U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-QSB
(Mark One)
(X) Quarterly Report Under Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the Quarterly period ended June 30, 2000
( ) Transition Report Under Section 13 or 15(d) of the Exchange Act
For the Transition period from ______________ to _______________
Commission File Number: 0-17600
____________________
Common Goal Health Care Participating Mortgage Fund L.P.
(Exact name of small business issuer as specified in its charter)
Delaware 52-1475268
- ---------------------------------- -------------------------
(State or other Jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
215 Main Street
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Penn Yan, New York, 14527
(Address of principal executive offices)
(315) 536-5985
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
PART 1 - Financial Information
Item 1. Financial Statements
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
Balance Sheets
June 30, December 31,
2000 1999
---------- -----------
(Unaudited)
Assets
------
Cash and cash equivalents $ 720,376 $ 381,677
Accrued interest receivable 16,182 85,233
Mortgage loan receivable 1,153,255 1,795,309
---------- ----------
Total Assets $1,889,813 $2,262,219
========== ==========
Liabilities and Partners' Capital
---------------------------------
Liabilities
Accounts payable and accrued expenses $ -- $ --
Due to affiliates 195,142 110,509
Deferred Revenue 227,645 227,645
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Total liabilities 422,787 338,154
Partners' capital:
General partners 71,401 70,542
Limited partners 1,395,625 1,853,523
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Total partners' capital 1,467,026 1,924,065
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Total Liabilities and Partners' Capital $1,889,813 $2,262,219
========== ==========
See accompanying notes
2
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
Statements of Income
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---- ---- ---- ----
Revenue
- -------
Interest Income $ 56,693 $ 50,051 $ 113,346 $ 99,672
---------- ---------- ---------- ----------
Total Revenue 56,693 50,051 113,346 99,672
Expenses
- --------
Professional fees 39,924 20,467 56,245 31,055
Fees to affiliates:
Management 4,463 5,401 9,864 10,801
Mortgage servicing 980 980 1,960 1,960
Other 1,522 2,005 2,316 2,440
---------- ---------- ---------- ----------
Total Expenses 46,889 28,853 70,385 46,256
---------- ---------- ---------- ----------
Net Income and
Comprehensive Income 9,804 21,198 42,961 53,416
========== ========== ========== ==========
Net income allocated to
general partners - 2% 196 424 859 1,068
Net income allocated to
limited partners - 98% 9,608 20,774 42,102 52,348
---------- ---------- ---------- ----------
$ 9,804 $ 21,198 $ 42,961 $ 53,416
========== ========== ========== ==========
Basic earnings per limited
partner unit $ .01 $ .01 $ .02 $ 03
========== ========== ========== ==========
Weighted average limited 1,911,411 1,911,411 1,911,411 1,911,411
========== ========== ========== ==========
partner units outstanding
See accompanying notes.
3
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
Statements of Partners' Capital
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
2000 1999
---------------------------------------- ---------------------------------------
TOTAL TOTAL
GENERAL LIMITED PARTNERS' GENERAL LIMITED PARTNERS'
PARTNERS PARTNERS CAPITAL PARTNERS PARTNERS CAPITAL
---------------------------------------- ---------------------------------------
Balance at beginning of period $ 70,542 $ 1,853,523 $ 1,924,065 $ 67,204 $ 1,689,939 $ 1,757,143
Net income 859 42,102 42,961 1,068 52,348 53,416
Distributions to partners -- (500,000) (500,000) -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance at end of period $ 71,401 $ 1,395,625 $ 1,467,026 $ 68,272 $ 1,742,287 $ 1,810,559
=========== =========== =========== =========== =========== ===========
See accompanying notes.
4
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
Statements of Cash Flows
(Unaudited)
SIX MONTHS ENDED
JUNE 30, JUNE 30,
2000 1999
--------- ---------
Cash flows from operating activities:
Net income $ 42,961 $ 53,416
Adjustments to reconcile net income to net cash provided by operating
activities:
Decrease (increase) in interest receivable 69,051 --
Increase (decrease) in due to affiliates 84,633 21,182
Decrease (increase) in mortgage
loan receivable 642,054 --
--------- ---------
Net cash provided by operating activities 838,699 74,598
--------- ---------
Cash used in financing activities:
Distribution to limited partners (500,000) --
--------- ---------
Net cash used in financing activities (500,000) --
--------- ---------
Net increase in cash and cash equivalents: 338,699 74,598
Cash and cash equivalents, beginning of period 381,677 241,487
--------- ---------
Cash and cash equivalents, end of period $ 720,376 $ 316,085
========= =========
See accompanying notes.
