UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended 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 No. 0-16856
BIGGEST LITTLE INVESTMENTS L.P.
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(Exact name of registrant as specified in its charter)
DELAWARE 13-3368726
--------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3702 S. VIRGINIA ST. UNIT G2
RENO, NEVADA 89502
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(Address of principal (Zip code)
executive offices)
Issuer's telephone number: (775) 825-3355
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3650 S. VIRGINIA ST. UNIT K2 RENO, NEVADA 89502
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(Former name, former address and former fiscal year,
if changed since last report)
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 the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the Registrant had submitted electronically
and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T
during the preceeding 12 months (or for such shorter period that the
registrant was required to submit and post suck files). YES [X] NO [ ]
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.
Large accelerated filer Yes [ ] No [X]
Accelerated filer Yes [ ] No [X]
Non-accelerated filer (Do not check if a smaller reporting company)
Yes [ ] No [X]
Smaller reporting company Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). YES [ ] NO [X]
PART I ? FINANCIAL INFORMATION
ITEM 1 ? FINANCIAL STATEMENTS
BIGGEST LITTLE INVESTMENTS L.P.
BALANCE SHEETS
SEPTEMBER 30, DECEMBER 31,
2009 2008
(UNAUDITED)
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ASSETS
Real estate, net............................ $12,200,292 $12,578,221
Cash and cash equivalents................... 9,809,669 9,433,792
Receivables................................. 17,882 22,161
Prepaid expense............................. 8,565 4,266
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Total assets............................. $22,036,408 $22,038,440
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LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable, accrued expenses and
unclaimed property..................... $ 47,116 $ 44,355
Rent prepaid............................. 100 1,000
Tenant deposits.......................... 22,387 25,283
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Total liabilities........................... 69,603 70,638
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Commitments and contingencies
Partners' equity
Limited partners' equity (180,937 units
issued and outstanding at 9/30/09 and
12/31/08).............................. 21,416,980 21,405,769
Prepaid redemption....................... (12,495) -
General partner?s equity................. 562,320 562,033
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Total partners' equity...................... 21,966,805 21,967,802
----------- -----------
Total liabilities and partners' equity........ $22,036,408 $22,038,440
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The accompanying Notes are an integral part of these Financial Statements.
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BIGGEST LITTLE INVESTMENTS L.P.
STATEMENTS OF INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
--------------------------- ---------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
2009 2008 2009 2008
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Revenues
Rental income.......................... $ 319,249 $ 319,567 $ 902,374 $ 1,071,605
Interest income........................ 32,333 53,133 112,336 181,345
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Total revenues...................... 351,582 372,700 1,014,710 1,252,950
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Costs and expenses
Operating expenses..................... 143,034 146,914 448,989 430,758
General and administrative............. 33,722 31,099 118,205 113,595
Depreciation........................... 125,976 125,976 377,929 377,929
Management fees........................ 20,852 19,442 58,089 69,084
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Total costs and expenses............ 323,584 323,431 1,003,212 991,366
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Net income............................. $ 27,998 $ 49,269 $ 11,498 $ 261,584
============= ============= ============= =============
Net income attributable to:
Limited partners....................... $ 27,298 $ 48,037 $ 11,211 $ 255,044
General partner........................ 700 1,232 287 6,540
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$ 27,998 $ 49,269 $ 11,498 $ 261,584
============= ============= ============= =============
Net income per unit of limited partnership
interest (180,937 weighted average units
outstanding for the three and nine months
ended September 30, 2009 and 2008)..... $ 0.15 $ 0.27 $ 0.06 $ 1.41
============= ============= ============= =============
The accompanying Notes are an integral part of these Financial Statements.
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BIGGEST LITTLE INVESTMENTS L.P.
STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
Limited General Total
Partners' Prepaid Partner?s Partners'
Equity Redemption Equity Equity
----------- ----------- ----------- -----------
Balance ? January 1, 2009 $21,405,769 $ - $ 562,033 $21,967,802
Net income 11,211 - 287 11,498
Prepayment for Unit
Repurchases - (12,495) - (12,495)
----------- ----------- ----------- -----------
Balance ? September 30, 2009 $21,416,980 $ (12,495) $ 562,320 $21,966,805
=========== =========== =========== ===========
The accompanying Notes are an integral part of these Financial Statements.
