##### 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-KSB (Mark One)x     ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2004 o     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _______________ Commission file number 0-8444 Yager/Kuester Public Fund Limited Partnership  North Carolina
    
    56-1560476(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)1300 Altura Road, PO Box 1329, Fort Mill, SC
    
    29716-1329(Address of principal executive offices)
    
    (Zip code)
 Issuers telephone number (803) 547-9100 Securities registered pursuant to Section 12(b) of the Exchange Act: Title of each class
    
    Name of each exchange on which registeredNone
 Securities registered pursuant to Section 12(g) of the Exchange Act: Limited Partnership Units   Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 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 Check if disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained
in this form, and no disclosure will be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.      x State issuers revenues for its most recent fiscal year: $607,103 State the aggregate market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was sold, or the average bid and
asked price of such common equity, as of a specified date within the past 60 days. Not Applicable. 1




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DOCUMENTS INCORPORATED BY REFERENCE Exhibits (4) and (10.1) of Part III required by Item 601 of Regulation S-K, are incorporated
by reference from the prospectus of the registrant, dated December 1, 1987, Registration Number
33-07056-A (hereinafter Prospectus). PART I Item 1. Description of Business. The registrant is a North Carolina limited
partnership formed in July 1986 (hereinafter referred to as the Partnership). The
Partnership engaged in a blind pool offering, the proceeds of which were used to purchase
income-producing real property. During the year ended December 31, 1988, the Partnership
received the minimum investment required to remove subscribers funds from escrow. The
Partnerships offering terminated with a total subscription of $3,195,000 from investor
limited partners. The net proceeds were used to purchase the properties described in Item 2
below, to pay the expenses of the offering and to fund the working capital account. The
funds not required for those purposes, totaling $84,273, were returned to investors. The sole business of the Partnership currently is the operation of the EastPark
Executive Center located in Charlotte, North Carolina (EastPark). This commercial office
building was purchased with the proceeds of the public offering and loan funds (described
below). The Partnership previously owned a second office building that was sold on April 24,
1998. (See Item 2 below for a description of the properties.) The lease terms with one of
the major tenants at EastPark are summarized below. EastPark Executive Center, Charlotte, NC  The ten (10) year lease of the
General Services Administration (GSA) ended on October 31, 2004; however, this lease was
extended to October 31, 2006 at the current rental rate of $15.22 per square foot. The GSA
may terminate this lease in full or in part at any time on or after October 31, 2005 by
giving at least thirty (30) days written notice. The Partnership has incurred approximately
$1,104,000 in leasehold improvements in connection with the GSA lease. The GSA lease
accounts for approximately 85% of the rental income related to the EastPark Executive
Center. The remaining leasehold space is leased to two other tenants. The Partnership has no employees of its own; management of the Partnerships property
is performed by FSK Properties, LLC, an affiliate of FSK Limited Partnership.
Administration of the Partnership is performed by the General Partners. (See Items 9 and 12
below.) Item 2. Description of Property. On June 23, 1989, the Partnership purchased the
EastPark Executive Center, an office complex comprised of two buildings located in
Charlotte, North Carolina with net leasable area of 45,300 square feet, for a purchase price
of $3,155,138 of which $1,500,000 was provided by a first mortgage loan bearing interest at
10.5% per annum and having a term of 10 years. This mortgage loan became due in July 1999,
and again in 2004, and was refinanced with First Union National Bank (currently Wachovia
Bank, N.A.). In 1998, the Partnership recorded a loss of $1,392,468 to reflect the
$2,365,800 estimated sales value of the EastPark facility, net of related costs to sell. In
1999, the Partnership recorded an additional loss of $81,262 to expense additional
improvements and to reflect a $2,323,501 estimated sales value, net of related costs to
sell. In 2004 and 2003, the Partnership incurred improvements costs of $11,575 and $10,300
respectively, that were expensed. On November 30, 1989, the Partnership acquired the BB&T Bank Building (formerly the UCB
Building), a three-story office building in Greenville, South Carolina with net leasable
area of 39,138 square feet, for a purchase price of $4,202,544 of which $3,110,000 was
provided by a first mortgage loan from United Omaha. This mortgage loan became due on
December 1, 1996, and was refinanced with First Union National Bank. On April 24, 1998,
this property was sold for $3,471,000, resulting in a loss to the Partnership of $206,428. In connection with the office building purchases, $26,312 of acquisition costs were
capitalized. No further purchases of real property are projected and no funds are available for that
purpose. (See Item 6 below, Status of EastPark Facility for recent developments regarding
the property.) Item 3. Legal Proceedings. The Partnership is not involved in any legal proceedings
and was not so involved during the year ended December 31, 2004. Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. 2




