<PAGE> 1
As filed with the Securities and Exchange Commission on May 17, 1999
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended March 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________ to _________________
Commission File Number: 0-21443
PLYMOUTH COMMERCIAL MORTGAGE FUND
(Exact name of registrant as specified in its charter)
Delaware 74-6439983
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
c/o Greystone Advisers, Inc.,
13333 Blanco Road, Suite 314
San Antonio, Texas 78216-7756
(Address of principal executive offices, including zip code)
210-493-3971
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 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.
[X] Yes [ ] No
As of May 14, 1999, 921,627 of the registrant's common shares of beneficial
interest, no par value, were outstanding.
<PAGE> 2
PLYMOUTH COMMERCIAL MORTGAGE FUND
Statements of Assets and Liabilities
March 31, 1998 and December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
-------------- -----------------
Assets
------
<S> <C> <C>
Investments in securities at fair value, cost of $8,124,461 and $9,210,118 $ 7,827,502 $ 7,943,201
Investment in affiliates 2,485,432 2,362,165
Cash 24,493 86,940
Accounts Receivable 25,268 -
Organization Costs - -
----------------- -----------------
Total Assets $ 10,362,695 $ 10,392,306
================== ==================
Liabilities
-----------
Accounts Payable $ 137,085 $ 120,284
Investment Advisory Fee Payable - 51,030
Dividend Payable - -
Note Payable 3,717,555 4,448,795
Escrow Funds 10,840 10,589
----------------- -----------------
Total Liabilities $ 3,865,480 $ 4,630,698
Net Assets
----------
Common shares of beneficial interest, no par value, 1,750,000
shares authorized, 921,627 shares issued and outstanding 7,976,773 7,976,773
Accumulated undistributed net investment loss (1,982,332) (1,716,978)
Accumulated undistributed net realized gains net of distributions of
$1,610,805 and $1,610,805 1,376,847 1,502,310
Accumulated undistributed equity of subsidiary (577,113) (733,580)
Accumulated undistributed unrealized gain on investments (296,960) (1,266,917)
----------------- -----------------
Total Net Assets ($7.04 and $6.25 per share) 6,497,215 5,761,608
Total Liabilities & Net Assets $ 10,362,695 $ 10,392,306
=================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements
Page -2-
<PAGE> 3
PLYMOUTH COMMERCIAL MORTGAGE FUND
Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE FOR THE THREE FOR THE THREE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1998 MARCH 31, 1999 MARCH 31, 1998
------------------ ------------------ ----------------- ------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 113,212 $ 197,174 $ 113,212 $ 197,174
Other Investment Income 814 - 814 -
------------------ ------------------ ------------------ ----------------
Total Investment Income 114026 197174 114026 197174
EXPENSES:
Investment advisory fee 145,571 239,093 145,571 239,093
Legal and Professional 36,489 34,609 36,489 34,609
Interest expense 98,714 170,665 98,714 170,665
Operating expense 98,606 74,115 98,606 74,115
------------------ ------------------ ------------------ ----------------
Total Expenses 379,380 518,482 379,380 518,482
Net Investment Loss $ (265,354) $ (321,308) $ (265,354) $ (321,308)
------------------ ------------------ ------------------ ----------------
Realized gain on sale of investments (168,634) 35,000 (168,634) 35,000
Realized gain on collection of notes 43,172 149,511 43,172 149,511
Change in unrealized appreciation on assets 969,957 49,015 969,957 49,015
Equity in earnings of affiliate 156,466 (60,649) 156,466 (60,649)
------------------ ------------------ ------------------ ----------------
Net increase (decrease) in net assets resulting
from operations $ 735,607 $ (148,431) $ 735,607 $ (148,431)
================== ================== ================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements
Page -3-
<PAGE> 4
PLYMOUTH COMMERCIAL MORTGAGE FUND
Statements of Changes in Net Assets
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE THREE MONTHS FOR THE THREE MONTHS
ENDED MARCH 31, ENDED MARCH 31, ENDED MARCH 31,
1999 1998 1999
<S> <C> <C> <C>
Operations before distributions
Net investment loss (265,354) (321,308) (265,354)
Net realized gain on sale of investments (168,634) 35,000 (168,634)
Net realized gain on collections 43,172 149,511 43,172
Changes in unrealized appreciation on investments 969,957 49,015 969,957
Equity in earnings of affiliates 156,466 (60,649) 156,466
----------------- ----------------- -----------------
Net increase in net assets from operations before
distributions 735,607 (148,431) 735,607
Distribution to shareholders from:
----------------- ----------------- -----------------