-4-
BIGGEST LITTLE INVESTMENTS L.P.
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
----------------------------
September 30, September 30,
2009 2008
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Cash flows from operating activities:
Net income...................................... $ 11,498 $ 261,584
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ............................... 377,929 377,929
Decrease in tenant receivables.............. 4,279 12,934
Increase in prepaid expense................. (4,299) (9,833)
Decrease in accounts payable, accrued
expenses, and other liabilities........... (1,035) (32,465)
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Net cash provided by operating activities.... 388,372 610,149
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Cash flows from financing activities:
Cash used for prepayment of redemption of
Limited partnership units.................... (12,495) -
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Net cash used in financing activities...... (12,495) -
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Net increase in cash and cash equivalents....... 375,877 610,149
Cash and cash equivalents, beginning of period.. 9,433,792 8,739,802
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Cash and cash equivalents, end of period........ $ 9,809,669 $ 9,349,951
============= ============
The accompanying Notes are an integral part of these Financial Statements.
-5-
BIGGEST LITTLE INVESTMENTS L.P.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 ? INTERIM FINANCIAL INFORMATION
The accompanying financial statements, footnotes and discussions should
be read in conjunction with the financial statements, related footnotes and
discussions contained in the Biggest Little Investments L.P. (the
"Partnership") Annual Report on Form 10-K for the year ended December 31,
2008. The financial information contained herein is unaudited. In the opinion
of management, all adjustments necessary for a fair presentation of such
financial information have been included. All adjustments are of a normal
recurring nature. The balance sheet at December 31, 2008, was derived from
audited financial statements at such date.
The results of operations for the three and nine months ended September
30, 2009 and 2008 are not necessarily indicative of the results to be expected
for the full year or for any other period.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Property and Provision for Impairment
Property is stated at cost, less accumulated depreciation. Since
acquisition, property has been depreciated on a straight-line basis over the
estimated service lives as follows:
Land improvements ........... 5 years
Site work ................... 15 years
Buildings ................... 30 years
Building improvements ....... 5-30 years
In accordance with the Financial Accounting Standards Board (?FASB?)
Accounting Standards Codification, the Partnership evaluates the carrying
value of its long-lived assets for impairment at least annually or whenever
events or changes in circumstances indicate that the carrying value of the
assets may not be recoverable from related future undiscounted cash flows. As
of September 30, 2009, the Partnership?s only operating asset was the Sierra
Marketplace Shopping Center located in Reno, Nevada (the "Sierra Property")
and the Partnership determined that none of its long-lived assets were
impaired as of such date.
Allowance for Doubtful Accounts
The Partnership monitors its accounts receivable balances on a monthly
basis to ensure they are collectible. On a quarterly basis, the Partnership
uses its historical experience to determine its accounts receivable reserve.
The Partnership?s allowance for doubtful accounts is an estimate based on
specifically identified accounts as well as general reserves. The Partnership
evaluates specific accounts where it has information that the customer may
have an inability to meet its financial obligations. These specific reserves
are reevaluated and adjusted as additional information is received that
impacts the amount reserved. The Partnership also establishes a general
reserve based upon a range of percentages applied to aging categories. These
percentages are based on historical collection and write-off experience. If
circumstances change, the Partnership?s estimate of the recoverability of
amounts due the Partnership could be reduced or increased by a material
amount. Such a change in estimated recoverability would be accounted for in
the period in which the facts that give rise to the change become known. The
Partnership currently does not believe a reserve for bad debt is appropriate.
-6-
Cash and Cash Equivalents
For the purpose of the statements of cash flows, the Partnership
considers all short-term investments which have original maturities of three
months or less to be cash equivalents. A majority of the Partnership's cash
and cash equivalents are held at one financial institution.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$250,000 by the Federal Deposit Insurance Corporation. Balances in excess of
amounts required for operations are usually invested in savings and money
market accounts, as well as in certificates of deposit. Cash balances exceeded
these insured levels during the period. No losses have occurred or are
expected due to this risk.