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PART II Item 5. Market for Common Equity and Related Stockholder Matters. There is no
established public trading market for the Partnerships securities. The Partnership has
approximately 520 limited partners. Cash distributions made to the limited partners during
the recent years are set out in the Statements of Cash Flow included in the Financial
Statements included in Part II, Item 7 of this Report. Item 6. Managements Discussion and Analysis or Plan of Operation. Liquidity and Capital Resources During the year ended December 31, 2004, the Partnership continued to fund working
capital requirements and working capital was increased by approximately $1,288,000 from
December 31, 2003. Working capital as of December 31, 2004 was $233,372. The large
increase in working capital is due to the reclassification of a portion of the short-term
debt to long-term due to the refinancing of the loan that matured on December 31, 2004. The
loan was refinanced with Wachovia Bank, N.A. and will mature on January 31, 2007. Payments
are due in monthly installments of $7,000 plus interest at prime, which was 5.25% at
December 31, 2004. The cumulative unpaid priority return to the unit holders increased from $3,619,173 at
December 31, 2003 to $3,861,957 at December 31, 2004. This increase resulted from no
distributions being made to partners during the year pursuant to the Limited Partnership
Agreement. Based on current and projected commercial real estate market conditions, the
General Partners believe that it is reasonably unlikely that a sale of the Partnership
properties would produce net sale proceeds sufficient to pay any of such priority return.
Furthermore, the General Partners believe that it is reasonably unlikely that the
Partnerships operating income or any refinancing of Partnership debt would generate
sufficient funds to pay the priority return. During the year ended December 31, 2004, the Partnership had net income of $152,539 as
compared to the net income of $118,053 in 2003. (See Results of Operations below for
explanation of variance.) Rental income, operating expenses and interest expense for the
years ended December 31, 2004 and 2003, resulted exclusively from the operations of the
Partnerships commercial real estate properties. The EastPark Executive Center buildings
were 91% leased at both December 31, 2004 and December 2003. See Item 12 (Certain Relationships and Related Transactions) for a discussion regarding
leasing commissions, management fees and repair service fees paid to FSK Properties, LLC, an
affiliate of a General Partner of the Partnership, as well as administrative reimbursements
paid to Internet Services Corporation. In the event that funds derived from operations are insufficient to meet the
Partnerships working capital needs, the General Partners have agreed to fund the shortfall. Forward-Looking Statements This report contains certain forward-looking statements with respect to the financial
condition, results of operations, plans, objectives, future performance and business of the
Partnership. These forward-looking statements involve certain risks and uncertainties.
Actual results may differ materially from those contemplated by such forward-looking
statements. Results of Operations Comparison of 2004 results with 2003. Net income for the year ended December 31, 2004 increased by approximately $34,000 or
29% as compared to the prior year. Rental income increased less than 1% from the prior year
as two of the tenants were on month-to-month leases that do not provide for rental
escalations. Operating expenses are down approximately 7% over the prior year. Repairs and
maintenance decreased 33% from the prior year while professional fees increased 42%.
Interest expense is down slightly from 2003 due to the 3




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decreasing loan balance. The rate on the loan increased from 4% at December 31, 2003 to
5.25% at December 31, 2004 and therefore interest expense has not decreased significantly as
in prior years. Comparison of 2003 results with 2002. Net income for the year ended December 31, 2003 decreased by approximately $9,000 or 7%
as compared to the same period of the prior year. Rental income increased less than 1% from
2002 to 2003 as two of the tenants began month-to-month leases this year that did not
provide for rental escalations. Operating expenses are up approximately 6% over the prior
year mainly due to a parking lot repair expense of $50,605. Interest expense continues to
be down from the prior year due to the decrease in interest rates on the floating rate loan.
The interest rate at December 31, 2003 was 4%. Critical Accounting Policy and Risk Factors In the ordinary course of business, the Partnership has made a number of estimates and
assumptions relating to the reporting results of operations and financial position in
preparing its financial statements in conformity with accounting principles generally
accepted in the United States of America. Actual results could differ significantly from
those estimates under different assumptions and conditions. The Partnership believes the
following discussion addresses the Partnerships most critical accounting policy, which is
determined to be the most important to the portrayal of the Partnerships financial
condition and results and require managements difficult, subjective and complex judgments,
often as a result of the need to make estimates about the effect of matters that are
inherently uncertain. Leased property held for sale The Partnership has adopted Statement of Financial Accounting Standards No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. As described in the section
Status of EastPark Facility (see below), the real estate has been listed with a broker for
approximately five years. The ultimate realizable value requires management to make
estimates and assumptions about market conditions and events that may or may not occur in
the future. Management has used all reasonably available information to record the property
at a net realizable value. Because future events cannot be predicted with certainty, there
can be no assurances that an additional write-down of the property will not be necessary. Status of EastPark Facility The General Partners remain committed on selling the EastPark facility and continue to
have it listed with a commercial real estate broker. The General Partners signed an
agreement with a new broker in 2004, as the previous brokers had shifted their objectives
and focus towards retail projects only. At this time, the facility is not under contract
with any potential buyers. The General Partners were able to negotiate a two-year extension
with GSA, the major tenant at the EastPark facility. (See Part I, Item 1). In 2005, the
General Partners were also able to negotiate a 20-month lease with another current tenant
that was previously under a month-to-month tenancy. This lease will expire October 31,
2006, but the tenant may terminate this lease with a ninety (90) written notice after one
year if the GSA either moves out or terminates its engagement contract with the tenant. The
General Partners will continue discussions with the GSA to determine if the GSA will be
terminating their lease after October 31, 2005. However, no assurances can be given that a
replacement tenant could be found if the GSA decides to terminate its lease. The General
Partners will continue to search for the best offer for the property and manage it at
acceptable standards until such time as the Partnership can sell the property to a qualified
buyer. Item 7. Financial Statements. The financial statements are attached hereto. 4