Total increase in net assets 735,607 (148,431) 735,607
Net assets, beginning of period 5,761,608 8,418,160 5,761,608
----------------- ----------------- -----------------
Net assets, end of period 6,497,215 8,269,729 6,497,215
================= ================= =================
Per Share Data
Investment income 0.12 0.21 0.12
Expenses (0.41) (0.56) (0.41)
Net realized gain on sale of investments (0.18) 0.04 (0.18)
Net realized gain on collection of notes 0.04 0.16 0.04
Equity in earnings of affiliate 0.16 (0.06) 0.16
Change in unrealized appreciation on assets 1.06 0.05 1.06
----------------- ----------------- -----------------
Increase in net assets from operations before
distributions 0.79 (0.16) 0.79
Distributions from realized gain on securities 0.00 0.00 0.00
----------------- ----------------- -----------------
Net increase (decrease) in net asset value 0.79 (0.16) 0.79
Net asset value
Beginning of period 6.25 9.13 6.25
----------------- ----------------- -----------------
End of period 7.04 8.97 7.04
================= ================= =================
Ratio:
Expenses to Average Assets 6.18% 6.21% 6.18%
Net Investment Income to Average Assets -0.04% (3.85) -0.04%
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
1998
<S> <C>
Operations before distributions
Net investment loss (321,308)
Net realized gain on sale of investments 35,000
Net realized gain on collections 149,511
Changes in unrealized appreciation on investments 49,015
Equity in earnings of affiliates (60,649)
----------------
Net increase in net assets from operations before
distributions (148,431)
Distribution to shareholders from:
----------------
Total increase in net assets (148,431)
Net assets, beginning of period 8,418,160
----------------
Net assets, end of period 8,269,729
================
Per Share Data
Investment income 0.21
Expenses (0.56)
Net realized gain on sale of investments 0.04
Net realized gain on collection of notes 0.16
Equity in earnings of affiliate (0.06)
Change in unrealized appreciation on assets 0.05
----------------
Increase in net assets from operations before
distributions (0.16)
Distributions from realized gain on securities 0.00
----------------
Net increase (decrease) in net asset value (0.16)
Net asset value
Beginning of period 9.13
----------------
End of period 8.97
================
Ratio:
Expenses to Average Assets 6.21%
Net Investment Income to Average Assets (3.85)
</TABLE>
The accompanying notes are an integral part of these financial statements
Page -4-
<PAGE> 5
PLYMOUTH COMMERCIAL MORTGAGE FUND
Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE THREE MONTHS
ENDED MARCH 31, 1999 ENDED MARCH 31, 1998
-------------------------- --------------------------
<S> <C> <C>
Cash flows from operating activities
Increase (decreases) in net asserts from operations before
distributions $ 735,607 $ (148,431)
Adjustments to reconcile increases in net assets from operations
before distributions to net cash provided
Amortization of organization costs - 7,800
Change in unrealized appreciation on investments (969,957) (49,015)
Changes in other assets - -
Equity in loss of affiliates (156,466) 60,649
Changes in receivables (25,268) 1
Changes in repurchase agreement - -
Changes in payables (34,230) 64,291
Change in escrow 251 (13,416)
-------------------------- --------------------------
Net cash provided/used by opperating activities (450,063) (78,121)
Cash flow from investing activities
Purchase of securities and capital expenditures (7,500) (523,701)
Sale of securities/principal collection on securities/
transfer to REO 1,085,657 1,076,218
Investment in affiliate 40,699 (212,507)
-------------------------- --------------------------
Net cash provided/used by investing activities 1,118,856 340,010
Cash flow from financing activities
Change in note net (731,241) (234,061)
Dividends paid - (275,001)
-------------------------- --------------------------
Net cash used by financing activities - -
(731,241) (509,062)
Net decrease in cash and cash equivalents (62,448) (247,172)
Cash and cash equivalents at beginning of period 86,940 568,899
-------------------------- --------------------------
Cash and cash equivalents at end of period 24,492 321,727
========================== ==========================
</TABLE>
The accompanying notes are an integral part of these financial statements
Page -5-
<PAGE> 6
1. ORGANIZATION AND BUSINESS PURPOSE
Plymouth Commercial Mortgage Fund, a Delaware business trust, (the "Fund") was
organized on August 23, 1996 and commenced operations on September 27, 1996. The
Fund seeks to achieve a high level of current income by purchasing loans where
the obligor is having trouble meeting the loan's contractual requirements. The
loans that the Fund purchases are typically secured by commercial real estate.
