-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M7kp8FqcY+oEwlGT2+lb5qJyVGMcCKdoD0i01c8JcRhIBkUfbec8653Sttl+ljeP iwDU3WDlNtMg7I7R5XeHnw== 0000745543-98-000007.txt : 19981030 0000745543-98-000007.hdr.sgml : 19981030 ACCESSION NUMBER: 0000745543-98-000007 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19981029 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALL STATE PROPERTIES LP CENTRAL INDEX KEY: 0000745543 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 592399204 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-12895 FILM NUMBER: 98733332 BUSINESS ADDRESS: STREET 1: 5500 NW 69TH AVENUE CITY: LAUDERHILL STATE: FL ZIP: 33319 BUSINESS PHONE: 3057356300 MAIL ADDRESS: STREET 1: PO BOX 5524 CITY: FORT LAUDERDALE STATE: FL ZIP: 33310-5524 10-K 1 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, 1998 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 partnership, Unicom Partnership Ltd.(Unicom)Registrant is engaged in the operation of an adult rental apartment project on 78.2 acres of land. (See Note 2 to financial statements.) (ii) Through a 50% owned real estate joint venture, City Planned Communities (CPC), 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)(c). (b)(1) NARRATIVE DESCRIPTION OF BUSINESS (i) (a) Adult Rental Apartment Project In April, 1987, CPC sold approximately 78 acres of land to Unicom for the purpose of constructing a 324-unit adult apartment rental project on the land. Registrant holds a 36.12% limited partnership interest in Unicom. (See Note 2.) The general partner of Unicom was Sadkin Associates, Inc., an affiliate of the late Herbert Sadkin, who died in February, 1989. Following Mr. Sadkin's death, the limited partners requested that Unicom retain Mr. Stanley Rosenthal, the General Partner of Registrant, as manager. Currently, all of Mr. Rosenthal's total compensation is considered compensation as manager of Unicom. (See Items 11 and 13.) I-2 The project is adjacent to the Inverrary and Woodlands Country Club communities in Broward County, Florida, which are upper-income retirement developments. The project consists of 80-one-bedroom, one-bath apartments of approximately 800 square feet and 244 two-bedroom, two-bath apartments of approximately 1,025 square feet. It includes a 29-acre lake and has dining and clubhouse facilities containing an auditorium, a swimming pool, various craft centers, a health club, game and club rooms, and a beauty and barber shop. The project is designed to meet the special needs of the elderly and includes features designed to appeal to upper-income retirees. Primary emphasis is placed on security with a well-designed entrance-exit monitoring system, emergency alarm systems in apartments, a security gate entrance and security fence as well as lever door handles and handrails along halls and stairs, and includes fire alarm systems and smoke detectors. Amenities include built-in washers and dryers and balconies or terraces. The monthly rentals range from $2,600 per month for the one-bedroom units to $3,100 per month for the two- bedroom units, and include food service, maid service and electricity. The facility is 98-percent leased and occupied. As of July 1, 1989, amended June, 1990 and January, 1992, Unicom entered into a management agreement with Senior Lifestyle Corporation, an Illinois corporation (Senior Lifestyle). The agreement as amended provided for a term which expired in December 1997. Senior Lifestyle received compensation for management services consisting of 6.5% of the residential, commercial and miscellaneous income, but not less than $100,000 or greater than $525,000 per year. The partnership terminated the management agreement as of July 31, 1995. The property is self-managed. A management fee of 4% of total income was paid to the partners assuming the managerial responsibility, of which $8,333 per month was paid to Senior Lifestyle Management Corporation for one year. The new management arrangement was approved by HUD. (See Item 11.) On July 28, 1995, Unicom Partnership Ltd. (Unicom), 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 will mature on January 1, 2029. It will bear interest at the rate of eight (8%) percent per annum, which includes a 0.25% servicing fee. In addition, Unicom will pay one-half of one percent per annum mortgage insurance premium. Unicom 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 will be 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. I-3 In order to accomplish the closing, the company borrowed $1,547,125. Of this amount, $500,000 was borrowed commercially (personally guaranteed by Mr. Rosenthal), to be repaid in one (1) year out of surplus cash earned by the company at an interest rate of two (2) percent over prime (the loan was repaid in July, 1996); $1,047,125 was borrowed from certain partners and other investors, to be repaid after the above bank loan is repaid, also from surplus funds at three (3%) percent over prime. In addition, because of the disproportionate contribution by certain partners in relationship to the other partners and because of new investors, the group was awarded a 3.41% interest in distributions from Unicom. All-State Properties L.P. did not participate in the investment. On June 25, 1997, Unicom signed a Letter of Intent with CareMatrix Corporation (AMEX) which Letter became effective July 18, 1997. Prior to that date Unicom, 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 Unicom. On September 24, 1997, CareMatrix made the required payment and the initial phase of the transaction was completed. Unicom 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 Unicom. The $4,500,000 payment made by CareMatrix to Unicom represents 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 will be 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. In the interim, CareMatrix is leasing 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, 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 balance of cash flow will be paid to Unicom as rent until the net operating income equals $2,300,000 per year. Any excess will then be divided equally between CareMatrix and Unicom. The present management team, will continue to manage the facility for a period of five years at the HUD- approved rate of 4% of collections. The management team has been approved by HUD under the name, SRR Management Corp. I-4 CareMatrix chose to prepay part of the management fee every six months for the five-year term, into a trust to be paid monthly to SRR Management Corp., as set forth in a consulting agreement. CareMatrix in turn is retaining $400,000 per year out of facility cash flow, as a reimbursement. In a related transaction, the partners of Unicom 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 it will purchase from Unicom at a price to be agreed upon. Chancellor has agreed to provide all the necessary financing to erect and open the assisted living facility. SRR Management Corp. will manage the facility for five years at a fee equal to the greater of $7,000 per month or 3-1/2% of collections, to commence six months prior to opening. The facility will be leased after completion to CareMatrix of Lauderhill II, Inc. for an initial term of 15 years. As consideration for the lease, Newall will receive 50% of the net cash flow from the assisted living facility. The joint venture has agreed to pay $40,000 plus 5% of the development cost to CareMatrix, and $5,000 per month to the general partner of the company for his services during the approval period and construction. The above sums are to be paid from construction loan draws. Chancellor has agreed to purchase the facility from the joint venture at the later of 27 months from commencement of the lease or June 30, 2002, at 8.75 times net operating income before depreciation for the twelve months prior to the purchase, plus the then outstanding mortgage balance. The majority of the partners of Newall, the Company abstaining, voted to award 5% of the venture to the general partner of the company for his services and 2% to others. Three homeowners living near the proposed assisted living facility site commenced an action against Unicom and the City of Lauderhill, seeking to prevent construction of the assisted living facility at that location. The court granted summary judgment in favor of Unicom and the City, dismissing the action. The homeowners have appealed, and the appeal is pending. In the opinion of counsel, Unicom and the City should prevail on appeal as well. (i) (b) CPC Operations Foreclosure Proceedings - As of October 26, 1992, the Company owed $2,511,551 of principal plus accrued interest of $655,036 to a bank. Collateral for the loan was substantially all the land owned by CPC. The bank obtained a final judgment of foreclosure, and a sale of the property took place on October 26, 1992. I-5 The Company recognized an extraordinary gain of $3,166,587, or $1.01 per unit in the fiscal year of foreclosure. CPC recognized a loss of $99,125 (the carrying value of the land taken by foreclosure, $333,101, less the real estate tax liability of $233,976). This directly affected the Company by $49,562 due to its 50% interest in CPC. (i) (c) 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 remaining from a condominium project known as Wimbledon constructed by Registrant during the period 1971-1978. The condominium project could be comprised of six two-story buildings of eight units each. Two such buildings on two acres of land were completed and all sixteen (16) units have been sold. Mortgages totaling $270,974 on the two buildings were in default and were purchased for and reduced to $125,000. (See Note 10.) Wimbledon owed $135,000 in recreational assessments to the operating association. By agreement, the delinquency would be paid out of proceeds from the sale of the remaining four acres of land, together with 50% of any profit realized. The property was sold on September 17, 1996, and the obligation was satisfied by a payment of $137,035 to the association. (See