UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One) |
|
[X] |
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the period ending September 30, 2009 |
|
[ ] |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from _______ to _____________ |
Commission File Number: 33-26327
RAINES LENDERS, L. P.
(Exact name of Registrant as specified in its charter)
Delaware |
62-1375240 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification) |
3310 West End Avenue, Suite 490, Nashville, TN 37203
(Address of principal executive offices)
(615) 292-1040(Registrant's telephone number, including area code)
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 Registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes X NoTransitional Small Business Disclosure Format (Check One) Yes No X |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o |
Accelerated filer o |
Non-accelerated filer o(Do not check if a smaller reporting company) |
Smaller reporting company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o
Yes þ No
PART 1. FINANCIAL INFORMATION
RAINES LENDERS, L.P.
(A Delaware Limited Partnership)
FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 and 2008
(Unaudited)
INDEX
RAINES LENDERS, L.P.
(A Limited Partnership)
BALANCE SHEET
(Unaudited)
ASSETS |
September 30, 2009 |
December 31, 2008 |
||
Cash |
$ |
$212,708 |
$ |
207,919 |
Restricted cash |
152,242 |
152,242 |
||
Land |
1,817,986 |
1,817,986 |
||
Total assets |
$ |
2,182,936 |
$ |
2,178,147 |
LIABILITIES AND PARTNERS' EQUITY |
||||
Due to affiliate |
$ |
584,619 |
$ |
548,375 |
Accounts payable |
105,693 |
113,513 |
||
Propery tax payable |
22,021 |
19,047 |
||
Note payable to bank |
400,000 |
257,721 |
||
Total liabilities |
1,112,333 |
938,656 |
||
Total partners' equity |
$1,070,603 |
1,239,491 |
||
Total liabilities and partners' equity |
$ |
$2,182,936 |
$ |
2,178,147 |
See accompanying notes to financial statements.
RAINES LENDERS, L.P.
(A Limited Partnership)
STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended |
For the nine months ended |
||||||||
September 30, |
|||||||||
2009 |
2008 |
2009 |
2008 |
||||||
REVENUE: |
|||||||||
Total Revenues |
$ |
0 |
$ |
0 |
$ |
0 |
$ |
0 |
|
Expenses |
|||||||||
State tax expense |
$ |
1,136 |
$ |
1,136 |
$ |
3,409 |
$ |
7,389 |
|
Property tax expense |
11,274 |
33,738 |
46,862 |
(625,337 |
) |
||||
Grounds maintenance |
1,800 |
7,800 |
|||||||
Management fees |
6,750 |
2,250 |
11,250 |
6,978 |
|||||
Professional fees |
20,243 |
52,562 |
33,671 |
125,214 |
|||||
Office administration expenses |
7,474 |
6,473 |
14,188 |
8,621 |
|||||
Interest expense |
18,062 |
14,777 |
51,709 |
53,980 |
|||||
Total expenses |
$ |
66,739 |
$ |
110,936 |
$ |
168,888 |
$ |
(423,155 |
) |
Net (loss) income |
$ |
(66,739) |
$ |
(110,936) |
$ |
(168,888) |
$ |
423,155 |
|
Net (loss) income per limited partner unit |
$ |
(11.86) |
$ |
(19.72) |
$ |
(30.02) |
$ |
75.23 |
|
Limited partner units outstanding |
5,625 |
5,625 |
5,625 |
5,625 |
See accompanying notes to financial statements.
(A Limited Partnership)
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30, |
||||||
2009 |
2008 |
|||||
: |
||||||
Cash flows from operating activities |
||||||
Net (loss) Income |
$ |
(168,888 |
) |
$ |
423,155 |
|
Adjustments to reconcile net (loss) income to net cash from operating activities: |
||||||
Increase/(decrease) in due to affiliates |
36,244 |
(179,502 |
) |
|||
(Decrease)/increase in accounts payable |
(7,820 |
) |
80,890 |
|||
Increase/(decrease) in property taxes payable |
2,974 |
(48,544 |
) |
|||
Net cash from operating activities |
(137,490 |
) |
275,999 |
|||
Cash flows from financing activities |
||||||
Note payable to bank |
142,279 |
(30,062 |
) |
|||
Net decrease in cash |
4,789 |
245,937 |
||||
Cash at beginning of period |
207,919 |
14,287 |
||||
Cash at end of period |
$ |
212,708 |
$ |
260,224 |
||
Cash payments - interest |
17,627 |
13,013 |
||||
See accompanying notes to financial statements.
