SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_____________
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended Commission File Number
March 31, 1997 0-14562
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Keystone Mortgage Fund
(Exact name of registrant as specified in its charter.)
California 95-3786580
(State of Incorporation) (I.R.S. Employer Identification No.)
11340 W. Olympic Boulevard 90064-1661
Suite 300 (Zip Code)
Los Angeles, California
(Address of principal executive offices)
Registrant's telephone number, including area code: (310) 479-4121
_____________
Indicated by check mark whether the registrant (1) has filed all report
required to be filed by Section 13 of 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 / /
KEYSTONE MORTGAGE FUND
INDEX
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
(a) Condensed Balance Sheets, December 31, 1996 and March 31, 1997............................. 3
(b) Condensed Statements of Income, three ended, March 31, 1997 and 1996....................... 4
(c) Condensed Statements of Partners' Capital (Deficit) for the year ended December 31, 1996
and the three months ended March 31, 1997.................................................. 5
(d) Condensed Statements of Cash Flows, three months ended March 31, 1997 and 1996............. 6
(e) Notes to condensed financial statements.................................................... 7
Item 2. Management's discussion and analysis of financial condition and results of operations.. 8
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K........................................................... 9 & 10
2
KEYSTONE MORTGAGE FUND,
A California Limited Partnership
BALANCE SHEETS
Assets
(Unaudited)
*December 31 March 31
1996 1997
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Current assets:
Cash and cash equivalents.......................................................... $ 25,526 $ 13,200
Short-term investments (market value of $2,417,512 in 1996 and $3,691,366 in
1997)............................................................................ 2,417,512 3,691,366
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Total current assets........................................................... 2,443,038 3,704,566
Investment in real estate, net....................................................... 812,778 -0-
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$ 3,255,816 $ 3,704,566
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Liabilities and Partners' Capital
Current liabilities:
Accounts payable and other liabilities............................................. $ 1,208 $ 1,005
Due general partner................................................................ 280,000 282,500
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Total current liabilities...................................................... 281,208 283,505
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Partners' capital:
General Partners................................................................... 26,655 31,120
Limited partners--authorized 20,000 units, outstanding 13,272 units................ 2,947,953 3,389,941
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2,974,608 3,421,061
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$ 3,255,816 $ 3,704,566
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See accompanying notes to financial statements.
*Extracted from audited December 31, 1996 financial statements.
3
KEYSTONE MORTGAGE FUND,
A California Limited Partnership
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended
March 31
1997 1996
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Revenue:
Interest on mortgage loans.............................................................. $ -0- $ 26,971
Interest on short-term investments...................................................... 42,736 30,319
Rental and other revenue from investment in real estate................................. 33,227 50,913
Gain on disposition of investment in real estate........................................ 409,361
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485,324 108,203
Expenses:
Servicing related expenses.............................................................. 11,654 24,441
Administrative and general expenses..................................................... 5,150 3,770
Expenses related to real estate acquired in settlement of loans......................... 22,067 28,536
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38,871 56,747
NET INCOME (LOSS)................................................................... $ 446,453 $ 51,456
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Weighted average number of limited partnership units outstanding.......................... 13,272 13,272
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Net income per limited partnership unit................................................... $ 33.64 $ 3.88
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KEYSTONE MORTGAGE FUND,
A California Limited Partnership
STATEMENTS OF PARTNER'S CAPITAL
General Limited
Partners Partners Total
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Balance at December 31, 1996............................................... $ 26,655 $ 2,947,953 $ 2,974,608
Net income three months ended March 31, 1997............................... 4,465 441,988 446,453
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Balance as of March 31, 1997............................................... $ 31,120 $ 3,389,941 $ 3,421,061
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KEYSTONE MORTGAGE FUND,
A California Limited Partnership
STATEMENTS OF CASH FLOWS
Nine Months Ended March 31
1997 1996
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OPERATING ACTIVITIES:
Net Income........................................................................... $ 446,453 $ 51,456
Amortization of net origination fees............................................... (275)
Depreciation expense from investment in real estate................................ 13,000
Decrease in interest receivable.................................................... 28
Increase in accounts payable and other liabilities................................. 2,297 2,498
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NET CASH PROVIDED BY OPERATING ACTIVITIES........................................ 448,750 66,707
INVESTING ACTIVITIES:
Decrease in trust deed receivable.................................................... 3,170
Proceeds from sale of investment in real estate...................................... 812,778
Purchase of short-term investments................................................... (1,273,854) (201,320)
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NET CASH USED IN INVESTING ACTIVITIES............................................ (461,076) (198,150)
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Decrease in cash and cash equivalents................................................ (12,326) (131,443)
Cash and cash equivalents at beginning of year....................................... 25,526 157,848
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CASH AND CASH EQUIVALENTS AT END OF PERIOD....................................... $ 13,200 $ 26,405
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6
KEYSTONE MORTGAGE FUND,
A California Limited Partnership
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE A--UNAUDITED BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
by Keystone Mortgage Fund in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the accompanying condensed financial
statements contain all adjustments necessary, which were of normal recurring
nature, for a fair statement of the results for the interim periods presented.
It is suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in Form 10-K for
the year ended December 31, 1996 filed by the Company under the Securities
Exchange Act of 1934.
7
KEYSTONE MORTGAGE FUND,
A California Limited Partnership
NOTES TO CONDENSED FINANCIAL STATEMENTS (Continued)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
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Total revenues for the three months ended March 31, 1997 increased $377,121,
or 348.5%, over the comparable 1996 period. This increase was due to the gain on
disposition of investment in real estate.
Total expenses decreased 33.3% for the three months ended March 31, 1997
over the same period March 31, 1996. Servicing related expenses decreased 52.3%
and general and administrative expenses increased 36.6% for the three months
ended March 31, 1997 over the same period March 31, 1995. Expenses related to
real estate acquired in settlement of loans decreased 22.7% for the three months
ended March 31, 1997 as compared to the same period March 31, 1996.
Net income increased $394,997, or 767.6% and net income per limited unit
increased $29.76 for the three months ended March 31, 1997 as compared to the
three months ended March 31, 1996.
The Partnership working capital increased $1,259,231 during the three months
ended March 31, 1997. The Partnership has adequate working capital and cash
reserves to carry on its business.
THE PARTNERSHIP IS IN DISSOLUTION PENDING FINAL DISPOSITION OF REMAINING
ASSETS. IT IS ANTICIPATED THAT FINAL DISTRIBUTIONS WILL BE MADE ON OR ABOUT
APRIL 30, 1997.
8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The Registrant filed no reports on Form 8-K during the quarter ended
March 31, 1997.
9
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.
KEYSTONE MORTGAGE FUND
a California Limited Partnership
Date: May 7, 1997
/s/ John P. Sullivan
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Keystone Mortgage Company
By: John P. Sullivan, President
Date: May 7, 1997
/s/ John P. Sullivan
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John P. Sullivan
General Partner
Date: May 7, 1997
/s/ Christopher E. Turner
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Christopher E. Turner
General Partner
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