<PAGE>
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

              (Mark One)
              [X] Quarterly report under Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

              For Quarter Ended June 30, 2004 or

              [ ] 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 0-18261
                            TOWER PROPERTIES COMPANY
                            ------------------------
             (Exact name of registrant as specified in its charter)

       Missouri                                          (43-1529759)
       --------                                          ------------
(State of incorporation)                       (IRS Employer Identification No.)

Suite 100, 911 Main Street,               Kansas City, Missouri          64105
--------------------------------------------------------------------------------
(Address of principal executive offices)                                Zip Code

                                 (816) 421-8255
                                  -------------
             (Registrant's telephone number, including area code)
             ----------------------------------------------------

      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 the
filing requirements for the past 90 days.
Yes [X]  No. [ ]

      Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act)
Yes [ ]  No. [X]

      184,969 shares of common stock, $1.00 par value per share, outstanding at
      July 31, 2004
<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS

                            TOWER PROPERTIES COMPANY
                                 BALANCE SHEETS
                       JUNE 30, 2004 AND DECEMBER 31, 2003

<TABLE>
<CAPTION>
                                                                     (UNAUDITED)
                                                                        2004              2003
                                                                        ----              ----
<S>                                                                 <C>              <C>
ASSETS

Investment in Commercial Properties:
    Rental Property, Net                                            $  91,452,566    $  92,285,745
    Tenant Leasehold Improvements, Net                                  7,188,840        5,703,292
    Equipment and Furniture, Net                                        6,423,718        6,892,018
    Construction in Progress                                               13,181          629,472
                                                                    -------------    -------------
       Commercial Properties, Net                                     105,078,305      105,510,527

Real Estate Held for Sale                                                 156,717          156,717

Cash and Cash Equivalents (Related Party)                                  37,517          321,517
Investment Securities at Fair Value (Related Party)                     6,281,319        6,700,985
Receivables (Including Related Party)                                   2,271,565        2,230,256
Income Taxes Recoverable                                                2,472,095          450,992
Prepaid Expenses and Other Assets                                       1,065,452        1,082,808
                                                                    -------------    -------------
          TOTAL ASSETS                                              $ 117,362,970    $ 116,453,802
                                                                    =============    =============

LIABILITIES AND STOCKHOLDERS' INVESTMENT
Liabilities:
    Mortgage Notes Payable                                          $  59,192,512    $  46,185,773
    Construction Loan (Related Party)                                   2,400,000       12,650,000
    Real Estate Bond Issue                                              6,400,000        6,400,000
    Line of Credit (Related Party)                                      6,488,000       10,398,000
    Accounts Payable and Other Liabilities                              2,903,082        2,398,705
    Deferred Income Taxes                                               5,227,667        3,991,337
                                                                    -------------    -------------

          Total Liabilities                                            82,611,261       82,023,815

Commitments and Contingencies

Stockholders' Investment:
Preferred Stock, No Par Value
  Authorized 60,000 Shares, None Issued                                        --               --
   Common Stock, Par Value $1.00
     Authorized 1,000,000 Shares, Issued
        185,430 and 183,430 Shares in 2004 and 2003, respectively         185,430          183,430
  Paid-In Capital                                                      18,923,038       18,481,720
  Retained Earnings                                                    12,413,058       13,257,705
  Accumulated Other Comprehensive Income                                3,304,847        3,560,843
                                                                    -------------    -------------
                                                                       34,826,373       35,483,698

  Less Treasury Stock, At Cost (461 and
      6,506 shares in 2004 and 2003, respectively)                        (74,664)      (1,053,711)
                                                                    -------------    -------------
    Total Stockholders' Investment                                     34,751,709       34,429,987
                                                                    -------------    -------------

TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT                      $ 117,362,970    $ 116,453,802
                                                                    =============    =============
</TABLE>
               See accompanying notes to the financial statements.

                                       2
<PAGE>

                            TOWER PROPERTIES COMPANY
                              STATEMENTS OF INCOME
            FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND JUNE 30, 2003
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                              2004           2003
                                                              ----           ----
<S>                                                       <C>             <C>
REVENUES
Non-Related Party Revenues:
  Rent                                                    $  9,575,005    $ 8,452,484
  Management and Service Fee                                       794          5,273
  Gain (Loss) on Disposition of Assets                         (20,751)       486,660
  Interest and Other Income                                     94,048        613,244
                                                          ------------    -----------
     Total Non-Related Party Revenues                        9,649,096      9,557,661

Related Party Revenues:
  Rent                                                         931,564        903,630
  Management and Service Fee                                   457,415        363,785
  Interest and Other Income                                     67,418        513,953
                                                          ------------    -----------
     Total Related Party Revenues                            1,456,397      1,781,368
                                                          ------------    -----------

          Total Revenues                                    11,105,493     11,339,029
                                                          ------------    -----------

OPERATING EXPENSES
  Operating Expenses                                         2,220,143      1,910,637
  Maintenance and Repairs                                    2,768,227      2,283,493
  Depreciation and Amortization                              2,963,171      2,107,190
  Taxes Other than Income                                    1,080,571        929,338
  General, Administrative and Other                          1,283,608        924,107
                                                          ------------    -----------
        Total Operating Expenses                            10,315,720      8,154,765

OTHER EXPENSE
  Interest (Including Related Party)                         2,174,436      1,881,878
                                                          ------------    -----------

        Income (Loss) Before Provision for Income Taxes     (1,384,663)     1,302,386

INCOME TAX EXPENSE (BENEFIT)                                  (540,016)       507,931
                                                          ------------    -----------

NET INCOME (LOSS)                                         $   (844,647)   $   794,455
                                                          ============    ===========
Earnings (Loss) Per Share:
  Basic                                                   $      (4.67)   $      4.47
                                                          ============    ===========
  Diluted                                                 $      (4.67)   $      4.47
                                                          ============    ===========

Weighted Average Common Shares Outstanding:
  Basic                                                        180,969        177,590
                                                          ============    ===========
  Diluted                                                      180,969        177,823
                                                          ============    ===========
</TABLE>

                 See accompanying notes to financial statements.

