<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED COMMISSION FILE NUMBER
JUNE 30, 1995 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
SUITE 300
LOS ANGELES, CALIFORNIA 90064-1661
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (310) 479-4121
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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 ____
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<PAGE>
KEYSTONE MORTGAGE FUND
INDEX
PAGE
---------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
(a) Condensed Balance Sheets, December
31, 1994 and June 30, 1995........ 3
(b) Condensed Statements of Income,
six and three months ended,
June 30, 1995 and 1994............. 4
(c) Condensed Statements of Partners'
Capital (Deficit) for the year
ended December 31, 1994 and the
six months ended June 30, 1995.... 5
(d) Condensed Statements of Cash
Flows, six months ended
June 30, 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
2
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KEYSTONE MORTGAGE FUND,
A California Limited Partnership
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1994 1995
----------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents............. $ 97,409 $ 13,983
Short-term investments................ 2,275,573 2,381,403
Interest receivable on trust deed
notes receivable..................... 18,761 13,570
Current portion of trust deed notes
receivable (note B).................. 580,508 567,401
----------- ----------
TOTAL CURRENT ASSETS................ 2,972,251 2,976,357
Investment in real estate, net.......... 1,155,504 1,128,804
Trust deed notes receivable, net (note
B)..................................... 1,028,372 1,022,919
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$ 5,156,127 $5,128,080
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----------- ----------
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Due general partner................... $ 265,000
Accounts payable...................... $ 1,957 661
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TOTAL CURRENT LIABILITIES........... 1,957 265,661
PARTNERS' CAPITAL
General Partners...................... 23,047 21,673
Limited Partners -- 20,000 units
authorized, 13,272 units
outstanding.......................... 5,131,123 4,840,746
----------- ----------
5,154,170 4,862,419
----------- ----------
$ 5,156,127 $5,128,080
----------- ----------
----------- ----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
KEYSTONE MORTGAGE FUND,
A CALIFORNIA LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30 JUNE 30
------------------- ------------------
1995 1994 1995 1994
--------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Interest on mortgage loans............ $ 77,518 $237,783 $ 43,135 $115,093
Interest on short-term investments.... 63,794 18,742 36,375 9,333
Rental and other revenue from
investment in real estate............ 63,577 40,920 30,323 2,627
--------- -------- -------- --------
204,889 297,445 109,833 127,053
Expenses:
Servicing related expenses............ 45,722 42,472 31,847 16,965
Administrative and general expenses... 270,522 3,179 5,165 1,129
Expenses related to real estate
acquired in settlement of loans...... 26,000 41,462 13,000 25,824
--------- -------- -------- --------
342,244 87,113 50,012 43,918
--------- -------- -------- --------
NET INCOME (LOSS)................... $(137,355) $210,332 $ 59,821 $ 83,135
--------- -------- -------- --------
--------- -------- -------- --------
Weighted average number of limited
partnership units outstanding.......... 13,272 13,272 13,272 13,272
--------- -------- -------- --------
--------- -------- -------- --------
Net income (loss) per limited
partnership unit....................... $ (10.35) $ 15.85 $ 4.51 $ 6.26
--------- -------- -------- --------
--------- -------- -------- --------
</TABLE>
See notes to financial statements.
4
<PAGE>
KEYSTONE MORTGAGE FUND,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF PARTNERS' CAPITAL
<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 loss six months ended June 30,
1995................................... (1,374) (135,981) (137,355)
Distributions........................... (154,396) (154,396)
-------- ---------- ----------
Balance at June 30, 1995................ $ 21,673 $4,840,746 $4,862,419
-------- ---------- ----------
-------- ---------- ----------
</TABLE>
5
<PAGE>
KEYSTONE MORTGAGE FUND,
A CALIFORNIA LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE
30
---------------------
1995 1994
--------- ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)..................... $(137,355) $ 210,332
Changes in operating assets &
liabilities:
Decrease in interest receivable..... 5,191 14,303
Depreciation expense for investment
in real estate..................... 26,000
Decrease in accounts payable........ (1,296) (920)
Increase in due general partners.... 265,000
Decrease in other assets............ 29,690
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NET CASH PROVIDED BY OPERATING
ACTIVITIES....................... 157,540 253,405
INVESTING ACTIVITIES:
Decrease in trust deeds receivable.... 19,260 1,710,325
Increase in short term investments.... (105,830)
FINANCING ACTIVITIES:
Distributions and withdrawals......... (154,396) (754,104)
--------- ----------
Increase (decrease) in cash and cash
equivalents.......................... (83,426) 1,209,626
Cash and cash equivalents at beginning
of year.............................. 97,409 1,228,378
--------- ----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD........................ $ 13,983 $2,438,004
--------- ----------
--------- ----------
</TABLE>
See notes to financial statements.
