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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-QSB
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2005
 or
 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: 0-18444
 YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
  North Carolina
    
    56-1560476(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification Number)
 1300 Altura Road Fort Mill, South Carolina
    
    29708(Address of principal executive office)
    
    (Zip code)
  
    Yes þ   No o




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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
 INDEX
 PAGEPART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsCondensed Balance Sheets as of June 30, 2005 and December 31, 2004
    
    3Condensed Statements of Operations for the three and six months ended June 30, 2005 and 2004
    
    4Condensed Statements of Cash Flows for the three and six months ended June 30, 2005 and 2004
    
    5Notes to Condensed Financial Statements
    
    6ITEM 2. Managements Discussion and Analysis or Plan of Operation
    
    7ITEM 3. Controls and Procedures
    
    8PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    8ITEM 6. Exhibits and Reports on Form 8-K
    
    8Signatures
    
    9
  2




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PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
 
 CONDENSED BALANCE SHEETS
 June 30,
    
    December 31,2005
    
    2004(Unaudited)
    
    (Note)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    326,466
    
    
    $
    295,689Accounts receivable, tenant
    
    
    42,852
    
    
    
    42,852Prepaid expenses
    
    
    10,036
    
    
    
    Total current assets
    
    
    379,354
    
    
    
    338,541Leased property held for sale, net
    
    
    2,323,501
    
    
    
    2,323,501Total assets
    
    $
    2,702,855
    
    
    $
    2,662,042LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIESCurrent maturities of long-term debt
    
    $
    1,177,000
    
    
    $
    84,000Accounts payable
    
    
    15,408
    
    
    
    18,990Accrued expenses
    
    
    27,714
    
    
    
    2,179Total current liabilities
    
    
    1,220,122
    
    
    
    105,169Long-term debt, less current maturities
    
    
    
    
    
    
    1,135,000Total liabilities
    
    
    1,220,122
    
    
    
    1,240,169Commitment and ContingencyPARTNERS EQUITYGeneral partners
    
    
    (8,229
    )
    
    
    (9,016
    )Limited partners
    
    
    1,490,962
    
    
    
    1,430,889Total partners equity
    
    
    1,482,733
    
    
    
    1,421,873Total liabilities and partners equity
    
    $
    2,702,855
    
    
    $
    2,662,042
 
 Note: The Condensed Balance Sheet at December 31, 2004 has been taken from the audited
financial statements at that date.  3




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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
 
 CONDENSED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004(Unaudited)
    
    (Unaudited)Rental income
    
    $
    150,943
    
    
    $
    149,919
    
    
    $
    307,354
    
    
    $
    304,899Operating expenses:Contract labor
    
    
    1,500
    
    
    
    1,500
    
    
    
    3,000
    
    
    
    3,000Repairs and maintenance
    
    
    36,438
    
    
    
    35,365
    
    
    
    66,172
    
    
    
    68,205Management fees
    
    
    4,463
    
    
    
    4,652
    
    
    
    8,987
    
    
    
    9,314Utilities
    
    
    22,850
    
    
    
    22,447
    
    
    
    46,581
    
    
    
    45,261Professional fees
    
    
    15,198
    
    
    
    17,329
    
    
    
    44,213
    
    
    
    45,583Property taxes
    
    
    10,770
    
    
    
    10,575
    
    
    
    21,540
    
    
    
    21,150Miscellaneous
    
    
    4,310
    
    
    
    1,559
    
    
    
    5,673
    
    
    
    3,17095,528
    
    
    
    93,427
    
    
    
    196,166
    
    
    
    195,683Operating income
    
    
    55,415
    
    
    
    56,492
    
    
    
    111,188
    
    
    
    109,216Nonoperating income (expense):Interest and dividend income
    
    
    1,017
    
    
    
    294
    
    
    
    1,878
    
    
    
    307Interest expense
    
    
    (17,862
    )
    
    
    (12,891
    )
    
    
    (34,323
    )
    
    
    (25,995
    )(16,845
    )
    
    
    (12,597
    )
    
    
    (32,445
    )
    
    
    (25,688
    )Net income
    
    $
    38,570
    
    
    $
    43,895
    
    
    $
    78,743
    
    
    $
    83,528Deduct net income applicable to limited
partners (per limited partner unit for the
quarter ended June 30, 2005 $8.56; 2004 $6.80; and
for the six months ended June 30, 2005 $9.43; 2004 $12.94)
    
    $
    38,184
    
    
    $
    43,456
    
    
    $
    77,956
    
    
    $
    82,693Net income applicable to general partners
(per general partner unit for the quarter ended
June 30, 2005 $4.14; 2004 $8.78; and for the six months
ended June 30, 2005 $12.16; 2004 $16.70)
    
    $
    386
    
    
    $
    439
    
    
    $
    787
    
    
    $
    835
  4




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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
 
 CONDENSED STATEMENTS OF CASH FLOWS
 Six Months EndedJune 30,2005
    
    2004(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    78,743
    
    
    $
    83,528Adjustments to reconcile net income to net cash
provided by operating activities:Change in assets and liabilities:(Increase) in prepaids and accounts receivable
    