                                       3
<PAGE>
                            TOWER PROPERTIES COMPANY
                       STATEMENTS OF COMPREHENSIVE INCOME
       FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2004 AND JUNE 30, 2003
                                    UNAUDITED

<TABLE>
<CAPTION>


                                                         Six Months Ended                    Three Months Ended
                                                    6/30/2004         6/30/2003         6/30/2004        6/30/2003
                                                  -----------------------------       -----------------------------
<S>                                               <C>               <C>               <C>               <C>
NET INCOME (LOSS)                                 $  (844,647)      $   794,455       $  (314,201)      $   (86,770)

Unrealized holding (loss) gain on marketable
equity securities arising during the period          (419,666)          (48,170)         (240,590)          308,551

Deferred income tax benefit (expense)                 163,670            18,786            93,830          (120,335)
                                                  -----------       -----------       -----------       -----------

Comprehensive income (Loss)                       $(1,100,643)      $   765,071       $  (460,961)      $   101,446
                                                  ===========       ===========       ===========       ===========

</TABLE>


               See accompanying notes to the financial statements.


                                       4
<PAGE>

                            TOWER PROPERTIES COMPANY
                              STATEMENTS OF INCOME
           FOR THE THREE MONTHS ENDED JUNE 30, 2004 AND JUNE 30, 2003
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                   2004           2003
                                                   ----           ----
<S>                                             <C>            <C>
REVENUES
Non-Related Party Revenues:
  Rent                                          $ 5,000,817    $ 4,246,407
  Management and Service Fee                            256          4,586
  Loss on Disposition of Assets                          --         (7,690)
  Interest and Other Income                          66,715        173,438
                                                -----------    -----------
     Total Non-Related Party Revenues             5,067,788      4,416,741

Related Party Revenues:
  Rent                                              448,394        419,047
  Management and Service Fee                        219,906        186,299
  Interest and Other Income                          33,589         24,381
                                                -----------    -----------
     Total Related Party Revenues                   701,889        629,727
                                                -----------    -----------
          Total Revenues                          5,769,677      5,046,468
                                                -----------    -----------
OPERATING EXPENSES
  Operating Expenses                              1,112,513        937,569
  Maintenance and Repairs                         1,378,634      1,299,302
  Depreciation and Amortization                   1,515,546      1,035,678
  Taxes Other than Income                           597,699        464,669
  General, Administrative and Other                 580,352        516,325
                                                -----------    -----------
        Total Operating Expenses                  5,184,744      4,253,543

OTHER EXPENSE
  Interest (Including Related Party)              1,100,015        935,170
                                                -----------    -----------
       Loss Before Provision for Income Taxes      (515,082)      (142,245)

INCOME TAX BENEFIT                                 (200,881)       (55,475)
                                                -----------    -----------
NET LOSS                                        $  (314,201)   $   (86,770)
                                                ===========    ===========
Loss Per Share:
  Basic                                         $     (1.70)   $     (0.49)
                                                ===========    ===========
  Diluted                                       $     (1.70)   $     (0.49)
                                                ===========    ===========
Weighted Average Common Shares Outstanding:
  Basic                                             184,925        177,469
                                                ===========    ===========
  Diluted                                           184,925        177,469
                                                ===========    ===========
</TABLE>

                 See accompanying notes to financial statements.

                                       5
<PAGE>

                            TOWER PROPERTIES COMPANY
                             STATEMENTS OF CASH FLOW
            FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND JUNE 30, 2003
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                               2004             2003
                                                               ----             ----
<S>                                                         <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net Income (Loss)                                        $   (844,647)   $    794,455
   Adjustments to Reconcile Net Income (Loss) to Net Cash
     Provided by Operating Activities:
       Depreciation                                            2,192,735       1,482,770
       Amortization                                              770,436         624,420
       (Gain) Loss on Disposition of Assets                       20,751        (493,935)
       Treasury Shares Issued to Directors                        10,125          10,092
     Change in Balance Sheet Accounts, Net:
       Accounts Receivable                                       (41,309)        531,107
       Prepaid Expenses and Other Assets                         151,557        (232,743)
       Accounts Payable and Other Liabilities                    504,377      (1,142,551)
       Current Income Taxes                                   (2,021,103)        (71,869)
       Deferred Income Taxes                                   1,400,000              --
                                                            ------------    ------------
           Net Cash Provided by Operating Activities           2,142,922       1,501,746
                                                            ------------    ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Net Change in Construction in Progress                   $    616,291    $(11,837,747)
   Proceeds from Disposition of Assets, Net                           --         733,785
   Additions to Equipment & Furniture, Net                      (231,117)       (229,176)
   Additions to Rental Property, Net                            (680,891)       (573,465)
   Additions to Leasehold Improvements, Net                   (2,163,453)       (287,299)
                                                            ------------    ------------
           Net Cash Used in Investing Activities              (2,459,170)    (12,193,902)
                                                            ------------    ------------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal Payments on Mortgage Notes                     $ (3,993,261)   $ (1,193,727)
   Principal Payments On Construction Loans                  (10,250,000)             --
   Proceeds from Long Term Borrowings                         17,000,000      12,084,621
   Net Change in Line of credit                               (3,910,000)        500,000
   Purchase of Treasury Stock                                         --        (229,261)
   Proceeds from Exercise of Stock Options                     1,328,000              --
   Tax Benefit from Stock Options Exercise                        84,240              --
   Deferred Loan Costs                                          (226,731)        (30,369)
                                                            ------------    ------------
           Net Cash Provided by Financing Activities              32,248      11,131,264
                                                            ------------    ------------

NET INCREASE (DECREASE) IN CASH                                 (284,000)        439,108

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                   321,517         282,696
                                                            ------------    ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD                    $     37,517    $    721,804
                                                            ============    ============
</TABLE>

               See accompanying notes to the financial statements.

                                       6
<PAGE>

                            TOWER PROPERTIES COMPANY
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.    The financial statements included herein have been prepared by Tower
Properties Company (the Company) and, in the opinion of management, present a
fair statement of the results for the interim periods. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America ("GAAP") have been condensed or omitted, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. These condensed financial statements should be read in conjunction
with the financial statements and the notes thereto included in the Company's
latest annual report on Form 10-K as of and for the year ended December 31, 2003
to provide a description of the accounting policies which have been continued
without change, and for additional information about the Company's financial
condition.

      The Company is primarily engaged in owning, developing, leasing and
managing real property located in Johnson County, Kansas, and Clay, St. Louis
and Jackson Counties in Missouri. Substantially all of the improved real estate
owned by the Company consists of office buildings, apartment complexes, a
warehouse, a warehouse/office facility, automobile parking lots and garages, and
land held for future sale or development.

