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 March 31, 1997
( ) 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
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 PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
Balance Sheets
March 31, March 31,
1997 1996
(Unaudited) (Unaudited)
----------- -----------
Assets
------
Current Assets
Cash and cash equivalents ....................... $1,867,604 $1,984,646
Due from affiliates ............................. 2,664 --
Accrued interest receivable ..................... 16,182 98,939
------ ------
Total current assets ....................... 1,886,450 2,083,585
Mortgage loans receivable ............................ 1,567,664 2,567,664
--------- ---------
Total assets ............................... $3,454,114 $4,651,249
========== ==========
Liabilities and Partners' Capital
---------------------------------
Current Liabilities
Accounts payable and accrued expenses ........... $ 24,053 $ 13,736
Due to affiliates ............................... 18,236 --
------
Total current liabilities .................. 42,289 13,736
Partners' capital:
General partners ................................ 61,749 45,763
Limited partners ................................ 3,350,076 4,591,750
--------- ---------
Total partners' capital .................... 3,411,825 4,637,513
--------- ---------
$3,454,114 $4,651,249
========== ==========
See accompanying notes
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
Statements of Earnings
(Unaudited)
THREE MONTHS ENDED
March 31, March 31,
1997 1996
---- ----
Income
Interest ............................ $ 80,559 $ 141,405
Misc. income ........................ -- 55,000
------ ------
80,559 196,405
Expenses
Professional fees ................... 12,170 20,262
Fees to affiliates:
Management ......................... 9,015 18,992
Mortgage servicing ................. 980 2,230
Other ............................... 23,464 26,018
------ ------
45,629 67,502
------ ------
NET EARNINGS ................... $ 34,930 $ 128,903
========== ==========
Net earnings per limited
partner unit ............................ $ .02 $ .07
========== ==========
Weighted average limited ................. 1,911,411 1,911,411
========= =========
partner units outstanding
See accompanying notes.
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
Statements of Partners' Capital
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
1997 1996
------------------------------------- ------------------------------------
TOTAL TOTAL
GENERAL LIMITED PARTNERS' GENERAL LIMITED PARTNERS'
PARTNERS PARTNERS CAPITAL PARTNERS PARTNERS CAPITAL
------------------------------------- ------------------------------------
Balance at beginning of period $ 61,050 $ 4,151,772 $ 4,212,822 $ 43,185 $ 4,699,352 $ 4,742,537
Net earnings ................. 699 34,231 34,930 2,578 126,325 128,903
Cash distributions to partners ( - ) (835,927) (835,927) ( - ) (233,927) (233,927)
- -------- -------- - -------- --------
Balance at end of period ..... $ 61,749 $ 3,350,076 $ 3,411,825 $ 45,763 $ 4,591,750 $ 4,637,513
========= =========== =========== ======== =========== ===========
See accompanying notes.
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
Statements of Cash Flows
(Unaudited)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1997 1996
---- ----
Cash flows from operating activities:
Net earnings ..................................... $ 34,930 $ 128,903
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Decrease (increase) in due from affiliates .. -- --
Decrease (increase) in other assets ......... -- 23,885
Decrease (incresase) in interest receivable . (3,864) 46,460
Increase (decrease) in accounts payable and . 7,086 8,666
accrued expenses
Increase (decrease) in due to affiliates .... 11,512 --
------ -------
Net cash provided by operating activities 49,664 207,914
------ -------
Cash from investing activities:
Proceeds from mortgage loan principal repayments . -- 1,000,000
-------- ---------
Net cash provided by investing activities -- 1,000,000
-------- ---------
Cash used in financing activities:
Distribution to general partner .................. -- --
Distribution to limited partners ................. (835,927) (233,927)
-------- --------
Net cash used in financing activities ....... (835,927) (233,927)
-------- --------
Net increase (decrease) in cash and cash equivalents: . (786,263) 973,987
Cash and cash equivalents, beginning of period ........ 2,653,867 1,010,659
--------- ---------
Cash and cash equivalents, end of period .............. $ 1,867,604 $ 1,984,646
=========== ===========
See accompanying notes.
COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
March 31, 1997
(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 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.
An allowance for loan losses is provided at a level which the Partnership's
management considers adequate based upon an evaluation of known and inherent
risks in the loan portfolio. Management believed no allowance was necessary as
of March 31, 1997.
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
months ended March 31, 1997 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.
(2) Mortgage Loan Receivable
------------------------
Information concerning mortgage loan receivable as of March 31, 1997 is as
follows:
Face and
Basic Carrying
Interest Maturity Amount of
Description Rate Date Mortgage
----------- ---- ---- --------
Honeybrook loan 13.7% January 1, 2000 1,567,664
---------
$1,567,664
==========
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. All properties are subject to a
first mortgage lien in each case held by unaffiliated third parties. As of March
31, 1997, the loan was current as to regular interest.