Note 10.) (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 CPC. Any cash distributions from Unicom and Wimbledon which may be received in the future will be available for working capital and distribution to investors and limited partners. (See Note 2.) (vii) The apartment rental market is not dependent upon a single or a few customers, but instead relies on a wide customer base. The Unicom units are expected to be rented to upper income retirees. (viii) No portion of Registrant's business involved government contracts. I-6 (ix) The adult rental apartment market in South Florida is highly competitive. Martinez & Associates, consultants retained by Unicom and specializing in housing for the elderly, identified nine facilities in the Fort Lauderdale area as being competitive with the Unicom complex. However, the Unicom project offers larger units and makes available more two-bedroom units than its competitors. (x) Registrant incurs no research and development expenses. (xi) In the development and sale of their properties, Registrant, Unicom 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. Unicom employs 87 people full time and 43 people part time, engaged in the operation of the retirement facility. (d) Unicom has no foreign operations or export sales. ITEM 2. PROPERTIES At June 30, 1998 Unicom held 78 acres on which it completed the construction of a 324 unit adult rental apartment project. See item 1(b)(1)(i)(a). The Company has outstanding 4% subordinated convertible debentures that became due September 30, 1989 (the Debentures) in the aggregate principal amount of $1,627,112. Accrued interest thereon aggregated $871,237 at June 30, 1998. The payment of the interest and principal on the Debentures is subordinate to payment of certain senior debt which remains outstanding. Consequently, the Registrant has been prohibited from paying the Debentures since maturity. Nonetheless, the Registrant believes that its assets are sufficient eventually to satisfy the senior indebtedness and pay the principal of and accumulated interest on the Debentures. ITEM 3. LEGAL PROCEEDINGS Foreclosure Proceedings - As of June 30, 1992, the Company owed $2,511,551 of principal plus accrued interest of $655,036 to a bank. Collateral for the loan was substantially all the land owned by CPC. The bank obtained a final judgment of foreclosure and a sale of the property took place on October 26, 1992. See Item 1(b)(1)(i)(b). I-7 ITEM 4. 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. I-8 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, 1998. The Company has no knowledge of other transactions. Therefore, no bid and asked prices could be ascertained. (b) As of September 30, 1998, there were 1,326 holders of record of 2,833,154 limited partnership interests, excluding individual participants in security nominee of street names. 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 September 30, 1998, 1,567 of the 2,893 record holders of limited partnership interests holding 284,911 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. II-1 ALL-STATE PROPERTIES L.P (A LIMITED PARTNERSHIP) (NOTE 1A) SELECTED FINANCIAL DATA AS OF AND FOR THE YEARS ENDED JUNE 30 UNAUDITED
SELECTED CASH FLOW AND AND OPERATING STATEMENT DATA 1 9 9 8 1 9 9 7 1 9 9 6 1 9 9 5 1 9 9 4 REVENUE: Equity in net earnings (loss) of real estate partnerships $ (34,380) $ (82,532) $ (76,228) $ (127,122) $ (121,015) Other income 49,763 328,171 99,341 36,396 27,97 0 Total $ 15,383 $ 245,639 $ 23,113 $ (90,726) $ (93,045) Income (loss) before Extraordinary Items $ (151,977) $ (141,963)$ (330,087) $ (294,9 03) $ (487,973) Net Income (Loss) $ (151,977) $ (141,963)$ (330,087) $ (294,903) $ (341,999) Per Share/Unit - fully diluted: Net income (loss) be- fore Extraordinary Items $ (.05) $ (.05) $ (.10) $ (.09) $ (.15) Net Income (Loss) $ (.05) $ (.05) $ (.10) $ (.09) $ (.11) SELECTED BALANCE SHEET DATA Total Assets $ 6,993 $ 28,806 $ 222,911 $ 375,421 $ 3 71,503 Notes, mortgages and con- struction loans $ 430,600 $ 427,117 $ 452,595 $ 450,041 $ 3 46,038 4% convertible debentures, due 1989 including accrued interest 2,498,349 2,433,265 2,368,181 2,303,097 2,238,013 Total $ 2,928,949 $2,860,382 $ 2,820,776 $ 2,753, 138 $ 2,584,051 Cash Dividends Declared Per Share/Unit $ NONE $ NONE $ NONE $ NONE $ NONE
See notes to financial statements. II-2 CITY PLANNED COMMUNITIES, (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) SELECTED FINANCIAL DATA AS OF AND FOR THE YEARS ENDED JUNE 30 UNAUDITED
SELECTED INCOME STATEMENT DATA 1 9 9 8 1 9 9 7 1 9 9 6 1 9 9 5 1 9 9 4 Sales and rental of real estate $ - $ 10,449,562 $ 10,186,182 $ 9,8 74,474 $ 9,475,261 Lease Income 4,755,196 - - - - Interest and other income 114,134 90,035 74,341 75,179 42,82 0 Total Revenues $ 4,869,330 $ 10,539,597 $ 10,260,523 $ 9,9 49,653 $ 9,518,081 Net Income(Loss) Before Extra- ordinary Item $ 140,884 $ 450,995 $ 224,775 $ (589,551) $ (597,908) Net Income(Loss) $ 140,884 $ 450,995 $ 224,775 $ (589,551) $ (597,908) SELECTED BALANCE SHEET DATA Total Assets $ 30,948,582 $ 31,006,067 $ 31,866,913 $ 31,5 67,368 $ 32,550,887 Partners' Cash Distributions $ NONE $ NONE $ NONE $ NONE $ NONE NOTE: Information shown is from the combined financial statements of City Planned Communities and Unicom Partnership Ltd.
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, 1998 COMPARED TO YEAR ENDED JUNE 30, 1997 FINANCIAL CONDITION Registrant's source of working capital consists of cash received from borrowings and loans received from its 50% joint venture, CPC. No cash was available for distribution during the year ended June 30, 1998. In consideration of cash advances made and services rendered by certain individuals to Unicom, Unicom 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 Unicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances to Unicom 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 Unicom, 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 Unicom 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 Unicom 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. II-4 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. RESULTS OF OPERATIONS Revenues Revenues decreased by 94% for the year ended June 30, 1998 as compared to 1997 as a result of the sale of land and condominium units in 1997. Costs and Expenses The total costs and expenses for the year ended June 30, 1998 decreased by 57%. Net Loss Net loss was increased by 8%. See Note 12 to the financial statements relative to a recent lease and option agreement entered into by Unicom Partnership Ltd. 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, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996 FINANCIAL CONDITION Registrant's source of working capital consists of cash received from borrowings and loans received from its 50% joint venture, CPC. No cash was available for distribution during the year ended June 30, 1997. As of June 30, 1997, in consideration of cash advances made and services rendered by certain individuals to Unicom, Unicom 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 partners equally 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: 1.00% to the general partner of Unicom 49.50% to Newnel Partnership 3.50% to certain individuals who made cash advances to Unicom on behalf of the Company 46.00% to the Company 100.00% 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. RESULTS OF OPERATIONS REVENUES Revenues increased by 950% for the year ended June 30, 1997 as compared to 1996 as a result of the sale of land and condominium units. COSTS AND EXPENSES The total costs and expenses for the year ended June 30,1 996 increased by 10%. Net Loss Net loss was decreased by 60%. SUBSEQUENT EVENTS See Note 12 to the financial statements relative to a recent lease and option agreement entered into by Unicom Partnership Ltd., a 49-1/2% owned subsidiary. II-6 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CITY PLANNED COMMUNITIES AND UNICOM PARTNERSHIP LTD. YEAR ENDED JUNE 30, 1998 COMPARED TO YEAR ENDED JUNE 30, 1997 The net income for the year ended June 30, 1998 as compared to 1997 decreased by 69% as a result of the payments to the lessee (see Note 8 to financial statement.) In consideration of cash advances made and services rendered by certain individuals to Unicom, Unicom 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 Unicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances to Unicom 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 Unicom, 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 Unicom 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 Unicom 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. II-7 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CITY PLANNED COMMUNITIES AND UNICOM PARTNERSHIP LTD. YEAR ENDED JUNE 30, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996 The net income for the year ended June 30, 1997 as compared to 1996 increased by 100% as a result of an increase in the net income from the retirement community. As of June 30, 1997, in consideration of cash advances made and services rendered by certain individuals to Unicom, Unicom 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 partners equally 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: 1.00% to the general partner of Unicom 49.50% to Newnel Partnership 3.50% to certain individuals who made cash advances to Unicom on behalf of the Company 46.00% to the Company 100.00% 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-8 ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ALL-STATE PROPERTIES L.P. P O BOX 5524 Fort Lauderdale, FL 33310-5524 Telephone (954) 572-2113 Fax (954) 749-5664 The accompanying balance sheets of All-State Properties L.P. (a limited partnership) (Note 1A) as of June 30, 1998 and the related statements of operations, changes in partners' capital (deficit) and cash flow for the year then ended and the schedule and exhibit listed in the index have been compiled in accordance with