Revenue Recognition
Rental revenues are based on lease terms and recorded as income when
earned and when they can be reasonably estimated. Rent increases are generally
based on the Consumer Price Index. Leases generally require tenants to
reimburse the Partnership for certain operating expenses applicable to their
leased premises. These costs and reimbursements have been included in
operating expenses and rental income, respectively.
Fair Value of Financial Instruments
The Partnership uses the following hierarchy to prioritize the inputs
used in measuring fair value in accordance with FASB Accounting Standards
Codification.
Level 1 Quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 2 Inputs other than quoted prices included within Level 1 that are
either directly or indirectly observable;
Level 3 Unobservable inputs in which little or no market activity exists,
therefore requiring an entity to develop its own assumptions about
the assumptions that market participants would use in pricing.
Financial instruments including cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses are carried in the financial
statements at amounts that approximated fair value at September 30, 2009.
Net Income Per Unit of Limited Partnership Interest
Net income per unit of limited partnership interest (each individually, a
"Unit" and, together, the "Units") is computed based upon the weighted average
number of units outstanding (180,937 for the three and nine months ended
September 30, 2009 and 2008) during the period then ended.
Income Taxes
Partnership earnings are allocated between the partners in accordance
with each partner?s ownership interest and are taxed individually and not at
the partnership level. Correspondingly, no provisions for federal, state and
local income taxes are included in the financial statements.
The income tax returns of the Partnership are subject to examination by
federal, state and local taxing authorities. Such examinations could result
in adjustments to Partnership income, which changes could affect the tax
liability of the individual partners.
-7-
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amount
of assets, liabilities, revenues and expenses and related disclosure of
contingent assets and liabilities.
On an ongoing basis, the Partnership evaluates its estimates, including
those related to bad debts, contingencies, litigation and valuation of the
real estate. The Partnership bases its estimates on historical experience and
on various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions.
NOTE 3. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
Effective October 1, 2009, Mr. Ben Farahi, the manager of Maxum LLC, the
Partnership?s general partner (the ?General Partner?), but acting in his
individual capacity, purchased an aggregate of 219 Units from limited partners
in various open market transactions.
Effective July 1, 2009, Mr. Ben Farahi, in his individual capacity,
purchased an aggregate of 146 Units from limited partners in various open
market transactions.
On January 30, 2009, Mr. Ben Farahi, in his individual capacity,
commenced a tender offer (the "Offer") to purchase up to 25,000 Units at a
price of $110 per Unit. The Offer was scheduled to expire on March 20, 2009,
but was extended until April 9, 2009. The Offer expired on such date and
resulted in the tender by limited partners, and purchase by Mr. Farahi, of
3,375 Units. These purchases were made effective July 1, 2009.
Effective April 1, 2009, Mr. Ben Farahi, in his individual capacity,
purchased an aggregate of 2,083 Units from limited partners in a series of
open market transactions.
Effective January 1, 2009, Mr. Ben Farahi, in his individual capacity,
purchased an aggregate of 208 Units from limited partners in a series of open
market transactions.
Beginning in April 2007, affiliates of the General Partner began leasing
office space at the Sierra Property and pay monthly rent of $2,408. The
General Partner uses a portion of this office space and participates in such
rent payments.
In 2004, the Partnership began renovation efforts in an attempt to
maximize the financial viability of the Sierra Property (the "Renovation"). As
part of the Renovation, a portion of the shopping center previously occupied
by an anchor tenant was demolished for the purpose of creating in its place a
new driveway (and traffic signal) directly between the Sierra Property and a
hotel casino property located next to the Sierra Property (the "Adjacent
Property?). The Adjacent Property entered into a lease with the Partnership
for a section of the Sierra Property (including the new driveway). The
Adjacent Property has a minimum lease term of 15 years at a monthly rent of
$25,000, subject to increases every 60 months based on the Consumer Price
Index. Such an increase became effective on September 30, 2009, and the
Adjacent Property now pays monthly rent of approximately $28,400. The Adjacent
Property also uses part of the common area of the Sierra Property and pays its
proportionate share of the common area expense of the Sierra Property. The
Adjacent Property has the option to renew the lease for three five-year terms
-8-
and, at the end of the extension periods, has the option to purchase the
leased section of the Sierra Property at a price to be determined based on an
MAI Appraisal.