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Report on Audited Financial Statements of Yager/Kuester Public Fund Limited Partnership for the year ended December 31, 2004




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Yager/Kuester Public Fund Limited Partnership Index to Financial Statements PagesIndependent Auditors Reports
    
    
    F-1  F-2Financial Statements:Balance Sheets
    
    
    F-3Statements of Operations
    
    
    F-4Statements of Changes in Partners Equity
    
    
    F-5Statements of Cash Flows
    
    
    F-6Notes to Financial Statements
    
    
    F-7  F-10




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Independent Auditors Report    To the Partners
Yager/Kuester Public Fund
     Limited Partnership
Fort Mill, South Carolina We have audited the accompanying balance sheet of Yager/Kuester Public Fund Limited Partnership as
of December 31, 2004, and the related statements of operations, partners equity and cash flows for
the year then ended. These financial statements are the responsibility of the Partnerships
management. Our responsibility is to express an opinion on these financial statements based on our
audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Companys internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion. In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Yager/Kuester Public Fund Limited Partnership as of December
31, 2004, and the results of its operations and its cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of America. /S/ Scott McElveen, L.L.P. Columbia, South Carolina
February 15, 2005 F-1




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Report of Independent Registered Public Accounting Firm To the Partners
Yager/Kuester Public Fund
     Limited Partnership
Fort Mill, South Carolina We have audited the accompanying balance sheets of Yager/Kuester Public Fund Limited Partnership as
of December 31, 2003, and the related statements of operations, partners equity and cash flows for
each of the two years in the period then ended. These financial statements are the responsibility
of the Partnerships management. Our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Yager/Kuester Public Fund Limited Partnership as of December
31, 2003, and the results of its operations and its cash flows for each of the two years in the
period then ended, in conformity with U.S. generally accepted accounting principles. /s/ McGLADREY & PULLEN, LLP Charlotte, North Carolina
February 20, 2004 F-2




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Yager/Kuester Public Fund Limited Partnership
Balance Sheets
December 31, 2004
    
    
    2003AssetsCurrent assets:Cash and cash equivalents
    
    $
    295,689
    
    
    $
    208,237Accounts receivable, tenants
    
    
    42,852
    
    
    
    45,962Prepaid expenses
    
    
    
    
    
    
    242Total current assets
    
    
    338,541
    
    
    
    254,441Leased property held for sale, net
    
    
    2,323,501
    
    
    
    2,323,501Total assets
    
    
    2,662,042
    
    
    $
    2,577,942Liabilities and Partners EquityCurrent liabilities:Current maturities of long-term debt
    
    $
    84,000
    
    
    $
    1,303,000Accounts payable
    
    
    18,990
    
    
    
    4,445Accrued expenses
    
    
    2,179
    
    
    
    1,163Total current liabilities
    
    
    105,169
    
    
    
    1,308,608Long-term debt, less current maturities
    
    
    1,135,000
    
    
    
    Total liabilities
    
    
    1,240,169
    
    
    
    1,308,608Commitment and ContingencyPartners EquityGeneral partners
    
    
    (9,016
    )
    
    
    (10,541
    )Limited partners
    
    
    1,430,889
    
    
    
    1,279,875Total partners equity
    
    
    1,421,873
    
    
    
    1,269,334Total liabilities and partners equity
    
    $
    2,662,042
    
    
    $
    2,577,942
 The accompanying notes are an integral part of these financial statements. F-3




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Yager/Kuester Public Fund Limited Partnership
Statements of Operations
for the years ended December 31, 2004
    
    
    2003
    
    
    2002Rental income
    
    $
    607,103
    
    
    $
    602,254
    
    
    $
    597,286Operating expenses:Repairs and maintenance
    
    
    137,306
    
    
    
    204,520
    
    
    
    171,023Utilities
    
    
    98,290
    
    
    
    90,063
    
    
    
    98,367Professional fees
    
    
    92,126
    
    
    
    64,888
    
    
    
    67,594Property taxes
    
    
    43,037
    
    
    
    42,295
    
    
    
