- --------------------------------------------------------------------------------
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, 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
June 30, December 31,
1998 1997
(Unaudited)
-----------
Assets
------
<S> <C> <C>
Current Assets
Cash and cash equivalents ....................................... $ 334,078 $ 593,842
Due from affiliates ............................................. -- --
Accrued interest receivable ..................................... 16,183 42,833
---------- ----------
Total current assets ................................... 350,261 636,675
Mortgage loan receivable ................................................. 1,567,664 1,567,664
---------- ----------
Total Assets ............................................................. $1,917,925 $2,204,339
========== ==========
Liabilities and Partners' Capital
---------------------------------
Current Liabilities
Accounts payable and accrued expenses ........................... $ 4,000 $ 4,000
Due to affiliates ............................................... 46,848 29,103
---------- ----------
Total current liabilities .................................. 50,848 33,103
Partners' capital:
General partners ................................................ 65,521 64,033
Limited partners ................................................ 1,801,556 2,107,203
---------- ----------
Total partners' capital .................................... 1,867,077 2,171,236
---------- ----------
Total Liabilities and Partners' Capital .................................. $1,917,925 $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 SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
---- ---- ---- ----
Income
- ------
<S> <C> <C> <C> <C>
Interest $ 51,098 $ 59,245 $ 112,687 $ 139,804
Misc. income - - - -
------------- -------------- ------------- -------------
Total Income 51,098 59,245 112,687 139,804
Expenses
- --------
Professional fees 11,299 27,737 21,457 39,907
Fees to affiliates:
Management 5,764 7,647 11,882 16,662
Mortgage servicing 980 980 1,960 1,960
Other 1,439 7,152 3,007 30,616
----------- ----------- ----------- ----------
Total Expenses 19,482 43,516 38,306 89,145
---------- ----------- ----------- ----------
Net Income $ 31,616 $ 15,729 $ 74,381 $ 50,659
========== =========== ========== ==========
Net earnings per limited
partner unit $ .02 $ .01 $ .04 $ .03
=========== ============ ============ ===========
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,
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 1,488 72,893 74,381 1,013 49,645 50,658
Cash distributions to partners - (378,540) (378,540) ( -) (1,542,270) (1,542,270)
---------- ------------ ------------ ----------- ------------ ------------
Balance at end of period $65,521 $1,801,556 $1,867,077 $62,063 $2,659,147 $2,721,210
======= =========== =========== ======== =========== ==========
</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,
1998 1997
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 74,381 $ 50,659
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 - 12,351
accrued expenses
Increase (decrease) in due to affiliates 17,745 21,740
---------- --------
Net cash provided by operating activities 118,776 83,549
--------- --------
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 (378,540) (1,542,270)
--------- -----------
Net cash used in financing activities (378,540) (1,542,270)
--------- -----------
Net increase (decrease) in cash and cash equivalents: (259,764) (1,458,721)
Cash and cash equivalents, beginning of period 593,842 2,653,867
--------- ---------
Cash and cash equivalents, end of period $ 334,078 $1,195,146
========= ==========
</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, 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's agreement of limited partnership,
as amended to date (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 also 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. Based on the
performance of the Partnership's last remaining mortgage loan,
management believes no allowance was necessary as of June 30, 1998. 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.
6
<PAGE>
The accompanying unaudited financial statements as of and for the three
and six months ended June 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 June 30, 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 June 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.
(4) Subsequent Event
----------------
On July 15, 1998, the Partnership declared and paid a distribution of
$94,112.19 ($.05 per unit) to Limited Partner unitholders of record at
June 15, 1998.
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 Loans") comprised of a
mix of first and junior Mortgage Loans,
7
<PAGE>
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
$1,917,925 at June 30, 1998. The decrease of $286,414 resulted
primarily from cash distributions on January 2 and April 2, to the
Limited Partners that was offset by net earnings for the period. As of
June 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's 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. Although not presently anticipated, repayment proceeds,
may, subject to certain exceptions, be used to make one or more
additional Mortgage Loans.
The Partnership's balance of cash and cash equivalents at June 30, 1998
and December 31, 1997 was $334,078 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 $74,381, an increase in due to affiliates of $17,745 and
interest receivables of $26,650, all of which were offset by payments
of $378,540 in dividend distributions. The net result was a decrease of
cash and cash equivalents of $259,764. 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 Loan. 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, 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
8
<PAGE>
Partnership and Common Goal II in August, 1990. As of June 30, 1998,
only the loan made by the venture remains 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 six months ended June 30, 1998 and 1997, the Partnership had
net earnings of $74,381 and $50,659 based on total revenues of $112,687
and $139,804 and total expenses of $38,306 and $89,145, respectively.
The increase in net earnings is due to decreases in interest income and
miscellaneous income, but offset partially by a decrease of $18,450 in
professional fees, a decrease of $4,780 in management fees and a
$27,609 decrease in other expenses. The one remaining Mortgage Loan was
current as to regular interest as of June 30, 1998. For the three
months ended June 30, 1998 and 1997, the Partnership had net earnings
of $31,616 and $15,729 based on total revenues of $51,098 and $59,245
and total expenses of $19,482 and $43,516 respectively. For the three
months ended June 30, 1998 and 1997, the net earnings per limited
partner unit was $.02 and $.01 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, 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> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 334,078
<SECURITIES> 0
<RECEIVABLES> 1,583,847
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,917,925
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,917,925
<CURRENT-LIABILITIES> 50,848
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,867,077
<TOTAL-LIABILITY-AND-EQUITY> 1,917,925
<SALES> 0
<TOTAL-REVENUES> 51,098
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 19,482
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 31,616
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,616
<EPS-PRIMARY> .02
<EPS-DILUTED> .00
</TABLE>
