ (136,415) $ 894,516 $ - $ 758,101 Net income (Loss) - 2002 - (39,927) - (39,927) Liquidation 136,415 - - 136,415 Contribution - 2,730 - 2,730 PARTNERS' CAPITAL - June 30, 2002 $ - $ 857,319 $ - $ 857,319

See accompanying summary of accounting policies and notes to financial statements. II-46 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 2002 AUDITED

COMBINED CITY TUNICOM LLC STATEMENT PLANNED OF COMMUNITIES ELIMINATIONS CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVA- LENTS Cash Flows from Opera- ing Activities: Interest received $ - $ 1,356 $ - $ 1,356 Cash paid - suppliers, employees and admini- strative expenses - (28,409) - (28,409) Cash paid ? taxes and insurance - (6,350) - (6,350) Net Cash (Used) Provided by Operating Activities: $ - $ (33,403) $ - $ (33,403) Cash Flows from Invest- ing Activities: Partner distribution $ - $ - $ - $ - Capital expenditures - (19,600) - (19,600) Net Cash (Used) Provided by Investing Activities $ - $ (19,600) $ - $ (19,600)

See accompanying summary of accounting policies and notes to financial statements. II-47 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 2002 AUDITED

COMBINED CITY TUNICOM LLC STATEMENT PLANNED OF COMMUNITIES ELIMINATIONS CASH FLOWS NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $ - $ (53,003) $ - $ (53,003) CASH AND CASH EQUIVA- LENTS BEGINNING OF YEAR - 165,722 - 165,722 CASH AND CASH EQUIVA- LENTS END OF YEAR $ - $ 112,719 $ - $ 112,719

See accompanying summary of accounting policies and notes to financial statements. II-48 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 2002 AUDITED

COMBINED CITY TUNICOM LLC STATEMENT PLANNED OF COMMUNITIES ELIMINATIONS CASH FLOWS Reconciliation of net profit (Loss) to net cash provided (used) by operating activi- ties: Net income $ - $ (39,927) $ - $ (39,927) Adjustments to recon- cile to net cash provided (used) by operating activities: (Decrease) (Increase) in accounts payable and accrued expenses $ - $ 6,524 $ - $ 6,524 Total Adjust- ments $ - $ 6,524 $ - $ 6,524 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ - $ (33,403) $ - $ (33,403)

See accompanying summary of accounting policies and notes to financial statements. II-49 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 2001 AUDITED

CITY TUNICOM LLC COMBINED PLANNED STATEMENT OF COMMUNITIES ELIMINATONS CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activi- ties: Interest received $ 81,337 $ 62,854 $ - $ 144,191 Cash paid - interest - (407,180) - (407,180) Cash paid - suppliers, employees and admini- strative expenses (35,724) (1,446,726) - (1,482,450) Net sale of property 25,800 43,188,890 - 43,214,690 Net Cash (Used) Provided by Opera- ting Activities $ 71,413 $ 41,397,838 $ - $ 41,469,251 Cash Flows from Invest- ing Activities: Partner distribution $(217,256) $(16,200,000) - $ (16,417,256) Net Cash (Used) Provided by Investing Acti- vities $ (217,256)$ (16,200,000) $ - $ (16,417,256) Cash Flows from Fi- nancing Activities: Cash received (paid) - related party $ 145,537 $ 55,074 $ - $ 200,611 Cash (paid) received - notes and mortgages - (26,751,910) - (26,751,910) Net Cash Provided (Used) by Financ- ing Activities $ 145,537 $ (26,696,836) $ - $ (26,551,299)

See accompanying summary of accounting policies and notes to financial statements. II-50 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 2001 AUDITED

CITY TUNICOM LLC COMBINED PLANNED STATEMENT OF COMMUNITIES ELIMINATONS CASH FLOWS NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $ (306) $ (1,498,997) $ - $ (1,499,303) CASH AND CASH EQUIVA- LENTS BEGINNING OF YEAR 306 1,664,719 - 1,665,025 CASH AND CASH EQUIVA- LENTS END OF YEAR $ - $ 165,722 $ - $ 165,722

See accompanying summary of accounting policies and notes to financial statements. II-51 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 2001 AUDITED

