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|PDL, INC. AND ASSOCIATES, LIMITED COPARTNERSHIP
|-----------------------------------------------
|                                               
|BALANCE SHEET
DECEMBER 31, 2004 (UNAUDITED)    
|                                               

|                                                           | 
|---------------------------------------------------------- | 
|ASSETS                                                     | 
|                                                           | 
|CASH AND CASH EQUIVALENTS                                  | 
|                                                           | 
|                                                           | 
|ACCOUNTS RECEIVABLENet of valuation allowance of $102,385 | 
|                                                           | 
|                                                           | 
|PROPERTYNet of accumulated depreciation of $3,923,065     | 
|                                                           | 
|CASH IN ESCROW                                             | 
|                                                           | 
|                                                           | 
|PREPAID EXPENSES                                           | 
|                                                           | 
|                                                           | 
|DEFERRED MORTGAGE COSTS                                   | 
|Net of accumulated amortization of $255,116                | 
|                                                           | 
|                                                           | 
|TOTAL                                                      | 
|                                                           | 
|                                                           | 
|LIABILITIES AND PARTNERS DEFICIENCY                       | 
|                                                           | 
|                                                           | 
|ACCOUNTS PAYABLE                                           | 
|                                                           | 
|ACCRUED EXPENSES                                           | 
|                                                           | 
|                                                           | 
|OTHER LIABILITIES                                          | 
|                                                           | 
|                                                           | 
|MORTGAGE PAYABLE                                           | 
|                                                           | 
|                                                           | 
|TOTAL LIABILITIES                                          | 
|                                                           | 
|PARTNERS DEFICIENCY                                       | 
|                                                           | 
|                                                           | 
|TOTAL                                                      | 
|                                                           | 
|                                                           | 
|See notes to financial statements.                         | 

|
|



|PDL, INC. AND ASSOCIATES, LIMITED COPARTNERSHIP                                          
|-----------------------------------------------------------------------------------------
|                                                                                         
|STATEMENT OF OPERATIONS AND PARTNERS DEFICIENCY
YEAR ENDED DECEMBER 31, 2004 (UNAUDITED)
|                                                                                         

|                                          | 
|----------------------------------------- | 
|INCOME:                                   | 
|Rent                                      | 
|Interest                                  | 
|Other                                     | 
|                                          | 
|                                          | 
|                                          | 
|Total income                              | 
|                                          | 
|                                          | 
|EXPENSES:                                 | 
|Interest                                  | 
|Utilities                                 | 
|Repairs and maintenance                   | 
|Depreciation                              | 
|Real estate taxes, other taxes and fees   | 
|Insurance                                 | 
|Management fees                           | 
|Security services                         | 
|Rental expenses, including commissions    | 
|Salaries and wages                        | 
|Amortization of mortgage costs            | 
|Provision for bad debtsNet of recoveries | 
|Parking                                   | 
|Professional services                     | 
|Other                                     | 
|                                          | 
|                                          | 
|                                          | 
|Total expenses                            | 
|                                          | 
|                                          | 
|                                          | 
|NET INCOME                                | 
|                                          | 
|PARTNERS DEFICIENCYBeginning of year    | 
|                                          | 
|DISTRIBUTIONS                             | 
|                                          | 
|                                          | 
|                                          | 
|PARTNERS DEFICIENCYEnd of year          | 
|                                          | 
|                                          | 
|See notes to financial statements.        | 

|
|



|PDL, INC. AND ASSOCIATES, LIMITED COPARTNERSHIP                 
|----------------------------------------------------------------
|                                                                
|STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 2004 (UNAUDITED)
|                                                                

