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 September 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 Nine months ended September 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 September 30, 2003, the Partnership owned and operated two commercial buildings (Perrymont and Inducon Amherst). Both of the properties are being 3 actively marketed for sale and, therefore, are not being depreciated. Depreciation not recorded for the three and nine months ended September 30, 2003 was approximately $66,000 and $195,000, respectively. Depreciation not recorded for the three and nine months ended September 30, 2002 was approximately $63,000 and $189,000, respectively. Current Accounting Pronouncements --------------------------------- In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN 46"). FIN 46 is applicable immediately for variable interest entities created after January 31, 2003. For variable interest entities created before February 1, 2003, the provisions of FIN 46 are applicable no later than December 15, 2003. The Partnership has not created any variable interest entities after January 31, 2003. The Partnership does not believe that the Interpretation will have a material impact on its consolidated financial statements. In May 2003, the Financial Accounting Standards Board issued SFAS No. 150 "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equities." SFAS No. 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the Consolidated Balance Sheets. Further, SFAS No. 150 requires disclosure regarding the terms of those instruments and settlement alternatives. 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 has evaluated SFAS No. 150 and determined that it does not have an 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. In the third quarter of 2003, the Partnership continued to experience difficulties generating sufficient cash to cover its financial obligations. Although cash decreased by $143,000 during the nine months ended September 30, 2003, the Partnership continued to fund capital improvements and to make scheduled debt payments. The partnership made no distributions to limited partners in the first nine 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 nine months of 2002, the Partnership's loss decreased approximately $81,000 from a loss of $268,000 in 2002 to a loss of $187,000 in 2003. Rental income at Perrymont increased approximately $29,000 for the first nine months while rental income at Inducon Amherst remained consistent. Other income increased approximately $5,500 due to an increase in common area maintenance fees. Total expenses decreased approximately $46,000. Property operations decreased $31,000, administrative expense to affiliates decreased $21,000, other 4 administrative expense increased $7,000 and interest expense decreased $1,000. The decrease in property operations was primarily attributable to a decrease real estate taxes. The decrease in administrative expense to affiliates was a result of a decrease in management fees and a decrease in costs associated with portfolio management. The increase in other administrative expense was due to increased professional services. PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- The Partnership invests in only 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 general movement of interest rates. The mortgage loan on the Partnership's property is fixed-rate and therefore, is not subject market risk. 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 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 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 changes in the Partnership's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities 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. 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 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. (b) Reports on Form 8-K None. 5 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 November 14, 2003 /s/ Joseph M. Jayson ----------------- ------------------------------ Date Joseph M. Jayson, Individual General Partner and Principal Financial Officer 6

REALMARK PROPERTY INVESTORS LTD PARTNERSHIP III 10-Q