U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 - 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 Identification Number)
organization)
Main Street Penn Yan, New York 14527
Address of principal executive offices) (Zip Code)
(315) 536-5985
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Interests
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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this Form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements, incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
Issuer's revenues for the fiscal year ended December 31, 1998 were $239,436.
The aggregate sales price of the units of Limited Partnership Interest held by
non-affiliates of the Registrant as of March 31, 1999 was $19,114,110 (1,577
investors). As of March 31, 1999, there was no market for these Units and no
market is expected to develop. The aggregate sales price is accordingly not
necessarily indicative of the price at which these Units would trade.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated February 20, 1987, and filed
pursuant to Rule 424(b) and Rule 424(c) under the Securities Act of 1933, as
amended, are incorporated by reference into Part III of this Annual Report on
Form 10-KSB.
<PAGE>
PART I
Item 1. Description of Business.
General.
Common Goal Health Care Participating Mortgage Fund L.P. (the "Partnership") was
organized on August 20, 1986 as a limited partnership under the Delaware Revised
Uniform Limited Partnership Act. The Partnership's general partners are Common
Goal Capital Group, Inc. ("Common Goal" or the "Managing General Partner") and
Common Goal Limited Partnership I (the "Minority General Partner")
(collectively, the "General Partners"). With limited exceptions, Common Goal has
exclusive control over the business of the Partnership, including the right to
manage the Partnership's assets. The Partnership commenced operations on July
21, 1987 after having accepted subscriptions for more than the requisite minimum
of 116,000 depositary units representing beneficial assignments of limited
partnership interests (the "Depositary Units") in a public offering registered
with the U.S. Securities and Exchange Commission on Form S-11 (the "Public
Offering"). The Partnership raised a total of $19,129,110 in the Public Offering
which terminated on February 20, 1989. On June 25, 1990, the Managing General
Partner caused all holders of Depositary Units to be admitted to the Partnership
as Limited Partners holding units of limited partnership interests (the
"Units").
The Partnership's primary business was to invest in or make mortgage loans (the
"Mortgage Loans"), comprised of a mix of first and junior Mortgage Loans,
secured by health care-related real properties owned by unaffiliated entities.
The Partnership did not own or acquire real property. The Partnership has one
Mortgage Loan which remained outstanding as of March 31, 1999. The Partnership
does not intend to make additional Mortgage Loans and its last remaining
Mortgage Loan matures in January 2000. See "Existing Mortgage Loan" below.
The Partnership's objectives in making investments of the type described above
were: (i) to preserve and protect the Partnership's capital; (ii) to provide
quarterly distributions from investment income; and (iii) to provide for
potential long-term appreciation of its Mortgage Loan investments, principally
through participation payable at maturity of the Mortgage Loan or upon the sale
or refinancing of the underlying property (the "Participation"). Because
Participation in facility appreciation is paid only upon maturity of a Mortgage
Loan or a sale of the underlying facility, cash distributions as a result of
Participation on the one remaining Mortgage Loan are not expected to commence
until repayment or maturity. It is not an objective of the Partnership to
provide tax-sheltered income.
Funds held pending distribution may be invested by the Partnership, at the
direction of the Managing General Partner, in United States government
securities, certificates of deposit of United States banks with a net worth of
at least $20,000,000, repurchase agreements covering the securities of the
United States government or governmental agencies, bankers' acceptances,
commercial paper rated A-1 or better by Moody's Investors Service, Inc., money
market funds having assets in excess of $100,000,000, interest-bearing time
deposits in banks and thrift institutions or any combination of these
investments.
The Partnership is conducting and intends to continue to conduct its operations
so that it will not become subject to regulation under the Investment Company
Act of 1940. Generally, the term "investment company" might include the
Partnership if, after a one-year period, the Partnership, among other things,
were to be engaged primarily, or were to hold itself out as being engaged
primarily, or were to propose to engage primarily, in the business of investing,
reinvesting or trading in securities, or if it were to have more than 40% of its
total assets, excluding cash and government securities, invested in "investment
securities" as that term is defined in the Investment Company Act of 1940. The
Partnership does not currently meet this test.