standards established by the American Institute of Certified Public Accountants. The accompanying financial statements have not been audited by independent public accountants and no accountant has expressed an opinion thereon. They have been prepared by the Registrant assuming that All-State Properties L.P. (a limited partnership) (Note 1A) will continue as a going concern. As explained in Note 11 to the financial statements, at June 30, 1998, conditions exist which indicate that the partnership is unable to generate sufficient cash flow to meet its obligations. The financial statements do not include any adjustments or reclassifications that might result from the outcome of these uncertainties. No auditing procedures have been performed since September, 1989. The Registrant's cash flow is insufficient for the Registrant to compensate accountants for past or present services. The Registrant intends to obtain audited financial statements for the 1990-1998 periods as soon as it is in a financial position to compensate an accountant for such services. Very truly yours, ALL-STATE PROPERTIES L.P. By: STANLEY R. ROSENTHAL General Partner II-9 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP)(NOTE 1A) YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED I N D E X PAGE Partnership's Letter II-9 FINANCIAL STATEMENTS: Balance Sheets 11-11 Statements of Operations II-12 Statements of Changes in Partners' Capital (Deficit) II-13 Statements of Cash Flows II-14/15 Notes to Financial Statements II-16/25 SUPPLEMENTAL INFORMATION: Exhibits indicating the Computation of Earnings per Unit IV-6 Schedule X - Supplemental Income Statement Information Charged to Cost and Expenses IV-5 Selected Financial Data II-2 II-10 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) BALANCE SHEETS JUNE 30, 1998 AND 1997 (UNAUDITED) A S S E T S JUNE 30 1 9 9 8 1 9 9 7 Cash $ 4,037 $ 13,432 Receivables: Trade and other $ - $ - Real estate held for sale and develop- ment at lower of cost or market value (Notes 1D, 1E and 4): Land and land improvements $ - $ 12,000 Condominium homes completed and under construction - - $ - $ 12,000 Other Assets $ 2,956 $ 3,374 Total Assets $ 6,993 $ 28,806 LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) LIABILITIES: Notes payable (Notes 4 and 8) $ 430,600 $ 427,117 4% convertible subordinated debentures (Notes 5, 8 and 11) 2,498,349 2,433,265 Partnership distributions payable (Note 9) 252,496 252,496 Notes payable - related party (Note 2) 166,749 66,760 Accounts payable and other liabilities (Note 7) 33,413 100,613 $ 3,381,607 $ 3,280,251 DEFICIENCY IN PARTNERSHIPS: Undistributed earnings (loss) of partnerships (Notes 1C, 1D, 2,4 and 11) $ 992,266 $ 957,886 COMMITMENTS AND CONTINGENCIES (Notes 2 and 11) $ - $ - PARTNERS' CAPITAL (DEFICIT): Partners' capital (deficit) (3,772,419 units authorized, 3,118,065 units outstanding) (Notes 4, 6 and 9) $(4,148,035) $ (3,996,058) Notes receivable-officers/partners including accrued interest of $78,988 in 1998 and $73,416 in 1997 (Note 3) (218,845) (213,273) $ (4,366,880)$ (4,209,331) TOTAL LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) $ 6,993 $ 28,806 See notes to financial statements. II-11 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF OPERATIONS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED 1 9 9 8 1 9 9 7 1 9 9 6 REVENUES (Note 10): Loss from real estate partnership (Note 2) $ (34,380) $ (82,532) $ (76,228) Interest and dividend income (Note 3) 9,448 11,971 11,991 Other 26,815 5,300 14,850 Sale of land and condominium units 13,500 310,900 72,500 $ 15,383 $ 245,639 $ 23,113 COST AND EXPENSES: Selling, general and administrative expenses(Note 1E) $ 31,441 $ 86,370 $ 148,828 Interest (Notes 1E, 4 and 5) 119,529 100,838 112,246 Cost of land and condominiums sold 16,390 200,394 92,126 Total $ 167,360 $ 387,602 $ 353,200 NET LOSS $ (151,977) $ (141,963) $ (330,087) NET INCOME OR (LOSS) PER PARTNERSHIP UNIT (Note 1F) $ (0.05) $ (0.05) $ (0.10) CASH DISTRIBUTIONS PER UNIT $ NONE $ NONE $ NONE See notes to financial statements. II-12 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED
NOTES TOTAL RECEIVABLE PARTNERS NUMBER GENERAL LIMITED OFFICERS/ CAPITAL OF UNITS PARTNER PARTNERS PARTNERS (DEFICIT) BALANCE - June 30, 1995 3,118,065 $ 2 $ (3,524,008) $ (202,0 85) $(3,726,093) Net loss - - (330,087) - (330,087) Net increase in notes receivable- partners - - - (5,594) (5,594) BALANCE - June 30, 1996 3,118,065 $ 2 $ (3,854,095) $ (207,6 79) $ (4,061,774) Net loss - - (141,963) - (141,963) Net increase in notes receivable- partners - - - (5,594) (5,594) BALANCE - June 30, 1997 3,118,065 $ 2 $ (3,996,058) $ (213,2 73) $ (4,209,331) Net loss - - (151,977) - (151,977) Net increase in notes receivable- partners - - - (5,572) (5,572) BALANCE - June 30, 1998 3,118,065 $ 2 $ (4,148,035) $ (218,8 45) $ (4,366,880)
See notes to financial statements. II-13 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED YEARS ENDED JUNE 30, 1 9 9 8 1 9 9 7 1 9 9 6 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (Note 1G) Cash Flows from Operating Activities: Cash received principally from rental activities and sale of condominiums $ 9,051 $ 310,900 $ 90,269 Interest and dividends and other income received 48,828 6,086 4 Cash paid for selling, general and administrative expenses (61,349) (256,409) (70,109) Interest paid (94,051) (7,937) - Net Cash (Used) Provided by Operating Activities $ (97,521) $ 52,640 $ 20,164 Cash Flows from Financing Activities: (Payment) Proceeds from notes payable - net $ 45,461 $ (40,925) $ (57,895) Proceeds (payments) on note-related party - net 42,665 - 24,651 Net Cash Provided (Used) by Financing Activities $ 88,126 $ (40,925) $ (33,244) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (9,395) $ 11,715 $ (13,080) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 13,432 1,717 14,797 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,037 $ 13,432 $ 1,717 See notes to financial statements. 11-14 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED YEARS ENDED JUNE 30, 1 9 9 8 1 9 9 7 1 9 9 6 Reconciliation of net (loss) to net cash (used) provided by operating activities: Net (Loss) $ (151,977) $ (141,963) $ (330,087) Adjustments to reconcile net (loss) to net cash (used) provided by operating activities: Cost of real estate sold $ 12,000 $ 205,036 $ 82,997 Depreciation and amortization - - - Loss from real estate partnership 34,380 82,532 76,228 Write down of land to net realizable value (1) - - 48,000 Changes in assets and liabilities: Increase (Decrease) in accrued interest - notes payable (41,978) 15,447 60,449 Increase in accrued interest - related party notes (net) 57,324 5,995 4,714 (Increase) in notes receiv- able - partners (5,572) (5,594) (5,594) Decrease in trade and other receivables - 1,720 - Decrease in deferred assets - - 2,919 Decrease (increase) in other assets 418 (936) 5,514 Increase in 4% convertible subordinated debenture in- cluding accrued interest 65,084 65,084 65,084 (Decrease) Increase in accounts payable and other liabilities (67,200) (174,681) 9,940 Total Adjustments $ 54,456 $ 194,603 $ 350,251 NET CASH (USED) PROVIDED BY OPERATING ACTIVITIES $ (97,521) $ 52,640 $ 20,164 SCHEDULE OF NON-CASH INVESTING AND FINANCIAL ACTIVITIES: (1) The Partnership recognized a loss on the write down of condominiums held for sale, to net realizable value in 1996. See notes to financial statements. II-15 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997, AND 1996 UNAUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Presentation On November 3, 1986, Wimbledon Development Ltd. (a limited partnership) was formed to construct and sell condominium units on land acquired from All- State Properties L.P. (hereafter the Company). As of June 30, 1998, all the land and condominiums owned by Wimbledon have been sold. The Company has a 99% limited partnership interest in Wimbledon Development Ltd. and the remaining ownership is being held by a corporation controlled by the president of the Company. The Corporation is the general partner of the partnership and is responsible for the management of Wimbledon Development Ltd. The Company includes in its accounts the assets, liabilities, revenues and expenses of Wimbledon Development Ltd. All significant intercompany accounts and trans- actions have been eliminated. B. Organization All-State Properties L.P. (a limited partnership) is the successor to All-State Properties, Inc. and Subsidiaries. On September 20, 1984, the shareholders of All-State Properties, Inc. approved a Plan of Liquidation pursuant to which the shareholders were issued limited partnership units in the Partnership in exchange for their stock of the Corporation. C. Equity in Partnerships The investments in unconsolidated real estate partnerships are carried at cost plus the Company's equity (deficiency) in the partnerships' undistributed e earnings (deficit) (Note 2). D. Operations and Income Recognition The Company was primarily engaged, in South Florida, in the development and sale of land through a 50% owned real estate partnership, City Planned Communities which is substantially inactive as of June 30, 1998, except for various intercompany loans and advances (Note 10). It also was involved in the construction and sale of residential condominium through a 99% owned limited partnership interest in Wimbledon Development Ltd. As of June 30, 1998, all the land and condominiums owned by Wimbledon have been sold II-16 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997, AND 1996 UNAUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Operations and Income Recognition (Continued) (Note 1A) and a 36.12% limited partnership interest in Unicom Partnership Ltd. (Note 2), which has constructed and operates an adult apartment rental community. Condominiums Revenues from the sale of condominiums are recorded at the time of closing. Construction costs, as outlined in FASB No. 67, Accounting for Cost and Initial Rental Operations of Real Estate Projects, are allocated to individual units based on relative sales value of each unit. E. Real Estate Held for Sale and Development Real estate held for sale and development is carried at the lower of cost or net realizable value. Costs of acquiring and developing land are accumulated and allocated on a per unit basis. During the period of development and construction, certain overhead, selling and carrying costs were capitalized to the extent that these capitalized costs did not increase the carrying value in excess of net realizable value. The following details the adjustments to the valuation accounts to reflect condominiums held for sale at their net realizable value based on projected sales prices. CHARGES CREDIT TO TO RESERVE COST OF SALES June 30, 1998 $ - $ - June 30, 1997 $ - $ - June 30, 1996 $ 48,000 $ 39,602 In accordance with FASB No. 34, Capitalization of Interest Cost, interest costs on qualifying assets under construction are capitalized until the assets are ready for their intended use. Thereafter, such expenses are a period cost. During the years ended June 30, 1998, 1997 and 1996, total interest incurred of $119,529, $100,838 and $112,246, respectively were charged to current operations. II-17 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997, AND 1996 UNAUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F. 