As part of the driveway lease, Monarch Casino & Resort, Inc. (?Monarch?),
the owner of the Adjacent Property, had reserved the gaming rights associated
with the Sierra Property for the initial five-year term, or until September
30, 2009. Before the end of the initial five-year term, Monarch had the option
to purchase an extension of the gaming restriction within the Sierra Property
at a price to be determined based on an MAI Appraisal. On August 13, 2009,
Monarch notified the Partnership that it would not purchase such extension.
The Partnership continues to market the Sierra Property to potential
tenants.
In addition to the driveway lease, as of September 30, 2009, the Adjacent
Property was leasing, on a month-to-month basis, approximately 16,500 square
feet of office and storage space at the Sierra Property and was paying
approximately $11,600 per month in rent plus common area expenses for such
spaces. The Adjacent Property has notified the Partnership that it will vacate
approximately 13,125 square feet of storage space effective November 6, 2009.
Ben Farahi, the manager of the General Partner, was, until May 26, 2006,
Co-Chairman of the Board, Chief Financial Officer, Secretary, and Treasurer of
Monarch and still owned approximately 12.1% of Monarch?s outstanding common
stock as of September 30, 2009.
Accounting rules define transactions with related parties as transactions
which are not arms-length in nature and, therefore, may not represent fair
market value.
Compensation of the General Partner
The General Partner is the manager of the Sierra Property. The General
Partner received $58,089 and $69,084 for the nine months ended September 30,
2009 and 2008, respectively, for such management services; included in these
amounts is three percent of the monthly interest earned on the Partnership?s
cash in savings and money market accounts, which the Partnership began paying
to the General Partner in 2006. Also, pursuant to the Partnership's Second
Amended and Restated Agreement of Limited Partnership (the ?Amended LP
Agreement?), the General Partner is entitled to receive 2.5% of the
Partnership's income, loss, capital and distributions, including, without
limitation, the Partnership's cash flow from operations, disposition proceeds
and net sale or refinancing proceeds. Accordingly, the General Partner was
allocated income of $287 for the nine months ended September 30, 2009 and
income of $6,540 for the nine months ended September 30, 2008.
Also pursuant to the Amended LP Agreement, the General Partner shall
receive mortgage placement fees for services rendered in connection with the
Partnership?s mortgage loans. These fees may not exceed such compensation
customarily charged in arm?s-length transactions by others rendering similar
services as an ongoing public activity in the same geographical location for
comparable mortgage loans. The General Partner is entitled to certain fees for
compensation of services rendered.
-9-
NOTE 4. REAL ESTATE
The Partnership's real estate is summarized as follows:
September 30, 2009 December 31, 2008
------------------ -----------------
Land........................... $ 3,198,574 $ 3,198,574
Building and improvements...... 12,069,070 12,069,070
------------------ -----------------
15,267,644 15,267,644
------------------ -----------------
Accumulated depreciation....... (3,067,352) (2,689,423)
------------------ -----------------
$ 12,200,292 $ 12,578,221
================== =================
ITEM 2 ? MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The matters discussed in this Form 10-Q contain certain forward-looking
statements and involve risks and uncertainties. Biggest Little Investments
L.P. (the "Partnership") could be affected by declining economic conditions as
a result of various factors that affect the real estate business including the
financial condition of tenants, competition, the ability to lease vacant space
within the Sierra Marketplace Shopping Center (the ?Sierra Property?) or renew
existing leases, increased operating costs (including insurance costs), and
the costs associated with, and results of, any Partnership plans to renovate
and reposition the Sierra Property, as detailed in the filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's liquidity, capital resources and results
of operations, including forward-looking statements pertaining to such
matters, is based on management's current expectations and does not take into
account the effects of any changes to the Partnership's operations resulting
from risks and uncertainties. Accordingly, actual results could differ
materially from those projected in the forward-looking statements.
Maxum LLC is the Partnership?s general partner (the ?General Partner?).
This item should be read in conjunction with the financial statements and
other items contained elsewhere in the report.