The Fund has elected to be regulated as a business development company under the
Investment Company Act of 1940, as amended ("1940 Act").
2. SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation- The financial statements included herein have
been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and
Article 6 of Regulation S-X. Accordingly, certain information and notes
that are required by generally accepted accounting principles for
complete financial statements are not included herein. The interim
statements should be read in conjunction with the financial statements
and notes included in the Fund's most recent annual report on Form 10-K.
Interim statements are subject to possible adjustments in connection with
the annual audit of the Fund. Management believes all adjustments
necessary for a fair presentation of these interim statements have been
included.
B. Security Valuation -There is no publicly quoted market for the Fund's
impaired loan portfolio. As such, the fair value of the portfolio is
established by the Fund's Board of Trustees using their best judgment.
Such values are based upon what the Board believes the Fund could
reasonably expect to receive for each impaired loan in an orderly
disposition over a reasonable time period.
In establishing the fair value of a loan, the Board considers aspects
about the individual loan as well as the general economy. Such factors
include but are not limited to: the type of loan, whether the borrower is
currently meeting the contractual terms of the obligation, the length of
time that the borrower has or has not been meeting the contractual terms,
the probability that the borrower will begin or stop making payments, the
value of the collateral and the guarantees securing the loans, the Fund's
historical experience selling the type of loan being valued, various
standard financial measurements, the remaining contract terms, and
prevailing interest rates.
Certain elements of the valuation procedure involve subjective judgment.
Because the majority of the Fund's impaired loans are delinquent, no
assurance can be given that the Fund will be able to recover the fair
value that the Board has established. The Fund's impaired loans are not
typically backed by any government guarantee or private credit
enhancement. In many cases, the Fund will also incur certain costs and
delays in attempting to assert its right to payment or in foreclosing on
the loan's collateral. The actual value realized on any particular loan
will vary from the values determined by the Board and can only be
determined in negotiations between the Fund and third parties.
In asserting its rights, the Fund will often attempt to foreclose on a
loan and acquire the collateral. Pursuant to the terms of its credit
agreement, any real estate that is acquired through foreclosure is held
by Plymouth REO, a wholly owned subsidiary of the Fund. Real estate
acquired through foreclosure is recorded at its estimated fair value.
C. Federal Income Taxes - The Fund has elected the special income tax
treatment available to "regulated investment companies" under Subchapter
M of the Internal Revenue Code. If the Fund
Page -6-
<PAGE> 7
qualifies as a regulated investment company and distributes to
shareholders annually in a timely manner at least 90% of its investment
company taxable income, as defined by the Code (i.e., net investment
income, including accrued discount, and net short-term capital gains), it
will not be subject to federal income tax on the portion of its taxable
investment income and net capital gain distributed to shareholders. In
addition, if the Fund distributes in a timely manner 98% of its net
capital gain income for each fiscal year, and distributes 98% of its
investment company taxable income for each calendar year (as well as any
income not distributed in prior years), it will not be subject to the 4%
nondeductible federal excise tax imposed with respect to certain
undistributed income of regulated investment companies.
D. Distributions to Shareholders - The Fund paid no dividends to
shareholders in respect of its operations during the first quarter of
1999, and none were declared.
E. Other - Principal and interest payments due on notes held by the Fund
are recognized on the date received. Interest income is typically not
accrued because of the impaired nature of the Fund's loan portfolio.