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. Effect is given to the convertible debentures that are dilutive. G. 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. H. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles may require management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2 - EQUITY (DEFICIENCY) IN PARTNERSHIPS AND NOTE RECEIVABLE The Company owns a 50% interest in City Planned Communities (a general partnership) (CPC). In September 1986, the Company acquired a 49.5% limited partnership interest in a limited partnership, Unicom Partnership Ltd (Note 12). The beneficial owners of Unicom Partnership Ltd. were substantially the same as the beneficial owners of City Planned Communities. Unicom Partnership Ltd. acquired land from City Planned Communities and has constructed an adult apartment rental community. CPC advanced approximately $12,700,000 to Unicom. The funds have been used by Unicom to fund project cost and the operating deficit. In June, 1995, the partners of CPC agreed to contribute $13,351,210 in notes, loans and accrued interest to Unicom's capital. II-18 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997, AND 1996 UNAUDITED NOTE 2 - EQUITY (DEFICIENCY) IN PARTNERSHIPS AND NOTE RECEIVABLE (Continued) The Company discontinued applying the equity method to its investment in Unicom Partnership Ltd. (Unicom) in 1988 when the investment account was reduced to zero. The Company will resume applying the equity method only after its share of the net income equals the share of net losses not recognized during the period the equity method was suspended. The unrecognized income or losses are not included in the Company's partners' deficiency. During the current year the Company's share of Unicom's income was $103,772. As of June 30, 1998 and 1997, the details of the related party obligations between City Planned Communities and the Company are as follows: JUNE 30, 1 9 9 8 1 9 9 7 Note receivable from City Planned Communities - Unsecured demand loan, interest at 8.5% per annum including accrued interest $ 33,592 $ 121,210 Note payable to City Planned Communities - unsecured demand loan, interest at 8.5% per annum, including accrued interest (200,341) (187,970) NET $ (166,749) $ (66,760) II-19 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 2 - EQUITY (DEFICIENCY) IN PARTNERSHIPS AND NOTE RECEIVABLE (Continued) 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 UNICOM PLANNED PARTNERSHIP COMMUNITIES LTD. (NOTE 10) (NOTE 12) COMBINED 1998 $ (992,266) $ -0- $ (992,266) 1998 (100.0%) -0- (100.0%) 1997 $ (957,886) $ -0- $ (957,886) 1997 (100.0%) -0- (100.0%) In consideration of cash advances made and services rendered by certain individuals to Unicom, Unicom 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 Partner ship 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 Unicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances to Unicom on behalf of the Company. 45.73% to the Company 100.00% II-20 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 2 - EQUITY (DEFICIENCY) IN PARTNERSHIPS AND NOTE RECEIVABLE (Continued) Subsequently, of the holders of the 26.76%, individuals receiving 23.27% were admitted as limited partners of Unicom, 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 Unicom 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 Unicom 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 assign 9.00% of any of its cash that becomes available for distribution to certain individuals for funds advanced by them to CPC. 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 former treasurer and the general partner of the Company, who were officers of the predecessor corporation, originated on April 19, 1984 the notes receivable when they exercised their options to acquire 130,000 shares of common stock, which were subsequently exchanged for limited partnership units. The Company received cash and notes receivable from the transaction. The balances of notes receivable consists of the following as of June 30, 1998. II-21 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 3 - NOTES RECEIVABLE - PARTNERS (Continued) PRINCIPAL INCLUDING ACCRUED INTEREST MATURITY DATE INTEREST $ 218,845 July, 2000 4% per Annum To secure their obligation to pay the notes and accrued interest, the Company was granted a lien on and a security interest in the units. Cash distributions which were previously applied as mandatory prepayments at 50% were increased to 100% and are to be applied first to accrued interest, and then as a reduction of principal until paid in full. The notes are non-recourse. 1 9 9 8 1 9 9 7 NOTE 4 - NOTES PAYABLE Notes payable at June 30 consist of the following: Notes payable - individual (in- cluding accrued interest of $3,127 and $35,397 respec- tively) due December 31, 2000. Interest at 10% per annum. The Company assigned a 1% par- ticipation in profits and cash flow from Unicom or City Planned Communities in order to obtain this loan. (Notes 2 and 10). $ 40,301 $ 37,770 Note payable - individuals (in- cluding accrued interest of $56,415 and $86,609 respec- tively) due on demand, interest from 8.5% to 15% per annum, un- secured. The Company assigned 7.5% of its potential distribu- tions from City Planned Communi- ties to the individuals in order to obtain this loan and other funds advanced on the Company's behalf. (See Note 2). 390,299 353,609 II-22 ALL STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 4 - NOTES PAYABLE (Continued) 1 9 9 8 1 9 9 7 Note payable - (including ac- crued interest of $12,538, due December 31, 1997 with inter- est calculated at 8% per annum from October 1, 1990. $ - $ 35,738 $ 430,600 $ 427,117 The approximate amortization of principal and accrued interest until maturity will be as follows as of June 30, 1998: June 30, 1999 $ 390,299 June 30, 2001 40,301 $ 430,600 NOTE 5 - 4% CONVERTIBLE SUBORDINATED DEBENTURES The 4% convertible subordinated debentures at June 30, consist of the following: 1 9 9 8 1 9 9 7 1 9 9 6 Convertible at $3 per unit $ 1,625,301 $ 1,625,301 $ 1,625,301 Convertible at $1 per unit 1,811 1,811 1,811 Accrued interest (Note 8) 871,237 806,153 741,069 $ 2,498,349 $ 2,433,265 $ 2,368,181 NOTE 6 - 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, 1998, 1997 and 1996 aggregated ($160,000), ($680,000) and ($575,000), respectively, which approximates income (losses) of ($0.05), ($0.22) and income of ($0.18) per unit, based on 3,118,065 outstanding partnership units. II-23 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 7 - ACCOUNTS PAYABLE AND OTHER LIABILITIES: Account payable and other liabilities at June 30 consist of the following: 1 9 9 8 1 9 9 7 1 9 9 6 Taxes, primarily real estate $ - $ 605 $ 23,975 Professional fees 9,585 77,012 94,954 Other 23,828 22,996 156,365 $ 33,413 $ 100,613 $ 275,294 NOTE 8 - ACCRUED INTEREST Accrued interest consists of the following: 1 9 9 8 1 9 9 7 Interest payable included in notes payable (Note 4) $ 59,542 $ 134,544 Interest included in 4% con- vertible subordinated deben- tures (Notes 5 and 10) 871,237 806,153 $ 930,779 $ 940,697 NOTE 9 - PARTNERS' CAPITAL (DEFICIT) As of June 30, 1998, there are 1,563 shareholders holding 290,836 shares of the predecessor corporation that have not converted their stock certificates into limited partnership units. The limited partnership, from inception through June 30, 1998, has declared accumulated distributions of $.85 per each unit of partnership interest outstanding. The partnership distributions payable represent the Company's liability if the stock certificates are converted into partnership units. The Company did not make cash distributions to its unit owners during years ended June 30, 1998, 1997 and 1996. NOTE 10 - RESTRUCTURED FINANCING In October of 1993, the Company owned a bank interest and principal totaling $270,974 on two outstanding obligations (See Note 4). A limited partner of the II-24 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) NOTES TO FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 10 - RESTRICTED FINANCING (Continued) Company purchased the obligation from the bank for $125,000 and advanced another $25,000 to the Company. The Company and the individual entered into a modification of the original mortgage and also assigned to the individual a 1% participation in profits and cash flows from Unicom or City Planned Communities. The obligation originally maturing on August 1, 1995 was extended to August 1, 1997 was modified as of August 1, 1997 converting all unpaid interest to principal and all principal will accrue interest at 10% per annum. This new note and accrued interest is due December 31, 2002. NOTE 