5
COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
(Unaudited)
June 30, 2000
(1) Organization and Summary of Significant Accounting, Policies
------------------------------------------------------------
Common Goal Health Care Participating Mortgage Fund L.P. (the
"Partnership") was formed on August 20, 1986 to invest in and make
mortgage loans to third parties involved in health care. On February
20, 1987, the Partnership commenced a public offering of limited
partner units (the "Public Offering"). On July 21, 1987, the
Partnership commenced operations, having previously sold more than the
specified minimum of 116,000 units ($1,160,000). The Partnership's
offering terminated on February 20, 1989 with the Partnership having
sold the specified maximum of 1,912,911 units ($19,129,110). The
Partnership has one remaining mortgage loan in its portfolio. The loan
matures in January 2001 after which the General Partner expects to
begin an orderly liquidation and dissolution of the Partnership.
The general partners are Common Goal Capital Group, Inc. as the
managing general partner and Common Goal Limited Partnership I as the
minority general partner. Under the terms of the Partnership's
agreement of limited partnership, (the "Partnership Agreement") the
general partners are not required to make any additional capital
contributions except under certain limited circumstances upon
termination of the Partnership.
Under the terms of the Partnership Agreement, the Partnership is
required to pay a quarterly management fee to the managing general
partner equal to .75% per annum of adjusted contributions, as defined.
Additionally, a mortgage servicing fee equal to .25% per annum of the
Partnership's outstanding mortgage loan principal amount is to be paid
to Common Goal Mortgage Company, an affiliate of the general partners.
Additionally, under the terms of the Partnership Agreement, the
Partnership is required to reimburse the managing general partner for
certain operating expenses.
The Partnership classifies all short-term investments with maturities
at dates of purchase of three months or less as cash equivalents.
Mortgage loans that have virtually the same risk and potential rewards
as joint ventures are accounted for and classified as investments in
operating properties. Cash received related to investments in
operating properties is recognized as interest income to the extent
that such properties have earnings prior to the recognition of the
distribution of
6
cash to the Partnership; otherwise, such cash is recorded as a
reduction of the related investments.
Management considers the necessity of reserving an allowance for loan
losses based upon an evaluation of known and inherent risks in the
loan portfolio. Management believed no allowance was necessary as of
June 30, 2000.
No provision for income taxes has been recorded, as the liability for
such taxes is that of the partners rather than the Partnership.
Earnings per limited partner unit are computed based on the weighted
average limited partner units outstanding for the period.
The accompanying unaudited financial statements as of and for the
three and six months ended June 30, 2000, and 1999 are the
representation of management and reflect all adjustments which are, in
the opinion of management, necessary to a fair presentation of the
financial position and results of operations of the Partnership. Such
adjustments are normal and recurring. The results are not necessarily
indicative of the results for the entire year.
These financial statements should be read in conjunction with the
Company's financial statements and notes included in the Annual Report
on Form 10-KSB filed by the Company with the Securities and Exchange
Commission on April 14, 2000.
(2) Mortgage Loan Receivable
------------------------
Information concerning mortgage loan receivable as of June 30, 2000,
is as follows:
Face and
Basic Carrying
Interest Maturity Amount of
Description Rate Date Mortgage
---- ---- --------
Honeybrook loan 10.5%(1) January 1, 2001 1,153,255
$ 1,153,255
===========
(1) The interest rate was modified from 13.7% to 10.5% effective April
1, 2000. The loan is a second mortgage loan secured by healthcare
related real properties. Interest is payable monthly with the
principal balance generally due at maturity. The carrying value of the
mortgage loan for tax purposes is the same as that for financial
reporting purposes. As of June 30, 2000, the loan was current as to
required regular interest payments. On February 14, 2000, the
Borrowers repaid $500,000 of the outstanding balance of the Joint
Venture Loan ($50,590 of which was used to pay down the Common Goal II
portion of the Joint Venture Loan). On April 11, 2000, the Lender and
Borrower agreed to pay Additional Interest of $235,000, of which
$200,000 was paid on May 5, 2000 and $35,000 will be paid when the
loan matures on January 1, 2001. The Partnership received all but
$7,356 of the Additional Interest, which amount was paid to Common
Goal II on May 5, 2000.