    40,633Management fees
    
    
    18,201
    
    
    
    17,776
    
    
    
    17,865Contract labor
    
    
    6,000
    
    
    
    6,000
    
    
    
    6,000Miscellaneous
    
    
    5,594
    
    
    
    5,914
    
    
    
    6,053400,554
    
    
    
    431,456
    
    
    
    407,535Operating income
    
    
    206,549
    
    
    
    170,798
    
    
    
    189,751Nonoperating income (expense):Interest and dividend income
    
    
    1,674
    
    
    
    3,464
    
    
    
    4,997Interest expense
    
    
    (55,684
    )
    
    
    (56,381
    )
    
    
    (67,497
    )Other
    
    
    
    
    
    
    172
    
    
    
    (54,010
    )
    
    
    (52,745
    )
    
    
    (62,500
    )Net income
    
    
    152,539
    
    
    
    118,053
    
    
    
    127,251Deduct net income
applicable to limited
partners (per limited
partner unit 2004
$23.63; 2003 $18.29;
2002 $19.72)
    
    
    151,014
    
    
    
    116,873
    
    
    
    125,979Net income applicable to
general partners
    
    $
    1,525
    
    
    $
    1,180
    
    
    $
    1,272
 The accompanying notes are an integral part of these financial statements. F-4




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Yager/Kuester Public Fund Limited Partnership
Statements of Changes in Partners Equity
for the three years ended December 31, 2004 AccumulatedOtherGeneral
    
    
    Limited
    
    
    ComprehensiveTotal
    
    
    Partners
    
    
    Partners
    
    
    Income (Loss)Balance, December 31, 2001
    
    $
    1,017,836
    
    
    $
    (12,993
    )
    
    $
    1,041,388
    
    
    $
    (10,559
    )Comprehensive income:Net income
    
    
    127,251
    
    
    
    1,272
    
    
    
    125,979
    
    
    
    Other comprehensive income:Unrealized loss on
securities available for
sale, net of
reclassification entry
below
    
    
    (656
    )
    
    
    
    
    
    
    
    
    
    
    (656
    )Total Comprehensive income
    
    
    126,595
    
    
    
    1,272
    
    
    
    125,979
    
    
    
    (656
    )Balance, December 31, 2002
    
    
    1,144,431
    
    
    
    (11,721
    )
    
    
    1,167,367
    
    
    
    (11,215
    )Comprehensive income:Net income
    
    
    118,053
    
    
    
    1,180
    
    
    
    116,873
    
    
    
    Other comprehensive income:Unrealized gain on
securities available for
sale, net of
reclassification entry
below
    
    
    11,215
    
    
    
    
    
    
    
    
    
    
    
    11,215Total Comprehensive income
    
    
    129,268
    
    
    
    1,180
    
    
    
    116,873
    
    
    
    11,215Distributions
    
    
    (4,365
    )
    
    
    
    
    
    
    (4,365
    )
    
    
    Balance, December 31, 2003
    
    
    1,269,334
    
    
    
    (10,541
    )
    
    
    1,279,875
    
    
    
    Net income; Total
comprehensive income
    
    
    152,539
    
    
    
    1,525
    
    
    
    151,014
    
    
    
    Balance, December 31, 2004
    
    $
    1,421,873
    
    
    $
    (9,016
    )
    
    $
    1,430,889
    
    
    $
    
 Reclassification adjustment:
    
    
    2004
    
    
    
    2003
    
    
    
    2002Unrealized holding gains
(losses) arising during the
period
    
    $
    
    
    
    $
    11,387
    
    
    $
    (656
    )Less reclassification
adjustment for gains included
in net income
    
    
    
    
    
    
    (172
    )
    
    
    Net unrealized gain (loss) on
investments securities
    
    $
    
    
    
    $
    11,215
    
    
    $
    (656
    )
 The accompanying notes are an integral part of these financial statements. F-5




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Yager/Kuester Public Fund Limited Partnership
Statements of Cash Flows
for the years ended December 31, 2004
    
    
    2003
    
    
    2002Operating activities:Net income
    
    $
    152,539
    
    
    $
    118,053
    
    
    $
    127,251Adjustments to reconcile net income to cash
provided by operating activities:Net realized gain on sale of securities available
for sale
    
    
    
    
    
    
    (172
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable, tenants
    
    
    3,110
    
    
    
    (3,715
    )
    
    
    (156
    )Prepaid expenses
    
    
    242
    
    
    
    (242
    )
    
    
    Accounts payable and accrued expenses
    
    
    15,561
    
    
    
    (19,195
    )
    
    
    4,241Net cash provided by operating activities
    
    
    171,452
    
    
    
    94,729
    
    
    
    131,336Investing activities:Purchase of securities available for sale
    
    
    
    
    
    
    
    
    
    
    (15,534
    )Proceeds from sale of securities available for sale
    
    
    
    
    
    
    84,813
    
    
    