RAINES LENDERS, L.P.
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2009 and 2008
(Unaudited)
A. ACCOUNTING POLICIES
The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's Form 10-K for the year ended December 31, 2008. In the opinion of management such financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to summarize fairly the Partnership's financial position and results of operations. The results of operations for the nine-month period ended September 30, 2009 may not be indicative of the results that may be expected for the year ending December 31, 2009. These financial statements were issued on November 6, 2009, with November 6, 2009 as the date through which subsequent events have been evaluated by management for recognition or disclosure purposes. |
The General Partner and its affiliates have been actively involved in managing the Partnership. Affiliates of the General Partner receive fees for performing certain services. Expenses incurred for these services are disclosed below. The Registrant has loans from affiliates of the general partners. The loans are funds transferred to provide liquidity, for the accrual of payments of services provided and for interest accrued on these notes. These loans are documented with notes that bear interest at a rate of 9% and are payable on demand. |
Nine months ended September 30, |
||||||||
Statement of operations |
2009 |
2008 |
||||||
Management fees |
$ |
11,250 |
$ |
6,978 |
||||
Accounting fees |
10,906 |
10,781 |
||||||
Balance sheet |
note for liquidity |
Note for services |
accrued interest |
total |
||||
Balance at December 31, 2008 |
$ |
538,000 |
$ |
10,375 |
$ |
548,375 |
||
Increase payables in 2009 |
14,531 |
36,588 |
51,119 |
|||||
Repayments |
(14,875 |
) |
(14,875) |
|||||
0 |
||||||||
Balance at September 30 2009 |
$ |
538,000 |
$ |
10,031 |
$ |
36,588 |
584,619 |
C. COMPREHENSIVE (LOSS) INCOME
During the nine-month periods ended September 30, 2009 and 2008, the Partnership had no components of other comprehensive (loss) income. Accordingly, comprehensive (loss) income for each of the periods was the same as net (loss) income. |
RAINES LENDERS, L.P.
(A Limited Partnership)
NOTES TO THE FINANCIAL STATEMENTS
For the Nine months Ended September 30, 2009 and 2008
(Unaudited)
D. LIQUIDITY
The Partnership has suffered recurring losses from operations. At September 30, 2009, the Partnership had unrestricted cash of $212,708 and liabilities to non-affiliated entities of $527,714. The Partnership owns assets with a net book value of $2,182,936 and has liabilities of $1,112,333. If funds are not sufficient to fund operations in 2009, the General Partner will defer the collection of fees for certain affiliated expenses and will provide advances until cash becomes available. |
E. IMPAIRMENT
Land and improvements held for sale are reported at the lower of the carrying value or estimated fair value less estimated costs to sell (Fair Value). To determine the Fair Value, management relied on the value in an appraisal prepared by an independent third party professional. When outside appraisals are not available, management estimates the future discounted net cash flows using a discount rate commensurate with the risk associated with the property. If this land is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated Fair Value. |
F. NOTE PAYABLE
On September 30, 2009, the Partnership held a term loan to a bank of $400,000 that bears interest at Prime +1% with a floor of 5% (5% at September 30, 2009). The 175 acres of land and improvements held for sale serve as collateral for the loan. The general partners of 222 Raines, Ltd., the Registrant's General Partner, have personally guaranteed the note. The loan terms require monthly payments of interest only. The maturity date of the loan is June 30, 2011. |
G. PROPERTY TAXES
The Registrant received property tax refunds totalling $643,111 as of September 30, 2008. These refunds were the result of an adjustment to the Registrant's property tax value in March 2008 by Memphis, Tennessee and Shelby County, Tenneessee. The reduction in expense related to these refunds was recognized in the periods they were received. |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations for the Quarter Ended September 30, 2009.