Types of Mortgage Loans. The Partnership's Mortgage Loans are secured by fee
interests (or other beneficial interests essentially equivalent to a mortgage on
real property). All real estate underlying Mortgage Loans is used in the health
care industry, particularly real estate used as nursing home and intermediate
care facilities.
Other Operating and Investment Policies. In 1990, Common Goal Health Care
Pension and Income Fund L.P. II ("Common Goal II"), an affiliated,
publicly-offered limited partnership with investment objectives that are
substantially identical to those of the Partnership and the Partnership
participated in a ten-year second mortgage loan in the original principal amount
of $3,430,114 to an unaffiliated third party through a joint venture between the
Partnership and Common Goal II (the "Joint Venture Loan"). At December 31, 1998
and 1997, the Partnership's mortgage loans receivable included one loan with an
outstanding balance of approximately $1,568,000, representing the Partnership's
participation in the remaining $1,618,254 of the loan. See "Existing Mortgage
Loan" below. The Managing General Partner will attempt to resolve any conflicts
of interest that may arise with respect to the Joint Venture Loan by exercising
the good faith required of fiduciaries. Such conflicts, if any, will be resolved
in the best judgment of the Managing General Partner.
Federal Income Taxes. The Partnership is not subject to federal income taxes as
the liability for such taxes is that of the Partners rather than the
Partnership.
Existing Mortgage Loan.
The Joint Venture Loan. On September 7, 1989, the Partnership funded a
short-term mortgage loan (the "Joint Venture Loan" or the "Honeybrook Loan") in
the original principal amount of $3,370,000, to two Tennessee limited
partnerships (individually, a "Borrower" and collectively, the "Borrowers"). One
of the Tennessee limited partnerships owns a 100-bed skilled care and
intermediate care facility and the other limited partnership owns a 101-bed
retirement and assisted care facility, both of which are located in Honeybrook,
Pennsylvania (collectively, the "Facilities"). The Honeybrook Loan was
originally secured by a second mortgage on the skilled and intermediate care
facility and by collateral assignments of 100% of the general partners' and
limited partners' interests in each Borrower. The security interest was taken in
the Borrower that owns the retirement and assisted care facility insofar as the
facility is subject to a HUD regulatory agreement which prohibits junior
encumbrances on the facility. The security interest is subject and subordinate
to all applicable HUD regulations. When the Honeybrook Loan was funded, the
loan-to-value ratio was approximately 89%. The Partnership elected to extend the
original term of the Honeybrook Loan and assigned its obligation to make the
long-term loan to a newly created joint venture with Common Goal II (the "Joint
Venture Loan"). The Joint Venture Loan was made on or about August 1, 1990, with
the Partnership making a $3,430,114 contribution at that time to fund the Joint
Venture Loan. In 1991, Common Goal II contributed $95,600, thereby decreasing
the Partnership's contribution by that amount. The Borrowers made a $30,000
repayment of principal in 1991, bringing the Partnership's contribution down to
$3,304,514 at December 31, 1991 and in December 1992 made a principal paydown of
$211,514 to bring the balance to $3,093,000 on December 31, 1992. The $211,514
was received on January 7, 1993 and reclassified as a short term receivable for
year end 1992. An additional $70,000 was paid down on the principal on March 29,
1993.
On November 3, 1993, Life Care Centers of America, Inc. ("Life Care") paid a
total of $1,746,790 in a restructuring of the Joint Venture Loan. Of the
$1,691,477 allocated to the Partnership, $1,455,336 was applied to principal and
$145,534 to a Prepayment Penalty. A Refinance Fee of $72,750 was negotiated,
while Gross Revenue, Basic Interest and Additional Interest were taken as set
forth in the loan documents. The Partnership's balance has been paid down to
$1,567,664 while the Common Goal II balance has also been paid down to $50,590.
In connection with the repayment of principal, the Partnership agreed to release
its mortgage on the skilled care and intermediate care facility. Life Care or
its affiliates operate the retirement and assisted care facility, which secures
the Joint Venture Loan.