    675Net cash provided by (used in) operating
activities
    
    
    
    
    
    
    84,813
    
    
    
    (14,859
    )Financing activities:Principal payments on long-term borrowings and
notes payable
    
    
    (84,000
    )
    
    
    (91,000
    )
    
    
    (58,000
    )Cash distributions
    
    
    
    
    
    
    (4,365
    )
    
    
    Cash used in financing activities
    
    
    (84,000
    )
    
    
    (95,365
    )
    
    
    (58,000
    )Net increase in cash
    
    
    87,452
    
    
    
    84,177
    
    
    
    58,477Cash and cash equivalents at beginning of period
    
    
    208,237
    
    
    
    124,060
    
    
    
    65,583Cash and cash equivalents at end of period
    
    $
    295,689
    
    
    $
    208,237
    
    
    $
    124,060Supplemental disclosure of cash flow informationCash payment for interest
    
    $
    55,684
    
    
    $
    61,488
    
    
    $
    68,453Supplemental disclosure of cash flow informationNet unrealized gain (loss) on securities available
for sale
    
    $
    
    
    
    $
    11,215
    
    
    $
    (656
    )
 The accompanying notes are an integral part of these financial statements. F-6




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Yager/Kuester Public Fund Limited Partnership Notes to Financial Statements Note 1. Nature of Business and Organization, Partnership Agreement and Significant
Accounting Policies Nature of business and
organization Yager/Kuester Public Fund Limited Partnership (the
Partnership) is a North Carolina limited partnership formed in July 1986. The purpose of the
Partnership is to acquire, operate, hold for investment and sell commercial rental property. The
Partnership has property located in Charlotte, North Carolina. The general partners of the Partnership are DRY Limited Partnership, a North Carolina limited
partnership, in which YFP, L.L.C., a South Carolina limited liability company, is the general
partner, and FSK Limited Partnership, a North Carolina limited partnership, in which Faison S.
Kuester, Jr. is the general partner. Partnership agreement Under the terms of the partnership agreement, all taxable income, tax
losses and cash distributions from operations are to be allocated 99% to the limited partners and
1% to the general partners until the limited partners receive a return of their initial capital
contributions and a Priority Return. The Priority Return is a sum equal to 8% per annum
cumulative, but not compounded, (prorated for any partial year) of the adjusted capital
contributions of the limited partners, calculated from the last day of the calendar quarter in
which each limited partner is admitted to the Partnership to the date of payment. Thereafter,
taxable income, tax losses and cash distributions from operations will be allocated 75% to the
limited partners and 25% to the general partners. Upon the sale or refinancing of any partnership properties, the partnership agreement specifies
certain allocations of net proceeds and taxable gain or loss from the transaction. A summary of the Partnerships significant accounting policies follows. Fair value of financial
instruments Cash and cash equivalents, accounts receivable and leased
property held for sale are financial assets with carrying values that approximate fair value. Accounts payable, accrued expenses and long-term debt are financial liabilities with carrying
values that approximate fair value, due to the short maturity of the respective liabilities. Use of estimates The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those
estimates. Cash and cash equivalents For purposes of reporting the statements of cash flows, the Partnership
includes all cash accounts, which are not subject to withdrawal restrictions or penalties, and all
highly liquid debt instruments purchased with an original maturity of three months or less as cash
and cash equivalents on the accompanying balance sheets. At various times throughout the year, the
Partnership may have cash balances at financial institutions which exceed federally-insured
amounts. At December 31, 2004, the Partnership had approximately $165,000 in excess of Federal
Deposit Insurance Corporation insured limits. F-7




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Yager/Kuester Public Fund Limited Partnership Notes to Financial Statements Note 1. Nature of Business and Organization, Partnership Agreement and Significant Accounting
Policies (continued) Accounts receivable, tenant Accounts receivable are recognized at the contracted monthly rent
amount. Accounts receivable are considered past due when payment is not received within the
contract term. The Partnership normally does not charge late fees or interest on past due
balances. Investment in securities available for sale Financial Accounting Standards Board Statement No.
115 requires that management determine the appropriate classification of securities at the date
individual investment securities are acquired, and that the appropriateness of such classification
be reassessed at each balance sheet date. Realized gains and losses, including losses from
declines in value of specific securities determined by management to be other-than-temporary, are
included in income. Realized gains and losses are determined on the basis of the specific
securities sold. Revenue recognition Rental revenue is recognized evenly over the term of the lease. In
connection with negotiating and obtaining leases, the Partnerships management may at times grant
concessions, such as free rent for a specific number of months during the lease. These costs are
amortized over the life of the lease. Partnership equity The Financial Accounting Standards Board issued Statement No. 128, Earnings
Per Share.The Statement specifies the computation, presentation, and disclosure requirements for
earnings per share. Management believes that Statement No. 128 is analogous to limited partnership
units and accordingly, additional disclosures for partnership units are presented in the
accompanying financial statements. Income taxes Under current income tax laws, income or loss of the Partnership is included in the
income tax returns of the partners. Accordingly, the Partnership makes no provision for federal or
state income taxes. Leased property held for sale The Partnership has adopted Statement of Financial Accounting
Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Statement No.
144 requires assets held for sale to be reported at the lower of their carrying value or estimated
fair value less cost to sell. Note 2. Working Capital Reserve Per the Partnership Agreement, a minimum working capital reserve of $94,500 must be maintained to
fund any expenditures that the cash flow from properties on operating leases is insufficient to
meet. F-8




