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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549 FORM 10-QSB (Mark one)x
    
    QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For Quarter Ended September 30, 2004oro
    
    TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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)
 (803) 547-9100       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 o




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PART I  FINANCIAL INFORMATION
Item 1. Financial Statements YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS September 30,
    
    December 31,2004
    
    2003(Unaudited)
    
    (Note)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    311,924
    
    
    $
    208,237Accounts receivable, tenant
    
    
    42,852
    
    
    
    45,962Prepaid expenses
    
    
    1,545
    
    
    
    242Total current assets
    
    
    356,321
    
    
    
    254,441Leased property held for sale
    
    
    2,323,501
    
    
    
    2,323,501$
    2,679,822
    
    
    $
    2,577,942LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIESCurrent maturities of long-term debt
    
    $
    1,240,000
    
    
    $
    1,303,000Accounts payable
    
    
    2,299
    
    
    
    4,445Accrued expenses
    
    
    39,133
    
    
    
    1,163Deferred revenue
    
    
    2,179
    
    
    
    Total current liabilities
    
    
    1,283,611
    
    
    
    1,308,608Commitment and ContingencyPARTNERS EQUITYGeneral partners
    
    
    (9,272
    )
    
    
    (10,541
    )Limited partners
    
    
    1,405,483
    
    
    
    1,279,8751,396,211
    
    
    
    1,269,334$
    2,679,822
    
    
    $
    2,577,942
 Note:
    
    The Condensed Balance Sheet at December 31, 2003 has been taken from the audited
financial statements at that date. See Notes to Condensed Financial Statements.
 2




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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2004
    
    2003
    
    2004
    
    2003(Unaudited)
    
    (Unaudited)Rental income
    
    $
    151,700
    
    
    $
    151,157
    
    
    $
    456,599
    
    
    $
    452,334Operating expenses:Contract labor
    
    
    1,500
    
    
    
    1,500
    
    
    
    4,500
    
    
    
    4,500Repairs and maintenance
    
    
    34,043
    
    
    
    94,291
    
    
    
    102,248
    
    
    
    168,518Management fees
    
    
    4,372
    
    
    
    4,525
    
    
    
    13,686
    
    
    
    13,381Utilities
    
    
    29,262
    
    
    
    25,812
    
    
    
    74,523
    
    
    
    69,659Professional fees
    
    
    14,100
    
    
    
    10,084
    
    
    
    59,683
    
    
    
    50,993Property taxes
    
    
    10,575
    
    
    
    10,665
    
    
    
    31,725
    
    
    
    31,995Miscellaneous
    
    
    1,080
    
    
    
    1,084
    
    
    
    4,250
    
    
    
    4,82294,932
    
    
    
    147,961
    
    
    
    290,615
    
    
    
    343,868Operating income
    
    
    56,768
    
    
    
    3,196
    
    
    
    165,984
    
    
    
    108,466Nonoperating income (expense):Interest and dividend income
    
    
    645
    
    
    
    1,007
    
    
    
    952
    
    
    
    3,113Interest expense
    
    
    (14,064
    )
    
    
    (13,650
    )
    
    
    (40,059
    )
    
    
    (42,918
    )(13,419
    )
    
    
    (12,643
    )
    
    
    (39,107
    )
    
    
    (39,805
    )Net income (loss)
    
    $
    43,349
    
    
    $
    (9,447
    )
    
    $
    126,877
    
    
    $
    68,661Deduct net income (loss) applicable to limited
partners (per limited partner unit for the quarter ended
September 30, 2004 $6.72; 2003 ($1.46) and for the nine months
ended September 30, 2004 $19.66; 2003 $10.64)
    
    $
    42,916
    
    
    $
    (9,353
    )
    
    $
    125,608
    
    
    $
    67,974Net income (loss) applicable to general partners
(per general partner unit for the quarter ended
September 30, 2004 $8.66; 2003 ($1.88) and for the nine months
ended September 30, 2004 $25.38; 2003 $13.74)
    
    $
    433
    
    
    $
    (94
    )
    
    $
    1,269
    
    
    $
    687
 See Notes to Condensed Financial Statements. 3




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YAGER/KUESTER PUBLIC FUND LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS Nine Months EndedSeptember 30,2004
    
    2003(Unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    126,877
    
    
    $
    68,661Adjustments to reconcile net income to net cash
provided by operating activities:Change in assets and liabilities:(Increase) decrease in prepaids and accounts receivable
    
