- --------------------------------------------------------------------------------
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 March 31, 1998
( ) 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 Delaware Limited Partnership)
<TABLE>
<CAPTION>
Balance Sheets
March 31, March 31,
1998 1997
(Unaudited) (Unaudited)
----------- -----------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents ....................................... $ 486,707 $1,867,604
Due from affiliates- ............................................ 2,664
Accrued interest receivable ..................................... 16,182 16,182
---------- ----------
Total current assets ................................... 502,889 1,886,450
Mortgage loans receivable ................................................ 1,567,664 1,567,664
---------- ----------
Total Assets ............................................................. $2,070,553 $3,454,114
========== ==========
Liabilities and Partners' Capital
Current Liabilities
Accounts payable and accrued expenses ........................... $ 4,000 $ 4,000
Due to affiliates ............................................... 42,868 38,289
---------- ----------
Total current liabilities .............................. 46,868 42,289
Partners' capital:
General partners ................................................ 64,888 61,749
Limited partners ................................................ 1,958,797 3,350,076
Total partners' capital ................................ 2,023,685 3,411,825
---------- ----------
Total Liabilities and Partners' Capital .................................. $2,070,553 $3,454,114
========== ==========
</TABLE>
See accompanying notes
2
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
<TABLE>
<CAPTION>
Statements of Earnings
(Unaudited)
THREE MONTHS ENDED
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Income
Interest ............................ $ 61,589 $ 80,559
Misc. income ........................ -- --
---------- ----------
Total Income ............... 61,589 80,559
Expenses
Professional fees ................... 10,158 12,170
Fees to affiliates:
Management ......................... 6,118 9,015
Mortgage servicing ................. 980 980
Other ............................... 1,568 23,464
---------- ----------
Total Expenses ............. 18,224 45,629
---------- ----------
Net Income ................. $ 42,765 $ 34,930
========== ==========
Net earnings per limited
partner unit ................................ $ .02 $ .02
========== ==========
Weighted average limited ..................... 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 Delaware Limited Partnership)
<TABLE>
<CAPTION>
Statements of Partners' Capital
(Unaudited)
THREE MONTHS ENDED
MARCH 31,
1998 1997
--------------------------------------------------- ----------------------------
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 $ 64,033 $ 2,107,203 $ 2,171,236 $ 61,050 $ 4,151,772 $ 4,212,822
Net Income ................... 855 41,910 42,765 699 34,231 34,930
Cash distributions to partners -- (190,316) (190,316) (-) (835,927) (835,927)
----------- ----------- ----------- ----------- ----------- -----------
Balance at end of period ..... $ 64,888 $ 1,958,797 $ 2,023,685 $ 61,749 $ 3,350,076 $ 3,411,825
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
<TABLE>
<CAPTION>
Statements of Cash Flows
(Unaudited)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings ......................................... $ 42,765 $ 34,930
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Decrease (increase) in due from affiliates .. -- --
Decrease (increase) in other assets ......... -- --
Decrease (incresase) in interest receivable . 26,651 (3,864)
Increase (decrease) in accounts payable and . -- --
accrued expenses
Increase (decrease) in due to affiliates .... 13,765 18,598
----------- -----------
Net cash provided by operating activities 83,181 49,664
----------- -----------
Cash from investing activities:
Proceeds from mortgage loan principal repayments ..... -- --
----------- -----------
Net cash provided by investing activities -- --
----------- -----------
Cash used in financing activities:
Distribution to general partner ...................... -- --
Distribution to limited partners ..................... (190,316) (835,927)
----------- -----------
Net cash used in financing activities ....... (190,316) (835,927)
----------- -----------
Net increase (decrease) in cash and cash equivalents: ......... (107,135) (786,263)
Cash and cash equivalents, beginning of period ................ 593,842 2,653,867
----------- -----------
Cash and cash equivalents, end of period ...................... $ 486,707 $ 1,867,604
=========== ===========
</TABLE>
See accompanying notes
5
<PAGE>
COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
(Unaudited)
March 31, 1998
(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
Partnership has one remaining mortgage loan in its portfolio.
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.
Management considers the necessity of reserving an allowance for loan
losses based upon an evaluation of known and inherent risks in the loan
portfolio. Management believed no allowance was necessary as of March
31, 1998.
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
months ended March 31, 1998 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 March 31, 1998 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. As
of March 31, 1998, the loan was current as to required regular interest
payments.
(3) Distribution
------------
On January 2, 1998, the Partnership declared and paid a distribution of
$190,316 ($.10 per unit) to Limited Partner unitholders of record at
December 15, 1997.
(4) Subsequent Event
----------------
On April 2, 1998, the Partnership declared and paid a distribution of
$188,224 ($.10 per unit) to Limited Partner unitholders of record at
March 15, 1998.
7
<PAGE>
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 $2,204,339 at December 31, 1997 to
$2,070,553 at March 31, 1998. The decrease of $133,786 resulted
primarily from cash distributions on January 2, to the Limited Partners
that was offset by net earnings for the period. As of March 31, 1998,
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 March 31,
1998 and December 31, 1997 was $593,842 and $486,707, respectively,
which consisted of operating cash and working capital reserves. The
decrease in cash and cash equivalents from December 31, 1997 resulted
from net income of $42,765, a decrease of $26,651 in interest
receivable, and a $13,765 increase due to affiliates. The net result
was a decrease of cash and cash equivalents of $107,135. The
Partnership is required to maintain reserves equal to 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.
The Partnership's success and the resultant rate of return to
Unitholders is dependent upon, among other things, the performance of
the Partnership's last Mortgage Loan.
8
<PAGE>
Results of Operations
---------------------
As of March 31, 1998, the Partnership had one Mortgage Loan. The
Partnership invests all available funds (funds not invested in Mortgage
Loans) in short term, temporary investments pending application to
Partnership uses or distributions to limited partners. 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 quarters ended March 31, 1998 and 1997, the Partnership had
net earnings of $42,765 and $34,930 based on total revenues of $61,589
and $80,559 and total expenses of $18,824 and $45,629, respectively.
The increase in net earnings is due to decreases in interest income,
but is offset partially by a decrease of $2,012 in professional fees, a
decrease of $2,897 in management fees and a $21,896 decrease in other
expenses. The one remaining Mortgage Loan was current as to regular
interest as of March 31, 1998.
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: May 15, 1998 /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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 486,707
<SECURITIES> 0
<RECEIVABLES> 1,583,846
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,070,553
<CURRENT-LIABILITIES> 46,868
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 2,023,685
<TOTAL-LIABILITY-AND-EQUITY> 2,070,553
<SALES> 0
<TOTAL-REVENUES> 61,589
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 42,765
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 42,765
<EPS-PRIMARY> .02
<EPS-DILUTED> .00
</TABLE>