Recent Events
On December 15, 2007, the Partnership signed a listing agreement with
Commercial Partners of Nevada, LLC (?Commercial Partners?) in an attempt to
locate and sign tenants for the Sierra Property. Such listing agreement will
expire on November 14, 2009, and the Partnership does not intend to renew this
agremeent with Commercial Partners.
On August 31, 2009, the Partnership initiated an offer enabling the
Partnership?s limited partners to sell their units of limited partnership
interest in the Partnership (the ?Units?) back to the Partnership (the
?Redemption Offer?). The Partnership may repurchase whole Units only, at a
price reasonably determined by the General Partner based on market
considerations. Units repurchased by the Partnership under the Rdemption Offer
will be canceled, and will have the status of authorized but unissued Units.
The Partnership will effect all repurchases on the first day of the following
calendar year after its receipt of a repurchase request. The Partnership's
obligation to repurchase any Units under the Redemption Offer is conditioned
upon its having sufficient funds available to complete the repurchase. The
Partnership will use any operating funds as the General Partner, in its sole
discretion, may reserve for the purpose of funding the Redemption Offer. The
Redemption Offer will be in effect for a 12-month period, subject to the right
-10-
of the General Partner to suspend, terminate, modify or extend the term of the
Rdemption Offer in its sole discretion. As of September 30, 2009, an aggregate
of 119 Units had been sold back to the Partnership pursuant to the Redemption
Offer.
In 2004, the Partnership began renovation efforts in an attempt to
maximize the financial viability of the Sierra Property (the "Renovation"). As
part of the Renovation, a portion of the shopping center previously occupied
by an anchor tenant was demolished for the purpose of creating in its place a
new driveway (and traffic signal) directly between the Sierra Property and a
hotel casino property located next to the Sierra Property (the "Adjacent
Property?). The Adjacent Property entered into a lease with the Partnership
for a section of the Sierra Property (including the new driveway). The
Adjacent Property has a minimum lease term of 15 years at a monthly rent of
$25,000, subject to increases every 60 months based on the Consumer Price
Index. Such an increase became effective on September 30, 2009, and the
Adjacent Property now pays monthly rent of approximately $28,400. The Adjacent
Property also uses part of the common area of the Sierra Property and pays its
proportionate share of the common area expense of the Sierra Property. The
Adjacent Property has the option to renew the lease for three five-year terms
and, at the end of the extension periods, has the option to purchase the
leased section of the Sierra Property at a price to be determined based on an
MAI Appraisal.
As part of the driveway lease, Monarch Casino & Resort, Inc. (?Monarch?),
the owner of the Adjacent Property, had reserved the gaming rights associated
with the Sierra Property for the initial five-year term, or until September
30, 2009. Before the end of the initial five-year term, Monarch had the option
to purchase an extension of the gaming restriction within the Sierra Property
at a price to be determined based on an MAI Appraisal. On August 13, 2009,
Monarch notified the Partnership that it would not purchase such extension.
The Partnership continues to market the Sierra Property to potential tenants.
Effective October 1, 2009, Mr. Ben Farahi, the manager of the General
Partner, but acting in his individual capacity, purchased an aggregate of 219
Units from limited partners in various open market transactions.
Effective July 1, 2009, Mr. Ben Farahi, in his individual capacity,
purchased an aggregate of 146 Units from limited partners in various open
market transactions.
On June 12, 2009, the Second Amended and Restated Agreement of Limited
Partnership (the ?LP Agreement?) of the Partnership was amended (the ?Second
Amendment?) by consent of a majority of the Partnership?s unit holders. The
Second Amendment permits the Partnership to invest in any personal property or
other non-real estate assets and to invest in joint ventures, partnerships,
firms, corporations or other entities where the Partnership would not have a
controlling interest in such entities. Prior to the Second Amendment, the LP
Agreement limited the Partnership to investments in mortgage notes or real
estate assets and to investing in entities only where it would acquire a
controlling interest in such entities.
The Second Amendment also extended the term of the Partnership to
December 31, 2030. Prior to the Second Amendment, the term of the Partnership
was scheduled to expire on December 31, 2016.