11 - BUSINESS UNCERTAINTIES The Company has $2,498,349 of convertible subordinated debentures including accrued interest which matured on September 30, 1989 (Note 5). The Company's primary source of cash flow has been from its 50% owned real estate partnership, City Planned Communities (Note 2). The current availability of cash flow from City Planned Communities is not deemed sufficient in order for the Company to meet its currently maturing obligations and its working capital requirement. The Company also has a 36.12% limited partnership interest in Unicom, A Limited Partnership (Notes 1D, 2 and 12). However, the investment in Unicom has not generated cash flow sufficient to pay its subordinate debentures. NOTE 12 - UNICOM PARTNERSHIP LTD - LEASE AGREEMENT Effective July 1, 1997, Unicom entered into an agreement with an intended purchaser who leased the facility for a three-year period after which time the purchaser can purchase the property or cancel the option and forfeit their deposit. The agreement calls for the tenant to pay Unicom 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 will retain $518,700, $775,000, and $875,000, respectively, during the three year period, and Unicom will be paid all other remaining revenue from the facility providing the profit during any year exceeds a certain threshold. II-25 CITY PLANNED COMMUNITIES 5500 NORTHWEST 69TH AVENUE * LAUDERHILL, FLORIDA * 33319 (954) 572-2112 BROWARD * TELECOPIER (954) 749-5664 The accompanying combined balance sheets of City Planned Communities (a partnership) (CPC) and Unicom Partnership Ltd. (a limited partnership) (Unicom) as of June 30, 1998 and 1997 and the related combined statements of operations, changes in partners' capital (deficit) and cash flows for the years then ended, and the supplemental information listed in the index, have been compiled by these partnerships in accordance with standards established by the American Institute of Certified Public Accountants. The accompanying financial statements have not been audited by independent public accountants, and no accountant has expressed an opinion thereon. As discussed in Note 5, Unicom successfully completed a reassignment and reinstatement of its mortgage on July 28, 1995. As of July 1, 1997, Unicom entered into a lease and an option to purchase agreement with CareMatrix Corporation. (See Note 6C to Combined Financial Statements). The financial statements of Unicom have been audited. No auditing procedures have been performed since September, 1989 for CPC. As explained in the accompanying statements in respect of the financial statements of All-State Properties L.P., the undersigned entities intend to obtain audited financial statements for the 1990-1998 periods as soon as they are in a financial position to compensate an accountant for such services. Very truly yours, CITY PLANNED COMMUNITIES UNICOM PARTNERSHIP LTD. By: STANLEY R. ROSENTHAL Managing Partner II-26 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINED COMPILED FINANCIAL STATEMENTS JUNE 30, 1998 UNAUDITED C O N T E N T S PAGE Partnership's Letter II-26 Combined Financial Statements: Balance Sheets II-28 Statements of Operations II-29 Statements of Partners' Capital (Deficit) II-30 Statements of Cash Flows II-31/33 Notes to Financial Statements II-34/39 Supplemental Information: Explanation of eliminations to combining financial statements II-40 Combining Balance Sheets II-41/44 Combining Statements of Operations II-45/47 Combining Statements of Partners' Capital (Deficit) II-48 Combining Statements of Cash Flows II-49/58 Selected Financial Data II-3 II-27 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINED BALANCE SHEETS JUNE 30, 1998 AND 1997 UNAUDITED A S S E T S 1 9 9 8 1 9 9 7 Property and equipment, at cost (Notes 1B, 5 and 6C): Building, including land of $966,170 $ 33,397,340 $ 33,389,465 Furniture and equipment 1,309,753 1,183,708 China, glassware, silverware and utensils 41,713 41,713 $ 34,748,806 $ 34,614,886 Less accumulated depreciation and amortization (7,812,616) (6,888,424) $ 26,936,190 $ 27,726,462 Cash 1,128,620 905,163 Cash - restricted for tenants' security deposits 686,127 694,909 Real estate for sale - at cost (Note 5) - land 9,666 9,666 Deferred management fees - related party (Notes 1A and 4) 631,543 631,543 Funds held in escrow 619,913 543,430 Prepaid expenses 336,773 174,447 Other assets 599,750 320,447 TOTAL ASSETS $ 30,948,582 $ 31,006,067 LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) LIABILITIES: Mortgage loan payable, including $0 and $183,312 of accrued interest, respectively (Note 5) $ 27,097,304 $ 27,496,637 Notes payable - others 40,812 72,753 Notes payable - non-interest bearing - - Notes payable - related parties, including $38,960 and $1,295,115 of accrued interest, respectively (Note 2) 849,987 3,756,454 Accounts payable and accrued expenses (Note 3) 1,157,380 474,223 Tenant security deposits 630,790 624,885 Deferred interest (Note 5) 2,355,572 2,397,258 Option deposit (Note 6C) 4,500,000 - $36,631,845 $ 34,822,210 COMMITMENTS AND CONTINGENCIES (Notes 4, 6, and 7) - - PARTNERS' CAPITAL (DEFICIT) (Notes 4 & 6B) (5,683,263) (3,816,143) TOTAL LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) $ 30,948,582 $ 31,006,067 See notes to combined financial statements. II-28 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINED STATEMENTS OF OPERATIONS YEARS ENDED JUNE 30, 1998, 1997, AND 1996 UNAUDITED 1 9 9 8 1 9 9 7 1 9 9 6 (Note 6C) REVENUES: Sale of land $ - $ - $ 54,166 Rental income - 10,449,562 10,132,016 Interest and other income 114,134 90,035 74,341 Lease income (Note 6C) 4,755,196 - - $ 4,869,330 $ 10,539,597 $ 10,260,523 EXPENSES: Cost of land sold $ - $ - $ 8,128 Dietary and resident services - 3,156,811 3,049,995 General and adminis- trative (Note 4) 594,477 1,049,693 1,069,538 Marketing and adverti- sing - 256,120 239,951 Maintenance and utili- ties - 1,390,463 1,355,630 Taxes and insurance 496,024 792,746 820,846 $ 1,090,501 $ 6,645,833 $ 6,544,088 NET INCOME BEFORE DEPRE- CIATION, AMORTIZATION AND INTEREST: $ 3,778,829 $ 3,893,764 $ 3,716,435 OTHER EXPENSES: Interest (Note 1C) $ 2,624,412 $ 2,490,833 $ 2,576,181 Depreciation and amortization 1,013,533 951,936 915,479 $ 3,637,945 $ 3,442,769 $ 3,491,660 NET INCOME $ 140,884 $ 450,995 $ 224,775 See notes to combined financial statements. II-29 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINED STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED 1 9 9 8 1 9 9 7 1 9 9 6 PARTNERS' CAPITAL (DEFICIT)- Beginning $ (3,816,143) $ (5,116,277) $ (5,341,052) Distributions (Notes 4 & 6B) (5,001,156) (1,219,000) - Contributions (Notes 4 & 6B) 2,993,152 2,068,139 - Net income 140,884 450,995 224,775 PARTNERS' CAPITAL (DEFICIT) - Ending $ (5,683,263) $ (3,816,143) $ (5,116,277) See notes to combined financial statements. II-30 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINED STATEMENTS OF CASH FLOWS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED 1 9 9 8 1 9 9 7 1 9 9 6 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activities: Cash from customers/ tenants $ - $ 10,421,519 $ 10,032,700 Interest received - 53,341 74,341 Cash paid - interest (4,078,848) (2,223,519) (3,422,967) Cash paid - suppliers, employees and admini- strative expenses (731,094) (6,780,951) (6,780,382) Lease income 4,676,201 - - Net Cash (Used) Pro- vided) by Operat- ing Activities $ (133,741) $ 1,470,390 $ (96,308) Cash Flows from Investing Activities: Capital expenditures - net $ (133,920) $ (107,567)$ (226,241) Escrow funding - (22,764) (288,762) Tenant security de- posits - (54,476) 10,444 Other - - (39,392) Partners' distribu- tions - net (2,008,004) $ (1,219,000)$ - Option deposit 4,500,000 - - Net Cash Provided (Used) by Invest- ing Activities $ 2,358,076 $ (1,403,807)$ (543,951) Cash Flows from Financ- ing Ativities: Cash received (paid) - related party $ (1,569,604) $ 2,416 $ 1,028,568 Cash received (paid) notes & mortgages (399,333) (227,513) 245,890 Other (31,941) (898) (215,394) Net Cash (Used) Pro- vided by Financ- ing Activities $ (2,000,878)$ (225,995)$ 1,059,064 See notes to combined financial statements. II-31 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINED STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED 1 9 9 8 1 9 9 7 1 9 9 6 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 223,457 $ (159,412)$ 418,805 CASH AND CASH EQUIVA- LENTS-BEGINNING OF YEAR 905,163 1,064,575 645,770 CASH AND CASH EQUIVA- LENTS-END OF YEAR $ 1,128,620 $ 905,163 $ 1,064,575 See notes to combined financial statements. II-32 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINED STATEMENTS OF CASH FLOWS (CONTINUED) YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED 1 9 9 8 1 9 9 7 1 9 9 6 Reconciliation of net profit to net cash provided (used)by operating activities: Net income $ 140,884 $ 450,995 $ 224,775 Adjustments to reconcile net profit (loss) to net cash provided (used) by operating activities: Depreciation and amortization $ 924,192 $ 951,936 $ 915,479 Increase (decrease) in accrued interest payable (1,674,363) 129,783 (849,648) Decrease in real estate held for sale - - 4,833 (Increase) decrease in prepaid expense (162,326) 11,415 (48,989) Decrease (increase) in other assets and ac- counts receivable (397,472) (69,868) 4,889 (Decrease) increase in accounts payable and accrued expenses 1,035,344 (3,871) (347,647) Total Adjustments $ (274,625) $ 1,019,395 $ (321,083) NET CASH (USED) PROVIDED BY OPERATING ACTIVI- IES $ (133,741) $ 1,470,390 $ (96,308) SCHEDULE OF NON-CASH INVESTING AND FINANC- ING ACTIVITIES: (A) In June of 1995, the partners of City Planned Communities contributed their $13,351,210 notes, loans and accrued interest to the capital of Unicom. (B) In December of 1996, $30,000 of notes due to partners of City Planned Communities were contributed to the capital of the Company. See notes to combined to financial statements. II-33 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED 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 Partnership is relatively inactive). The two fifty percent partners of CPC are All-State Properties L.P. (a limited partnership) and NLI Partners, Ltd. (a limited partnership). 