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: 0-21604
_______________________________
Common Goal Health Care Pension and Income Fund L.P. II
(Exact name of small business issuer as specified in its charter)
Delaware 36-3644837
- --------------------------------- -----------------
(State or other Jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
215 Main Street
Penn Yan, New York 14527
-------------------------------
(Address of principal executive offices)
(315) 536-5985
--------------
(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 PENSION AND INCOME FUND L.P. II
(A Delaware Limited Partnership)
Balance Sheets
June 30, December 31,
2000 1999
---------- ----------
(Unaudited)
Assets
------
Cash and cash equivalents $ 416,852 $ 423,207
Due from affiliates 76,513 16,038
Accrued interest receivable 78,193 65,126
Mortgage loans receivable 1,250,000 1,307,945
---------- ----------
Total Assets $1,821,558 $1,812,316
========== ==========
Liabilities and Partners' Capital
---------------------------------
Liabilities
-----------
Due to affiliates $ 60,497 $ 50,781
Accrued distributions 41,685 37,986
Deferred revenue 400,000 400,000
---------- ----------
Total Liabilities 502,182 488,767
Partners' capital:
General partner 51,632 49,600
Limited partner 1,267,744 1,273,949
---------- ----------
Total partners' capital 1,319,376 1,323,549
---------- ----------
Total Liabilities and Partners' Capital $1,821,558 $1,812,316
========== ==========
See accompanying notes
2
COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II
(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 $ 57,188 $ 56,237 $120,522 $114,392
-------- -------- -------- --------
Total Revenue 57,188 56,237 120,522 114,392
Expenses
- --------
Professional fees 26,525 20,295 33,356 31,812
Fees to affiliates:
Management 1,692 2,180 3,494 4,986
Mortgage Servicing 282 281 563 563
Other 1,217 783 1,849 1,039
-------- -------- -------- --------
Total Expenses 29,716 23,539 39,262 38,400
-------- -------- -------- --------
Net Income and
Comprehensive Income $ 27,472 $ 32,698 $ 81,260 $ 75,992
======== ======== ======== ========
Net Income allocated to
general partners - 2.5% $ 686 $ 817 $ 2,032 $ 1,900
Net Income allocated to
limited partners - 97.5% 26,786 31,881 79,228 74,092
-------- -------- -------- --------
$ 27,472 $ 32,698 $ 81,260 $ 75,992
======== ======== ======== ========
Basic earnings per limited
partner unit $ .05 $ .06 $ .15 $ .14
======== ======== -------- --------
Weighted average limited 522,116 522,116 522,116 522,116
partner units outstanding ======== ======== ======== ========
See accompanying notes.
3
COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II
(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 $ 49,600 $ 1,273,949 $ 1,323,549 $ 45,308 $ 1,474,084 $ 1,519,392
Net income 2,032 79,228 81,260 1,900 74,092 75,992
Distributions to partners -- (85,433) (85,433) -- (290,906) (290,906)
----------- ----------- ----------- ----------- ----------- -----------
Balance at end of period $ 51,632 $ 1,267,744 $ 1,319,376 $ 47,208 $ 1,257,270 $ 1,304,478
=========== =========== =========== =========== =========== ===========
See accompanying notes.
4
COMMON GOAL HEALTH CARE PENSION AND INCOME FUND L.P. II
(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 $ 81,260 $ 75,992
Adjustments to reconcile net income to net cash
provided by operating activities:
Decrease (increase) in due from affiliates (60,475) (3,036)
Decrease (increase) in interest receivable (13,067) 6,151
Increase (decrease) in due to affiliates 9,716 15,216
Decrease (increase) in mortgage
loan receivable 57,945 --
--------- ---------
Net cash provided by operating activities 75,379 94,323
--------- ---------
Cash flows from investing activities:
Loan to affiliates -- --
--------- ---------
Net cash used in investing activities -- --
--------- ---------
Cash flows from financing activities:
Distributions to limited partners (81,734) (500,000)
--------- ---------
Net cash used in financing activities (81,734) (500,000)
--------- ---------
Net decrease in cash and cash equivalents: (6,355) (405,677)
Cash and cash equivalents, beginning of period 423,207 839,759
--------- ---------
Cash and cash equivalents, end of period $ 416,852 $ 434,082
========= =========
See accompanying notes.
5
COMMON GOAL HEALTH CARE
PENSION AND INCOME FUND L.P. II
(A Delaware Limited Partnership)
Notes to Financial Statements
(Unaudited)
June 30, 2000
(1) Organization and Summary of Significant Accounting Policies
-----------------------------------------------------------------
Common Goal Health Care Pension and Income Fund L.P. II (Partnership)
was formed on May 9, 1989, to invest in and make mortgage loans to
third parties and affiliates involved in health care. On July 2, 1990,
the Partnership commenced operations, having previously sold more that
the specified minimum of 117,650 units ($1,176,500). The Partnership's
offering terminated January 11, 1992, with the Partnership having sold
522,116 Units ($5,221,160).
The general partners are Common Goal Capital Group, Inc. II, the
managing general partner, and Common Goal Limited Partnership II, the
associate general partner. Under the terms of the Partnership's
agreement of limited partnership ("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 1% per annum of adjusted contributions, as defined. A
mortgage servicing fee equal to .25% per annum of the Partnership's
outstanding mortgage loan receivable principal amount also 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 date 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 cash to the Partnership; otherwise, such cash is
recorded as a reduction of the related investments.
6
An allowance for loan losses will be provided, if necessary, at a
level which the Partnership's management considers adequate based upon
an evaluation of known and inherent risks in the loan portfolio.