2.    Interest paid during the six months of 2004 and 2003, amounted to
$2,130,728 and $2,043,835, respectively. Of those amounts, interest paid to
related party was $269,364 and $124,870 for the six months ended June 30, 2004
and 2003, respectively. Income taxes paid during the six months ended June 30,
2004 and 2003 amounted to $7,500 and $579,800, respectively.

3.    Interest of $7,399 and $152,650 was capitalized during the six months
ended June 30, 2004 and 2003, respectively. Interest of $5,671 and $97,783 was
capitalized during the three months ended June 30, 2004 and 2003, respectively.

4.    Under SFAS No. 115, the investment in Commerce Bancshares, Inc. common
stock is classified as "available for sale", and is recorded at fair value. The
unrealized gain at June 30, 2004 of $5,417,782 net of tax effects of $2,112,935,
or $3,304,847 is reflected as a separate component of stockholders' investment.
There was a decrease in the net unrealized holding gain for the six months ended
June 30, 2004 of $255,996, net of deferred taxes, and a decrease in the net
unrealized holding gain of $146,760, net of deferred taxes, for the three months
ended June 30, 2004.

5.    On March 1, 2004, the Company refinanced the loan for Peppertree
Apartments with the current lender, Thrivent Financial for Lutherans. The
original $4,000,000 loan had an outstanding balance of $2,714,631 at March 1,
2004. The Company paid off the existing loan on March 1, 2004, paid a 5%
prepayment penalty of $136,000 and replaced the original loan

                                       7
<PAGE>

with a new $5,000,000, 20-year loan at 5.89% and paid $79,856 of costs
associated with the loan closing.

      On May 14, 2004, the Company refinanced the loan for Oakbrook Apartments
with State Farm Life Insurance Company and paid off the $10,250,000 construction
loan with Commerce Bank. The new loan is a 15-year (25 year amortization) loan
at 5.56% that matures on June 1, 2019 and the Company paid $146,875 of costs
associated with the loan closing.

      The new loan is initially a full recourse loan but after certain leasing
and financial criteria are met at Oakbrook the loan can be converted to a 50%
recourse loan and ultimately to a full non-recourse loan.

6.    COMMITMENTS AND CONTINGENCIES:

            Congress passed the Americans With Disabilities Act (the Act) of
1990 which became effective January 26, 1992. The Act contains provisions for
building owners to provide persons with disabilities with accommodations and
access equal to, or similar to, that available to the general public. Management
cannot estimate the eventual impact of the Act on the financial condition or
results of operations of the Company since certain provisions of the Act are
open to interpretation. The Company is implementing the requirements of the Act
that are readily achievable and will not constitute an undue burden on the
Company.

      Due to governmental regulations regarding asbestos and the uncertainty
surrounding the advantages and disadvantages of asbestos removal, the Company
will continue to monitor the status of asbestos in its commercial office
buildings and will take appropriate action when required. The cost to remove all
asbestos from properties owned by the Company cannot be determined; however,
these removal costs could have a significant adverse impact on the future
operations and liquidity of the Company.

      A former tenant of Commerce Tower has pending a suit against the Company
relating to asbestos in that building. The suit alleges fraud, gross negligence,
nuisance and breach of contract. The suit also seeks punitive damages and an
order requiring removal of the asbestos in the building. Plaintiff originally
filed suit in June 2001, then voluntarily dismissed that suit on May 30, 2003
and immediately filed the current suit. Plaintiff sought to represent a class
for damages for alleged excessive rent, property damage and medical monitoring,
but the court denied class certification. Monitoring performed in the building
has indicated that fibers are properly contained. The Company believes the suit
is without merit and intends to defend its position vigorously.

7.    EARNINGS (LOSS) PER SHARE

      Basic earnings (loss) per share is based upon the weighted average common
shares outstanding during each period. Diluted earnings (loss) per share is
based upon the weighted average common and common equivalent shares outstanding
during each period. Stock options are the Company's only common stock
equivalent. The following table presents

                                       8
<PAGE>

information necessary to calculate basic and diluted earnings (loss) per share
for the periods indicated:

<TABLE>
<CAPTION>
                                       Six Months Ended June 30    Three Months Ended June 30
                                       ------------------------    --------------------------
                                           2004         2003            2004         2003
                                           ----         ----            ----         ----
<S>                                    <C>            <C>          <C>             <C>
Weighted average common shares - basic   180,969      177,590         184,925      177,469

Dilutive stock options                         -          233               -            -
                                         -------      -------         -------      -------

Weighted average common shares -
dilutive                                 180,969      177,823         184,925      177,469
                                         =======      =======         =======      =======
</TABLE>

      For the six months ended June 30, 2004, the three months ended June 30,
      2004 and the three months ended June 30, 2003, basic and diluted earnings
      per share are the same because of the net losses for the periods.

8.    STOCK BASED COMPENSATION

      The Company accounts for stock options under the recognition and
measurement principles of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related Interpretations. No stock-based employee compensation
cost is reflected in operations, as all options granted under the plan had an
exercise price equal to the market value of the underlying common stock on the
date of grant. The following table illustrates the effect on net income (loss)
and earnings (loss) per share if the Company had applied the fair value
recognition provisions of FASB Statement No. 123, Accounting for Stock-Based
Compensation, to stock-based employee compensation:

<TABLE>
<CAPTION>
                                               Six Months Ended June 30,    Three Months Ended June 30,
                                              --------------------------    ---------------------------
                                                 2004           2003           2004           2003
                                                 ----           ----           ----           ----
<S>                                           <C>            <C>            <C>            <C>
Net income (loss) as reported                 $  (844,647)       794,455    $  (314,201)       (86,770)
Deduct:  Total stock-based employee
     Compensation expense determined
     under fair value based method for all

     awards, net of related tax effects                 -         (7,848)             -         (3,924)
                                              -----------    -----------    -----------    -----------
Pro forma net income (loss)                   $  (844,647)       786,607    $  (314,201)       (90,694)
                                              ===========    ===========    ===========    ===========

Earnings (loss) per share:
     Basic-as reported                        $     (4.67)   $      4.47    $     (1.70)   $     (0.49)
                                              ===========    ===========    ===========    ===========

     Basic-proforma                           $     (4.67)   $      4.43    $     (1.70)   $     (0.51)
                                              ===========    ===========    ===========    ===========

     Diluted-as reported                      $     (4.67)   $      4.47    $     (1.70)   $     (0.49)
                                              ===========    ===========    ===========    ===========

     Diluted-proforma                         $     (4.67)   $      4.42    $     (1.70)   $     (0.51)
                                              ===========    ===========    ===========    ===========
</TABLE>

On March 31, 2004, the Company's Chairman of the Board exercised stock options
to acquire 8,000 shares of common stock. At June 30, 2004, there are no stock
options outstanding.