CITY TUNICOM LLC COMBINED PLANNED STATEMENT OF COMMUNITIES ELIMINATONS CASH FLOWS Reconciliation of net profit (Loss) to net cash provided (used) by operating activities: Net income $ 2,400,452 $ 20,235,874 $ - $22,636,326 Adjustments to recon- cile to net income (used) by operating activities: Decrease in Property, Plant & Equipment $ 9,666 $ 24,486,653 $ - $ 24,496,319 Decrease in deferred Management fees 597,440 - - 597,440 Decrease in deferred profit (2,987,200) - - (2,987,200) Decrease in un- amortized interest - (2,212,612) - (2,212,612) Decrease in accounts expenses (35,410) (1,129,916) - (1,165,326) Decrease of notes receivable 79,579 - - 79,579 Decrease in prepaid expenses 6,886 152,710 - 159,596 Decrease in notes payable - (134,871) - (134,871) Total Adjustments $ 2,329,039 $ 21,161,964 $ - $ 18,832,925 NET CASH PROVIDED (USED) BY OPERATING ACTIVI- TIES $ 71,413 $ 41,397,838 $ - $ 41,469,251

See accompanying summary of accounting policies and notes to financial statements. II-52 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 2000 AUDITED

CITY TUNICOM LLC COMBINED PLANNED ELIMI- STATEMENT OF COMMUNITIES NATIONS CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activities: Interest received $ - $ 1,428 $ - $ 1,428 Cash paid ? interest (100,619) (2,218,594) - (2,319,213) Cash paid - suppliers, employees and admini- strative expenses - (2,024,381) - (2,024,381) Lease income - 5,677,155 - 5,677,155 Net Cash (Used) Provided by Oper- ating Activities $ (100,619)$ 1,435,608 $ - $ 1,334,989 Cash Flows from Invest- ing Activities: Capital expenditures- net $ - $ (160,480) $ - $ (160,480) Escrow funding - - - - Tenant security deposits - net - (30,508) - (30,508) Partner contribution (distribution) (Net) 572,562 (848,936) - (276,374) Net Cash (Used) by Investing Acti- vities $ 572,562 $ (1,039,924) $ - $ (467,362) Cash Flows from Financ- ing Activities: Cash received (paid) - related party $ (471,943)$ (82,674) $ - $ (554,617) Cash (paid) received - notes and mortgages - (174,867) - (174,867) Net Cash Provided (Used) by Financ- ing Activities $ (471,943)$ (257,541) $ - $ (729,484)

See accompanying summary of accounting policies and notes to financial statements. II-53 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 2000 AUDITED

CITY TUNICOM LLC COMBINED PLANNED ELIMI- STATEMENT OF COMMUNITIES NATIONS CASH FLOWS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ - $ 138,143 $ - $ 138,143 CASH AND CASH EQUIVA- LENTS BEGINNING OF YEAR 306 1,526,576 - 1,526,882 CASH AND CASH EQUIVA- LENTS END OF YEAR $ 306 $ 1,664,719 $ - $ 1,665,025

See accompanying summary of accounting policies and notes to financial statements. II-54 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND TUNICOM LLC (A LIMITED LIABILITY CORPORATION) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 2000 AUDITED

CITY TUNICOM LLC COMBINED PLANNED STATEMENT OF COMMUNITIES ELIMINATIONS CASH FLOWS Reconciliation of net profit (Loss) to net cash provided (Used) by operating acti- vities: Net income (Loss) $ 1,367 $ 417,900 $ - $ 419,267 Adjustments to reconcile net income (Loss) to net cash prov- ided (Used) by operating activ- ities: Depreciation and amortization $ - $ 1,057,963 $ - $ 1,057,963 (Decrease) in interest pay- able (87,851) 27,993 - (59,858) (Increase) in pre- paid expenses - 1,509 - 1,509 (Increase) in other assets and accounts receiv- able (12,405) 72,719 - 60,314 Increase in accounts payable and accrued expenses (1,730) (142,476) - (144,206) Total Adjust- ments $ (101,986) $ 1,017,708 $ - $ 915,722 NET CASH PROVIDED (USED) BY OPERA- TING ACTIVITIES $ (100,619) $ 1,435,608 $ - $ 1,334,989

