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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
(X) Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly period ended September 30, 1998
( ) 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
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
215 Main Street
Penn Yan, New York, 14527
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(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___
The purpose of this filing is to amend and restate Part 1, Item 2,
Management's Discussion and Analysis or Plan of Operations, of the
Registrant's 10-QSB for the period ended September 30, 1998.
Item 2. Management's Discussion and Analysis or Plan of Operations
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Liquidity and Capital Resources
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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 $2,204,339 at December 31, 1997
to $1,861,368 at September 30, 1998. The decrease of $342,971 resulted primarily
from cash distributions on January 2, April 2, and July 15 to the Limited
Partners that were offset by net earnings for the period. As of September 30,
1998, the Partnership's loan portfolio consisted of one mortgage loan, the
aggregate outstanding principal balance of which was $1,567,664.
The Partnership Mortgage Loan provides for payment of quarterly
distributions from investment income. The interest derived from the Mortgage
Loan 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. Repayment
proceeds, may, subject to certain exceptions, be used to make additional
Mortgage Loans.
The Partnership's balance of cash and cash equivalents at September 30,
1998 and December 31, 1997 was $277,521 and $593,842, respectively, which
consisted of operating cash and working capital reserves. The decrease in cash
and cash equivalents from December 31, 1997 resulted from net earnings of
$104,538, an increase due to affiliates of $29,143, a decrease in interest
receivables of $26,650, all of which were offset by payments of $476,652 in
dividend distributions. The net result was a decrease of cash and cash
equivalents of $316,321. 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, net of distributions are being invested in accordance with Partnership
guidelines.
Results of Operations
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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 September 30,
1998, only the loan made by the venture remaining as a Partnership 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.
2
During the nine months ended September 30, 1998 and 1997, the
Partnership had net earnings of $104,538 and $88,171 based on total revenues of
$167,234 and $199,070 and total expenses of $62,696 and $110,899, respectively.
The increase in net earnings is due to decreases in interest income and
miscellaneous income, but is offset partially by a decrease of $13,460 in
professional fees and a decrease of $6,552 management fees. The one remaining
Mortgage Loan was current as to regular interest as of September 30, 1998. For
the three months ended September 30, 1998 and 1997, the Partnership had net
earnings of $52,807 and $37,514 based on total revenues of $77,197 and $59,267
and total expenses of $24,340 and $21,753 respectively. For the three months
ended September 30, 1998 and 1997, the net earnings per limited partner unit was
$.03 and $.02 respectively.
Year 2000 Compliance
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Information provided within this note constitute a year 2000 readiness
disclosure pursuant to the provisions of the Year 2000 Information Readiness and
Disclosure Act.
The year 2000 issue is the result of computer programs being written
and microchips being programmed using two digits rather than four to define the
applicable year. If not corrected, any program having time-sensitive software or
equipment incorporating embedded microchips may recognize a date using "00" as
the year 1900 rather than the year 2000 or may not recognize the year 2000 as a
leap year. This could result in a variety of problems including miscalculations,
loss of data and failure of entire systems. Critical areas that could be
affected are accounts receivable, accounts payable, general ledger, cash
management, computer hardware, telecommunications and property operating
systems.
The Partnership receives quarterly interest payments from a single
borrower. The Partnership is in the process of obtaining documentation related
to year 2000 readiness from its outside vendors, including its banks. The
Partnership has received documentation from an outside vendor that maintains its
books and records, indicating that the vendors is year 2000 compliant. The
Partnership expects to complete the documentation phase by September 30, 1999.
The Partnership expects to complete a contingency plan by September 30, 1999.
The Partnership believes that based on the status of the Partnership's portfolio
and its limited number of transactions, aside from catastrophic failures of
banks, governmental agencies, etc., it could carry out substantially all of its
critical administrative and accounting operations on a manual basis or easily
convert to systems that are year 2000 ready.
Some statements in this Form 10-QSB/A 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.
3
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.
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(Registrant)
By: Common Goal Capital Group, Inc.,
Managing General Partner
/s/Albert E. Jenkins, III
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Albert E. Jenkins, III
President, Chief Executive Officer
and Acting Chief Financial Officer
DATED: May 5, 1999