- --------------------------------------------------------------------------------
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, 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 Limited Partnership)
<TABLE>
<CAPTION>
Balance Sheets
Sep. 30, December 31,
1998 1997
---- ----
<S> <C> <C>
Assets
------
Current Assets
Cash and cash equivalents ....................................... $ 277,521 $ 593,842
Due from affiliates ............................................. -- --
Accrued interest receivable ..................................... 16,183 42,833
---------- ----------
Total current assets ................................... 293,704 636,675
Mortgage loan receivable ................................................. 1,567,664 1,567,664
---------- ----------
Total Assets ............................................................. $1,861,368 $2,204,339
========== ==========
Liabilities and Partners' Capital
---------------------------------
Current Liabilities
Accounts payable and accrued expenses ........................... $ 4,000 $ 4,000
Due to affiliates ............................................... 58,246 29,103
---------- ----------
Total current liabilities .............................. 62,246 33,103
Partners' capital:
General partners ................................................ 66,123 64,033
Limited partners ................................................ 1,732,999 2,107,203
---------- ----------
Total partners' capital ................................ 1,799,122 2,171,236
---------- ----------
Total Liabilities and Partners' Capital .................................. $1,861,368 $2,204,339
========== ==========
</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,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income
Interest .............. $ 77,197 $ 59,267 $ 167,234 $ 199,070
Misc. income .......... -- -- -- --
---------- ---------- ---------- ----------
Total Income . 77,197 59,267 167,234 199,070
Expenses
Professional fees ..... 16,738 11,747 38,195 51,655
Fees to affiliates:
Management ........... 5,588 7,359 17,470 24,022
Mortgage servicing ... 979 980 2,939 2,939
Other ................. 1,085 1,667 4,092 32,283
---------- ---------- ---------- ----------
Total Expenses 24,390 21,753 62,696 110,899
---------- ---------- ---------- ----------
Net Income ... $ 52,807 $ 37,514 $ 104,538 $ 88,171
========== ========== ========== ==========
Net earnings per limited
partner unit .................. $ .03 $ .02 $ .05 $ .05
========== ========== ========== ==========
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)
NINE MONTHS ENDED
SEPTEMBER 30,
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 ................... 2,090 102,448 104,538 1,763 86,408 88,171
Cash distributions to partners -- (476,652) (476,652) ( -- ) (1,741,535) (1,741,535)
----------- ----------- ----------- ----------- ----------- -----------
Balance at end of period ..... $ 66,123 $ 1,732,999 $ 1,799,122 $ 62,813 $ 2,496,645 $ 2,559,458
=========== =========== =========== =========== =========== ===========
</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,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ........................................... $ 104,538 $ 88,171
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 .. 26,650 (3,865)
Increase (decrease) in accounts payable and
accrued expenses .......................... -- (7,150)
Increase (decrease) in due to affiliates .... 29,143 11,085
----------- -----------
Net cash provided by operating activities 160,331 90,905
----------- -----------
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 ...................... (476,652) --
-----------
Distribution to limited partners ..................... (476,652) (1,741,535)
----------- -----------
Net cash used in financing activities ....... (1,741,535)
-----------
Net increase (decrease) in cash and cash equivalents: ......... (316,321) (1,650,630)
----------- -----------
Cash and cash equivalents, beginning of period ................ 593,842 2,653,867
----------- -----------
Cash and cash equivalents, end of period ...................... $ 277,521 $ 1,003,237
=========== ===========
</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, 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"). 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 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.
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, 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
and nine months ended September 30, 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 September 30,
1997 is as follows:
Face and
Basic Carrying
Interest Maturity Amount of
Description Rate Date Mortgage
----------- ---- ---- --------
Honeybrook loan 13.7% January 1, 2000 1,567,664
----------
$1,567,664
==========
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 September 30, 1998, the loan was current as to regular interest.
(3) Distributions
-------------
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. On July 15, 1998, the Partnership declared and paid a
distribution of $94,112 ($.05 per unit) to Limited Partner unitholders
of record at June 15, 1998.
(4) Subsequent Distributions
------------------------
On October 15, 1998, the Partnership declared and paid a distribution
of $100,000 ($.05 per unit) to Limited Partner unitholders of record at
September 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
$1,861,368 at September 30, 1998. The decrease of $342,971 resulted
primarily from cash distributions on January 2, April 2, and July 15 to
the Limited Partners that was offset by net earnings for the period. As
of September 30, 1998, the Partnership's loan portfolio consisted of
one mortgage loan, the aggregate outstanding principal balance of which
was $1,567,664.
The Partnership Mortgage Loan provides for payment of quarterly
distributions from investment income. The interest derived from the
Mortgage Loan and interest earned on short-term investments contribute
to the Partnership's liquidity. These funds are used to make cash
distributions to Limited Partners and to pay normal operating expenses
as they arise. 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,
1998 and December 31, 1997 was $277,521 and $593,842, respectively,
which consisted of operating cash and working capital reserves. The
decrease in cash and cash equivalents from December 31, 1997 resulted
from net earnings of $104,538, an increase in due to affiliates of
$29,143 a decrease in interest receivables of $26,650, all of which
were offset by payments of $476,652 in dividend distributions. The net
result was a decrease of cash and cash equivalents of $316,321. 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.
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
8
<PAGE>
repayment of the above mentioned loans, net of distributions are being
invested in accordance with 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 September 30, 1998, only the loan made by the venture remaining as a
Partnership 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, 1998 and 1997, the
Partnership had net earnings of $104,538 and $88,171 based on total
revenues of $167,234 and $199,070 and total expenses of $62,696 and
$110,899, respectively. The increase in net earnings is due to
decreases in interest income and miscellaneous income, but is offset
partially by a decrease of $13,460 in professional fees and a decrease
of $6,552 management fees. The one remaining Mortgage Loan was current
as to regular interest as of September 30, 1998. For the three months
ended September 30, 1998 and 1997, the Partnership had net earnings of
$52,807 and $37,514 based on total revenues of $77,197 and $59,267 and
total expenses of $24,340 and $21,753 respectively. For the three
months ended September 30, 1998 and 1997, the net earnings per limited
partner unit was $.03 and $.02 respectively.
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, 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> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 277,521
<SECURITIES> 0
<RECEIVABLES> 1,583,847
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,861,368
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,861,368
<CURRENT-LIABILITIES> 62,246
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,799,122
<TOTAL-LIABILITY-AND-EQUITY> 1,861,368
<SALES> 0
<TOTAL-REVENUES> 167,234
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 62,696
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 104,538
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,538
<EPS-PRIMARY> .05
<EPS-DILUTED> .00
</TABLE>