                                       9
<PAGE>

9.    BUSINESS SEGMENTS

The Company groups its operations into three business segments: commercial
office, apartments, and parking. The Company's business segments are separate
business units that offer different real estate services. The accounting
policies for each segment are the same as those described in the summary of
significant accounting policies.

Following is information for each segment for six months ended June 30, 2004 and
2003:

<TABLE>
<CAPTION>
                                                                               June 30, 2004
                                             ---------------------------------------------------------------------------
                                              COMMERCIAL                                      CORPORATE
                                                OFFICE       APARTMENTS        PARKING        AND OTHER         TOTAL
                                             -----------     ----------      ----------      ----------      -----------
<S>                                          <C>             <C>             <C>             <C>             <C>
REVENUE FROM EXTERNAL CUSTOMERS              $ 4,848,471      3,315,867         686,829         797,929        9,649,096

REVENUE FROM RELATED PARTY/MAJOR CUSTOMER      1,456,397              -               -               -        1,456,397

INTEREST EXPENSE                                 949,394        920,004          77,350         227,688        2,174,436

DEPRECIATION AND AMORTIZATION                  1,265,410      1,306,821         153,129         237,811        2,963,171

SEGMENT INCOME (LOSS) BEFORE TAX                 295,559     (1,510,900)         (8,566)       (160,756)      (1,384,663)

CAPITAL EXPENDITURES BY SEGMENT                1,530,509        274,244          72,290         582,127        2,459,170

IDENTIFIABLE SEGMENT ASSETS                   47,244,666     41,082,981      12,241,859      16,793,464      117,362,970
</TABLE>

<TABLE>
<CAPTION>
                                                                           June 30, 2004
                                             ----------------------------------------------------------------------
                                              COMMERCIAL                                   CORPORATE
                                                OFFICE       APARTMENTS       PARKING      AND OTHER       TOTAL
                                             -----------     ----------     ----------    ----------    -----------
<S>                                          <C>             <C>            <C>           <C>           <C>
REVENUE FROM EXTERNAL CUSTOMERS              $ 4,650,421      2,911,297        587,272     1,408,671      9,557,661

REVENUE FROM RELATED PARTY/MAJOR CUSTOMER      1,781,368              -              -             -      1,781,368

INTEREST EXPENSE                               1,008,391        767,669         12,164        93,654      1,881,878

DEPRECIATION AND AMORTIZATION                  1,101,552        636,681         54,542       314,415      2,107,190

SEGMENT INCOME (LOSS) BEFORE TAX                 644,897       (342,548)       100,595       899,442      1,302,386

CAPITAL EXPENDITURES BY SEGMENT                2,137,428      7,154,154      3,560,807        75,298     12,927,687

IDENTIFIABLE SEGMENT ASSETS                   46,733,994     36,446,760     10,136,728    13,576,945    106,894,427
</TABLE>

                                       10
<PAGE>

Following is information for each segment for three months ended June 30, 2004
and 2003:

<TABLE>
<CAPTION>
                                                                   June 30, 2004
                                    ---------------------------------------------------------------------------
                                     COMMERCIAL                                      CORPORATE
                                       OFFICE       APARTMENTS       PARKING         AND OTHER         TOTAL
                                    -----------     ----------      ----------      ----------      -----------
<S>                                 <C>             <C>             <C>             <C>             <C>
REVENUE FROM EXTERNAL CUSTOMERS     $ 2,572,047      1,738,926         361,168         395,647        5,067,788

REVENUE FROM RELATED PARTY/MAJOR

CUSTOMER                                701,889              -               -               -          701,889

INTEREST EXPENSE                        471,586        478,805          35,513         114,111        1,100,015

DEPRECIATION AND AMORTIZATION           653,224        648,234          80,310         133,778        1,515,546

SEGMENT INCOME (LOSS) BEFORE TAX        212,136       (617,679)         (7,981)       (101,558)        (515,082)

CAPITAL EXPENDITURES BY SEGMENT       1,001,681        124,099               -         516,620        1,642,400

IDENTIFIABLE SEGMENT ASSETS          47,244,666     41,082,981      12,241,859      16,793,464      117,362,970
</TABLE>

<TABLE>
<CAPTION>
                                                                June 30, 2003
                                    -----------------------------------------------------------------------
                                     COMMERCIAL                                   CORPORATE
                                       OFFICE       APARTMENTS       PARKING      AND OTHER        TOTAL
                                    -----------     ----------     ----------    ----------     -----------
<S>                                 <C>             <C>            <C>           <C>            <C>
REVENUE FROM EXTERNAL CUSTOMERS     $ 2,343,544      1,439,268       299,158        334,771       4,416,741

REVENUE FROM RELATED PARTY/MAJOR

CUSTOMER                                629,727              -              -             -         629,727

INTEREST EXPENSE                        498,848        403,778         12,164        20,380         935,170

DEPRECIATION AND AMORTIZATION           556,974        321,945         27,608       129,151       1,035,678

SEGMENT INCOME (LOSS) BEFORE TAX         37,886       (267,371)        34,899        52,341        (142,245)

CAPITAL EXPENDITURES BY SEGMENT         990,629      4,117,079      2,185,072        71,870       7,364,650

IDENTIFIABLE SEGMENT ASSETS          46,733,994     36,446,760     10,136,728    13,576,945     106,894,427
</TABLE>

                                       11
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal assets consist of real estate holdings which are not
liquid assets. Real estate holdings include office buildings, apartment
complexes, a warehouse and a warehouse/office facility, parking facilities and
land held for future sale. The principal source of funds generated internally is
income from operations. The principal source of external funds is long-term debt
and an $18,500,000 line of credit with Commerce Bank, N.A. The Line of Credit is
collateralized by 136,699 shares of Commerce Bancshares, Inc. common stock, real
estate owned in Downtown Kansas City, MO. and a negative pledge and assignment
of rents from the Commerce Tower Building. The line of credit has been utilized
by issuing a $6,656,000 letter of credit to back a low rate Industrial Revenue
Bond and a $65,000 letter of credit required by the Company's mortgage on the
Hillsborough apartment complex. At June 30, 2004, the Company had $6,488,000
outstanding borrowings on the line of credit. The Company had $5,291,000
available under the line at June 30, 2004. This line of credit has been extended
at market rates and terms and management believes the Company could obtain
similar financing arrangements if the Company's relationship with Commerce Bank,
N.A. did not exist. The Company does not utilize off-balance sheet financing or
leasing transactions.