The Joint Venture Loan is guaranteed by Life Care and by the beneficial owner of
the Borrowers. In connection with the negotiation of the Refinance Fee, two
individual guarantors who are no longer employees of the Borrowers were released
from their guaranty obligations. As of December 31, 1998, Life Care had an
audited net worth in excess of [$91,000,000], a substantial amount of which was
illiquid. A substantial portion of the net worth of the individual guarantor is
also illiquid.
The table set forth below provides information concerning the basic terms and
conditions of the Mortgage Loan made and currently held by the Partnership as of
the date of this report.
Common Goal Existing Mortgage Loan
Joint Venture
Loan
Date of Loan 8/1/90
Type of Loan Second Mortgage
Outstanding Principal
Amount $1,567,664 (1)
Base Interest Rate 13.7% (2)
Maturity 1/1/2000
Type of Collateral assignment of
Property/Location borrower's interests in
of Property 101-bed retirement and
Securing Loan assisted care facility in
Honeybrook, PA
(1) This amount reflects the funding provided to the Joint Venture by the
Partnership.
(2) This loan currently requires payment of additional interest at a rate of
1.95% of gross revenues from the Facilities in excess of $1,694,000 per
annum. This provision is currently the subject of negotiation as a result
of the refinancing of this loan and the release of the Joint Venture's
lien on one of the Facilities. The Partnership believes that the
negotiations will not have a material effect on the amount of additional
interest received. The loan also provides for payment of a participation
equal to 30% of the first $1,000,000 of increase in the fair market value
(or gross sales price) of the Facilities over aggregate secured
indebtedness (including the Joint Venture Loan) as of the date of funding
of the Joint Venture Loan and 17% of the balance of any such increase. As
a result of the refinancing of this loan, the fair market value of the
retirement and assisted care facility has been deemed to be $6,400,000 for
the purpose of calculating the participation. The participation is payable
upon sale, refinancing of a senior mortgage loan or at maturity of the
Joint Venture Loan with the fair market values to be determined at that
time.
Partnership Allocation of Income and Loss and Distribution.
Net Income and Net Loss. Net income (except with respect to a Disposition, which
includes any Partnership transaction not in the ordinary course of its business,
including, without limitation, collections of principal payments, equity
participation payments, prepayments, prepayment penalties, sales, exchanges,
foreclosures or other dispositions of Mortgage Loans held by the Partnership,
recoveries of damage awards and insurance proceeds (other than the receipt of
subscriptions for Units, all forms of interest payments when due on Mortgage
Loans or business or rental interruption insurance proceeds)) and net loss of
the Partnership are allocated 98% to Limited Partners and 2% to the General
Partners. Net income arising from a Disposition is allocated 98% to Limited
Partners and 2% to the General Partners to the extent of any negative balances
in the capital accounts of the Limited Partners, and then 100% to Limited
Partners in an amount necessary to bring the Limited Partners' capital accounts
up to an amount equal to their Original Contributions, which means the amount of
$10.00 for each Unit less the return of any amount of uninvested funds returned,
as defined in the prospectus, plus the 11% per annum preferred cumulative return
thereon (less previous distributions to the Limited Partners in repayment of
such amounts). The remainder of such net income shall be allocated 85% to the
Limited Partners and 15% to the General Partners.
Distributions of Cash From Operations. Distributions of Adjusted Cash From
Operations, defined as all receipts of interest payments on Mortgage Loans less
cash receipts used to pay operating expenses and to repurchase any Units (Cash
Flow) less any amount set aside for the restoration or creation of working
capital reserves, are distributed 98% to the Limited Partners and 2% to the
General Partners, and are apportioned quarterly among Limited Partners of record
as of the record date declared within 30 days after the end of each quarter and
are paid quarterly. No distributions of Adjusted Cash From Operations with
respect to any calendar year are made to the General Partners until the
following occurs:
First, distributions to the Limited Partners equal to the 8% annual
cumulative return on their Adjusted Contributions, defined as Original
Contributions attributable to a Unit, reduced by the total of cash
distributed from Disposition Proceeds and from working capital reserves,
for such year (plus any amounts accrued from prior years) have been made to
the Limited Partners; and
Second, payment of all previously subordinated management fees, if any,
have been made.
