10-Q 1 tpi210q060805.txt 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10Q ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2005 Commission file number: 0-13745 TPI LAND INVESTORS II LIMITED PARTNERSHIP (Exact name of registrant as specified in its charter) ARIZONA 86-0483912 (State or other jurisdiction of (I.R.S.Employer incorporation organization) Identification No.) 3420 E. Shea Blvd., Suite 200, Phoenix, Arizona 85028 (Address of principal executive offices) (Zip Code) (602) 953-5298 (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 the past 90 days. Yes X No ---------------- ---------------- TPI LAND INVESTORS II LIMITED PARTNERSHIP March 31, 2005 PART 1 Item 1. Financial Statements. Balance Sheet as of

Statement of Cash Flows

TPI LAND INVESTORS II LIMITED PARTNERHSIP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS March 31, 2005 NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES METHOD OF ACCOUNTING The Partnership's financial statements are prepared using the accrual method of accounting. The Partnership's intent to sell all of the remaining properties and liquidate the Partnership will not impact the accounting treatment applied by the Partnership in its financial statements prepared in accordance with generally accepted accounting principles as the liquidation proceeds and the timing thereof are not currently estimable. CASH AND CASH EQUIVALENTS The Partnership considers all highly liquid debt instruments with maturity of three months or less when acquired to be cash and cash equivalents. FIXED ASSETS AND DEPRECIATION POLICY The fixed assets listed on the Balance Sheet as Casa Grande Infrastructure, Casa Grande Medical Campus Lot 3, Lot 7A, and Lot 5, and Land in Tolleson are the land inventory currently being marketed for sale. These items have been reclassified as Other Assets. The only fixed asset owned by the Partnership are file cabinets, which are listed at residual value. The Partnership does not have a depreciation policy since the inventory is land and new construction. RISKS AND UNCERTAINTIES The Partnership's ability to (i) achieve positive cash flow from operations, (ii) meet its debt obligations, (iii) provide distributions either from operations or the ultimate disposition of the Partnership's properties or (iv) continue as a going concern, may be impacted by changes in interest rates, property values, geographic economic conditions, or the entry of other competitors into the market. The accompanying financial statements do not provide for adjustments with regard to these uncertainties. REVENUE RECOGNITION The Partnership accounts for sales of land held for investment purposes under the accrual method when certain criteria are met, and profit is recorded when a sale has been consummated. AMORTIZATION OF OTHER ASSETS Organization costs represent costs incurred during the formation period of the Partnership. Syndication costs represent commissions incurred on the sale of limited partnership interests due diligence costs and the costs of preparing the prospectuses. Organization costs are being amortized over 60 months. Syndication costs are not amortized for income tax reporting purposes. Loan origination fees represent costs incurred by the Partnership to secure a loan. Loan fees are being amortized over 36 months. Syndication costs were expended in 1984. Total Syndication Costs include: $709,100.00 Commissions $ 35,455.00 Due Diligence - Legal $ 83,868.26 Prospectus Costs ----------- $828,423.26 Total Syndication Costs LAND HELD FOR INVESTMENT PURPOSES AND RELATED COSTS Land values as stated on the balance sheet are at actual cost plus capitalized legal, improvement fees, architectural fee's and construction costs. INCOME TAXES The Partnership is a limited partnership. As such, all taxable income or losses and available income tax credits are passed from the partnership to the individual partners. It is the responsibility of the individual partners to report the taxable income or losses and tax credits, and to pay any resulting income taxes. Consequently, there is no provision for income taxes included in these financial statements. The Partnership is required to file Internal Revenue Service Form 1065, U.S. PARTNERSHIP RETURN OF Income, and to provide its partners with Schedule K-1, PARTNERS' SHARE OF INCOME, CREDITS, DEDUCTIONS, ETC. Partners' share of income and loss is allocated to those partners' in proportion to each partner's share of the basis in the Partnership, calculated after special allocations of expenses have been made. If any partner is not a partner for an entire fiscal year or if his capital percentage changed during the year, the share of net profits, net losses, distributions, credits and deductions of the Partnership allocable to such partner is determined consistent with the portion of the year during which he was a partner and by taking into account his varying capital percentages. Any assignment or sale of units is recognized by the Partnership not later than the last day of the calendar quarter following receipt of written notice of such assignment or sale accompanied by copies of all operative documents effecting such assignment or sale. NOTE 2 - INFRASTRUCTURE COSTS The infrastructure improvements were deeded to TPI Land Investors II Limited Partnership from TPI Land Development IV Limited Partnership in December 2004 when TPI Land Development IV Limited Partnership sold its last property and made a final distribution to its limited partners. The infrastructure has no resale value; therefore, it is listed at $1.00 on the Balance Sheet. NOTE 3 - LAND HELD FOR INVESTMENT PURPOSES Land Held For Investment Purposes represents costs incurred by the Partnership for the acquisition and holding of land as of March 31, 2005 are as follows:

NOTE 4 - DISTRIBUTIONS PAYABLE The Partnership is holding $18,710.00 in distributions payable in the money market account. These distributions payable are from distributions made to limited partners in 1996 and 1999. If the "missing" limited partners' are not located by the close of the Partnership these distributions will be turned over to the State Of Arizona as unclaimed property. The Partnership is making genuine efforts to locate missing partners before turning over any distributions to the State of Arizona. NOTE 5 - COMMISSION PAYABLE The Partnership sold properties in prior years and the General Partner, TPI Asset Management, Inc. earned a real estate commission on these sales. According to the prospectus, TPI Asset Management, Inc. cannot be paid the Commission until the Limited Partners have received their original investment and their program return. NOTE 6 - PARTNERS' CAPITAL Partners' capital contributions received and subscribed as of March 31, 2005 Limited partners contributions (14,182 units) $ 7,091,000 General partners contribution (1%) 71,666 ----------- Total contribution 7,162,666 Prior year retained earning (1,103,115) Net Income (26,788) Distribution to partners 1987 (143,293) Distribution to partners 1988 (1,074,397) Distribution to partners 1996 (354,470) Distribution to Partners 1999 (567,280) ----------- Partner's capital $3,893,324 =========== Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. LIQUIDITY As of March 31, 2005 the Partnership had $1,166,357.50 in cash and money market instruments. This large cash reserve has been retained to complete the construction of the shell medical condominium building and provide operating funds for the Partnership for fiscal year 2005. CAPITAL RESOURCES In fiscal year 2004, the Partnership entered into a construction contract with Gonzalez & Associates, Inc. to finish the shell medical condominium building by April 30, 2005. As of March 31, 2005, approximately $80,000.00 will be needed to complete construction of the shell medical condominium building. The source of these funds will come from the Partnership's money market account. RESULTS OF OPERATIONS For the first quarter of fiscal year 2005 the Partnership had net loss of $26,787.96. The sources of revenue during the operating period were proceeds from property sales and interest on the money market account. One property was sold during this period. Lot 7B in the Casa Grande Medical Campus was sold for $271,148.50 The cost of this sale was $265,854.64 for a gross profit of $5293.76. Interest on the money market account for this period was $4354.97. The major expenses for the Partnership during the period were income tax preparation fee's of $14,200.00, professional services of $12,506.34 and real estate taxes of $6,036.99. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Partnership's units are not publicly traded on any open market therefore this is not applicable. Item 4. Controls and Procedures. The General Partners approve all expenditures and sign each check written from the Partnership's checking account. SCSA, Inc. performs the general accounting functions for the Partnership but has no signatory rights on the Partnership's bank accounts. The registrant has retained Jo Ann Rudd, CPA, P.C. to prepare the yearly income tax returns from the books and records prepared by SCSA, Inc. PART II Item 1. Legal Proceedings. None. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information None. Item 6. Exhibits None. 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. TPI LAND INVESTORS II LIMITED PARTNERSHIP BY: /s/ Herve J.R. Tessier ------------------------------ Herve J.R. Tessier General Partner DATE: June 10, 2005

TPI LAND INVESTORS II LIMITED PARTNERSHIP 10-Q