    
    1,807
    
    
    
    (3,713
    )Increase in accounts payable, accrued expenses, and deferred revenue
    
    
    38,003
    
    
    
    82,677Net cash provided by operating activities
    
    
    166,687
    
    
    
    147,625CASH FLOWS FROM INVESTING ACTIVITIES, proceeds from sale of
securities available for sale
    
    
    
    
    
    
    603CASH FLOWS FROM FINANCING ACTIVITIESPrincipal payments on long-term borrowings
    
    
    (63,000
    )
    
    
    (70,000
    )Cash distributions
    
    
    
    
    
    
    (4,388
    )Net cash (used in) financing activities
    
    
    (63,000
    )
    
    
    (74,388
    )Net increase in cash and cash equivalents
    
    
    103,687
    
    
    
    73,840Cash and cash equivalents:Beginning
    
    
    208,237
    
    
    
    124,060Ending
    
    $
    311,924
    
    
    $
    197,900
 See Notes to Condensed Financial Statements. 4




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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.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, 2003, the cumulative unpaid priority return to the unit
holders was $3,619,173 compared to $3,380,753 one-year prior. This increase
resulted from no distributions being made to partners during the year.
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.




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Item 2. Management Discussion and Analysis of Financial Condition and Results
of Operations Changes in Financial Condition There have not been any significant changes in financial condition from
December 31, 2003 to September 30, 2004. Accrued expenses have increased from
year-end due to the accrual of the 2004 real property taxes and the accrual of
operating expenses. Liquidity and Capital Resources During the nine months ended September 30, 2004, the Partnership operations
continued to meet working capital requirements and the working capital deficit
was decreased by approximately $127,000 since year-end. The working capital
deficit as of September 30, 2004 was $927,290. The large working capital
deficit is due to the classification of the long-term debt as short-term, as
the current loan matures on December 31, 2004. The General Partners will seek
refinancing with Wachovia Bank, N.A. (f/k/a First Union National Bank) for the
loan on the EastPark property; however, no assurance can be given that such
refinancing will occur. Results of Operations Operating income for nine months ended September 30, 2004 was approximately 53%
higher than the same period of the prior year. The variance is attributable to
$50,605 of parking lot repairs completed in September 2003. Excluding this
nonrecurring expense, operating income would have been 4% higher than the prior
year. Rental income has increased slightly from the prior year. Interest
expense continues to be down from the prior year due to the decrease in
interest rates on the floating rate loan and the decreased principal balance. Status of EastPark Executive Center The General Partners remain committed to 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 broker
shifted its 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 General Services
Administration (GSA) at the current rental rate with a termination date of
October 31, 2006. However, the GSA may terminate this lease in full or in part
at any time on or after October 31, 2005 by giving at least 30 days written
notice. 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. 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. Factors that may
cause actual results to differ materially from those contemplated by such
forward-looking statements include, among others, the following possibilities:  
    
    Inability to sell the building due to current market conditions
    
    Inability to extend the lease on a long-term basis to its major tenant
    
    Inability to renew long-term debt




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Item 3. Controls and Procedures The Partnerships General Partner and Principal Accounting Officer have
conducted an evaluation of the Partnerships disclosure procedures as of
September 30, 2004. Based on their evaluation, the General Partner and
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 Partner and Principal Accounting
Officer, including any corrective actions with regard to significant
deficiencies and material weaknesses. PART II. OTHER INFORMATION Item 1.
    
    Legal ProceedingsThe Partnership is not engaged in any legal proceedings of a
material nature at the present time.Item 6.
    
    Exhibit Index(a) Exhibits:
 DesignationNumber 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, 2004 (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.)
 (b) Reports on Form 8-K:No reports on Form 8-K have been filed during the three
months ended September 30, 2004.
   *
    
    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-K for the year ended December 31, 2003.




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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. YAGER/KUESTER PUBLIC FUNDLIMITED PARTNERSHIP(Registrant)By:
    
    DRY Limited Partnership,General Partner of RegistrantBy:
    
    YFP, LLCGeneral PartnerDate
    
    11/12//04
    
    
    
    By:
    
    /s/ Jeffrey S. YagerJeffrey S. YagerManagerDate
    
    11/12/04
    
    
    
    By:
    
    /s/ Thomas K. EmeryThomas K. Emery(Serving in the function of Principal Financial Officer)