2. Unicom Partnership Ltd. (Hereafter Unicom) The limited partnership 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 is being operated as an adult apartment rental complex (AARC). Effective July, 1997, Unicom has leased its property. (See Note 6C) 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 Unicom. Accordingly, the beneficial owners of Unicom are substantially the same as those of CPC. Therefore, the financial statements of CPC and Unicom 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, Unicom 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 (Note 1D), the gross profit of approximately $3,158,000 from this sale, computed as follows, has been deferred: Selling price $ 4,000,000 Cost of land and land development (822,000) Closing costs (20,000) $ 3,158,000 II-34 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Organization, Operations and Principles of Combination (Continued) 3. Basis for Combination (Continued) Pursuant to the Management Agreement with the deceased Managing Partner, the management fee related to this transaction was paid to the deceased Manager. The expense will be recognized when the profit is recognized. 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. 5. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles may require management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. B. Property and Equipment 1. Building is 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 is used for tax presentation. Since the company is a partnership, income or losses are reported by the partners. Accordingly, no tax effect results from the temporary differences. 2. Furniture and equipment are depreciated using MACRS for both tax and financial statement presentation. Differences between this method and other accelerated depreciation methods are not material. 3. China, glassware, silverware and utensils are represented by a base inventory. Additional acquisitions are expensed when purchased. The base inventory will only change if material variances occur. II-35 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP, LTD. (A LIMITED PARTNERSHIP) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Interest In accordance with FASB Nos. 34 and 67, Capitalization of Interest Cost and Accounting for Costs and Initial Rental Operation of Real Estate Projects, interest and real estate taxes on qualifying assets under construction were capitalized until such time as the property was ready for its intended use. Thereafter, such expenses are period costs. During the years ended June 30, 1998, 1997 and 1996, total interest incurred was $2,434,762, $2,490,833 and $2,576,181,respectively was charged to operations. D. Income Tax Reporting For income tax purposes, CPC reports on the cash basis of accounting while Unicom 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. NOTE 2 - NOTES PAYABLE - RELATED PARTIES Funds advanced by various partners, evidenced by unsecured demand notes, bearing interest at prime rate. 1 9 9 8 1 9 9 7 Total principal $ 811,027 $ 2,461,339 Accrued interest 38,960 1,295,115 $ 849,987 $3,756,454 NOTE 3 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses at June 30, 1998 and 1997 consist of the following: 1 9 9 8 1 9 9 7 Accounts payable $ 623,301 $ 279,379 Real estate taxes 196,579 194,844 $ 819,880 $ 474,223 II-36 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP, LTD. (A LIMITED PARTNERSHIP) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 4 - TRANSACTIONS WITH RELATED PARTIES Management Agreements In a prior year, Unicom entered into an agreement with an individual who is the general partner of All-State Properties L.P., to oversee the day-to-day operations of the AARC. In the prior year Unicom assigned a 5% interest of all available cash flows to the individual for services rendered. (See Note 6A) NOTE 5 - MORTGAGE LOAN PAYABLE The mortgage balance of $27,638,956 was modified on July 28, 1995. The rate of interest was reduced to 8%, including servicing while the maturity date remained unchanged at January 1, 2029. The mortgage is insured by the Department of Housing and Urban Development (HUD) and is payable in monthly installments of $198,051. As a result of the mortgage modification $2,498,809 in accrued interest was forgiven. This amount is recorded as a deferred interest adjustment and is being amortized over the remaining term of the mortgage. During the current fiscal year interest was reduced by $41,686 as a result of the deferred interest amortization. The approximate principal payments for the next five years ending June 30, are as follows: 1999 $ 197,941 2000 233,091 2001 252,438 2002 273,390 2003 296,081 As of June 30, 1998 and 1997 the outstanding indebtedness consisted of: 1 9 9 8 1 9 9 7 Principal $ 27,097,304 $ 27,313,325 Interest - 183,312 $27,097,304 $ 27,496,637 NOTE 6 - COMMITMENTS AND CONTINGENCIES A. Management Contract (See Note 4) 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 is paid a fee equal to 4% of the monthly revenue. The management agreement expires June 30, 2002. II-37 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP, LTD. (A LIMITED PARTNERSHIP) NOTES TO COMBINED FINANCIAL STATEMENTS YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 6 - COMMITMENTS AND CONTINGENCIES (Continued) B. Distributions In consideration of cash advances made and services rendered by certain individuals to Unicom, Unicom 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 Unicom 49.33% to Newnel Partnership 3.60% to certain individuals who made cash advances to Unicom 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 Unicom, 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 Unicom 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 Unicom on behalf of the the Company) 100.00% II-38 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) NOTES TO COMBINED FINANCIAL STATEMENTS JUNE 30, 1998, 1997 AND 1996 UNAUDITED NOTE 6 - COMMITMENTS AND CONTINGENCIES (Continued) B. Distributions (Continued) 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. C. Lease Agreement Effective 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 can purchase the property or cancel the option and forfeit their deposit. The agreement calls 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 will retain $518,700, $775,000, and $875,000, respectively, during the three year period, and the Partnership will be paid all other remaining revenue from the facility providing the profit during any year exceeds a certain threshold. NOTE 7 - PENSION PLAN During year ended June 30, 1995, Unicom Partnership implemented a 401-K pension plan. Employees are 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 are at least 21 years of age. The employer does not make a matching contribution. II-39 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) EXPLANATION OF ELIMINATIONS TO COMBINING FINANCIAL STATEMENTS JUNE 30, 1998 AND 1997 UNAUDITED The combining financial statements for City Planned Communities (CPC) and Unicom Partnership Ltd., (Unicom) are presented as supplemental information to the combined financial statements. All significant transactions between CPC and Unicom have been eliminated. Descriptions of the eliminations are as follows: (a) Cost of land purchased by Unicom 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) (b) As of June 30, 1994, Unicom borrowed approximately $12,700,000 from CPC for construction costs overruns on the AARC and has issued demand notes to evidence the loans. Note activity is detailed below: JUNE 30, 1994 Net cash loaned from CPC to Unicom $ 12,703,031 Net accrued interest on notes 648,079 $ 13,351,110 Allowance for loss - note receivable June 30, 1990 $ (2,505,000) June 30, 1991 (3,616,000) June 30, 1992 (1,815,511) Unamortized discount (1,012,900) $ (8,949,411) $ 4,401,699 Interest on the notes was eliminated effective April 1, 1990. In June of 1995 CPC distributed to its partners the notes and interest receivable due from Unicom (net of allowances and discounts). The partners agreed to contribute these obligations to the capital of Unicom. See notes to combined financial statements. II-40 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING BALANCE SHEETS JUNE 30, 1998 UNAUDITED
ASSETS Property and equip- ment, at cost: Building, includ- ing land of $4,123,888 $ - $ 36,555,058 $(3,157,718)(a) $ 33,397,340 Furniture and equipment - 1,309,753 - 1,309,753 China, glassware, silverware and utensils - 41,713 - 41,713 $ - $ 37,906,524 $(3,157,718) $ 34,748,806 Less accumulated depreciation and amortization - (7,812,616) - (7,812 ,616) $ - $ 30,093,908 $ (3,157,718) $ 26,936,190 Cash 306 1,128,314 - 1,128,620 Cash - restricted for tenants' security deposits - 686,127 - 686,127 Real estate for sale - at cost - land 9,666 - - 9,666 Deferred management fees - related party 631,543 - - 631,543 Funds held in escrow - 619,913 - 619,913 Prepaid expenses - 336,773 - 336,773 Other assets 6,886 592,864 - 599,75 0 TOTAL ASSETS $ 648,401 $ 33,457,899 $ (3,157,718) $ 30,9 48,582
See notes to combined financial statements. II-41 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING BALANCE SHEETS (CONTINUED) JUNE 30, 1998 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP BALANCE COMMUNITIES LTD. ELIMINATIONS SHEET LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) LIABILITIES: Mortgage loan payable $ - $ 27,097,304 $ - $ 27,097,304 Notes payable - others - 40,812 - 40,812 Notes payable - related parties 849,987 - - 849,987 Accounts payable and accrued expenses 34,874 1,122,506 - 1,157,380 Tenant security deposits - 630,790 - 630,790 Deferred profit 3,157,718 - (3,157,718)(a) - Deferred interest - 2,355,572 - 2,355,572 Option deposit - 4,500,000 - 4,500,000 $ 4,042,579 $ 35,746,984 $(3,157,718) $ 36,631,845 COMMITMENTS AND CONTINGENCIES - - - - PARTNERS' CAPITAL (DEFICIT) (3,394,178) (2,289,085) - (5,683,263) TOTAL LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) $ 648,401 $ 33,457,899 $ (3,157,718) $ 30,9 48,582
