<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission File Number 0-14562
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Keystone Mortgage Fund
- - ---------------------------------------------------------
(Exact name of registrant as specified in its charter.)
California 95-3786580
- - ---------------------------- ----------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
11340 W. Olympic Boulevard 90064-1661
Suite 300 -------------------
Los Angeles, California (Zip Code)
- - -----------------------------
(Address of principal
executive offices)
Registrant's telephone number, including area code: (310) 479-4121
--------------
Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 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.
Yes X No
----- -----
<PAGE>
KEYSTONE MORTGAGE FUND
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
(a) Condensed Balance Sheets, December 31, 1994 and
March 31, 1995. 3
(b) Condensed Statements of Income, three months
ended, March 31, 1995 and 1994. 4
(c) Condensed Statements of Partners' Capital (Deficit)
for the year ended December 31, 1994 and the three months
ended March 31, 1995. 5
(d) Condensed Statements of Cash Flows, three months ended
March 31, 1995 and 1994. 6
(e) Notes to condensed financial statements. 7 & 8
Item 2. Management's discussion and analysis of financial
condition and results of operations. 9
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K. 10 & 11
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<PAGE>
KEYSTONE MORTGAGE FUND, (A California Limited Partnership)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 March 31
ASSETS 1994 1995
------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 97,409 $ 44,011
Short-term investments 2,275,573 2,421,547
Interest receivable on trust deeds notes
receivable 18,761 13,679
Current portion of trust deed notes receivable
(note B) $ 580,508 $ 573,933
------------------------------
TOTAL CURRENT ASSETS 2,972,251 3,053,170
Investment in real estate, net 1,155,504 1,141,804
Trust deed notes receivable, net (note B) 1,028,372 1,025,788
------------------------------
$ 5,156,127 $ 5,220,762
------------------------------
------------------------------
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Due general partner: 262,500
Accounts payable $ 1,957 $ 1,268
------------------------------
TOTAL CURRENT LIABILITIES 1,957 263,768
PARTNERS' CAPITAL
General Partners 23,047 21,075
Limited Partners--20,000 units
authorized, 13,272 units outstanding 5,131,123 4,935,919
------------------------------
5,154,170 4,956,994
------------------------------
$ 5,156,127 $ 5,220,762
------------------------------
------------------------------
</TABLE>
See accompanying notes to financial statements
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<PAGE>
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
KEYSTONE MORTGAGE FUND, A California Limited Partnership
<TABLE>
<CAPTION>
Three Months Ended
March 31
1995 1994
---- ----
<S> <C> <C>
Revenue:
Interest on mortgage loans $ 34,383 $ 122,690
Interest on short-term investments 27,419 9,409
Rental and other revenue from
investment in real estate 33,254 38,293
------------------------------
95,056 170,392
Expenses:
Servicing related expenses 13,875 25,507
Administrative and general expenses 265,357 2,050
Expenses related to real estate acquired
in settlement of loans 13,000 15,638
------------------------------
292,232 43,195
NET INCOME $(197,176) $ 127,197
------------------------------
------------------------------
Weighted average number of
limited partnership units
outstanding 13,272 13,272
------------------------------
------------------------------
Net income per limited
partnership unit $ (14.86) $ 9.58
------------------------------
------------------------------
</TABLE>
See notes to financial statements.
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<PAGE>
STATEMENTS OF PARTNERS' CAPITAL
KEYSTONE MORTGAGE FUND, A California Limited Partnership
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
----------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1994 $ 23,047 $5,131,123 $5,154,170
Net income three months
ended March 31, 1995 (1,972) (195,204) (197,176)
----------------------------------------
Balance at March 31, 1995 $ 21,075 $4,935,919 $4,956,994
----------------------------------------
----------------------------------------
</TABLE>
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<PAGE>
STATEMENTS OF CASH FLOWS
KEYSTONE MORTGAGE FUND, A California Limited Partnership
<TABLE>
<CAPTION>
Three Months Ended March 31
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (197,176) $ 127,197
Amortization of net origination fees (275) (825)
Depreciation expense for investment
in real estate 13,700 (1,744)
Decrease (increase) in interest
receivable 5,082
Increase in accounts payable and
other liabilities 61,811 5,171
Decrease in other assets 14,595
------------------------------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 83,142 144,394
INVESTING ACTIVITIES:
Decrease in trust deeds
receivable 9,434 14,996
Sale (purchase) of short term
investment (145,974)
------------------------------
NET CASH USED IN INVESTING
ACTIVITIES (136,540) 14,996
------------------------------
Increase (decrease) in cash and
cash equivalents (53,398) 159,390
Cash and cash equivalents at
beginning of year 97,409 1,228,378
------------------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 44,011 $ 1,387,768
------------------------------
------------------------------
</TABLE>
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<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
KEYSTONE MORTGAGE FUND, A California Limited Partnership
NOTE A - UNAUDITED BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared by
Keystone Mortgage Fund in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, the accompanying condensed financial
statements contain all adjustments necessary, which were of normal recurring
nature, for a fair statement of the results for the interim periods presented.