6
<PAGE>
KEYSTONE MORTGAGE FUND,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
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.
7
<PAGE>
KEYSTONE MORTGAGE FUND,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(B) TRUST DEED NOTES RECEIVABLE
<TABLE>
<CAPTION>
MONTHLY
PAYMENT,
INCLUDING DECEMBER 31 JUNE 30
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 $ 555,399
First trust deed on an
office/warehouse/light industrial
building, interest rate of 10.375%, due
November 1, 1997....................... $9,965 1,043,284 1,037,491
--------- ------------ ----------
---------
1,612,000 1,592,890
Less net deferred loan origination
fees................................... 3,120 2,570
Less current portion.................... 580,508 567,401
------------ ----------
$ 1,028,372 $1,022,919
------------ ----------
------------ ----------
</TABLE>
8
<PAGE>
KEYSTONE MORTGAGE FUND,
A CALIFORNIA LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Total revenues for the six months ended June 30, 1995 decreased $92,556 or
31.1% over the comparable 1994 period. Total revenues for the three months ended
June 30, 1995 decreased 13.5% compared to the same period ending June 30, 1994.
These decreases were due to the decrease of income producing assets during the
past year. 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.
Servicing related expenses increased 7.8% for the six months and increased
87.7% for the three months ended June 30, 1995 over the comparable periods ended
June 30, 1994. General and administrative expenses increased $247,343 for the
six months and increased $4,036 for the three months ended June 30, 1995 over
the comparable periods ended June 30, 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 $265,000 at
June 30, 1995.
Expenses related to real estate acquired in settlement of loans decreased
37.3% for the six months ended June 30, 1995 and decreased 49.7% for the three
months ended June 30, 1995 over the comparable periods June 30, 1994.
Net income for the six months and the three months ended June 30, 1995
decreased $347,687 for the six months and $23,314 or 28.1% for the three months
ended June 30, 1995 over the same periods June 30, 1994.
The Partnership's working capital increased by $259,598 during the six
months ended June 30, 1995. The Partnership has adequate working capital and
cash reserves to carry on its business.
The Partnership continues to distribute to the Limited Partners principal
repayments (less required reserves).
9
<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 June
30, 1995.
10
<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
<TABLE>
<S> <C>
Date: , 1995 /s/ JOHN P. SULLIVAN
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Keystone Mortgage Company
By: John P. Sullivan, President
Date: , 1995 /s/ JOHN P. SULLIVAN
--------------------------------------------
John P. Sullivan
General Partner
Date: , 1995 /s/ CHRISTOPHER E. TURNER
--------------------------------------------
Christopher E. Turner
General Partner
</TABLE>
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 13,983
<SECURITIES> 2,381,403
<RECEIVABLES> 1,606,460
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,976,357
<PP&E> 1,335,351
<DEPRECIATION> 165,347
<TOTAL-ASSETS> 5,128,080
<CURRENT-LIABILITIES> 256,661
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 4,862,419
<TOTAL-LIABILITY-AND-EQUITY> 5,128,080
<SALES> 0
<TOTAL-REVENUES> 204,889
<CGS> 0
<TOTAL-COSTS> 342,244
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (137,355)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (137,355)
<EPS-PRIMARY> (10.35)
<EPS-DILUTED> (10.35)
</TABLE>