See notes to combined financial statements. II-42 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING BALANCE SHEETS JUNE 30, 1997 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP BALANCE COMMUNITIES LTD. ELIMINATIONS SHEET ASSETS Property and equip- ment at cost: Building, includ- ing land of $4,123,888 $ - $ 36,547,183 $ (3,157,718)(a)$ 33,389,465 Furniture and equipment - 1,183,708 - 1,183,708 China, glassware, silverware and utensils - 41,713 - 41,713 $ - $ 37,772,604 $ (3,157,718) $ 34,614,886 Less accumulated depreciation and amortization - (6,888,424) - (6,888,424) $ - $ 30,884,180 $ (3,157,718) $27,726,462 Cash 456 904,707 - 905,163 Cash - restricted for tenants' se- curity deposits - 694,909 - 694,909 Real estate for sale - at cost - land 9,666 - - 9,666 Deferred management fees - related party 631,543 - - 631,543 Funds held in escrow - 543,430 - 543,430 Prepaid expenses - 174,447 - 174,447 Other assets 6,886 313,561 - 320,447 TOTAL ASSETS $ 648,551 $ 33,515,234 $ (3,157,718) $ 31,006 ,067
See notes to combined financial statements. II-43 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING BALANCE SHEETS (CONTINUED) JUNE 30, 1997 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP BALANCE COMMUNITIES LTD. ELIMINATIONS SHEET LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) LIABILITIES: Mortgage loan payable $ - $ 27,496,637 $ - $ 27,496,637 Notes payable - others - 72,753 - 72,753 Notes payable - related parties 3,756,454 - - 3,756,454 Accounts payable and accrued expenses 52,951 421,272 - 474,223 Tenant security deposits - 624,885 - 624,885 Deferred profit 3,157,718 - (3,157,718)(a) - Deferred interest - 2,397,258 - 2,397,258 $ 6,967,123 $ 31,012,805 $ (3,157,718) $ 34,822,210 COMMITMENTS AND CONTINGENCIES - - - - PARTNERS' CAPITAL (DEFICIT) (6,318,572) 2,502,429 - (3,816 ,143) TOTAL LIABILITIES AND PARTNERS' CAPITAL (DEFICIT) $ 648,551 $ 33,515,234 $ (3,157,718) $ 31,0 06,067
See notes to combined financial statements. II-44 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF OPERATIONS JUNE 30, 1998 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP STATEMENT OF COMMUNITIES LTD. ELIMINATIONS OPERATIONS REVENUES: Rental income $ - $ - $ - $ - Interest and other income 52,340 61,794 - 114,134 Lease income - 4,755,196 - 4,755,196 $ 52,340 $ 4,816,990 $ - $ 4,869,330 EXPENSES: Dietary and re- sident ser- vices $ - $ - $ - $ - General and administra- tive 1,027 593,450 - 594,477 Marketing and ad- vertising - - - - Maintenance and utilities - - - - Taxes and insurance - 496,024 - 496,024 $ 1,027 $ 1,089,474 $ - $ 1,090,501 NET INCOME BEFORE DEPRECIATION, AMORTIZATION AND INTEREST $ 51,313 $3,727,516 $ - $ 3,778,829 OTHER EXPENSES: Interest $ 120,071 $2,504,341 $ - $ 2,624,412 Depreciation and amortization - 1,013,533 - 1,013,533 $ 120,071 $ 3,517,874 $ - $ 3,637,945 NET INCOME (LOSS) $ (68,758) $ 209,642 $ - $ 140,884
See notes to combined financial statements. II-45 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF OPERATIONS JUNE 30, 1997 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP STATEMENT OF COMMUNITIES LTD. ELIMINATIONS OPERATIONS REVENUES: Rental income $ - $ 10,449,562 $ - $ 10,449,562 Interest and other income 36,694 53,341 - 90,035 $ 36,694 $ 10,502,903 $ - $ 10,539,597 EXPENSES: Dietary and resi- dent services $ - $ 3,156,811 $ - $ 3,156,811 General and admini- strative 3,699 1,045,994 - 1,049,693 Marketing and adver- tising - 256,120 - 256,120 Maintenance and utilities - 1,390,463 - 1,390,463 Taxes and in- surance 549 792,197 - 792,746 $ 4,248 $ 6,641,585 $ - $ 6,645,833 NET INCOME BEFORE DEPRECIATION, AMORTIZATION AND INTEREST $ 32,446 $ 3,861,318 $ - $ 3,893,764 OTHER EXPENSES: Interest $ 197,509 $ 2,293,324 $ - $ 2,490,833 Depreciation and amortization - 951,936 - 951,936 $ 197,509 $ 3,245,260 $ - $ 3,442,769 NET INCOME (LOSS) $ (165,063) $ 616,058 $ - $ 450,995
See notes to combined financial statements. II-46 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF OPERATIONS JUNE 30, 1996 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP STATEMENT OF COMMUNITIES LTD. ELIMINATIONS OPERATIONS REVENUES: Sale of land $ 54,166 $ - $ - $ 54,166 Rental income - 10,132,016 - 10,132,016 Interest income 11,107 63,234 - 74,341 $ 65,273 $ 10,195,250 $ - $ 10,260,523 EXPENSES: Cost of land sold $ 8,128 $ - $ - $ 8,128 Dietary and resi- dent services - 3,049,995 - 3,049,995 General and admini- strative 10,700 1,058,838 - 1,069,538 Marketing and adver- tising - 239,951 - 239,951 Maintenance and utilities - 1,355,630 - 1,355,630 Taxes and insurance 851 819,995 - 820,846 $ 19,679 $ 6,524,409 $ - $ 6,544,088 NET INCOME BEFORE DEPRECIATION, AMORTIZATION AND INTEREST $ 45,594 $ 3,670,841 $ - $ 3,716,435 OTHER EXPENSES: Interest $ 198,050 $ 2,378,131 $ - $ 2,576,181 Depreciation and amortization - 915,479 - 915,479 $ 198,050 $ 3,293,610 $ - $ 3,491,660 NET(LOSS)INCOME $ (152,456) $ 377,231 $ - $ 224,775
See notes to combined financial statements. II-47 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF PARTNERS' CAPITAL (DEFICIT) YEARS ENDED JUNE 30, 1998, 1997 AND 1996 UNAUDITED
COMBINED STATEMENT CITY UNICOM OF PARTNERS' PLANNED PARTNERSHIP CAPITAL COMMUNITIES LTD. ELIMINATIONS (DEFICIT) PARTNERS' CAPITAL (DEFICIT) - June 30, 1995 $ (6,031,053) $ 690,001 $ - $ (5,341,052) Net Income (Loss)- 1996 (152,456) 377,231 - 224,775 PARTNERS' CAPITAL (DEFICIT) - June 30, 1996 $ (6,183,509) $ 1,067,232 $ - $ (5,116,277) Net income (loss) - 1997 (165,063) 616,058 - $ 450,995 Distribution - (1,219,000) - (1,219,000) Contribution 30,000 2,038,139 - 2,068,139 PARTNERS' CAPITAL (DEFICIT) - June 30, 1997 $ (6,318,572) $ 2,502,429 $ - $ (3,816,143) Net Income (loss) - 1998 (68,758) 209,642 - 140,884 Distribution - (5,001,156) - (5,001,156) Contribution 2,993,152 - - 2,993,152 PARTNERS' CAPITAL (DEFICIT) - June 30, 1998 $ (3,394,178) $ (2,289,085) $ - $ (5,683,263)
See notes to combined financial statements. II-48 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 1998 UNAUDITED
COMBINED CITY UNICOM STATEMENT PLANNED PARTNERSHIP OF COMMUNITES LTD. ELIMINATIONS CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVA- LENTS Cash Flows from Opera- ing Activities: Cash from customers/ tenants/sales $ - $ - $ - $ - Interest received - - - - Cash paid - interest (1,418,655) (2,660,193) - (4, 078,848) Cash paid - suppliers, employees and admini- strative expenses (5,043) (726,051) - (731,094) Lease income - 4,676,201 - 4,676,201 Net Cash (Used) Pro- vided by Operating Activities $ (1,423,698) $ 1,289,957 $ - $ (133,741) Cash Flows from Invest- ing Activities: Capital expenditures - net $ - $ (133,920) $ - $ (133,920) Escrow funding - - - - Tenant security deposits - net Partner contribution (distribution) 2,993,152 (5,001,156) - (2,008 ,004) Option deposit - 4,500,000 - 4,500,000 Net Cash (Used) Provided by Investing Activities $ 2,993,152 $ (635,076) $ - $ 2,358,076 Cash Flows from Financ- ing Activities: Cash received (paid) - related party $ (1,569,604) $ - $ - $ (1,569,604) Cash (paid) received - - notes and mort- gages - (399,333) - $ (399,333) Other - (31,941) - (31,941) Net Cash Provided (Used) by Financ- ing Activities $ (1,569,604) $ (431,274) $ - $ (2,000 ,878)
See notes to combined financial statements. II-49 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 1998 UNAUDITED
COMBINED CITY UNICOM STATEMENT PLANNED PARTNERSHIP OF COMMUNITIES LTD. ELIMINATIONS CASH FLOWS NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS $ (150) $ 223,607 $ - $ 223,457 CASH AND CASH EQUIVA- LENTS BEGINNING OF YEAR 456 904,707 - 905,163 CASH AND CASH EQUIVA- LENTS END OF YEAR $ 306 $ 1,128,314 $ - $ 1,128,620
See notes to combined financial statements. II-50 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 1998 UNAUDITED
COMBINED CITY UNICOM STATEMENT PLANNED PARTNERSHIP OF COMMUNITIES LTD. ELIMINATIONS CASH FLOWS Reconciliation of net profit (loss) to net cash provided (used) by operating activi- ties: Net income (loss) $ (68,758) $ 209,642 $ - $ 140,884 Adjustments to recon- cile net income (loss) to net cash provided (used) by operating activities: Depreciation and amortization $ - $ 924,192 $ - $ 924,192 (Decrease) in interest payable (1,674,363) - - (1,674,363) (Increase) in prepaid expenses - (162,326) - (162,326) (Increase) in other assets and accounts receivable - (397,472) - (397,472) Increase in ac- counts payable and accrued expenses 319,423 715,921 - 1,035,344 Total Adjust- ments $ (1,354,940) $ 1,080,315 $ - $ (274,625) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (1,423,698) % 1,289,957 $ - $ (133,741)
See notes to combined financial statements. II-51 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 1998 UNAUDITED [CAPTION] SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES: (A) In June of 1995 the partners of City Planned Communities contributed their $13,351,210 notes, loans and accrued interest to the capital of Unicom. (B) In December of 1996, $30,000 of notes due to partners of City Planned Communities were contributed to the capital of the Company. See notes to combined financial statements. II-52 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 1997 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP ELIMI- STATEMENT OF COMMUNITIES LTD. NATIONS CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activities: Cash from customers/ tenants/sales $ - $ 10,421,519 $ - $ 10,421,519 Interest received - 53,341 - 53,341 Cash paid - interest - (2,223,519) - (2,223,519) Cash paid - suppliers, employees and admini- strative expenses (2,393) (6,778,558) - (6,780,951) Net Cash (Used) Provided by Oper- ating Activities $ (2,393) $ 1,472,783 $ - $ 1,470,390 Cash Flows from Invest- ing Activities: Capital expenditures- net $ - $ (107,567) $ - $ (107,567) Escrow funding - (22,764) - (22,764) Tenant security deposits - net - (54,476) - (54,476) Partner distribution - (1,219,000) - (1,219,000) Investing Activi- ties $ - $ (1,403,807) $ - $ (1,403,807) Cash Flows from Financ- ing Activities: Cash received - related party $ 2,416 $ - $ - $ 2,416 Cash paid - notes and mortgages - (227,513) - (227,513) Other - (898) - (898) Net Cash Provided (Used) by Financ- ing Activities $ 2,416 $ (228,411) $ - $ (225,995) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 23 $ (159,435) $ - $ (159,412) CASH AND CASH EQUIVA- LENTS BEDGINNING OF YEAR 433 1,064,142 - 1,064,575 CASH AND CASH EQUIVA- LENTS END OF YEAR $ 456 $ 904,707 $ - $ 905,163