On January 30, 2009, Mr. Ben Farahi, in his individual capacity,
commenced a tender offer (the "Offer") to purchase up to 25,000 Units at a
price of $110 per Unit. The Offer was scheduled to expire on March 20, 2009,
but was extended until April 9, 2009. The Offer expired on such date and
resulted in the tender by limited partners, and purchase by Mr. Farahi, of
3,375 Units. These purchases were made effective July 1, 2009.
-11-
Effective April 1, 2009, Mr. Ben Farahi, in his individual capacity,
purchased an aggregate of 2,083 Units from limited partners in a series of
open market transactions.
Effective January 1, 2009, Mr. Ben Farahi, in his individual capacity,
purchased an aggregate of 208 Units from limited partners in a series of open
market transactions.
Liquidity and Capital Resources
The Partnership's level of liquidity based on cash and cash equivalents
increased by $375,877 to $9,809,669 during the nine months ended September 30,
2009 as compared to December 31, 2008. The increase was due to cash provided
by operating activities and interest earned, partially reduced by prepayments
to limited partners who had sold their Units back to the Partnership pursuant
to the Redemption Offer. Cash and cash equivalents are invested in short-term
instruments and are expected to be sufficient to pay administrative expenses
during the term of the Partnership.
None of the recently issued accounting standards had an effect on the
Partnership?s financial statements.
Real Estate Market
The Partnership's sole fixed asset as of September 30, 2009, is the
Sierra Property, which currently has a vacancy rate of approximately 72% based
on leasable square footage. There has been substantial development of retail
space in the Reno area over the past few years, which has created substantial
competition for the Sierra Property. In addition, the ongoing softness in the
overall economy has hurt the retail sector, thus adding to the difficulty in
locating new tenants for the Sierra Property. Also in the past few years, the
Sierra Property has lost all three of its original anchor tenants and has not
been able to locate new anchor tenants with similar lease terms. One of the
anchor tenant spaces was demolished for the purpose of creating in its place a
new driveway (and traffic signal) directly between the Sierra Property and the
Adjacent Property, and the portion of the Sierra Property that was demolished
has been leased to the owner of the Adjacent Property since September 30,
2004, enabling the Partnership to make up much of the lost rental revenue
previously generated by the space. The other two anchor tenant spaces are
vacant.
There can be no assurances that the Partnership's plan to improve the
Sierra Property's occupancy will be successful.
Results of Operations
COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS ENDED SEPTEMBER
30, 2009 AND 2008.
Net income decreased by $21,271 to $27,998 for the three-month period
ended September 30, 2009, as compared to the same period in 2008. Revenues
decreased by $21,118 to $351,582 for the quarter ended September 30, 2009 as
compared to the same period in 2008. The decrease in revenues is mainly due to
decreased interest income during the third quarter of 2009 as compared to the
same period in the prior year due to lower interest rates.
Costs and expenses remained relatively unchanged for the three-month
period ended September 30, 2009, as compared to the same period in the prior
year.
-12-
COMPARISON OF OPERATING RESULTS FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30,
2009 AND 2008.
Net income decreased by $250,086 to $11,498 for the nine-month period
ended September 30, 2009, as compared to the same period in 2008. Revenues
decreased by $238,240 to $1,014,710 for the nine-month period ended September
30, 2009 as compared to the same period in 2008. The decrease in revenues is
mainly due to decreased rental income during the first nine months of 2009 as
compared to the same period in the prior year due to fewer tenants at the
Sierra Property, as well as a decrease in interest income from lower interest
rates.
Costs and expenses increased by $11,846 for the nine-month period ended
September 30, 2009, as compared to the same period in the prior year. The
increase was mainly due to increases in operating and general and
administrative expenses partially offset by a decrease in management fees.
Operating expenses increased mainly due to costs associated with our increased
efforts to maintain the Sierra Property. General and administrative expenses
increased primarily as a result of increased transfer agent expenses which
were partially offset by a decrease in audit fees. Management expenses
decreased due to the decreases in revenues. Depreciation expense remained
unchanged.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the Sierra Property to adequately maintain the
physical assets and the other operating needs of the Partnership. Such assets
are currently thought to be sufficient for any near-term and long-term needs
of the Partnership, except that the Partnership may need to obtain financing
for any potential renovation and/or redevelopment.