3. INVESTMENT ADVISORY AGREEMENT
The Fund has to entered into an Investment Advisory Agreement (Agreement) with
Greystone Advisers, Inc., a Delaware corporation, (Adviser). Initially, the
Adviser was a federally registered investment adviser under the Investment
Advisers Act of 1940. The Securities Markets Improvements Act of 1996, however,
altered the requirements for federal investment adviser registration. To
maintain its federal registration, the Adviser would have needed to have at
least $25,000,000.00 in assets under management. Accordingly, as of July 8,
1997, the Adviser was required by law to, and did, withdraw its federal
registration. Further, upon consultation with Texas securities counsel, the
Adviser determined that it was not required to have a Texas investment adviser
registration. Accordingly, until such time as the Adviser reaches $25,000,000.00
under management, it will have no investment adviser registration. If and when
that threshold may be achieved, it intends to reregister under the Investment
Advisers Act.
Under the Agreement, the Adviser manages the investments of the Fund, subject to
the supervision and control of the Fund's Board of Trustees. Specifically, the
Adviser identifies, evaluates, structures, closes and monitors the investments
made by the Fund. The Agreement was ratified by the Board of Trustees at its
February1, 1999 meeting remains in effect for a year from that time. It will
need to be renewed at least annually by the Board of Trustees, including a
majority of its members casting their votes in person who are not interested
persons of the Fund (as defined by the 1940 Act) at a meeting called for the
purpose of voting on such approval, or by a vote of a majority of the
outstanding voting securities of the Fund. The Agreement can be terminated by
the Fund at any time, without payment of any penalty, on sixty day's written
notice to the Adviser if the decision to terminate has been made by the Board of
Trustees or by a vote of a majority of the outstanding voting securities of the
Fund. The Agreement will terminate automatically in the event of its assignment.
The Adviser is required to pay all expenses that are incurred in rendering its
services. Generally, these expenses include the cost of office space, telephone
service, equipment and personnel required to perform its obligations under the
Agreement. The Fund will be required to pay its operating expenses and reimburse
the Adviser promptly for expenses that the Adviser may pay on the Fund's behalf,
except those specifically required to be borne by the Adviser under the
Agreement. Without limitation, the expenses to be borne by the Fund will
include: all expenses of any offering and sale by the Fund of its shares; the
fees and disbursements of the Fund's counsel, accountants, and custodian; fees
and expenses incurred in producing and effecting filings with federal and state
securities administrators; costs of the Fund's periodic reports to and other
Page -7-
<PAGE> 8
communications with the Fund's shareholders; fees and expenses of members of the
Fund's Board of Trustees who are not directors, officers or employees of the
Adviser; premiums for the fidelity bond maintained by the Fund; all costs
related to portfolio investments, including without limitation financing costs,
legal and accounting fees, expenses related to protecting or maintaining the
value of the loan portfolio or its underlying collateral, and other professional
or technical fees and expenses (e.g., credit reports, title searches and
delivery charges, property taxes, insurance premiums, long-distance telephone
charges, costs of specialized consultants such as accountants or
industry-specific technical experts, and travel expenses) incurred in acquiring,
monitoring, negotiating, working-out, and effecting disposition of such
investments, as well as responding to any litigation arising therefrom; and all
expenses related to any borrowings by the Fund.
During the term of this Agreement, the Fund pays to the Adviser, on the 15th day
of each month: (a) a fee calculated at an effective annual rate of 5.94% of the
Fund's invested assets as of the end of the previous month; and (b) a fee
calculated at an effective annual rate of 0.48% of the Fund's cash and
short-term investments as of the end of the previous month. For purposes of
calculating the fee to be paid on a monthly basis, "invested assets" means the
asset value as determined by the Board as of the end of the previous fiscal
quarter minus cash, short-term investments, intangible assets, and the amount of
collections applied to the carrying value of the loan portfolio since the end of
the previous quarter, plus the cost of loans purchased and capitalized advances
to protect portfolio investments or underlying collateral since the end of the
previous quarter.
4. INVESTMENTS
The Fund invests primarily in impaired loans of companies that qualify as
"eligible portfolio companies" as defined in Section 2(a)(46) of the 1940 Act or
in securities that otherwise qualify for investment as permitted in Section
55(a)(1) through (6). These loans are carried on the Statement of Assets and
Liabilities as of March 31, 1998, at fair value, as determined in good faith by
the Fund's Board of Trustees.
