REALMARK PROPERTY INVESTORS LTD PARTNERSHIP II - FORM 10-Q/A

Attached files

file	filename
EX-31 - CERTIFICATION CEO - REALMARK PROPERTY INVESTORS LTD PARTNERSHIP II	ex-31.htm
EX-32 - CERTIFICATION CFO - REALMARK PROPERTY INVESTORS LTD PARTNERSHIP II	ex-32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 1

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2010

o 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: 0-11909

REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - II

(Exact name of registrant as specified in its charter)

Delaware	16-1212761
(State of organization)	(IRS Employer Identification No.)

2350 North Forest Road, Getzville, New York 14068

(Address of principal executive offices)

(716) 636-9090

(Registrant’s telephone number)

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 o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).Yes o No x

EXPLANATORY NOTE

We are filing this Amendment No.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 (“Quarterly Report on Form 10-Q”), which was filed with the Securities and Exchange Commission on November 15, 2010, to: (i) amend Item 1 - “Financial Statements” to restate our financial statements for the quarter ended September 30, 2010 to record depreciation expense for the periods presented as if the property had been held for use during those periods, and (ii) to make corresponding amendments to the following section Item - 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (MD&A): Liquidity and Capital Resources and Results of Operations.

The Audit Committee of our Board of Directors (or persons performing the equivalent function), after discussions with the SEC, concluded that the Quarterly Report on Form 10-Q for the period ended September 30, 2010 should be restated to record depreciation expense.

Part 1 - FINANCIAL INFORMATION

Item 1 - Financial Statements

Condensed Balance Sheets

	(Unaudited)
	September 30,	December 31,
Assets	2010	2009
	(As restated)	(As restated)

Property and equipment, at cost	$ 4,863,356	4,863,356
Less accumulated depreciation	(3,811,310)	(3,789,704)
	1,052,046	1,073,652
Equity interest in unconsolidated joint
ventures in excess of investment	1,162,962	1,133,045
Cash and equivalents	279,582	341,890
Accounts receivable	25,211	9,854
Receivable from affiliates	592,589	604,589
Other assets	61,178	31,725

Total assets	$ 3,173,568	3,194,755

Liabilities and Partners' Equity

Accounts payable and accrued expenses	49,161	39,964
Security deposits and prepaid rent	75,532	88,026
Partners' equity	3,048,875	3,066,765

Total liabilities and partners' equity	$ 3,173,568	3,194,755

Condensed Statements of Operations
(Unaudited)

	Three months ended Sept. 30,		Nine months ended Sept. 30,

	2010	2009	2010	2009
	(As restated)	(As restated)	(As restated)	(As restated)

Rental income	$ 159,832	160,057	493,853	485,208
Other income	986	1,975	11,900	6,824

Total income	160,818	162,032	505,753	492,032

Property operating costs	137,112	133,210	383,406	397,219
Administrative expense - affiliates	29,242	22,434	68,154	70,072
Other administrative expenses	19,975	24,389	80,394	75,944
Depreciation	7,202	7,202	21,606	21,606

Total expenses	193,531	187,235	553,560	564,841

Loss before equity in earnings of
unconsolidated joint ventures	(32,713)	(25,203)	(47,807)	(72,809)

Equity in earnings of unconsolidated
joint ventures	10,480	10,451	29,917	31,342

Net loss	$ (22,233)	(14,752)	(17,890)	(41,467)

Net loss per limited partnership unit	$ (2.16)	(1.43)	(1.74)	(4.02)

Weighted average limited partnership
units outstanding	10,000	10,000	10,000	10,000

Condensed Statements of Cash Flows
(Unaudited)

	Nine months ended Sept. 30,

	2010	2009
	(As restated)	(As restated)
Cash used in:
Operating activities:
Net loss	$ (17,890)	(41,467)
Adjustments:
Depreciation	21,606	21,606
Equity in earnings of joint ventures	(29,917)	(31,342)
Other, principally changes in other assets
and liabilities	(36,107)	(1,872)
	-
Net cash used in operating activities	(62,308)	(53,075)