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Yager/Kuester Public Fund Limited Partnership Notes to Financial Statements Note 3. Leased Property Held for Sale The Partnership leases office facilities under various lease agreements. The following schedule
provides an analysis of the Partnerships investment in property by major classes as of December
31, 2004 and 2003, respectively. 2004
    
    
    2003Land
    
    $
    631,028
    
    
    $
    631,028Building
    
    
    2,524,110
    
    
    
    2,524,110Building improvements
    
    
    1,311,641
    
    
    
    1,311,641Other deferred charges and commissions, net
    
    
    35,932
    
    
    
    35,9324,502,711
    
    
    
    4,502,711Less accumulated depreciation
    
    
    705,480
    
    
    
    705,4803,797,231
    
    
    
    3,797,231Less impairment of property
    
    
    1,473,730
    
    
    
    1,473,730$
    2,323,501
    
    
    $
    2,323,501
 The property is currently contracted with a real estate broker. It is the intention of the General
Partners to market and sell the property. To the extent the cash proceeds allow, the proceeds will
be used to pay off debt/liabilities and return partners equity. The Partnership expensed $11,575,
$10,300 and $15,050 of additional improvements and upgrades made to the building, for the years
ended December 31, 2004, 2003 and 2002, respectively. The allowance on impairment of property is
subject to potential significant change based upon market conditions. Subsequent to the
recognition of the impairment, depreciation and amortization of the related assets were
discontinued. Note 4. Long-Term Debt and Pledged Assets Long-term debt and pledged assets consists of the following at December 31, 2004 and 2003: 2004
    
    
    2003Note payable to bank, due in monthly
installments of $7,000 plus interest at prime
(5.25% at December 31, 2004), through January
31, 2007, collateralized by building, and
guaranteed by an affiliate of a General Partner
    
    $
    1,219,000
    
    
    $
    1,303,000Less current maturities
    
    
    84,000
    
    
    
    1,303,000$
    1,135,000
    
    
    $
    3⁄4
 F-9




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##### 



Yager/Kuester Public Fund Limited Partnership Notes to Financial Statements Note 5. Priority Return The cumulative unpaid priority return to the limited partners is $3,861,957 and $3,619,173 at
December 31, 2004 and 2003, respectively. There were no cash distributions to the limited partners
for the priority return for the years ended December 31, 2004 and 2003. For the year ended
December 31, 2003, there was a cash disbursement of $4,365 to pay taxes. Based on current and
projected real estate market conditions, the General Partners believe that it is reasonably
unlikely that a future sale of the Partnership property would produce sufficient net sales proceeds
to pay the priority return. Note 6. Related Party Transactions Management fees paid to a General Partner in connection with day-to-day operations of the property
amounted to $18,201, $17,776, and $17,865 for the years ended December 31, 2004, 2003 and 2002,
respectively. An additional $28,471, $33,644, and $34,451 for on-site management and repair
service fees was paid to this affiliate for the years ended December 31, 2004, 2003 and 2002,
respectively. Allocated expenses were paid to Internet Services Corporation, a related party, in the amounts of
$25,659, $31,705, and $41,487 for the years ended December 31, 2004, 2003 and 2002, respectively
for day-to-day operations associated with accounting and administration. Note 7. Major Tenants Rental income for the years ended December 31, 2004, 2003 and 2002, respectively, included
approximate rentals from the following major tenants which accounted for 10% or more of the total
rental income of the Partnership for those years: Approximate Amount of Rental IncomeYear Ended December 31,2004
    
    
    2003
    
    
    2002Tenant A
    
    $
    513,600
    
    
    $
    510,700
    
    
    $
    506,500Tenant B
    
    
    61,600
    
    
    
    61,600
    
    
    
    
 Accounts receivable from major tenants identified above was as follows at December 31, 2004 and
2003, respectively: December 312004
    
    
    2003Tenant A
    
    $
    42,852
    
    
    $
    45,962Tenant B
    
    $
    
    
    
    $
    
 The lease term of one of the major tenants expires in October 2006, but allows for an early
termination anytime after October 2005 with 30 days notice. The other two tenants have
month-to-month leases that can terminate at any time. Monthly rental income ranges from $2,179 to
$42,852 for the largest tenant. Due to the short-term nature of the lease terms future rentals are
uncertain. Subsequent to year end, Tenant B renegotiated its lease from month-to-month to a 20 month lease
with an expiration date of October 2006, however tenant can terminate lease with a 90 day notice if
Tenant A moves out or terminates its engagement contract with Tenant B. F-10