These loans typically are offered at auction in packages of multiple loans.
Sellers include entities such as the Federal Deposit Insurance Corporation
(FDIC), banks, savings and loans, insurance companies and other financial
institutions. The Fund's investments in loan packages will be directed by the
Adviser. The Fund holds its real estate assets in a wholly-owned subsidiary as
required in the agreement establishing its senior credit facility.
Generally, a loan is considered impaired when, based on current information and
events, it is probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement unless the borrower
receives material assistance. While several types of impaired loans are
available for purchase, the Fund's portfolio is concentrated in impaired loans
secured by commercial real estate. For both financial and regulatory reasons,
commercial banks, either directly or indirectly through the FDIC, make these
loans available for sale in packages with prices that are typically more than $1
million per package. Quite often the sale of impaired loans in this market
offers creditors the only alternative to foreclosure.
5. INDEBTEDNESS
During the period to which this report relates, the Fund had an $8,000,000 line
of credit with a Texas bank that is secured by a first lien on all of the Fund's
assets. As of March 31, 1999 the Fund had borrowed $3,717,555 on the credit
facility. As of May 12, 1999, the Fund 's borrowings were approximately
$1,800,000.
Since the end of the first quarter, the Fund's lender has reduced the Fund's
credit line from $8,000,000 to $4,000,000 and has informed the Fund that it
should move the credit line to another institution. See the discussion regarding
the Fund's credit needs set forth below under "Liquidity and Capital Resources."
Page -8-
<PAGE> 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF LIQUIDITY, CAPITAL RESOURCES,
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
As of March 31, 1999, Plymouth has $6,497,215 in net assets and had borrowed
$3,717,555 on its credit line.
Plymouth's liquidity consists of its capital not invested in loans plus the
amount that is available on its line of credit with Comerica Bank, N.A.
Plymouth's original capital is long since invested so amounts available under
its credit line are its only source of liquidity. Collections add to liquidity
only indirectly, to the extent they free up a portion of the borrowing base,
since all collections are paid into the bank lockbox. When Plymouth's borrowing
base goes to zero or below, it has no liquidity.
The average time to resolution for loans in Plymouth's portfolio has increased
to approximately sixteen and one half months. Therefore, on average, invested
capital will not be available for the purchase of new assets until approximately
sixteen and one half months from when it was spent on present assets.
Management previously recognized and has reported the problems inherent in being
caught in a cycle of lumps of purchases and collections. The mismatch between
Plymouth's declining borrowing base and the average time to resolution of loans
in Plymouth's portfolio materialized. Throughout most of the first quarter of
1999, Plymouth had insufficient room on its borrowing base to make any new
purchases. At various points during the quarter, the borrowing base was
negative.
By means of a letter dated April 27, 1999, Plymouth's lender formally notified
Plymouth of its obligation under the loan agreement to bring the then existing
negative borrowing base back up to zero. Fortunately, the closing of Plymouth's
first loan auction in 1999 closely coincided with that letter. The proceeds of
the loan auction reduced the amount of credit outstanding and brought the credit
line back into a positive state. After receipt of that letter, Plymouth reached
an agreement with the bank for a sixth amendment to its loan agreement. The
maximum amount of the credit line was reduced from $8,000,000 to $4,000,000.
That reduction has the effect of reducing the "unused credit" fee Plymouth would
otherwise owe the bank and does not affect Plymouth's liquidity because, under
the current structure of the borrowing base, Plymouth could not borrow more than
the reduced amount in any event.
Plymouth is currently able to borrow the lesser of $4,000,000 or its borrowing
base. The borrowing base limits advances to a declining percentage applied to
the lesser of cost or current fair market value. On a new purchase, the
allowable percentage is 60%. After Plymouth has held the asset for six months,
the advance rate declines to 48% (See page 3 of Plymouth's December 31, 1997
Form 10-K for the other decline thresholds). As of May 10, 1999, Plymouth had
the ability to borrow an additional $523,691.56. In all likelihood, in the near
term the amount Plymouth can borrow will decrease rather than increase. This
limited liquidity will make it difficult for Plymouth to conduct normal
operations. It will not be able to buy new assets and may not be able to make
protective advances, such as paying past due real estate taxes to avoid tax
foreclosures on its assets. It is imperative that Plymouth find new financing
with a borrowing base better synchronized to the nature of Plymouth's assets. It
appears to management that Plymouth can do that only if it withdraws its
business development company election.