(3) Distribution
-------------
On January 8, 1997, the Partnership declared and paid a distribution of
$224,567 ($.12 per unit) to Limited Partner unitholders of record at December
15, 1996. Additionally, a return of principal to the Limited Partners of
$611,360 ($.32 per unit) was also declared and paid by the Partnership on
January 8, 1997.
(4) Subsequent Event
----------------
On April 4, 1997, the Partnership declared and paid a distribution of
$206,343 ($.11 per unit) to Limited Partner unitholders of record at March 15,
1997. Additionally, a return of principal to the Limited Partners of $500,000
($.26 per unit) was also declared and paid by the Partnership on April 4, 1997.
Item 2. Management's Discussion and Analysis or Plan of 0perations
----------------------------------------------------------
Liquidity and Capital Resources
-------------------------------
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. The Public
Offering commenced on February 20, 1987 and continued through February 20, 1989,
when the Public Offering terminated. Total gross offering proceeds raised were
$19,129,110.
Partnership assets decreased from $4,236,512 at December 31, 1996 to
$3,454,114 at March 31, 1997. The decrease ($782,398 or approximately 18.0%)
resulted primarily from cash distributions on January 8, to the Limited Partners
that was offset by net earnings for the period. As of March 31, 1997, the
Partnership's loan portfolio consisted of one mortgage loan, the aggregate
outstanding principal balance of which was $1,567,664.
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 and, in the case of repayment proceeds, may, subject to certain
exceptions, be used to make additional Mortgage Loans.
The Partnership's balance of cash and cash equivalents at March 31, 1997
and December 31, 1996 was $1,867,604 and $2,653,867, respectively, which
consisted of operating cash and working capital reserves. The decrease in cash
and cash equivalents from December 31, 1996 resulted from net earnings of
$34,930, an increase in interest and other receivables of $3,864, all of which
were offset by a payments of $835,927 ($.43 per unit) in dividend distributions
(which included $611,360 [$.32 per unit] return of capital), and a $18,598
increase in accounts payable, accrued expenses and due to affiliates.. The net
result was a decrease of cash and cash equivalents of $786,263. 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. The amount of cash and cash equivalents currently
maintained by the Partnership is primarily the result of proceeds from the
payment of mortgage loans.
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.
The Partnership's success and the resultant rate of return to Unitholders
is dependent upon, among other things, the continued ability of the borrowers to
pay the current interest, additional interest and principal of the Mortgage
Loans. Since the Horizon Loan was charged off, the Riverview, SHALP, New Medico,
Winthrop and Westwood Loans have been paid off, and the Joint Venture Loan paid
down, the Partnership's rates of return have been and will be adversely
impacted. The additional funds representing repayment of the above mentioned
loans are being invested per Partnership guidelines.
Results of Operations
---------------------
The Partnership was organized in August, 1986. The Partnership funded seven
Mortgage Loans between 1987 and 1990, including a loan made by a venture between
the Partnership and Common Goal II in August, 1990. As of March 31, 1997, the
Partnership had one Mortgage Loan. Since commencement of operations in July of
1987, the Partnership invested all available funds (funds not invested in
Mortgage Loans) in short term, temporary investments. 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 quarters ended March 31, 1997 and 1996, the Partnership had net
earnings of $34,930 and $128,903 based on total revenues of $80,559 and $196,405
and total expenses of $45,629 and $67,502, respectively. The decrease in net
earnings is due to decreases in interest income, but is offset partially by a
decrease of $8,092 in professional fees, $9,977 in management fees and $1,250 in
mortgage servicing fees, and a $2,554 decrease in other expenses. The one
remaining Mortgage Loan was current as to regular interest as of March 31, 1997.
Although the Partnership makes quarterly dividend distributions, the
distributions may not remain at the present level (9.256% financial capital) as
a result of the Horizon Loan charge-off, the payoffs and the pay downs mentioned
above. The general partners are currently reviewing the distribution policy. The
Partnership receives a lesser rate of return from its short-term investments
than it would receive form the Mortgage Loans, (were they not paid down) thereby
reducing interest income available for distribution.
PART II - Other Information
Items 1 through 6 are omitted because of the absence of conditions under
which they are required.
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 Participating Mortgage Fund L,P.
--------------------------------------------------------
(Registrant)
By: Common Goal Capital Group, Inc.,
Managing General Partner
DATED: May 15, 1997 /s/Albert E. Jenkins, III
---------------------------------
Albert E. Jenkins, III
President, Chief Executive Officer
and Acting Chief Financial Officer