Cash and equivalents at beginning of period	341,890	347,423

Cash and equivalents at end of period	$ 279,582	294,348

Notes to Financial Statements

Nine months ended September 30, 2010 and 2009

(Unaudited)

Organization

Realmark Property Investors Limited Partnership - II (the Partnership), a Delaware Limited Partnership was formed on March 25, 1982, to invest in a diversified portfolio of income producing real estate investments. The general partners are Realmark Properties, Inc. (the corporate general partner) and Joseph M. Jayson (the individual general partner). Joseph M. Jayson is the sole stockholder of J.M. Jayson & Company Inc. Realmark Properties, Inc. is a wholly-owned subsidiary of J.M. Jayson & Company, Inc. Under the partnership agreement, the general partners and their affiliates receive compensation for services rendered and reimbursement for expenses incurred on behalf of the Partnership.

Restatement of Financial Statements

In this Amendment No. 1, we have restated our previously issued financial statements and related disclosures for the quarter ended September 30, 2010, to record depreciation expense for the quarter, previous quarters and year ended December 31, 2009. According to generally accepted accounting principles, the partnership has not met the available for sale criteria for it properties marketed for sale. Generally accepted accounting principles require that property be reclassified as held and used if the property is not available for sale at a price that is reasonable in relation to its current fair value.

The following tables summarize the effect of the restatement on the specific items presented in our financial statements included in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010.

	September 30,	September 30,
	2010	2010
	(As previously
Condensed Balance Sheet	reported)	(As restated)
Accumulated depreciated	$ 2,531,480	3,811,310
Total assets	$ 4,453,398	3,173,568
Partners’ equity	$ 4,328,705	3,048,875

	Three months	Nine months	Three months	Nine months
	ended	ended	ended	ended
	September 30,	September 30,	September 30,	September 30,
	2010	2010	2010	2010
	(As previously
Condensed Statements of Operations	reported)		(As restated)
Depreciation	$ -	-	7,202	21,606
Net income (loss)	$ (15,031)	3,716	(22,233)	(17,890)
Net income (loss) per limited partnership unit	$ (1.46)	.36	(2.16)	(1.74)

	September 30,	September 30,
	2010	2010
	(As previously
Condensed Statements of Cash Flows	reported)	(As restated)
Net Income (loss)	$ 3,716	(17,890)
Depreciation	$ -	21,606

Notes to Financial Statements

Nine months ended September 30, 2010 and 2009

(Unaudited)

Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The balance sheet at December 31, 2009 has been derived from the audited financial statements (as restated) at that date. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation, have been included. The Partnership’s significant accounting policies are set forth in its December 31, 2009 Form 10-K. The interim financial statements should be read in conjunction with the financial statements included therein. The interim results should not be considered indicative of the annual results.

Property and Equipment

At September 30, 2010, the Partnership owned and operated an office complex in Michigan (Northwind Office Park), and was a partner in two joint ventures. It has a 50% interest in Research Triangle Industrial Park Joint Venture with the other 50% owned by Realmark Property Investors Limited Partnership - VI A (RPILP - VI A), an entity affiliated through common general partners.

Investment in Research Triangle Industrial Park Joint Venture

The Partnership has a 50% interest in Research Triangle Industrial Park Joint Venture (the Venture) with Realmark Property Investors Limited Partnership – VI A (RPILP – VI A), an entity affiliated through common general partners. The joint venture owned and operated the Research Triangle Industrial Park West, an office/warehouse facility in Durham, North Carolina, which was sold in December 2006. The joint venture agreement provides that any income, loss, gain, cash flow, or sale proceeds be allocated 50% to the Partnership and 50% to RPILP – VI A. Summary financial information of the Venture follows:

Balance Sheet Information
	(Unaudited)
	September 30,	December 31,
	2010	2009
Assets:
Cash and equivalents	$ 1,261,272	1,344,645
Receivable from affiliates	1,068,798	1,012,490
Accrued interest receivable	316,891	253,513

Total assets	$ 2,646,961	2,610,648

Liabilities:
Accounts payable and accrued expenses	25	-
Payable to affiliates	533,120	556,666

Total liabilities	533,145	556,666

Partners' equity:
The Partnership	1,056,908	1,026,991
RPILP - VI A	1,056,908	1,026,991