Thereafter, all previously subordinated amounts payable to the General Partners
with respect to their 2% interest are paid in full to the extent funds are
available, and if not available, are deferred and paid out of Disposition
Proceeds, defined as receipts from Dispositions net of related expenses, amounts
necessary for the payment of debts and obligations of the Partnership and any
amount set aside for working capital reserves. The Partnership has been making
distributions to the Limited Partners in excess of the 8% annual cumulative
return on Adjusted Contributions.
Distributions of Disposition Proceeds. The Managing General Partner has the
right to reinvest or distribute all Disposition Proceeds, through the end of the
eleventh year after the date of the Prospectus. Non-liquidating distributions of
Disposition Proceeds are distributed in the following order of priority, except
as otherwise required by law:
First, 100% to the Limited Partners until the Limited Partners have
received an amount which, when added to prior distributions of Disposition
Proceeds and cash from reserves attributable thereto, equals the Original
Contributions of the Limited Partners;
Second, 100% to the Limited Partners until each Limited Partner has
received an amount which, when added to all prior distributions to Limited
Partners from all sources (including prior distributions in satisfaction of
the 8% annual cumulative return but excluding distributions pursuant to
above), equals the 11% per annum preferred cumulative return on their
Adjusted Contributions, (calculated from the first day of the calendar
quarter succeeding the quarter in which Capital Contributions are
received);
Third, 100% to the General Partners until they have been paid 100% of the
subordinated portion, if any, of (a) the Partnership Management Fee, if
any, and then (b) their 2% interest in Adjusted Cash From Operations; and
Fourth, the remainder, 85% to the Limited Partners and 15% to the General
Partners.
Dissolution and Returns of Principal. Since it was the intention of the Managing
General Partner to liquidate the Partnership's assets between 1999 and 2004, the
Managing General Partner will not reinvest loan proceeds in new Mortgage Loans.
The Partnership's last remaining Mortgage Loan, the Joint Venture Loan, will
mature on January 1, 2000. The Partnership intends to commence an orderly
liquidation thereafter.
Proceeds from the liquidation shall be applied and distributed in the following
order:
First, to the payment of creditors of the Partnership but excluding secured
creditors whose obligations will be assumed or otherwise transferred on the
liquidation of Partnership assets; and
Second, after allowance for the expenses of liquidation and the setting up
of any reserves for contingencies which the Managing General Partner
considers necessary, to the General Partners and Limited Partners in
proportion to and to the extent of the positive balances in their capital
accounts, after net income or loss arising from a Disposition has been
allocated, with any excess being distributed in accordance with the order
of priority for non-liquidating distributions.
Notwithstanding anything to the contrary, the Managing General Partner has the
right to defer liquidation if, in the opinion of the Managing General Partner,
the sale of Partnership assets in liquidation would result in a material
underrealization on the Partnership's assets. The Managing Partner also has the
right to determine the rate at which returns of principal (returns of Original
Contribution) are distributed to the limited partners.
Item 2. Description of Property.
The Partnership owned no real property as of December 31, 1998.
Item 3. Legal Proceedings.
The Partnership is not a party to any litigation.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the last
quarter of 1998.
PART II
Item 5. Market for Units of Limited Partnership Interest and Related Security
Holder Matters.
The Units are not readily transferable. There is no public market for the Units
and it is not currently expected that any will develop. There are restrictions
upon the transferability of Units, including the requirement that the General
Partners consent to any transferee becoming a substituted Unitholder (which
consent may be granted or withheld at the sole discretion of the General
Partners). In addition, restrictions on transfer may be imposed under state
securities laws.
The Revenue Act of 1987 contains provisions which may have an adverse impact on
investors in certain "publicly traded partnerships." If the Partnership were to
be classified as a "publicly traded partnership," income attributable to the
Units would be characterized as portfolio income and the gross income
attributable to Units acquired by tax-exempt entities after December 17, 1987
would be unrelated business income, with the result that the Units could be less
marketable. The General Partners will, if necessary, take appropriate steps to
ensure that the Partnership will not be deemed a "publicly traded partnership."
At March 31, 1999, 1,911,411 Units were outstanding and were held by
approximately 1577 holders of record.
The Partnership made distributions to Limited Partners of $572,651 or $.30 per
Unit during 1998, $829,446, or $.43 per unit during 1997. