10-Q 1 realmarkiii_10q.txt QUARTERLY REPORT FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2003 ------------- Commission File Number: 0-13331 ------- REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - III ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 16-1234990 -------- ---------- (State of organization) (IRS Employer Identification No.) 2350 North Forest Road, Suite 12A, Getzville, New York 14068 ------------------------------------------------------------ (Address of principal executive offices) (716) 636-0280 -------------- (Registrant's telephone number) Indicate by a 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 [ ] Part I - FINANCIAL INFORMATION Item 1. Financial Statements --------------------

Notes to Consolidated Financial Statements Six months ended June 30, 2003 and 2002 (Unaudited) Organization ------------ Realmark Property Investors Limited Partnership - III (the Partnership), a Delaware limited partnership, was formed on November 18, 1983, 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 shareholder 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 can receive compensation for services rendered and reimbursement for expenses incurred on behalf of the Partnership. Basis of Presentation --------------------- The accompanying unaudited interim consolidated 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, 2002 has been derived from the audited financial statements 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, 2002 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 June 30, 2003, the Partnership owned and operated two commercial buildings (Perrymont Office Building and Inducon Amherst). Both of the properties are being actively marketed for sale and, therefore, are not being depreciated. Depreciation not recorded for the three and six months ended June 30, 2003 was approximately $66,000 and $129,000, respectively. Depreciation not recorded for the three and six months ended June 30, 2002 was approximately $63,000 and $126,000, respectively. 3 Current Accounting Pronouncements --------------------------------- Statements of Financial Accounting Standards (SFAS) Nos. 145, 146, 147, and 148 which concern accounting for gains and losses from the extinguishments of debt, exit or disposal activities, acquisitions of certain financial institutions, and accounting for stock-based compensation, respectively, became effective for the Partnership on January 1, 2003 and did not have any effect on the Partnership's consolidated financial statements. In April 2003, the Financial Accounting Standards Board issued SFAS No. 149 "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." This statement is effective for contract and hedging relationships entered into or modified after June 30, 2003. In May 2003, the Financial Accounting Standards Board issued SFAS No. 150 "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equities." This statement is effective for financial instruments entered into or modified after May 31, 2003 and is effective for all other financial instruments as of the first interim period beginning after June 15, 2003. The Partnership does not believe that either statement will have a material impact on its consolidated financial statements. In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, "Consolidation of Variable Interest Entities." The Partnership does not believe that the Interpretation will have a material impact on its consolidated financial statements. PART I - Item 2. Management's Discussion and Analysis of Financial Condition ----------------------------------------------------------- and Results of Operations ------------------------- Liquidity and Capital Resources ------------------------------- Effective January 1, 2001, management began formally marketing all properties in the Partnership for sale. Although cash decreased approximately $143,000 during the first six months of 2003, the Partnership continues to fund capital improvements and to make scheduled debt payments. The partnership made no distributions to limited partners in the first six months of 2003. In accordance with the settlement of the lawsuit (Part II, Item 1), it is anticipated that with the sale of the remaining properties, the Partnership may be in a position to make distributions to the limited partners. Results of Operations --------------------- As compared to the first six months of 2002, the Partnership's loss decreased approximately $35,000 from a loss of $176,000 in 2002 to a loss of $141,000 in 2003. Rental income at Perrymont increased approximately $20,000 for the first six months while rental income at Inducon Amherst remained unchanged. Other income increased approximately $5,000 due to an increase in common area maintenance fees. Total expenses decreased approximately $8,000. Property operating costs increased $13,000, administrative expense to affiliates decreased $18,000, other administrative expense decreased $2,000 and interest expense decreased $1,000. The increase in property operating costs was primarily attributable to repairs made to the common area at Inducon Amherst. The decrease in administrative expense to affiliates was due to a decrease in the costs associated with portfolio management. The decrease in other administrative expense was primarily attributable to a decrease in legal and professional services. 4 PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- The Partnership invests only in short term money market instruments, in amounts in excess of daily working cash requirements. The rates of earnings on those investments increase or decrease in line with the general movement of interest rates. The mortgage loan on the Partnership's property is fixed-rate and therefore, is not subject to market risk. PART I - Item 4. Controls and Procedures ----------------------- Within the 90 days prior to the filing date of this report, the Partnership carried out an evaluation, under the supervision and with the participation of the Partnership's management, including Joseph M. Jayson (the Partnership's Individual General Partner and Principal Financial Officer), of the effectiveness of the design and operation of the Partnership's disclosure controls and procedures. Based upon that evaluation, the Principal Financial Officer concluded that the Partnership's disclosure controls and procedures are effective. There have been no significant changes in the Partnership's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation. 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 is described in its Annual Report on Form 10-K for the year ended December 31, 2002. Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 31. Certification Pursuant to 18 U.S.C. Section 1350, 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 is filed herewith. (b) Reports on 8-K 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. REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP - III August 14, 2003 /s/ Joseph M. Jayson --------------- -------------------- Date Joseph M. Jayson, Individual General Partner and Principal Financial Officer 5

REALMARK PROPERTY INVESTORS LTD PARTNERSHIP III 10-Q