Total partners' equity	2,113,816	2,053,982

Total liabilities and partners' equity	$ 2,646,961	2,610,648

Operating Information
(Unaudited)

	Three months ended Sept. 30,		Nine months ended Sept. 30,
	2010	2009	2010	2009

Income - interest income	$ 21,126	21,126	63,378	63,378

Expenses:
Interest	166	224	639	660
Administrative	-	-	2,905	34

Total expenses	166	224	3,544	694

Net income	$ 20,960	20,902	59,834	62,684

Allocation of net income:
The Partnership	10,480	10,451	29,917	31,342
RPILP - VI A	10,480	10,451	29,917	31,342

	$ 20,960	20,902	59,834	62,684

PART I - Item 2.

Management’s Discussion and Analysis of Financial Condition and Result of Operations

Restatement of Financial Statements

In this Amendment No. 1, we have restated our previously issued financial statements and related disclosures for the quarter ended September 30, 2010, to record depreciation expense for the quarter, previous quarters and year ended December 31, 2009. Previously, the partnership did not record depreciation expense, but has restated the financial statements to record depreciation expense back to January 1, 2001. We are also making corresponding amendments to the following section of MD&A: Liquidity and Capital Resources and Results of Operations.

Liquidity and Capital Resources

Effective January 1, 2001, management began formally marketing all remaining properties in the Partnership for sale. The Partnership continues to maintain a cash position adequate to fund capital improvements. Cash decreased approximately $62,000 and $53,000 during the nine month periods ended September 30, 2010 and 2009, respectively. The Partnership made no distributions to limited partners in the first nine months of 2010 and 2009. In accordance with the settlement of the lawsuit (Part II, Item 1), it is anticipated that with the sale of the remaining property and joint ventures, the Partnership may be in a position to make distributions to the limited partners.

Results of Operations

As compared to the first nine months of 2009, the Partnership's income, excluding equity in earnings from joint ventures, increased approximately $25,000 from a net loss of $72,000 in 2009 to net loss of $47,000 in 2010.

Total income for the nine months ended September 30, 2010 increased approximately $14,000 when compared to the same period in 2009. A increase in monthly rents resulted in an increase in rental income of approximately $9,000, while other income increased approximately $6,000. Total expenses decreased approximately $11,000. Property operations decreased approximately $13,000 due to a decrease in contracted services and payroll expense during the nine months ended September 30, 2010. Other administrative expense increased approximately $4,000 due to a increase in legal and other professional expenses. Administrative expense to affiliates decreased approximately $2,000 due to a decrease in portfolio reimbursed expenses.

PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Partnership’s cash equivalents are short-term, interest-bearing bank accounts.

PART I - Item 4. Controls and Procedures

Disclosure Controls and Procedures: The Partnership’s management, with the participation of the Partnership’s Individual General Partner, Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Partnership’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on such evaluation, the Partnership’s Individual General Partner, Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of such period, the Partnership’s disclosure controls and procedures are effective.

Internal Control Over Financial Reporting: There have been no significant changes in the Partnership’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as amended) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership’s internal control over financial reporting. Management assessed the effectiveness of our internal control over financial reporting as of September 30, 2010. In making this assessment, our management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

As previously reported, the Partnership, as a nominal defendant, the General Partners of the Partnership and of affiliated public partnerships (the “Realmark Partnerships”) and the officers and directors of the Corporate General Partner, as defendants, had been involved in a class action litigation in New York State court. The Partnership’s settlement of this litigation was described in its Annual Report on Form 10-K for the year ended December 31, 2009.

Item 5. Other Information

Reports on Form 8-K

None.

Item 6. Exhibits

31.	Certification Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP - II

January 21, 2010	/s/ Joseph M. Jayson
Date	Joseph M. Jayson,
	Individual General Partner,
	Principal Executive Officer and
	Principal Financial Officer

REALMARK PROPERTY INVESTORS LTD PARTNERSHIP II - FORM 10-Q/A - January 21, 2011

Attached files

REALMARK PROPERTY INVESTORS LTD PARTNERSHIP II Reports