There are no material, unused sources of liquidity.
Page -9-
<PAGE> 10
Results of Operations
Three Months Ending 3/31/99
During the three month period ending March 31, 1999, Plymouth purchased no new
assets. Plymouth's per share value increased from $6.25 at December 31, 1998 to
$7.04 at March 31, 1999. The increase was mainly due to an increase in
unrealized appreciation of assets and unrealized equity of affiliate. This
indicates that several assets were closer to resolution thn was believed at
12/31/98. Also, one asset sold in the first quarter for $150,000 that had been
written down to zero at 12/31/98.
During the three month period ending March 31, 1999, Plymouth had gross
collections of $1,114,104. Those collections resulted in a realized loss of
$390,816 for the three month period. The loss arose from slow collections and
the disposition of one asset that produced a $245,000 loss. Expenses for the
period were consistent with the level of assets under management. Seven loans in
Plymouth's portfolio may result in a loss of $850,705. This potential loss is
already reflected in Plymouth's financial statements in the account for
unrealized gain and loss on appreciation.
Three Months Ending 3/31/98
By way of comparison, during the three month period ending March 31,1998,
Plymouth purchased seven additional loans with a cost of $516,902 and a total
outstanding principal balance of $670,427. Plymouth's per share value declined
to $8.97 per share from $9.13 at December 31,1997. The decline was due to a
realized GAAP loss of $136,797. Plymouth did not declare a dividend for the
first quarter 1998 due to a tax loss of $86,874 for that period.
By wayof comparison, during the three month period ending March 31,1998,
Plymouth had gross collections of $1,275,961. This included eight notes that
settled or sold for an average return on investment of roughly 35.50%. This
return takes into the account the original cost, gross collections, and direct
expenses. It does not include overhead such as the adviser fee and interest
expense. The above gross collections resulted in a GAAP realized loss of
$136,797 for the three month period. The loss was due to slow collections in
January and February of approximately $412,000. For those months, Plymouth
posted a loss of approximately $187,000. In March gross collections increased to
$865,920, and the fund posted approximately a $51,000 profit. In April gross
collections have continued to rise. When Plymouth is fully invested in notes, as
it was at the end of 1997 and throughout the first quarter of 1998, the fund
needs to have gross monthly collections of between $800,000 and $900,000 to be
profitable and maintain per share value, although increased costs could prevent
profitability even at that level.
Other
Early in 1999, management recommended to the Board of Trustees that Plymouth
withdraw its election as a business development company and convert to a limited
partnership. In addition to reducing regulatory requirements, the two new
lenders with whom management has explored lines of credit will not deal with
Plymouth until the business development company election is withdrawn. Since
that recommendation was originally made, management has been working with the
board of trustees by providing them with requested analyses and projections. The
Board of Trustees is still considering what course is in the best interest of
shareholders. If the Board of Trustees directs management to proceed with the
change, management will cause the necessary decisions to be put before the
shareholders. If the Board does not authorize the recommended change, management
will follow such other directives as the Board may give.
Page -10-
<PAGE> 11
PART II - OTHER INFORMATION
Item 1: LEGAL PROCEEDINGS
None.
Item 2: CHANGES IN SECURITIES
None.
Item 3: DEFAULTS UPON SENIOR SECURITIES
By means of a letter dated April 27, 1999, Plymouth's lender formally
notified Plymouth of its obligation under the loan agreement to bring
the then existing negative borrowing base back up to zero. Fortunately,
the closing of Plymouth's first loan auction in 1999 closely coincided
with that letter. The proceeds of the loan auction reduced the amount
of credit outstanding and brought the credit line back into a positive
state.
Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5: OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS-
(2)Plan of acquisition, reorganization, arrangement, liquidation
or succession: (None)
(3)(i) (A)Certificate of Trust of the registrant, as filed
August 23, 1996(1)
(B)Declaration of Trust of the registrant, dated
August 23, 1996(1)
(3)(ii)Bylaws of the registrant, dated September 3, 1996(1)
(4) (A)Loan Agreement between Comerica Bank-Texas and the
registrant, dated September 27, 1996(1)
(B)Agreement to furnish to the Commission upon request a
copy of Subordinated Note Agreement between the
registrant and SouthWest Holding Company, Inc., dated
September 27, 1996(2)
(10) (A)Investment Advisory Agreement by and between the
registrant and Greystone Advisers, Inc.(3)
(B)Custodial Agreement by and between Broadway National
Bank, Comerica Bank-Texas and the registrant, dated
September 27, 1996(4)
(15) Letter re unaudited interim financial information:
(None)
(18) Letter re change in accounting principles: (None)
(1) Incorporated herein by reference from the registrant's initial registration
statement on Form 10 (File No. 0-21443), as filed with the commission on
January 15, 1997.
(2) Incorporated herein by reference from amendment #1 to the registrant's
initial registration statement on Form 10 (File No. 0-21443), as filed with the
commission on January 15, 1997.
(3) "Incorporated by reference from registrant's Form 10-Q for the period
ending March 31, 1998 (File No. 0-21433), as filed with the Commission on May
14, 1998."
(4) Incorporated herein by reference from the registrant's Form 10-Q filed with
the Commission for the period ending June 30, 1997 on or about August 14, 1997.
Page -11-
<PAGE> 12
(19) Report furnished to security holders: (None)
(22) Published report regarding matters submitted to vote of
security holders: (None)
(23) Consents of experts and counsel: (None)
(24) Power of attorney: (None)
(27) Financial Data Schedule (1)
REPORTS ON FORM 8-K- None.
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.
PLYMOUTH COMMERCIAL MORTGAGE FUND
/s/ Robert R. Swendson
May 17, 1999 ---------------------------------------
Robert R. Swendson, President and Chief
Executive Officer
/s/ Patrick J. Panzarella
May 17, 1999 ---------------------------------------
Patrick J. Panzarella, Chief Financial
Officer (Principal Financial Officer)
- ------------------------
(1) Filed Herewith.
Page -12-
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 1999
(UNAUDITED), AND STATEMENT OF OPERATIONS, STATEMENT OF CHANGES IN NET ASSETS,
AND STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED MARCH 31, 1999 (UNAUDITED), AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENT OF ASSETS AND
LIABILITIES, STATEMENT OF OPERATIONS, STATEMENT OF CHANGES IN NET ASSETS, AND
STATEMENT OF CASH FLOWS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 8,124,461
<INVESTMENTS-AT-VALUE> 7,827,502
<RECEIVABLES> 25,268
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 2,509,925
<TOTAL-ASSETS> 10,362,695
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 3,717,555
<OTHER-ITEMS-LIABILITIES> 147,925
<TOTAL-LIABILITIES> 3,865,480
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,976,773
<SHARES-COMMON-STOCK> 921,627
<SHARES-COMMON-PRIOR> 921,627
<ACCUMULATED-NII-CURRENT> (1,982,332)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,376,847
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (874,073)
<NET-ASSETS> 6,497,215
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 113,212
<OTHER-INCOME> 814
<EXPENSES-NET> 379,380
<NET-INVESTMENT-INCOME> (265,354)
<REALIZED-GAINS-CURRENT> (125,462)
<APPREC-INCREASE-CURRENT> 1,126,423
<NET-CHANGE-FROM-OPS> 735,607
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 735,607
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 145,571
<INTEREST-EXPENSE> 98,714
<GROSS-EXPENSE> 379,380
<AVERAGE-NET-ASSETS> 6,129,411
<PER-SHARE-NAV-BEGIN> 6.25
<PER-SHARE-NII> (.29)
<PER-SHARE-GAIN-APPREC> 1.08
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 7.04
<EXPENSE-RATIO> 6
<AVG-DEBT-OUTSTANDING> 4,083,175
<AVG-DEBT-PER-SHARE> 4.43
</TABLE>