CASH PROVIDED BY OPERATING ACTIVITIES for the six months ended June 30, 2004 was
$2,143,000, or an increase of $641,000 over the $1,502,000 for the six months
ended June 30, 2003. In 2004, the Accounts Payable and Other Liabilities account
has increased by $504,000, mostly due to the accrual of property taxes during
the year, while there was a decrease in the account balances in 2003 of
$1,143,000. The large decrease in Accounts Payable and Other Liabilities in 2003
reflects a reduction from payment of construction invoices for Oakbrook
apartments at New Mark and 811 Main garage expansion compared to year-end 2002
that was greater than the accrual for property taxes. The 2004 net loss plus
change in Income Tax balance sheet accounts totals a negative $1,466,000
compared to a positive $723,000 in 2003. But, the 2004 net loss includes
non-cash charges for depreciation and amortization of $2,964,000 compared to
only $2,107,000 in 2003 and 2003 includes $494,000 in Gain on Disposition of
Assets which is considered an investing activity rather than an operating
activity for cash flow purposes (see discussion of net income in the Results of
Operations section attached).

INVESTING ACTIVITIES utilized $2,459,000 of cash in the six months ended June
30, 2004, including $784,000 of improvements for two tenants that moved into the
Commerce Tower, $150,000 of improvements for a tenant that moved into the
commercial building at New Mark, $125,000 for the cooling tower at the Barkley
building, $71,000 for sidewalk improvements associated with the 811 Main garage
expansion, $451,000 for improvements for a tenant that moved into 9909 Lakeview
warehouse, and $265,000 paid for commissions for new leases and lease
extensions.

                                       12
<PAGE>

FINANCING ACTIVITIES provided $32,000 in the six months ended June 30, 2004 as
the net amounts received from the refinancings and stock option exercise were
utilized to pay down the Line of Credit. During the six months ended June 30,
2004 the Line of Credit balance decreased by $3,910,000 because of the following
transactions.

On March 1, 2004, the Company refinanced the loan for Peppertree Apartments with
the current lender, Thrivent Financial for Lutherans. The original $4,000,000
loan had an outstanding balance of $2,714,631 at March 1, 2004. The Company paid
off the existing loan on March 1, 2004, paid a 5% prepayment penalty of $136,000
and replaced the original loan with a new $5,000,000, 20-year loan at 5.89% and
paid $79,856 of costs associated with the loan closing. The $2,714,631 pay-off
of the original Peppertree loan combined with $1,278,630 of normal monthly
payments on other debt total $3,993,261 of principal payments on Mortgage Notes.
On May 14, 2004, the Company refinanced the loan for Oakbrook Apartments with
State Farm Life Insurance Company and paid off the $10,250,000 construction loan
with Commerce Bank. The new loan of $12,000,000 is a 15-year (25 year
amortization) loan at 5.56% that matures on June 1, 2019 and the Company paid
$146,875 of costs associated with the loan closing.

On March 31, 2004, Mr. James Kemper, Jr. (Chairman of the Board) exercised all
of his 8,000 non-qualified stock options to buy shares of the Company. The total
received for the 8,000 shares was $1,328,000 or an average exercise price of
$166 per share. To fill the option exercise, the Company sold 6,000 shares from
Treasury Stock for $992,000 and issued 2,000 shares of common stock for
$336,000. The market value of the Company's stock on the exercise date was $193
per share. Therefore, the market value of 8,000 shares totaled $1,544,000 or
$216,000 more than the total exercise amount of $1,328,000. For non-qualified
stock options, the difference between the market value and exercise cost is a
tax deduction for the Company. The Company's tax benefit of $84,240, based on a
39% effective tax rate, was recorded as additional paid-in-capital.

The Company did not experience liquidity problems during the six months ended
June 30, 2004. The Company does not anticipate any deficiencies in meeting its
liquidity needs. The availability under the $18,500,000 line of credit along
with cash provided from operations will give the Company adequate resources to
meet the Company's cash requirements during 2004. If necessary, the Company has
adequate resources to collateralize additional financing. The Company had cash
on hand of $38,000 at June 30, 2004.

The Company's revenues are primarily based on lease contracts, none of which are
deemed to be materially at risk.

CONTRACTUAL CASH OBLIGATIONS AND OTHER COMMERCIAL COMMITMENTS

There have been no material changes to the Registrant's contractual cash
obligations and other commercial commitments from amounts disclosed in its
Annual Report on Form 10-K for the year ended December 31, 2003.

                                       13
<PAGE>

CRITICAL ACCOUNTING POLICIES

Revenue Recognition

The Company derives its revenue primarily from two sources: 1) rent from leases
of real property, and 2) management and service fees from real property leased
and managed. Rental revenue is recognized on a straight-line basis over the term
of individual non-cancellable operating leases. The recognition of scheduled
rent increases on a straight-line basis results in the recognition of a
receivable from tenants. Such receivables were $1,433,073 and $1,030,474 at June
30, 2004 and 2003, respectively. Lease agreements generally do not provide for
contingent rents. If amounts are received from tenants upon early termination of
leases the amounts are recorded as income when received. Management and service
fees are recognized as a percentage of revenues on managed properties as earned
over the terms of the related management agreements.

Impairment of Long-Lived Assets

The Company follows the provisions of Statement of Financial Accounting
Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets". The Company assesses the carrying value of its long-lived
assets whenever events or changes in circumstances indicate that the carrying
amount of the underlying asset may not be recoverable. Certain factors that may
occur and indicate that an impairment exists include, but are not limited to:
significant underperformance relative to expected projected future operating
results; significant changes in the manner of the use of the assets; and
significant adverse industry or market economic trends. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of an
asset to estimated undiscounted future cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeded its estimated future cash
flows, an impairment charge would be recognized by the amount by which the
carrying amount of the asset exceeds the fair value of the asset. Assets to be
disposed of would be separately presented in the balance sheet as held for sale
and reported at the lower of the carrying amount or fair value less costs to
sell, and would no longer be depreciated.

