- --------------------------------------------------------------------------------
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 September 30, 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 ___
<PAGE>
PART 1 - Financial Information
Item 1. Financial Statements
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
<TABLE>
<CAPTION>
Balance Sheets
Sep. 30, Sep. 30,
1997 1996
(Unaudited) (Unaudited)
----------- -----------
Assets
------
<S> <C> <C>
Current Assets
Cash and cash equivalents ............................. $1,003,237 $1,185,528
Due from affiliates ................................... -- --
Accrued interest receivable ........................... 16,183 77,659
Other assets .......................................... -- 10,879
---------- ----------
Total current assets ......................... 1,019,420 1,274,066
Mortgage loan receivable ....................................... 1,567,664 2,567,664
---------- ----------
Total Assets ........................ $2,587,084 $3,841,730
========== ==========
Liabilities and Partners' Capital
---------------------------------
Current Liabilities
Accounts payable and accrued expenses ................. $ 4,000 $ 8,455
Due to affiliates ..................................... 23,626 --
---------- ----------
Total current liabilities .................... 27,626 8,455
Partners' capital:
General partners ...................................... 62,813 48,968
Limited partners ...................................... 2,496,645 3,784,307
---------- ----------
Total partners' capital .................... 2,559,458 3,833,275
---------- ----------
Total Liabilities and Partners' Capital .... $2,587,084 $3,841,730
========== ==========
</TABLE>
See accompanying notes
2
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
<TABLE>
<CAPTION>
Statements of Earnings
(Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED
Sep. 30, Sep. 30, Sep. 30, Sep. 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income
- ------
Interest .............. $ 59,267 $ 115,767 $ 199,070 $ 377,567
Misc. income .......... -- -- -- 55,000
----------- ----------- ----------- -----------
Total Income . 59,267 115,767 199,070 432,567
Expenses
- --------
Professional fees ..... 11,747 (708) 51,655 31,356
Fees to affiliates:
Management ........... 7,359 10,572 24,022 35,895
Mortgage servicing ... 980 2,230 2,939 6,689
Other ................. 1,667 25,122 32,283 69,491
----------- ----------- ----------- -----------
Total Expenses 21,753 37,216 110,899 143,431
----------- ----------- ----------- -----------
$ 37,514 $ 78,551 $ 88,171 $ 289,136
=========== =========== =========== ===========
Net earnings per limited
partner unit .................. $ .02 $ .04 $ .05 $ .15
=========== =========== =========== ===========
Weighted average limited
partner units outstanding .... 1,911,411 1,911,411 1,911,411 1,911,411
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
3
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
<TABLE>
<CAPTION>
Statements of Partners' Capital
(Unaudited)
NINE MONTHS ENDED
SEPTEMBER 30,
1997 1996
-------------------------------------------- -----------------------------------------
TOTAL TOTAL
GENERAL LIMITED PARTNERS' GENERAL LIMITED PARTNERS'
PARTNER PARTNERS CAPITAL PARTNERS PARTNERS CAPITAL
<S> <C> <C> <C> <C> <C> <C>
Balance at beginning of period $61,050 $4,151,772 $4,212,822 $43,185 $4,699,352 $4,742,537
Net income 1,763 86,408 88,171 5,783 283,353 289,136
Cash distributions to partners ( -) (1,741,535) (1,741,535) ( - ) (1,198,398) (1,198,398)
----------- ------------ ------------ ----------- ------------ ------------
Balance at end of period $62,813 $2,496,645 $2,559,458 $48,968 $3,784,307 $3,833,275
======== =========== =========== ======== =========== ==========
</TABLE>
See accompanying notes.