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Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Not applicable. Item 8A. Controls and Procedures.The Partnerships General Partners and its Principal
Accounting Officer have conducted an evaluation of the Partnerships disclosure and
procedures as of December 31, 2004. Based on their evaluation, the General Partners and its
Principal Accounting Officer have concluded that the Partnerships disclosure controls and
procedures are effective to ensure that information required to be disclosed by the
Partnership in reports that it files or submits under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified in the
applicable Securities and Exchange Commission rules and forms. There were 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 most recent evaluation of these controls
by the Partnerships General Partners and its Principal Accounting Officer, including any
corrective actions with regard to significant deficiencies and material weaknesses. Item 8B. Other Information. None PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With
Section16(a)of the Exchange Act.The Partnership has no executive officers and directors;
however, the General Partners perform these functions. The General Partners of the
partnership are DRY Limited Partnership, the sole General Partner of which is YFP, LLC
(successor by conversion of The Dexter and Birdie Yager Family Limited Partnership) and FSK
Limited Partnership, the sole General Partner of which is Faison S. Kuester, Jr. The
manager of YFP, LLC is Jeffrey S. Yager. Following is a brief discussion of the background and experience of Messrs. Kuester and Yager. Faison S. Kuester, Jr., 59, graduated from the University of North Carolina at Chapel
Hill with a Bachelor of Arts Degree in History in 1967. He is a resident of Charlotte,
North Carolina. After three years service in the United States Army as a Lieutenant, Mr.
Kuester joined Independence Development Corporation in 1972 serving as a director of leasing
and management for a period of three years. In 1974, Mr. Kuester formed his own company,
Kuester Realty and Management, in order to lease and manage commercial properties in
Charlotte, North Carolina and surrounding communities. In addition to leasing and managing
various commercial properties, Kuester Realty developed two medical clinics in the Charlotte
area. In 1980, Kuester Properties, Inc. (KPI) was formed to specialize in on-site
management of apartment communities in the southeastern United States. The following year
Cauble and Kuester Company, Inc. was organized to lease and manage commercial properties in
the metropolitan Atlanta area. This partnership brought together Cauble and Company,
experienced mortgage lenders and leasing agents in the Atlanta market, and Kuester Realty
and Management. Finally, in 1983, Kuester Development Corporation was formed to allow the
Kuester companies to engage in selective real estate development projects in the
southeastern United States. Through Kuester Development Corporation, a wholly-owned subsidiary of KPI, Mr. Kuester
has been directly involved with the development of several commercial real estate properties
in North and South Carolina and Georgia. These include the First United National Bank
Building in Wilmington, North Carolina, two retail office showroom projects, two medical
office buildings and residential condominiums in Charlotte, North Carolina, an office
building in Savannah, Georgia, and an office building in Greenville, South Carolina.
Kuester Development Corporation also has developed over 1000 apartment units throughout
Charlotte, North Carolina since 1983. In October 1996, Mr. Kuester formed FSK Properties, LLC to provide management, leasing
and brokerage services to his clients. FSK Properties, LLC serves as property manager of
the Partnership property. Jeffery S. Yager, 39, is the President of Internet Services Corporation, an international
company with operations in over 20 countries. Mr. Yager began working with his father, Dexter R.
Yager, Sr., in a family business at the age of 13 and now has over 25 years experience in business
and management. Mr.Yager has gained experience in a variety of industries during this time, such
as real estate development, restaurant management, construction, product distribution,
manufacturing, and sales and marketing. 17




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##### 



Mr. Yager has significant experience in real estate investments. He serves in a
decision-making role in various family real estate ventures. These real estate ventures include
investment in raw land, office buildings, multi-family apartments, shopping centers, and
residential developments. Item 10. Executive Compensation.The Partnership does not employ any executive
officers or directors. Jeffrey S. Yager and Faison S. Kuester have policy-making functions
with regard to Partnership operations. See Item 9 for the relationship of such persons to
the Partnership. See Item 12 for a description of payments made to FSK Properties, LLC for
property management services and to Internet Services Corporation, Inc. for accounting and
management services. Item 11. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters. The General Partners initially contributed a total of $2,500 to the
capital of the Partnership, consisting of a $1,600 contribution from DRY Limited Partnership
and $900 from FSK Limited Partnership. The General Partners own a 1% interest in all items
of Partnership income, gain, loss, deductions or credits including 1% of net cash from
operations. The General Partners also own a residual 25% interest in net cash from a sale
or refinancing of the Partnership Property, subordinated to the receipt by the Limited
Partners of the return of their capital contributions and their priority return and to the
payment of any subordinated real estate commissions due to affiliates of the General
Partners. The General Partners do not own any Limited Partnership interest in the Partnership. Item 12. Certain Relationships and Related Transactions. During the fiscal year ended
December 31, 2004, FSK Properties, LLC received $18,201 for management fees and an additional
$28,471 for on-site management and repair service fees. Internet Services Corporation, Inc.
received $25,659 for providing accounting/management services. Internet Services Corporation is
owned equally by three trusts, the beneficial interests one of which inures to the benefit of
Jeffrey S. Yager, Manager of YFP, LLC the sole General Partner of DRY Limited Partnership, which
limited partnership is one of the two general partners of the Partnership. Janitorial services for
the EastPark Executive Center are provided by Marquis Cleaning Services, which is operated and
owned by a relative of Jeffrey S. Yager. The General Partners believe that the terms for the above mentioned services are as favorable
as those the Partnership could obtain from unaffiliated parties. Item 13. Exhibits. (a)(1)
    