Currently management believes no allowance for loan losses is
necessary.
No provision for income taxes has been recorded as the liability of
such taxes is that of the partners rather than the Partnership.
Earnings per limited partner unit is 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. All
such adjustments are normal and recurring. These 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 Loans Receivable
-------------------------
The Joint Venture Loan
----------------------
This loan was repaid in full on February 14, 2000, including $7,356 of
participation interest.
St. Catherine's Loan
--------------------
The principal balances outstanding for these loans as of June 30, 2000
were as follows:
Second Mortgage Loan Third Mortgage Loan
-------------------- -------------------
St. Catherine's of Tiffin $ 51,500 $ 51,281
St. Catherine's of Bloomville 36,000 173,425
St. Catherine's of Fostoria 102,000 113,550
St. Catherine's of Findlay 142,500 126,379
St. Catherine's of Washington
Court House 68,000 385,365
--------- ---------
400,000 $ 850,000
========= =========
7
As of June 30, 2000, the Second Mortgage Loans were current as to
regular interest. The Partnership and the Borrowers have agreed to
extend the terms of the Second Mortgage Loans, which matured on April
30, 2000 to April 20, 2001, so that the Second Mortgage Loans would be
continuous with the underlying first mortgage. The borrowers are
paying additional interest at the penalty rate of 3% per annum in
addition to Basic Interest, pending documentation. The Third Mortgage
Loans were not current as to regular interest as of June 30, 2000 and
are due to mature August 31, 2000. As of June 30, 2000, the
Partnership was owed $51,561 in interest on the Third Mortgage Loans
including, $9,640 at the 3% penalty rate. The Partnership is working
with the borrowers to bring the Third Mortgage Loans current.
(3) Partners' Capital
-----------------
On April 14, 2000, the Partnership declared a distribution of $43,748
($.08 per unit) to Limited Partner unitholders of record at March 15,
2000, which was paid during the second quarter. On July 10, 2000, the
Partnership declared a distribution of $ 41,685 ($.08 per unit) to
Limited Partner unitholders of record at June 15, 2000, which was paid
subsequent to June 30, 2000.
Item 2. Managements Discussion and Analysis or Plan of Operations.
---------------------------------------------------------
General
-------
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 Pension and Income Fund L.P. II, a Delaware
limited partnership (the "Partnership"), was formed to make mortgage
loans secured by a mix of first and junior liens on health
care-related properties. The Partnership commenced its offering of
Units to the public on January 12, 1990, and commenced operations on
July 2, 1990 (having sold the Minimum Number of Units as of that
date).
The Partnership's Mortgage Loans pay Basic Interest which is payable
at higher rates than are being earned on temporary investments and
provide for payments of Additional Interest and Participations. The
movement of funds from Mortgage Loans to short-term investments has
increased the Partnership's overall liquidity, but has lowered
expected interest income. The Partnership has structured its Mortgage
Loans to provide for payment of quarterly distributions to Limited
Partners from investment income.
8
Liquidity and Capital Resources
-------------------------------
Partnership assets increased from $1,812,316 at December 31, 1999 to
$1,821,558 at June 30, 2000. The increase of $9,242 resulted primarily
from net earnings for the period that was partially offset by cash
distributions on January 15, 2000 and April 14, 2000 totaling $81,734
to the Limited Partners. The Partnership also received $ 57,945
(including $7,356 of participation interest) in payment of one of its
mortgage loans. As of June 30, 2000 the Partnership's loan portfolio
consisted of five Second Mortgage Loans, and five Third Mortgage
Loans, the aggregate outstanding principal balance of which was $
1,250,000.
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 and to pay normal operating expenses
as they arise.
The Partnership intends to maintain working capital reserves equal to
approximately 2% of gross proceeds of the offering (approximately
$104,423 ), an amount which is anticipated to be sufficient to satisfy
liquidity requirements. The Managing General Partner continues
monitoring the level of working capital reserves.
The Second Mortgage Loans were current as to regular interest as of
June 30, 2000. See Note 2 to the Financial Statements herein regarding
extension of the Partnership's Second Mortgage Loans. The Third
Mortgage Loans were not current as to regular interest as of June 30,
2000. The Partnership is working with the borrowers to bring the Third
Mortgage Loans current. As of June 30, 2000 the Partnership was owed
$51,561 of interest. The borrowers are paying interest at the penalty
rate of 3% per annum plus Basic Interest.
Results of Operations
---------------------
The Partnership commenced operations July 2, 1990, and funded its
First Mortgage Loan in November 1990. As of June 30, 1991, the
Partnership had completed its portfolio of Mortgage Loans. The
interest earned on these investments has stabilized on a tax
accounting basis. Accordingly, the General Partners expect the
Partnership's earnings to remain relatively constant.
During the six months ended June 30, 2000 and 1999, the Partnership
had net earnings of $81,260 and $75,992, based on total revenue of
$120,522 and $114,392 and total expenses of $39,262 and $38,400,
respectively. For the six months ended June 30, 2000 and 1999, the net
earnings per limited partner unit was $.15 and $.14 respectively.
During the three months ended June 30, 2000 and 1999, the Partnership
had net earnings of $27,472 and $32,698, based on total revenue of
$57,188 and $56,237, and total expenses of $29,716 and $23,539,
respectively.
9
The increase in net earnings of $5,268 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 $6,130, an increase in professional
fees of $1,544, an increase in other expenses of $810 and a decrease
in management fees of $1,492.
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
----------
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 Pension and Income Fund L.P. II
-------------------------------------------------------
(Registrant)
By: Common Goal Capital Group, Inc., II
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
11