4
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
<TABLE>
<CAPTION>
Statements of Cash Flows
(Unaudited)
NINE MONTHS ENDED
-----------------
SEP. 30, SEP. 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................................ $ 88,171 $ 289,136
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Decrease (increase) in due from affiliates ................... 2,664 --
Decrease (increase) in interest receivable ................... (3,865) 67,741
Decrease (increase) in other assets .......................... -- 13,006
Increase (decrease) in accounts payable and .................. (7,150) 2,079
accrued expenses
Increase (decrease) in due to affiliates ..................... 11,085 1,305
----------- -----------
Net cash provided by operating activities ................ 90,905 373,267
----------- -----------
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 ...................................... (1,741,535) (1,198,398)
----------- -----------
Net cash used in financing activities ........................ (1,741,535) (1,198,398)
----------- -----------
Net increase (decrease) in cash and cash equivalents: .......................... (1,650,630) 174,869
Cash and cash equivalents, beginning of period ................................. 2,653,867 1,010,659
----------- -----------
Cash and cash equivalents, end of period ....................................... $ 1,003,237 $ 1,185,528
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE>
COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
September 30, 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 September 30, 1997.
6
<PAGE>
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
and nine months ended September 30, 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 September 30,
1997 is as follows:
<TABLE>
<CAPTION>
Face and
Basic Carrying
Interest Maturity Amount of
Description Rate Date Mortgage
----------- ---- ---- --------
<S> <C> <C> <C>
Honeybrook loan 13.7% January 1, 2000 1,567,664
----------
$1,567,664
</TABLE>
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 September 30, 1997, the loan was
current as to regular interest.
(3) Distributions
-------------
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. 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. On July 4,
1997, the Partnership declared and paid a distribution of $199,265
($.10 per unit) to Limited Partner unitholders of record at June 15,
1997.
7
<PAGE>
(4) Subsequent Event
----------------
On October 5, 1997, the Partnership declared and paid a distribution of
$199,271 ($.10 per unit to Limited Partner Unit holders of record at
September 15, 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
$2,587,084 at September 30, 1997. The decrease of $1,649,428 resulted
primarily from cash distributions on January 8, April 4, and July 4 to
the Limited Partners that was offset by net earnings for the period. As
of September 30, 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 September 30,
1997 and December 31, 1996 was $1,003,237 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 $88,171, an increase in due from affiliates and
interest receivables of $1,201, all of which were offset by payments of
$1,741,535 in dividend distributions (which included $1,111,360 return
of capital), and a $3,935 increase in accounts payable, accrued
expenses and due to affiliates. The net result was a decrease of cash
and cash equivalents of $1,650,630. 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.
8
<PAGE>
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 June 30, 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 nine months ended September 30, 1997 and 1996, the
Partnership had net earnings of $88,171 and $289,136 based on total
revenues of $199,070 and $432,567 and total expenses of $110,899 and
$143,431, respectively. The decrease in net earnings is due to
decreases in interest income and miscellaneous income, but is offset
partially by an increase of $20,299 in professional fees, a decrease of
$11,873 in management fees and a decrease of $3,750 in mortgage
servicing fees, and a $37,208 decrease in other expenses. The one
remaining Mortgage Loan was current as to regular interest as of
September 30, 1997. For the three months ended September 30, 1997 and
1996, the Partnership had net earnings of $37,514 and $78,551 based on
total revenues of $59,267 and $115,767 and total expenses of $21,753
and $37,216 respectively. For the three months ended September 30, 1997
and 1996, the net earnings per limited partner unit was $.02 and $.04
respectively.
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.
9
<PAGE>
PART II - Other Information
Items 1 through 6 are omitted because of the absence of conditions under which
they are required.
10
<PAGE>
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: November 14, 1997 /s/Albert E. Jenkins, III
-------------------------
Albert E. Jenkins, III
President, Chief Executive Officer
and Acting Chief Financial Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,003,237
<SECURITIES> 0
<RECEIVABLES> 1,583,847
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,587,084
<CURRENT-LIABILITIES> 27,626
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,559,458
<TOTAL-LIABILITY-AND-EQUITY> 2,587,084
<SALES> 0
<TOTAL-REVENUES> 199,077
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 110,899
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 88,171
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 88,171
<EPS-PRIMARY> .05
<EPS-DILUTED> .00
</TABLE>