    The following financial statements of the Partnership are included in Part II, Item 7
hereof.(i)
    
    Independent Auditors Report(ii)
    
    Balance Sheets as of December 31, 2004 and 2003(iii)
    
    Statements of Operations for the years ended December 31, 2004, 2003 and 2002(iv)
    
    Statements of Changes in Partners Equity for the three years ended December 31, 2004(v)
    
    Statements of Cash Flows for the years ended December 31, 2004,
2003 and 2002(vi)
    
    Notes to Financial Statements(a)(2)
    
    All schedules have been omitted because they are inapplicable, not required, or the
information is included elsewhere in the financial statements or notes thereto.(a)(3)
    
    Exhibits:(4)
    
    Instrument defining rights of securities holders  set forth in the
Limited Partnership Agreement which is contained in the Prospectus incorporated
herein by reference.
 18




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##### 



(10.1)*
    
    Limited Partnership Agreement(10.2)**
    
    Exclusive Leasing and Management Agreement dated October 1, 1994 (EastPark Executive Center).(10.3)***
    
    Listing Agreement of Property for Lease and/or Sale dated February 2, 2004
(EastPark Executive Center).(31.1)
    
    Certification required by Section 31 of Item 601of Regulation S-K(31.2)
    
    Certification required by Section 31 of Item 601 of Regulation S-K.(32.1)
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United
States Code (Sarbanes-Oxley Act of 2002)(23)
    
    Consent of Independent Auditors(b)
    
    Reports on Form 8-K:1. November 30, 2004 Form 8-K filing for dismissal of
certifying accountants, McGladrey & Pullen, L.L.P.2. December 16, 2004 Form 8-K filing for engagement of
certifying accountants, Scott McElveen, L.L.P.3. December 17, 2004 Form 8-K/A amendment for dismissal
of certifying accountants, McGladrey & Pullen,     L.L.P.(c)
    
    Exhibits: The exhibits listed in Item 14(a)(3) above and not incorporated herein
by reference are filed with this Form 10-KSB.(d)
    
    Financial Statement Schedules: There are no financial statement schedules
included in this Form 10-KSB report.
 Item 14. Principal Accountant Fees and Services. During the period covering the fiscal years ended 2004 and 2003, Scott McElveen, L.L.P. and
McGladrey & Pullen, L.L.P./RSM McGladrey, Inc. performed the following professional services: 2004
    
    
    2003Audit Fees
    
    $
    30,720
    
    
    $
    27,970Audit-Related Fees
    
    $
    -0-
    
    
    $
    -0-Tax Fees
    
    $
    -0-
    
    
    $
    -0-All Other Fees
    
    $
    -0-
    
    
    $
    -0-
   * Incorporated by reference
to Exhibit A of the Partnerships Prospectus dated December 1, 1987, Registration Number 33-07056-A.
** Incorporated by reference to Exhibit 3 of the
Partnerships Form 10-K for the year ended December 31, 1995.
***Incorporated by reference to Exhibit 10.3 of the
Partnerships Form 10-KSB for the year ended December 31, 2003. 19




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SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized. YAGER/KUESTER PUBLIC FUND
LIMITED PARTNERSHIPBy:
    
    FSK Limited PartnershipBy:
    
    /s/ Faison S. Kuester, Jr.Faison S. Kuester, Jr.
General Partner
(Principal Executive Officer)Date:
    
    March 22, 2005
 In accordance with the Exchange Act, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates indicated. /s/Thomas K. Emery
    
    /s/ Faison S. KuesterThomas K. Emery
    
    Faison S. Kuester, Jr., General(Serving in the function of Principal Accounting Officer)
    
    Partner of FSK Limited Partnership, aGeneral Partner of the PartnershipDate March 22, 2005
    
    Date March 22, 2005/s/ Jeffrey S. YagerJeffrey S. Yager, Manager of YFP, LLC, GeneralPartner of DRY Limited Partnership,a General Partner of the PartnershipDate March 22, 2005
 20