It is suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in Form 10-K for
the year ended December 31, 1994 filed by the Company under the Securities
Exchange Act of 1934.
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<PAGE>
KEYSTONE MORTGAGE FUND
(A California Limited Partnership)
Notes to Financial Statements, Continued
<TABLE>
<CAPTION>
Monthly
Payment,
including December 31 March 31
(B) Trust Deed Notes Receivable interest 1994 1995
- - ------------------------------------------ -----------------------------------------
<S> <C> <C> <C>
Second trust deed on an office/warehouse/
light manufacturing facility, interest
rate of 10.0%, due December 1, 1995 $ 6,913 $ 568,716 $ 562,141
First trust deed on an
office/warehouse/light industrial
building, interest rate 10.375%, due
November 1, 1997 9,965 1,043,284 1,040,425
----------------------------------------
--------- 1,612,000 1,602,566
Less net deferred loan origination fees 3,120 2,845
Less Current portion 580,508 573,933
-------------------------
$1,028,372 $1,025,788
-------------------------
-------------------------
</TABLE>
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Total revenues for the three months ended March 31, 1995 decreased $75,336 or
44.2% over the comparable 1994 period. Cash flow from principal payments have
been distributed to the limited partners less required reserves. These amounts
represent return of capital which has caused the decrease in income producing
assets the past few years.
Total expenses increased $249,037 for the three months ended March 31, 1995 over
the same period March 31, 1994. Servicing related expenses decreased $11,632
and general and administrative expenses increased $263,307 for the three months
ended March 31, 1995 over the same period March 31, 1994. Expenses related to
real estate acquired in settlement of loans decreased $2,638 for the three
months ended March 31, 1995 as compared to the same period March 31, 1994.
During the first quarter of 1995, a determination was made by the general
partners to seek reimbursement for which they were otherwise entitled. The
amount of general and administrative expenses were determined to be $262,500.
Net income per limited partnership unit decreased from $9.58 per unit for the
three months ended March 31, 1994 to a loss of $14.86 per unit for the three
months ended March 31, 1995. This decrease in unit income resulted from the
decrease of earning assets and the increase in general and administrative
expenses.
The Partnership's working capital decreased by $180,892 during the three months
ended March 31, 1995. The Partnership has adequate working capital and cash
reserves to carry on its business.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The Registrant filed no reports on Form 8-K during the quarter ended
March 31, 1995.
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<PAGE>
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.
KEYSTONE MORTGAGE FUND
A CALIFORNIA LIMITED PARTNERSHIP
Date: May 3, 1995 John P. Sullivan
----------- ----------------------------------------
Keystone Mortgage Company
By: John P. Sullivan, President
Date: May 3, 1995 John P. Sullivan
----------- ----------------------------------------
John P. Sullivan
General Partner
Date: May 3, 1995 Christopher E. Turner
----------- ----------------------------------------
Christopher E. Turner
General Partner
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 44,011
<SECURITIES> 2,421,547
<RECEIVABLES> 587,612
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,053,170
<PP&E> 1,335,351
<DEPRECIATION> 152,347
<TOTAL-ASSETS> 5,220,762
<CURRENT-LIABILITIES> 263,768
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 4,956,994
<TOTAL-LIABILITY-AND-EQUITY> 5,220,762
<SALES> 0
<TOTAL-REVENUES> 95,056
<CGS> 0
<TOTAL-COSTS> 292,232
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (197,176)
<INCOME-TAX> 0
<INCOME-CONTINUING> (197,176)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (197,176)
<EPS-PRIMARY> (14.86)
<EPS-DILUTED> (14.86)
</TABLE>