The Registrant had no land sales during the first nine months of 2009 or 2008. During the first nine months of 2008, the city of Memphis and Shelby county agreed to adjust the property tax values of the property. This adjustment resulted in a refund of property tax of $643,111, $369,496 in the second quarter of 2008 and $273,615 in the first quarter of 2008. Management revised its accural for property taxes based on the new property tax value in the first quarter of 2008. No such property tax refunds are expected in 2009 or in the future. For 2009, management accrued property taxes based on the current property tax values and rates. Professional fees in 2008 include the fees due to the property tax consultant used to contest property tax values. Ground maintenance expense in 2009 represents certain site clearing expenses incurred to maintain the property. Financial Condition and Liquidity The Partnership has suffered recurring losses from operations. At September 30, 2009, the Partnership had unrestricted cash of $212,708 and liabilities to non-affiliated entities of $527,714. The Partnership owns assets with a net book value of $2,182,936 and has liabilities of $1,112,333. If funds are not sufficient to fund operations in 2009, the General Partner will defer the collection of fees for certain affiliated expenses and will provide advances until cash becomes available. Critical Accounting Policies Land and improvements held for sale are reported at the lower of the carrying value or estimated fair value less estimated costs to sell (Fair Value). To determine the Fair Value, management relied on the value in an appraisal prepared by an independent third party professional. When outside appraisals are not available, management estimates the future discounted net cash flows using a discount rate commensurate with the risk associated with the property. If this land is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated Fair Value. Contractual Obligations and Commitments At September 30, 2009, the Partnership has no capital lease obligations, operating leases, or unconditional purchase obligations. The Partnership does not enter into derivative transactions. On September 30, 2009, the Partnership held a term loan to a bank of $400,000 that bears interest at Prime +1% with a floor of 5% (5% at September 30, 2009). The 175 acres of land and improvements held for sale serve as collateral for the loan. The general partners of 222 Raines, Ltd., the Registrant's General Partner, have personally guaranteed the note. The loan terms require monthly payments of interest only. The maturity date of the loan is June 30, 2011. At September 30, 2009 and 2008, the Partnership had a cash balance of $ 152,242 restricted by the City of Memphis to be used to fund property improvements, consisting of road and utility work. This restricted cash secures a letter of credit in the same amount to ensure the required developments are made. The Partnership may also borrow from the General Partner in order to meet cash flow needs and may have amounts payable to the General Partner for management fees or other services. At September 30, 2009, the Partnership had borrowings from the General Partner totaling $584,619. Transactions with the General Partner and affiliates are discussed in Note B to the financial statements. |
The Registrant maintains "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Act of 1934, as amended (the "Exchange Act"), that are designed to ensure that information required to be disclosed by the Registrant in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management including the Registrant's principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. The General Partners' of the Registrant have designed the Registrant's disclosure controls and procedures. The General Partners' of the Registrant evaluated the disclosure controls and procedures. The General Partners's assessment was based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The General Partners' recognize that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Registrant necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The General Partners', including its principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by the report, and concluded that the disclosure controls and procedures were effective. The General Partners continue to strengthen the disclosure controls in the future through training for the accounting staff. There have been no significant changes in the Registrant's internal controls over financial reporting during the fiscal quarter or in other factors that could significantly affect, or are reasonably likely to materially effect, internal control over financial reporting. |
Part II. OTHER INFORMATION
INDEXItem 6. Exhibits and reports on Form 8-K
(a) Exhibits
(b) The Registrant has not filed a Form 8-K during the nine-month period ending September 30, 2009.
exhibit
RAINES LENDERS, L. P.
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATE OF CHIEF EXECUTIVE OFFICER
Exhibit 31.1
I, Steven D. Ezell, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Raines Lenders, L.P; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Raines Lenders, L.P. |
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By: |
222 Raines, Ltd. |
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Date: November 16, 2009 |
By: |
Steven D. Ezell |
|
general partner |
RAINES LENDERS, L. P.
CERTIFICATION PURSUANT TO
SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
CERTIFICATE OF CHIEF FINANCIAL OFFICER
Exhibit 31.2
I, Michael A. Hartley, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Raines Lenders, L.P; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
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Raines Lenders, L.P. |
|||
By: |
222 Raines, Ltd. |
||
Date: November 16, 2009 |
By: |
Michael A. Hartley |
|
general partner |
RAINES LENDERS, L. P.
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Report of Raines Lenders, L. P. on Form 10-Q for the quarter ended September 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:
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Raines Lenders, L.P. |
|||
By: |
222 Raines, Ltd. |
||
Date: November 16, 2009 |
By: |
Steven D. Ezell |
|
general partner |
Date: November 16, 2009 |
By: |
Michael A. Hartley |
|
general partner |
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 |
. |
RAINES LENDERS, L.P. |
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By: 222 RAINES LTD. |
||||
General Partner |
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Date: November 16, 2009 |
By: /s/ Steven D. Ezell |
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general partner |
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By: 222 PARTNERS, INC. |
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general partner |
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Date: November 16, 2009 |
By: /s/ Michael A. Hartley |
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Vice President |