Critical Accounting Policies
The Partnership's only significant critical accounting policy relates to
the evaluation of the fair value of real estate. The Partnership evaluates the
need for an impairment loss on its real estate assets when indicators of
impairment are present and the undiscounted cash flows are not sufficient to
recover the asset's carrying amount. The impairment loss is measured by
comparing the fair value of the asset to its carrying amount. The evaluation
of the fair value of real estate is an estimate that is susceptible to change
and actual results could differ from those estimates. The Partnership did not
incur any impairment charges during the first nine months of 2009.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership is not subject to market risk as its cash and cash
equivalents are invested in short term money market mutual funds and
certificates of deposit. The Partnership has no loans outstanding.
ITEM 4 - CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that
are designed to provide reasonable assurance that information required to be
disclosed by the Partnership in its periodic reports filed or submitted by the
Partnership under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")is recorded, processed, summarized and reported, within the
time periods specified in the Securities and Exchange Commission's rules and
forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
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disclosed by the Partnership in its periodic reports that are filed under the
Exchange Act is accumulated and communicated to our management, including our
Principal Executive Officer, as appropriate to allow timely decisions
regarding required disclosure.
Based on an evaluation under the supervision and with the participation
of our management, our principal executive officer and principal financial
officer have concluded that our disclosure controls and procedures as defined
in Rules 13a-15(e) and 15d-15(e) under the Exchange Act were effective as of
September 30, 2009 to ensure that information required to be disclosed in
reports that are filed or submitted under the Exchange Act is (i) recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission rules and forms and (ii) accumulated and
communicated to our management, including our principal executive officer and
principal financial officer, as appropriate to allow timely decisions
regarding required disclosure.
There were no changes in our internal controls that could materially
affect the disclosure controls and procedures subsequent to the date of their
evaluation, nor were there any significant deficiencies or material weaknesses
in our internal controls.
PART II ? OTHER INFORMATION
ITEM 6 ? EXHIBITS
Exhibits required by Item 601 of Regulation S-K are filed herewith and
are listed in the attached exhibit index.
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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.
BIGGEST LITTLE INVESTMENTS L.P.
BY: MAXUM LLC
Its General Partner
BY: /S/ BEN FARAHI
-------------------
Ben Farahi
Manager
DATE: 11/12/2009
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BIGGEST LITTLE INVESTMENTS, L.P.
FORM 10-Q SEPTEMBER 30, 2009
Exhibit Index
Exhibit Page No.
------- --------
31.1 Certification pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002. 17
32.1 Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002. 18
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EXHIBIT 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ben Farahi, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Biggest Little
Investments L.P.;
2. Based on my knowledge, this quarterly 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
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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 quarterly report;
4. I am responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and I have:
a) designed such disclosure controls and procedures or caused such
disclosure controls and procedures to be designed, under my
supervision, to ensure that material information relating to the
registrant is made known to me, particularly during the
period in which this quarterly report is being prepared:
b) designed such control over financial reporting, or caused such
internal control over financial reporting to be designed under my
supervision, to provide reasonable assurance regarding the
liability 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 my conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this quarterly report based on such
evaluation; and
d) disclosed in this quarterly report any change in the registrant?s
internal control over financial reporting that occurred during the
registrant?s most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the
registrant?s internal control over financial reporting; and
5. I have disclosed, based on my 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.
/s/ BEN FARAHI
--------------
Ben Farahi
Manager of the General Partner
Date: 11/12/09
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EXHIBIT 32.1
BIGGEST LITTLE INVESTMENTS L.P.
FORM 10-Q SEPTEMBER 30, 2009
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Biggest Little Investments
L.P. (the "Partnership") on Form 10-Q for the fiscal quarter ended September
30, 2009, as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), the undersigned, in the capacity and on the date
indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1)
the Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and (2) the information contained in the
Report fairly presents, in all material respects, the financial condition and
results of operations of the Partnership.
This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended. A signed
original of this written statement required by Section 906 has been provided
to the Partnership and will be retained by the Partnership and furnished to
the Securities and Exchange Commission or its staff upon request.
Date: November 12, 2009
/s/ BEN FARAHI
--------------
Ben Farahi
Manager of the General Partner
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