See notes to combined financial statements. II-53 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 1997 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP STATEMENT OF COMMUNITIES LTD. ELIMINATIONS CASH FLOWS Reconciliation of net profit (loss) to net cash provided (used) by operating acti- vities: Net income (loss) $ (165,063) $ 616,058 $ - $ 450,995 Adjustments to reconcile net profits (loss) to cash provided (used) by opera- ting activities: Depreciation and amortization $ - $ 951,936 $ - $ 951,936 Increase (de- crease) in in- terest payable 185,138 (55,355) - 129,783 Decrease in real estate held for sale - - - - (Increase) in prepaid expenses - 11,415 - 11,415 (Increase) De- crease in other assets and ac- counts receiv- able - (69,868) - (69,868) (Decrease)increase in acounts pay- able and accrued expenses (22,468) 18,597 - (3,871) Total Adjust- ments $ 162,670 $ 856,725 $ - $ 1,019,395 NET CASH PROVIDED (USED) BY OPERA- TING ACTIVITIES $ (2,393) $ 1,472,783 $ - $ 1,470,390
See notes to combined financial statements. II-54 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 1997 UNAUDITED [CAPTION] SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES: (A) In June of 1995 the partners of City Planned Communities contributed their $13,351,210 notes, loans and accrued interest to the capital of Unicom. (B) In December of 1996, $30,000 of notes due to partners of City Planned Communities were contributed to the capital of the Company. See notes to combined financial statements. II-5 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 1996 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP STATEMENT OF COMMUNITIES LTD. ELIMINATONS CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash Flows from Operating Activi- ties: Cash from customers/ tenants/sales $ 54,166 $ 9,978,534 $ - $ 10,032,700 Interest received 11,107 63,234 - 74,341 Cash paid - interest - (3,422,967) - (3,422,967) Cash paid - suppliers, employees and admini- strative expenses (47,889) (6,732,493) - (6,780 ,382) Net Cash (Used) Provided by Opera- ting Activities $ 17,384 $ (113,692) $ - $ (96,308) Cash Flows from Invest- ing Activities: Capital expendi- tures - net $ - $ (226,241) $ - $ (226,241) Escrow funding - (288,762) - (288,762) Tenant security de- posits - net - 10,444 - 10,444 Other - (39,392) - (39,392) Net Cash Used by Investing Acti- vities $ - $ (543,951) $ - $ (543,951) Cash Flows from Fi- nancing Activities: Cash received (paid) - related party $ (18,557) $ 1,047,125 $ - $ 1,028,568 Cash received - notes and mortgages - 245,890 - 245,890 Other - (215,394) - (215,394) Net Cash Provided (Used) by Financ- ing Activities $ (18,557) $ 1,077,621 $ - $ 1,059,064
See notes to combined financial statements. II-56 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 1996 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP STATEMENT OF COMMUNITIES LTD. ELIMINATONS CASH FLOWS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (1,173) $ 419,978 $ - $ 418,805 CASH AND CASH EQUIVA- LENTS BEGINNING OF YEAR 1,606 644,164 - 645,770 CASH AND CASH EQUIVA- LENTS END OF YEAR $ 433 $ 1,064,142 $ - $ 1,064,575
See notes to combined financial statements. II-57 CITY PLANNED COMMUNITIES (A PARTNERSHIP) AND UNICOM PARTNERSHIP LTD. (A LIMITED PARTNERSHIP) COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) YEAR ENDED JUNE 30, 1996 UNAUDITED
CITY UNICOM COMBINED PLANNED PARTNERSHIP STATEMENT OF COMMUNITIES LTD. ELIMINATONS CASH FLOWS Reconciliation of net profit (loss) to net cash provided (Used) by operating activities: Net income (loss) $ (152,456) $ 377,231 $ - $ 224,775 Adjustments to recon- cile net income (loss) to net cash provided used) by operating activities: Depreciation and amortization $ - $ 915,479 $ - $ 915,479 Increase (decrease) in interest pay- able 183,050 (1,032,698) - (849,648) Decrease in real estate held for sale 4,833 - - 4,833 (Increase) in pre- paid expenses - (48,989) - (48,989) (Increase) decrease in other assets and accounts receivable 16,100 (11,211) - 4,889 (Decrease)in accounts payable and accrued expenses (34,143) (313,504) - (347,647) Total Adjustments $ 169,840 $ (490,923) $ - $ (321,083) NET CASH PROVIDED (USED) BY OPERATING ACTIVI- TIES $ 17,384 $ (113,692) $ - $ (96,308)
[CAPTION] SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES: In June of 1995 the partners of City Planned Communities contributed their $13,352,210 notes, loans and accrued interest to the capital of Unicom. See notes to combined financial statements. II-58 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-59 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 69 General Partner; President and Chief Executive Officer of predecessor All-State Properties, Inc. since 1971 Managing Partner of Unicom Partnership Ltd. 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, 1998 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- Effective August 1, 1995 with HUD approval, Unicom Partnership Ltd. 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 Unicom 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 $75,000 per year. III-1 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of June 30, 1998 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 Unicom, Unicom 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 $13,351,21 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 Unicom 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 Unicom, 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 Unicom 23.27% to the newly admitted limited partners 36.12to Newnel Partnership 36.12% to the Company (including 3.60% given to certain indivi- duals who made cash advances to Unicom 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. 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, 1998 and 1997 II-10 Statements of Operations for the years ended June 30, 1998, 1997 and 1996 II-11 Statements of Changes in Partners' Capital (Deficit) for the years ended June 30, 1998, 1997 and 1996 II-12 Statements of Cash Flows for the years ended June 30, 1998, 1997 and 1996 II-13/14 Notes to Financial Statements for the years ended June 30, 1998, 1997 and 1996 II-15/24 Combined Financial Statements of City Planned Communities (a partnership) and Unicom Partnership Ltd. (a limited partnership) for the years ended June 30, 1998, 1997 and 1996 II-26/56 2. Financial Statement Schedules Included in Part IV of this report: Schedule X - Supplementary Income Statement Information at June 30, 1998, 1997 and 1996 (Registrant) IV-5 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. Unicom 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 Unicom 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 Unicom 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 Unicom 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 Unicom 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 Unicom and on 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 Unicom and Stanley on 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 Unicom and Stanley on Form 10-K for the year R. Rosenthal, effective ended June 30, 1995 August 1, 1995 m. Lease and option to pur- chase agreements between Incorporated by reference between Unicom and Care- to Form 8-K dated October Matrix Corporation effective 10, 1997 as of July 1, 1997 (11) Exhibits indicating computa- IV-6 tion of earnings per unit for the years ended June 30, 1998, 1997 and 1996. 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-7 IV-4 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) SCHEDULES - SUPPLEMENTAL INCOME STATEMENT INFORMATION CHARGED TO COST AND EXPENSES JUNE 30, 1998, 1997 AND 1996 UNAUDITED 1 9 9 8 1 9 9 7 1 9 9 6 Maintenance and repairs $ 708 $ 9,570 $ 8,406 Depreciation and amortiza- tion of intangible assets - - - Taxes, other than payroll and income taxes 375 1,192 11,522 Advertising cost - - - $ 1,083 $ 10,762 $ 19,928 IV-5 ALL-STATE PROPERTIES L.P. (A LIMITED PARTNERSHIP) (NOTE 1A) EXHIBITS INDICATING THE COMPUTATION OF EARNINGS PER UNIT YEARS ENDED JUNE 30, 1998, 1997 AND 1996 1 9 9 8 1 9 9 7 1 9 9 6 Computation of pri- mary earnings per unit: Units issued 3,118,303 3,118,303 3,118,303 Add: Unit equivalent (incremental units): Debentures conv- ertible at $1.00 - - Debentures conv- ertible at $3.00 31,952 31,952 31,952 3,150,255(A) 3,150,255(A) 3,150,255(A) Net Loss before Extraordinary Items $ (151,977) $ (141,963) $ (330,087) Computation of Fully diluted loss per unit Before Extra- ordinary Items $ (0.05) $ (0.05)(B)$ (0.10)(B) Net Loss After Extraordinary Items $ (151,977) $ (141,963) $ (330,087) Computation of Fully diluted loss per unit after Extraordinary Items $ (0.05)(B)$ (0.05)(B) $ (0.10)(B) (A) Weighted average number of units outstanding (B) Computation based on the modified treasury stock method as the number of units obtainable upon exercise of outstanding options in the aggregate exceeds 20% of the units outstanding at the end of the period. See notes to financial statements. IV-6 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: October 20, 1998 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 October 20, 1998 STANLEY R. ROSENTHAL (Chief Executive Officer) DATE IV-7 EX-27 2
5 YEAR JUN-30-1998 JUN-30-1998 4,037 0 0 0 0 0 0 0 6,993 33,413 0 0 0 0 0 6,993 13,500 15,383 16,390 16,390 150,970 0 119,529 (151,977) 0 (151,977) 0 0 0 (151,977) (0.05) (0.05)
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