- --------------------------------------------------------------------------------
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 June 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
June 30, June 30,
1997 1996
(Unaudited) (Unaudited)
----------- -----------
Assets
------
<S> <C> <C>
Current Assets
Cash and cash equivalents ....................... $1,195,146 $1,877,648
Other receivables ............................... -- 6,650
Due from affiliates ............................. -- --
Accrued interest receivable ..................... 16,183 58,273
------ ------
Total current assets ....................... 1,211,329 1,942,571
Mortgage loan receivable ............................. 1,567,664 2,567,664
--------- ---------
Total Assets ...................... $2,778,993 $4,510,235
========== ==========
Liabilities and Partners' Capital
---------------------------------
Current Liabilities
Accounts payable and accrued expenses ........... $ 23,501 $ 18,409
Due to affiliates ............................... 34,282 15
------ --
Total current liabilities .................. 57,783 18,424
Partners' capital:
General partners ................................ 62,063 47,397
Limited partners ................................ 2,659,147 4,444,414
--------- ---------
Total partners' capital .................. 2,721,210 4,491,811
--------- ---------
Total Liabilities and Partners' Capital .. $2,778,993 $4,510,235
========== ==========
</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 SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income
Interest .............. $ 59,245 $ 120,394 $ 139,804 $ 55,000
Misc. income .......... -- -- -- 261,799
------ ------- ------- ------- -------
Total Income ..... 59,245 120,394 139,804 316,799
Expenses
Professional fees ..... 27,737 11,802 39,907 32,064
Fees to affiliates:
Management ........... 7,647 6,331 16,662 25,323
Mortgage servicing ... 980 2,229 1,960 4,459
Other ................. 7,152 18,351 30,616 44,369
----- ------ ------ ------
Total Expenses ... 43,516 38,713 89,145 106,215
------ ------ ------ -------
NET INCOME ....... $ 15,729 $ 81,681 $ 50,659 $ 210,584
========== ========== ========== ==========
Net earnings per limited
partner unit .............. $ .01 $ .04 $ .03 $ .11
========== ========== ========== ==========
Weighted average limited ... 1,911,411 1,911,411 1,911,411 1,911,411
========= ========= ========= =========
partner units outstanding
</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)
SIX MONTHS ENDED
JUNE 30,
1997 1996
----------------------------------- ------------------------------------------
TOTAL TOTAL
GENERAL LIMITED PARTNERS' GENERAL LIMITED PARTNERS'
PARTNERS 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 ................... 1,013 49,645 50,658 4,212 206,372 210,584
Cash distributions to partners ( -) (1,542,270) (1,542,270) ( -) (461,310) (461,310)
--------- ---------- ---------- --------- -------- --------
Balance at end of period ..... $ 62,063 $ 2,659,147 $ 2,721,210 $ 47,397 $ 4,444,414 $ 4,491,811
=========== =========== =========== =========== =========== ===========
</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)
SIX MONTHS ENDED
-------------------
JUNE 30, JUNE 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ....................................... $ 50,659 $ 210,584
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Decrease (increase) in other receivables .... -- 17,235
Decrease (increase) in due from affiliates .. 2,664 --
Decrease (increase) in interest receivable .. (3,865) 87,126
Increase (decrease) in accounts payable and . 12,351 13,339
accrued expenses
Increase (decrease) in due to affiliates .... 21,740 15
------ --
Net cash provided by operating activities 83,549 328,299
------ -------
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 ................. (1,542,270) (461,310)
---------- --------
Net cash used in financing activities ....... (1,542,270) (461,310)
---------- --------
Net increase (decrease) in cash and cash equivalents: . (1,458,721) 866,989
Cash and cash equivalents, beginning of period ........ 2,653,867 1,010,659
--------- ---------
Cash and cash equivalents, end of period .............. $ 1,195,146 $ 1,877,648
=========== ===========
</TABLE>
See accompanying notes.
5
<PAGE>
COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(A Limited Partnership)
Notes to Financial Statements
(Unaudited)
June 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 June 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
six months ended June 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 June 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 June 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.
7
<PAGE>
(4) Subsequent Event
----------------
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.
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
$2,778,993 at June 30, 1997. The decrease of $1,457,519 resulted primarily
from cash distributions on January 8 and April 4, to the Limited Partners
that was offset by net earnings for the period. As of June 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 June 30, 1997 and
December 31, 1996 was $1,195,146 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 $50,659, an increase in due from affiliates and interest receivables of
$6,529, all of which were offset by payments of $1,542,270 in dividend
distributions (which included $1,111,360 return of capital), and a $34,091
increase in accounts payable, accrued expenses and due to affiliates. The
net result was a decrease of cash and cash equivalents of $1,458,721. 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 six months ended June 30, 1997 and 1996, the Partnership had net
earnings of $50,659 and $210,584 based on total revenues of $139,804 and
$316,799 and total expenses of $89,145 and $106,215, respectively. The
decrease in net earnings is due to decreases in interest income and
miscellaneous income, but is offset partially by an increase of $7,843 in
professional fees, a decrease of $8,661 in managemen fees and a decrease of
$2,499 in mortgage servicing fees, and a $13,753 decrease in other
expenses. The one remaining Mortgage Loan was current as to regular
interest as of June 30, 1997. For the three months ended June 30, 1997 and
1996, the Partnership had net earnings of $15,729 and $81,681 based on
total revenues of $59,245 and $120,394 and total expenses of $43,516 and
$38,713 respectively. For the three months ended June 30, 1997 and 1996,
the net earnings per limited partner unit was $.01 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: August 14, 1997 /s/Albert E. Jenkins, III
--------------------------
Albert E. Jenkins, III
President, Chief Executive Officer
and Acting Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,195,146
<SECURITIES> 0
<RECEIVABLES> 16,183
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,211,329
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,778,993
<CURRENT-LIABILITIES> 57,783
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,721,210
<TOTAL-LIABILITY-AND-EQUITY> 2,778,993
<SALES> 0
<TOTAL-REVENUES> 59,245
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 43,516
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,729
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,729
<EPS-PRIMARY> .01
<EPS-DILUTED> .00
</TABLE>