See accompanying summary of accounting policies and notes to financial statements. II-55 ITEM 8. SUPPLEMENTARY DATA (a) Selected quarterly financial disclosure date. Not required. (b) Information on the effects of changing prices. Not applicable. ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable II-56 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT The following information is provided with respect to each general partner and officer of Registrant. BUSINESS EXPERIENCE DURING NAME AGE PAST FIVE YEARS Stanley R. Rosenthal 73 General Partner; President and Chief Executive Officer of predecessor All-State Properties, Inc. since 1971 Managing Partner of Tunicom LLC. since 1989 President of SRR Consulting Corp. and President of SRR Management Corp. since July, 1997 ITEM 11. EXECUTIVE COMPENSATION The following table sets forth aggregate cash compensation paid or accrued by the Registrant to the General Partner during the twelve months ended June 30, 2002. NAME OF INDIVIDUAL OR REGISTRANT?S SHARE NUMBER OF PERSONS CAPACITIES OF CASH IN GROUP IN WHICH SERVED COMPENSATION Stanley R. Rosenthal General Partner $ -0- All officers as a group (1 person) $ -0- Prior to the sale of the property in August 2000, effective August 1, 1995 with HUD approval, Tunicom LLC. began to self manage its retirement community. (See Item 1(b)(1)(i)(a)). A management fee of 4% of total income is being paid to the partners assuming managerial responsibility. The General Partner of the Registrant (Stanley R. Rosenthal) has been functioning as Managing Partner of Tunicom and is retaining that responsibility, as well as management of the facility. Registrant?s share of Mr. Rosenthal?s portion of the management fee is approximately $90,000 per year. III-1 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of June 30, 2002 information concerning: (i) all the persons who are known to the Registrant to be the beneficial owners of more than 5% of the units of limited partnership interest; and (ii) the beneficial ownership of limited partnership units by the General Partner. AMOUNT BENEFICIALLY PERCENTAGE TITLE OF CLASS NAME & ADDRESS OWNED OF CLASS Limited J.W. Sopher Partnership 425 E. 61 Street Units New York, N.Y. 165,000 (1) 5.3% Limited Stanley R. Rosenthal Partnership c/o All-State Units Properties L.P. P.O. Box 5524 Ft. Lauderdale, FL 156,474 5.0% (1) Included 48,000 units owned directly and 117,000 units owned beneficially (67,000 units owned by a pension trust and 50,000 units owned by a corporation in which Mr. Sopher holds a 50% interest and in which Mr. Sopher holds shared voting and dispositive powers). III-2 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In consideration of cash advances made and services rendered by certain individuals to Tunicom, Tunicom agreed to distribute 26.76% (including 5% to the general partner of the Company) of any of its cash that becomes available for distribution to those individuals. The balance of any cash that becomes available for distribution up to $13,351,210 will be distributed to the Company and Newnel Partnership for the benefit of CPC. After $13,351,210 is disbursed, remaining cash will be distributed 26.76% to the aforementioned individuals and the remainder as follows: 1.34% to F. Trace, Inc., the former general partner of Tunicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances on behalf of the Company 45.73% to the Company 100.00% Subsequently, of the holders of the 26.76%, individuals receiving 23.27% were admitted as limited partners of Tunicom, with the 3.49% remaining as non-partner distributees. Restating the above to reflect the admission of the aforesaid individuals as limited partners, the cash flow available for distribution after the payment of the $13,351,210 will be distributed as follows: 3.49% to the non-partner distributees As to the partners: 1.00% to F. Trace, Inc., the former general partner of Tunicom 23.27% to the newly admitted limited partners 36.12% to Newnel Partnership 36.12% to the Company (including 3.60% given to certain indivi- duals who made cash advances to Tunicom on behalf of the Company) 100.00% The amount of the distribution to be received by the Company is the same under both of the above calculations. In addition, CPC assigned 9.00% of any of its cash that becomes available for distribution to certain individuals for funds advanced by them to CPC. Certain individuals advanced funds to the Company. In consideration of those advances, the Company assigned to those individuals 10.23% of distributions received by it from CPC, after deducting the amounts necessary to repay the funds advanced by them. III-3 PART IV ITEM 14. EXHIBITS FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K PAGE (a) 1. Financial Statements included in Part II of this report: FINANCIAL STATEMENTS: Registrant: Balance Sheets as of June 30, 2002 and 2001 II-14 