|                                                                                  | 
|--------------------------------------------------------------------------------- | 
|CASH FLOWS FROM OPERATING ACTIVITIES:                                             | 
|Net income                                                                        | 
|Adjustments to reconcile net income to net cash provided by operating activities: | 
|Depreciation and amortization                                                     | 
|Provision for bad debts                                                           | 
|Changes in assets and liabilities:                                                | 
|Decrease in notes and accounts receivable                                         | 
|Decrease in prepaid expenses                                                      | 
|Increase in cash in escrow                                                        | 
|Increase in accounts payable                                                      | 
|Decrease in accrued expenses                                                      | 
|Decrease in other liabilities                                                     | 
|                                                                                  | 
|                                                                                  | 
|Net cash provided by operating activities                                         | 
|                                                                                  | 
|                                                                                  | 
|                                                                                  | 
|CASH FLOWS FROM INVESTING ACTIVITIES                                             | 
|Building additions and improvements                                               | 
|                                                                                  | 
|                                                                                  | 
|CASH FLOWS FROM FINANCING ACTIVITIES:                                             | 
|Mortgage payments                                                                 | 
|Distributions to partners                                                         | 
|                                                                                  | 
|                                                                                  | 
|Net cash used in financing activities                                             | 
|                                                                                  | 
|                                                                                  | 
|                                                                                  | 
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                         | 
|                                                                                  | 
|CASH AND CASH EQUIVALENTSBeginning of year                                       | 
|                                                                                  | 
|                                                                                  | 
|CASH AND CASH EQUIVALENTSEnd of year                                             | 
|                                                                                  | 
|                                                                                  | 
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW                                              | 
|INFORMATION:                                                                      | 
|                                                                                  | 
|CASH PAID FOR INTEREST                                                            | 
|                                                                                  | 
|                                                                                  | 
|                                                                                  | 
|See notes to financial statements.                                                | 

|
|



|PDL, INC. AND ASSOCIATES, LIMITED COPARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 2004  (UNAUDITED)
|-----------------------------------------------------------------------------------------------------------------------
|                                                                                                                       
|                                                                                                                       
|1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                                                          
|                                                                                                                       

| | GeneralPDL, Inc. and Associates, Limited Copartnership (the Partnership) was formed in June
of 1990. The general partner is PDL, Inc., a wholly-owned subsidiary of Presidential Realty Corporation.
The primary asset of the Partnership is an office building located in Hato Rey, Puerto Rico, known
as Home Mortgage Plaza.                                                                                                                                                               
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Income taxesNo provision has been made for income taxes because, as a partnership, such taxes are the responsibility
of the individual partners.                                                                                                                                                                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | PropertyProperty, principally a building, is stated at cost less accumulated depreciation. Depreciation
is provided on the straight-line method over the estimated useful lives of the assets, generally
ten to thirty-one years. Repairs and maintenance are charged to operations as incurred.                                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The Partnership reviews its investment in its property for possible impairment at least annually, and
more frequently if circumstances warrant. Impairment is determined to exist when estimated amounts
recoverable through future operations on an undiscounted basis is below the propertys carrying
value. If the property is determined to be impaired, it would be written down to its estimated fair
value.                                                                              
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Deferred mortgage costsDeferred mortgage costs are amortized over the term of the mortgage using the interest method.                                                                                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Use of estimatesThe preparation of financial statements in accordance with accounting principles generally accepted
in the United States of America 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 revenue and expenses during the
reporting period. Actual results could differ from those estimates.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Cash and cash equivalentsFor the purposes of this statement, the Partnership considers liquid investments purchased having
a maturity of three months or less to be cash equivalents.                                                                                                                                                                                                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Revenue recognitionThe Partnership acts as a lessor under operating leases with rental revenue recognized on a straight
line basis over the related lease term.                                                                                                                                                                                                                                                                                                                                 

|                   
|-------------------
|2. MORTGAGE PAYABLE
|                   

| | The building is subject to a mortgage payable dated April 1998 with an original principal balance of
$17,500,000. The mortgage bears interest at a rate of 7.38% per annum until May 11, 2008, at which
time the outstanding principal balance is expected to be repaid. However, the maturity date of the
mortgage is May 11, 2028 and if the mortgage is not repaid in 2008, the interest rate will be increased
by 2% and additional repayments will be required from the surplus cash flows from the operations
of the property (after payment of operating expenses) which will be applied to the outstanding principal
amount.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|
|



|
|
|

| | At December 31, 2004, the mortgage payable is due as follows:
| | -------------------------------------------------------------

| |     
| | ----
| | 2005
| | 2006
| | 2007
| | 2008
| |     
| |     
| |     
| |     

|                             
|-----------------------------
|3. RELATED PARTY TRANSACTIONS
|                             

| | Included in the statement of operations and partners deficiency are $20,000 of general partner
administrative fees.
| | --------------------------------------------------------------------------------------------------------------------

|                               
|-------------------------------
|4. MINIMUM FUTURE RENTAL INCOME
|                               

| | The Partnership is the lessor for various commercial tenants under non-cancelable operating leases.
| | ---------------------------------------------------------------------------------------------------
| |                                                                                                    
| | The future non-cancelable lease payments are as follows:                                           

| |           
| | ----------
| | 2005      
| | 2006      
| | 2007      
| | 2008      
| | 2009      
| | Thereafter
| |           
| |           
| |           
| |           

|      
|------
|******

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