Cost Capitalization

The Company evaluates major expenditures for capitalization. Those which improve
or extend the useful life of the property are capitalized. Depreciation is based
upon the expected useful lives, generally forty years for buildings, fifteen
years for land improvements, seven years for furniture and fixtures, five years
for equipment and three years for software.

RELATED PARTY TRANSACTIONS:

The Company has a variety of related party transactions with Commerce
Bancshares, Inc. and its subsidiaries (Commerce). In addition to the line of
credit borrowing arrangement described above, the Company has the following
transactions with Commerce:

                                       14
<PAGE>

-     Rentals - The Company leases space to Commerce Bank and its affiliates.
      Total rental income derived from these leases for the six months ended
      June 30, 2004 and June 30, 2003 was $931,564 and $903,630, respectively.
      Total rental income for the three months ended June 30, 2004 and June 30,
      2003 was $448,394 and $419,047, respectively. Such leases contain lease
      rates and other provisions similar to those of other leases with unrelated
      parties.

-     Management and Service fees - The Company manages certain properties owned
      by Commerce under property management agreements. In addition, the Company
      has been overseeing the construction of an office building in Wichita,
      Kansas owned by Commerce. Total fees earned under these property and
      construction management agreements were $437,290 and $355,454 for the six
      months ended June 30, 2004 and June 30, 2003, respectively. Total fees
      earned for property and construction management agreements were $217,110
      and $184,124 for the three months ended June 30, 2004 and June 30, 2003,
      respectively. The Company earns lease commissions on property owned by or
      rented by Commerce under a listing agreement. Total fees earned under
      these lease commission arrangements were $19,825 and $6,156 for the six
      months ended June 30, 2004 and June 30, 2003, respectively. Total fees
      earned for lease commission arrangements for the three months ended June
      30, 2004 were $2,616. No fees were earned for lease commission
      arrangements for the three months ended June 30, 2003. The Company may
      also earn income from consulting fee services. Total fees earned for
      consulting services were $300 and $2,175 for the six months ended June 30,
      2004 and June 30, 2003, respectively. Total fees earned for consulting
      services were $180 and $2,175 for the three months ended June 30, 2004 and
      June 30, 2003, respectively. The Company provides similar services to
      unrelated parties and revenues earned under these arrangements are similar
      to those earned from other unrelated parties.

-     Interest and other income - The Company owns 136,699 shares of Commerce
      Bancshares, Inc. common stock at June 30, 2004. The Company received
      dividend income from ownership of Commerce Bancshares common stock of
      $62,882 for the six months ended June 30, 2004 and $31,441 for the three
      months ended June 30, 2004. The Company owned 130,190 shares at June 30,
      2003 and received dividend income of $42,962, for the six months ended
      June 30, 2003 and $21,481 for the three months ended June 30, 2003. In
      addition, excess funds are deposited in Commerce Bank, N.A. Interest
      income earned on such deposits aggregated $4,536 and $5,991 for the six
      months ended June 30, 2004 and June 30, 2003, respectively, and $2,148 and
      $2,900 for the three months ended June 30, 2004 and June 30, 2003,
      respectively. The dividend and interest income earned are similar to those
      earned from other unrelated parties. During the first quarter of 2003 the
      Company also received $465,000 of other income from the Commerce Tower
      Building Banking Center Lobby lease buyout of $415,000 and Suite 618 lease
      buyout of $50,000. These lease buyouts contained rates and other
      provisions similar to those of other lease buyouts with unrelated parties.

                                       15
<PAGE>

-     Interest expense - The Company has an $18,500,000 line of credit with
      Commerce Bank, N.A. that has a variable interest rate equal to one and one
      half percent (1 1/2%) in excess of the Fed Funds rate. At June 30, 2004,
      $5,291,000 was available under this line of credit, and the interest rate
      at June 30, 2004 was 2.63%. The line requires monthly interest payments
      and matures June 1, 2005. The Company intends to renew this line of credit
      with Commerce upon expiration. Interest expense for this loan, including
      letter of credit fees, was $120,271 and $33,501 for the six months ended
      June 30, 2004 and 2003, respectively. Interest expense for this loan,
      including letter of credit fees, was $50,772 and $14,097 for the three
      months ended June 30, 2004 and 2003, respectively. The Company pledged its
      shares of Commerce common stock and certain real estate, and granted a
      negative pledge and assignment of rents on the Commerce Tower Building as
      collateral for the line of credit. The weighted average short term
      borrowing rate on the line of credit was 2.51% for the six months ended
      June 30, 2004.

      The Company has a $2,400,000 construction loan with Commerce Bank, N.A.
      for the expansion of the 811 Garage with a variable interest rate equal to
      the LIBOR plus 1.75%. At June 30, 2004, the loan was fully drawn, and the
      interest rate at June 30, 2004 was 2.875%. The loan requires monthly
      interest payments and matures May 1, 2006. Interest expense for this loan
      was $34,651 and $12,164 for the six months ended June 30, 2004 and June
      30, 2003, respectively, and $17,320 and $12,164 for the three months ended
      June 30, 2004 and June 30, 2003, respectively

      The Company also had a $10,250,000 construction loan with Commerce Bank,
      N.A. for the development of the Oakbrook apartments with a variable
      interest rate equal to the London Interbank Offered Rate (LIBOR) plus
      1.75%. On May 14, 2004 the Company paid off the fully drawn construction
      loan. At June 30, 2003, the outstanding balance was $9,684,621 with
      $565,379 available under the construction loan and the interest rate at
      June 30, 2003 was 3.07%. The loan required monthly interest payments and
      would have matured February 18, 2006. Interest expense for this loan was
      $108,827 and $81,027 for the six months ended June 30, 2004 and June 30,
      2003, respectively, and $34,808 and $62,859 for the three months ended
      June 30, 2004 and June 30,2003, respectively.

-     Included in receivables at June 30, 2004 and 2003 are amounts due from
      Commerce of $462,993 and $382,561, respectively.

RESULTS OF OPERATIONS

                         SIX MONTHS ENDED JUNE 30, 2004
                COMPARED WITH THE SIX MONTHS ENDED JUNE 30, 2003

Results for six months ended June 30, 2004 reflect a net loss of ($845,000),
while the comparable six months of 2003 had net income of $794,000. Pre-tax loss
in 2004 is ($1,385,000), which is $2,687,000 less than pre-tax profit in 2003 of
$1,302,000. The decrease

                                       16
<PAGE>

in pre-tax results is a combination of a $233,000 decrease in Total Revenues and
an increase in expenses (excluding the Provision for Income Taxes) of
$2,454,000.

The $233,000 decrease in Total Revenues is the net of several factors, including
a decrease of $966,000 in Interest and Other Income (Non-Related Party and
Related Party), a decrease of $507,000 in Gain on Disposition of Assets (2003
gain includes $494,000 from the sale of 60.04 acres of development land at New
Mark to the Catholic Diocese of KC), offset partially by an increase in Total
Rent income (mostly Non-Related Party) of $1,150,000.

Interest and Other Income decreased by $966,000 mostly due to the fact that 2003
included $1,020,000 of revenue from lease buyouts ($465,000 in February 2003
from Commerce Bank for the Commerce Tower banking center area ($415,000) and
Suite 618 ($50,000) of the Commerce Tower, $133,000 in March 2003 from Ford
Motor for 9909 Lakeview Warehouse, $282,000 in March 2003 from Valentine Radford
for the 8th, 9th and 11th floors of the Commerce Tower and $40,000 in April 2003
from Citigroup and $100,000 in May 2003 from the City of Overland Park for the
Barkley Building).

The increase of $1,150,000 in Total Rent income includes the following:

      a)    Related to the Valentine Radford lease buy-out in 2003 the Company
            wrote-off as a reduction in rent $327,000 of straight-line rent. The
            straight-line rent represented the amount by which accumulated
            income, which had been recorded equally over the life of the lease,
            exceeded the actual amount owed in the early years of the lease.

      b)    Prior to the Ford Motor lease buy-out at 9909 Lakeview Warehouse in
            2003, income of $122,000 had been recorded, while in 2004 the
            building was vacant until June when $25,000 of income was recorded.

      c)    Income from the UMB office building in St. Louis is up by $278,000
            as average occupancy in 2004 is 79% compared to only 59% in 2003. d)
            Income from the Barkley office building is up by $105,000 as average
            occupancy in 2004 is 94% compared to 87% in 2003.

      e)    Income at the apartment complexes is $401,000 greater in 2004 than
            2003 mostly because the Oakbrook apartments at New Mark, which were
            not completed until late 2003, have rental income in 2004 of
            $433,000.

      f)    Parking revenue from the 811 Main garage is $63,000 greater in 2004
            than 2003 because of the garage expansion completed in late 2003.

The expense increase of $2,454,000 (excluding the Provision for Income Taxes),
was due to several factors. Operating expenses increased $310,000 as: a)
salaries and benefits increased by $187,000 due to normal salary increases, new
employees at the Oakbrook apartments, and an increase in health insurance
premiums of $34,000, and b) utilities expense increased $123,000 mostly due to
$65,000 of utility expense in 2004 for the new Oakbrook apartments.

Maintenance and Repairs expense increased by $485,000. The largest factors
associated with the increase include: a) Roof and skylight repairs in 2004 of
$115,000 at the 9909 Lakeview Warehouse, b) Snow removal costs in 2004 exceeded
2003 by $49,000, c) Mostly due to

                                       17
<PAGE>

"make ready" repairs associated with increased leasing, repairs in 2004 at the
New Mark Phase I & II apartments, excluding snow removal, exceeded 2003 by
$112,000, d) repairs at the Oakbrook apartments in 2004, excluding snow removal,
are $76,000, and e) repairs at the Commerce Tower office building in 2004 are
$92,000 greater than 2003 due to the "make ready" repairs associated with the
increased number of major tenant improvements.

Depreciation and Amortization expense increased by $856,000. The increase is
mostly due to major projects put in service in late 2003. The expense in 2004
for these projects includes depreciation from the Oakbrook apartments of
$584,000 and the 811 Main Garage expansion of $108,000 plus $106,000 of
amortization of tenant improvements at the UMB office building in St. Louis.

General Administrative and Other expenses increased by $360,000 as 2004 includes
$136,000 for prepayment penalty (calculated at 5% of the loan balance) when the
loan for the Peppertree apartments was refinanced on March 31, 2004 and $32,000
of expense associated with the moving of existing 23rd floor tenants at the
Commerce Tower to accommodate a new tenant. Advertising and referrals expense is
$36,000 greater in 2004 than 2003 mostly because of the costs associated with
the leasing of the new Oakbrook apartments. Also, there has been an increase in
property and liability insurance expense of $91,000, of which $49,000 is to
insure the Oakbrook apartments.

Interest expense on the income statement reflects an increase of $293,000. Total
interest costs have actually increased by only $147,000. However, in 2004 the
Company has capitalized only $7,000 of interest related to construction
projects, while in 2003 $153,000 was capitalized, mostly from construction for
the Oakbrook apartments and 811 Main Garage expansion. Actual interest has
increased by $147,000 because the average outstanding debt in 2004 is
approximately $14,375,000 greater than 2003, basically due to the additional
debt related to the financing of the Oakbrook apartments and 811 Garage
expansion construction.

                        THREE MONTHS ENDED JUNE 30, 2004
               COMPARED WITH THE THREE MONTHS ENDED JUNE 30, 2003

Results for three months ended June 30, 2004 reflect a net loss of ($314,000)
while the comparable three months of 2003 had a net loss of ($87,000). Pre-tax
loss in 2004 is ($515,000) while the pre-tax loss in 2003 was ($142,000). The
decrease in pre-tax results is made up a $723,000 increase in Total Revenues
which was more than offset by an increase in expenses (excluding the Provision
for Income Taxes) of $1,096,000.

The $723,000 increase in Total Revenues is the net of several factors, including
an increase in Total Rent income (mostly Non-Related Party) of $784,000 offset
slightly by a decrease of $98,000 in Interest and Other Income (mostly
Non-Related Party).

Interest and Other Income decreased by $98,000 mostly due to the fact that 2003
included $140,000 of revenue from lease buyouts ($40,000 in April from Citigroup
and $100,000 in May from the City of Overland Park for the Barkley Building).