Statements of Operations for the years ended June 30, 2002, 2001, and 2000 II-15 Statements of Changes in Partners' Capital (Deficit) for the years ended June 30, 2002, 2001 and 2000 II-16 Statements of Cash Flows for the years ended June 30, 2002, 2001 and 2000 II-17/18 Notes to Financial Statements for the years ended June 30, 2002, 2001 and 2000 II-19/29 Combined Financial Statements of City Planned Communities (a partnership) and Tunicom Partnership Ltd. (a limited partnership) for the years ended June 30, 2002, 2001 and 2000 II-32/61 All other schedules are omitted, as the required information is not applicable or the information is presented in the financial statements or related notes. IV-1 (b) (1) REPORTS ON FORM 8-K PAGE NO. OR INCORPORATION (C) EXHIBITS BY REFERENCE (3) Limited Partnership Incorporated by reference Agreement, All-State to the Registration Properties L.P. Statement of Registrant No. 2-90988 (4) (ii) Instruments Defining Rights of Security Holders, included Debentures: 4% Convertible Sub- Incorporated by reference ordinated Debenture, to Form 10-K for the year due 1989 ended June 30, 1985 (10)(iii) (A) Material Contracts: a. Stock Purchase Incorporated by reference agreement dated to the Registration April 18, 1984 Statement of Registrant between All-State No. 2-90988 Properties, Inc. and Security Management Corp. b. Loan Agreement Incorporated by reference between All-State to Form 10-K for the Properties, L.P. and year ended June 30, 1987 City Nat'l Bank of Florida dated April 20, 1987 - $2,400,000 c. Tunicom Partnership Incorporated by reference Ltd. Limited Partner- to Form 10-K for the ship Agreement dated year ended June 30, 1987 September 23, 1986 d. Loan Agreement Incorporated by reference between Tunicom Partner- to Form 10-K for the year ship Ltd. and Puller ended June 30, 1987 Mortgage Associates, Inc. dated 4/23/87 - $27,749,100 e. Management Contract Incorporated by reference between Tunicom Partner- to Form 10-K for the year ship Ltd. and Basic ended June 30, 1987 American Medical Inc. dated Sept. 29, 1986 IV-2 f. Contract of Sale Incorporated by reference between CPC and to Form 8-K dated Centex Real Estate July 7, 1989 Corporation dated May 2, 1989 g. Management Contract Incorporated by reference between Tunicom Partner- to Form 10-K for the year ship Ltd. and Senior ended June 30, 1989 Lifestyle Corporation dated 7/1/89 h. Settlement Agreement Incorporated by reference between CPC and MFM Group to Form 10-K for the year dated March 28, 1990 ended June 30, 1990 i. Settlement Agreement Incorporated by reference between Tunicom and MFM to Form 10-K for the year Group dated March 28, 1990 ended June 30, 1990. j. Amendment to Management Incorporated by reference Contract between Tunicom and to Form 10-K for the year Senior Lifestyle Corporation ended June 30, 1992 dated as of Jan. 1, 1992 k. Management Agreement Incorporated by reference between Tunicom and Stanley to Form 10-K for the year R. Rosenthal, Managing ended June 30, 1995 Partner of Owner dated August 1, 1995 l. Employment Agreement Incorporated by reference between Tunicom and Stanley to Form 10-K for the year R. Rosenthal, effective ended June 30, 1995 August 1, 1995 m. Lease and option to pur- Incorporated by reference chase agreements between to Form 8-K dated October Tunicom and CareMatrix 10, 1997 Corporation effective as of July 1, 1997 n. Disposition of assets in Incorporated by reference accordance with Option to Form 8-K dated August Agreement on August 16, 2000 16, 2000 (11) Exhibits indicating computa- IV-5 tion of earnings per unit for the years ended June 30, 2001, 2000 and 1999. IV-3 (22) Subsidiaries of the Registrant: State of Incorporation Name or Organization Ownership Wimbledon Develop- Florida 99% ment Ltd. (d) NONE Signature Page IV-6 IV-4 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) EXHIBITS INDICATING THE COMPUTATION OF EARNINGS PER UNIT YEARS ENDED JUNE 30, 2002, 2001 AND 2000 2 0 0 2 2 0 0 1 2 0 0 0 Computation of pri- mary earnings per unit: Units issued 3,118,065 3,118,065 3,118,065 3,118,065 3,118,065 3,118,065 Net Income (Loss) Before Extraordinary Items $ (85,154) $ 6,843,331 $ (174,197) Computation of Fully diluted income (Loss) per unit Before Extra- ordinary Items $ (0.03) $ 2.19 $ (0.05) Net Income (Loss) After Extraordinary Items $ (85,154) $ 6,843,311 $ (174,197) Computation of Fully diluted income (Loss) per unit after Extra- ordinary Items $ (0.03) $ 2.19 $ (0.05) (A) Weighted average number of units outstanding See notes to financial statements. IV-5 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALL-STATE PROPERTIES L.P. By: STANLEY R. ROSENTHAL General Partner Date: September 12, 2002 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 capacity and on the date indicated. General Partner September 12, 2002 STANLEY R. ROSENTHAL (Chief Executive Officer) DATE IV-6