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Item 2. Management's Discussion and Analysis or Plan of 0perations
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General
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Some statements in this Form 10-QSB are forward looking and actual
results may differ materially from those stated. As discussed herein,
among the factors that may affect actual results are changes in the
financial condition of the borrower and/or anticipated changes in
expenses or capital expenditures.
Common Goal Health Care Participating Mortgage Fund L.P., a Delaware
limited partnership (the "Partnership"), was formed to make mortgage
loans secured by real property (the "Mortgage Loan") comprised of a
mix of first and junior Mortgage Loans, secured by health-care related
properties.
Liquidity and Capital Resources
-------------------------------
The Partnership has structured its Mortgage Loans to provide for
payment of quarterly distributions from investment income. The
interest derived from the Mortgage Loans, repayments of Mortgage Loans
and interest earned on short-term investments contribute to the
Partnership's liquidity. These funds are used to make cash
distributions to Limited Partners, to pay normal operating expenses as
they arise.
Partnership assets decreased from $2,262,219 at December 31, 1999 to
$1,889,813 at June 30, 2000. The decrease of $372,406 resulted
primarily from cash distributions made to limited partners during the
period. As of June 30, 2000, the Partnership's loan portfolio
consisted of one mortgage loan, the aggregate outstanding principal
balance of which was $1,153,255.
The Partnership's balance of cash and cash equivalents at June 30,
2000 and December 31, 1999 was $720,376 and $381,677, respectively,
which consisted of operating cash and working capital reserves. The
increase in cash and cash equivalents of $338,699 from December 31,
1999 resulted from net income of $42,961, a decrease in interest
receivable of $69,051, an increase in due to affiliates of $84,633,
and payments received on the mortgage loan receivable of $642,054. The
Partnership is required to maintain reserves not less than 1% of gross
offering proceeds (not less than $191,201), but currently maintains a
reserve significantly in excess of that amount, pending distribution
to the Limited Partners. The Managing General Partner expects to make
a cash distribution of a significant portion of the excess over
required reserves during the third quarter.
The Managing General Partner continues to monitor the level of working
capital reserves and may adjust the reserves as necessary to meet the
Partnership's reserve requirements.
8
However, the General Partner intends to commence an orderly
liquidation and dissolution of the Partnership after the Partnership's
remaining mortgage loan matures in January 2001.
The Partnership's success and the resultant rate of return to holders
of units of limited partnership interests are dependent upon, among
other things, the performance of the Partnership's last Mortgage Loan.
Results of Operations
---------------------
As of June 30, 2000, the Partnership had one Mortgage Loan. The
Partnership invests all available funds (funds not invested in
Mortgage Loans) in short term, temporary investments pending
application to Partnership uses or distributions to limited partners.
The interest earned on these investments has been and is expected to
continue to be less than the interest rates achievable on Mortgage
Loans made by the Partnership. During the six months ended June 30,
2000, and 1999, the Partnership had net earnings of $42,961 and
$53,416 based on total revenues of $113,346 and $99,672 and total
expenses of $70,385 and $46,256, respectively. For the six months
ended June 30, 2000 and 1999, the net earnings per limited partner
unit was $.02 and $.03 respectively. For the three months ended June
30, 2000 & 1999, the Partnership net earnings of $9,804 and $21,198
based on total revenue of $56,693 & $50,051 & total expenses of
$46,889 and $28,853, respectively. For the three months ended June 30,
2000 and 1999, the net earnings per limited partner unit was $.01 and
$.01, respectively.
The decrease in net earnings of $10,455 for the six months ended June
30, 2000, compared to the six months ended June 30, 1999, is due to an
increase in interest income of $13,674 offset by an increase of
$25,190 in professional fees. The one remaining Mortgage Loan was
current as to regular interest as of June 30, 2000.
9
PART II - Other Information
Items 1 through 5 are omitted because of the absence of conditions under which
they are required.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K
None
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SIGNATURES
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In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Common Goal Health Care Participating Mortgage Fund L.P.
-------------------------------------------------------
(Registrant)
By: Common Goal Capital Group, Inc.,
Managing General Partner
DATED: August 16 , 2000 /s/Albert E. Jenkins, III
-------------------------
Albert E. Jenkins, III
President, Chief Executive Officer
and Acting Chief Financial Officer