                                       18
<PAGE>

The increase of $784,000 in Total Rent income includes the following:

      a)    Income from the Commerce Tower office building is up by $158,000 as
            average occupancy in 2004 is 74% compared to 69% in 2003.

      b)    Income from the UMB office building in St. Louis is up by $161,000,
            as average occupancy in 2004 is 85% compared to 70% in 2003.

      c)    Income from the Barkley office building is up by $107,000 as average
            occupancy in 2004 is 96% compared to 86% in 2003.

      d)    In mid-June 2004 Duhnke Millwork began leasing the 9909 Lakeview
            Warehouse (recording $25,000 of income in 2004) which had been
            vacant since the March 2003 lease buy-out by Ford Motor Co.

      e)    The Oakbrook apartments at New Mark, which were not completed until
            late 2003 generated rental income in 2004 of $273,000.

      f)    Parking revenue from the 811 Main garage is $27,000 greater in 2004
            than 2003 because of the garage expansion completed in late 2003.

The expense increase of $1,096,000 (excluding the Provision for Income Taxes),
was due to the following factors. Operating expenses increased $175,000 as: a)
salaries and benefits increased by $87,000 due to normal salary increases, new
employees at the Oakbrook apartments, and an increase in health insurance
premiums of $13,000, and b) utilities expense increased $88,000 and $30,000 of
the amount in 2004 is for the new Oakbrook apartments.

Maintenance and Repairs expense increased by $79,000 of which $51,000 is from
the new Oakbrook apartments.

Depreciation and Amortization expense increased by $480,000 as 2004 includes
depreciation from the Oakbrook apartments of $292,000 and the 811 Main Garage
expansion of $58,000, plus $53,000 of amortization of tenant improvements at the
UMB office building in St. Louis. These projects were put in service in late
2003.

Taxes Other than Income expense increased by $133,000 which includes increases
in property taxes of $87,000 for the Oakbrook apartments and $35,000 for the 811
Main Garage expansion.

General Administrative and Other expenses increased by $64,000 due mainly to an
increase in property and liability insurance expense of $30,000 and an increase
in advertising and referrals expense of $15,000, both are due to the costs
associated with the Oakbrook apartments.

Interest expense on the income statement reflects an increase of $165,000. Total
interest costs have actually increased by only $73,000. However, in 2004 the
Company has capitalized only $6,000 of interest related to construction
projects, while in 2003 $98,000 was capitalized,

                                       19
<PAGE>

mostly from construction for the Oakbrook apartments and 811 Main garage
expansion. Actual interest has increased by $73,000 because the average
outstanding debt in 2004 is greater than 2003, basically due to the additional
debt related to the financing of the Oakbrook apartments and 811 Garage
expansion construction.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to various market risks, including equity investment
prices and interest rates.

The Company has a significant amount of fixed rate debt and believes that the
fair value risk is best quantified by considering prepayment penalties
associated with the debt. Most prepayment penalties are based upon the
difference between the debt's fixed rate and the Treasury note rate that most
closely corresponds with the remaining life of the mortgage. The estimated
aggregate prepayment penalty on such debt was $6,349,000 at June 30, 2004.

The Company has $16,184,059 of variable rate debt as of June 30, 2004. A 100
basis point change in each debt series benchmark would impact net income on an
annual basis by approximately $99,000. This debt is not hedged.

The Company has 136,699 shares of common stock of Commerce Bancshares, Inc. with
a fair value of $6,281,319 as of June 30, 2004. This investment is not hedged
and is exposed to the risk of changing market prices. The Company classifies
these securities as "available-for-sale" for accounting purposes and marks them
to market on the balance sheet at the end of each period. Management estimates
that its investments will generally be consistent with trends and movements of
the overall stock market excluding any unusual situations. An immediate 10%
change in the market price of the securities would have a $383,000 effect on
comprehensive income.

ITEM 4. CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, the Company has evaluated the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as of June 30, 2004 (the "Evaluation Date"). Based on such
evaluation, the Company's Chief Executive Officer and Chief Financial Officer
have concluded that, as of the Evaluation Date, these controls and procedures
are effective. There have been no significant changes in the Company's internal
control over financial reporting during the Company's quarter ended June 30,
2004, that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.



                                       20
<PAGE>
PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

      A former tenant of Commerce Tower has pending a suit against the Company
relating to asbestos in that building. The suit alleges fraud, gross negligence,
nuisance and breach of contract. The suit also seeks punitive damages and an
order requiring removal of the asbestos in the building. Plaintiff originally
filed suit in June 2001, then voluntarily dismissed that suit on May 30, 2003
and immediately filed the current suit. Plaintiff sought to represent a class
for damages for alleged excessive rent, property damage and medical monitoring,
but the court denied class certification. Monitoring performed in the building
has indicated that fibers are properly contained. The Company believes the suit
is without merit and intends to defend its position vigorously.

ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY
        SECURITIES

(c)     The Company sold 8,000 shares of common stock on March 31, 2004 to James
Kemper, Jr., Chairman of the Board, for the aggregate cash consideration of
$1,328,000, pursuant to the exercise by Mr. Kemper of non-qualified stock
options. The shares were not registered under the Securities Act of 1933 (the
"Act"), but were sold pursuant to the exemption provided by Section 4(2) of the
Act. Mr. Kemper is an "accredited investor" and represented that the shares were
being acquired for investment purposes and not for resale or distribution.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        On May 12, 2004, the Company held its annual meeting of stockholders to
elect two directors of the Company to serve until the annual stockholders
meeting in 2007 and to transact such other business as may properly come before
the meeting or any adjournment thereof. The results of the meeting were as
follows:

        Jonathan M. Kemper was elected to serve as a director of the Company
 with 156,003 votes for and 4,219 votes withheld.

        Thomas R. Willard was elected to serve as a director of the Company with
156,003 votes for and 4,219 votes withheld.

ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a) Exhibits

                                       21
<PAGE>

        Exhibit 31.1 - Certification of the Chief Executive Officer pursuant to
        Rule 13a-14(a) under the Securities Exchange Act of 1934

        Exhibit 31.2 - Certification of the Chief Financial Officer pursuant to
        Rule 13a-14(a) under the Securities Exchange Act of 1934

        Exhibit 32.1 - Certification of the Chief Executive Officer pursuant to
        18 U.S.C. Section 1350

        Exhibit 32.2 - Certification of the Chief Financial Officer pursuant to
        18 U.S.C. Section 1350

        (b) Reports on Form 8-K

No reports on Form 8-K were filed during the quarter for which this report is
filed.

                                       22
<PAGE>

SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

TOWER PROPERTIES COMPANY

/s/ Thomas R. Willard
---------------------
Thomas R. Willard
President and Chief Executive Officer

/s/ Stanley J. Weber
--------------------
Stanley J. Weber
Chief Financial Officer

Date:  August 13, 2004

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