    
    (10,036
    )
    
    
    (4,048
    )Increase in accounts payable, accrued expenses, and deferred revenue
    
    
    21,953
    
    
    
    30,244Net cash provided by operating activities
    
    
    90,660
    
    
    
    109,724CASH FLOWS FROM INVESTING ACTIVITIES,Proceeds from sale of securities available for sale
    
    
    
    
    
    
    Net cash provided by investing activities
    
    
    
    
    
    
    CASH FLOWS FROM FINANCING ACTIVITIESPrincipal payments on long-term borrowings
    
    
    (42,000
    )
    
    
    (42,000
    )Cash distributions
    
    
    (17,883
    )
    
    
    Net cash (used in) financing activities
    
    
    (59,883
    )
    
    
    (42,000
    )Net increase in cash and cash equivalents
    
    
    30,777
    
    
    
    67,724Cash and cash equivalents:Beginning
    
    
    295,689
    
    
    
    208,237Ending
    
    $
    326,466
    
    
    $
    275,961
  5




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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 (Unaudited)
 1.
    
    Nature of Business:The Partnership was formed in July 1986 to acquire, operate, hold for investment and sell real
estate. The Partnership currently owns the EastPark Executive Center in Charlotte, North
Carolina. On April 24, 1998, the Partnership sold its only other real property holding, the
BB&T building facilities (formerly the UCB building) located in Greenville, South Carolina.2.
    
    Basis of Presentation:In the opinion of management, the accompanying unaudited condensed financial statements contain
all adjustments (all of which were normal recurring adjustments) necessary for a fair
presentation. The results of operations for the interim periods are not necessarily indicative
of the results which may be expected for an entire year.Leased property held for sale has been recorded following the 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 recorded at the lower of their carrying value or
estimated fair value less cost to sell. The fair market value of the property is subject to
potential significant change based on market conditions. Due to the length of time the
property has been on the market, management has decided to begin depreciating the property over
the remaining life of the property commencing the third quarter of 2005, unless sold.3.
    
    Statement of Cash Flows: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 a maturity of three months or less as cash and cash equivalents
on the accompanying condensed balance sheets.4.
    
    Priority Return:At December 31, 2004, the cumulative unpaid priority return to the unit holders was $3,861,957
compared to $3,619,173 one year prior. This increase resulted from no distributions being made
to partners during the year. Although no distributions were paid to partners on the priority
return, the Partnership did make distributions in the first quarter of 2005 in the amount of
$17,883 representing taxes owed on behalf of foreign and non-resident partners. Based on the
current and projected commercial real estate market conditions, the General Partners believe
that it is reasonably unlikely that a sale of the remaining Partnership property 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 any portion of the
priority return.
 6




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Item 2. Managements Discussion and Analysis or Plan of Operation
 Changes in Financial Condition
  Liquidity and Capital Resources
  Results of Operations
  Status of EastPark Executive Center
  Forward-Looking Statements
  
    
    Inability to sell the building due to current market conditions
    
    Inability to extend the lease on a long-term basis to its major tenant
 7




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Item 3. Controls and Procedures
  
  
 Legal Proceedings
  
 Exhibits and Reports on Form 8-K
  Designation4Number UnderExhibit
    
    Item 601 ofNumber
    
    Regulation S-K
    
    Exhibit Description1*
    
    
    4
    
    
    Instrument defining rights of security holders  set forth in the
Limited Partnership Agreement2*
    
    
    10
    
    
    Limited Partnership Agreement3**
    
    
    10.1
    
    
    Exclusive Leasing and Management Agreement dated October 1, 1994
(EastPark Executive Center)4***
    
    
    10.2
    
    
    Listing Agreement of Property For Lease and/or Sale dated
February 2, 004 (EastPark Executive Center)5
    
    
    31.1
    
    
    Certification required by Section 31 of Item 601 of Regulation S-K6
    
    
    31.2
    
    
    Certification required by Section 31 of Item 601 of Regulation S-K7
    
    
    32.1
    
    
    Certification pursuant to Section 1350 of Chapter 63 of
Title 18 of the United States Code (Sarbanes-Oxley Act of 2002.)
   
 *
    
    Incorporated by reference to Exhibit A of the Partnerships Prospectus dated December 1,
1987,
Registration Number 33-07056-A. 8




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**
    
    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-K for the year
ended
December 31, 2003. 
 SIGNATURES
  YAGER/KUESTER PUBLIC FUND
LIMITED PARTNERSHIP
(Registrant)By:
    
    DRY Limited Partnership,
General Partner of Registrant
By: YFP, LLCGeneral Partner
 Date
    
    08/12/05
    
    
    
    By:
    
    /s/ Jeffrey S. YagerJeffrey S. YagerManagerDate
    
    08/12/05
    
    
    
    By:
    
    /s/ Thomas K. EmeryThomas K. Emery(Serving in the function of Principal Financial Officer)
 9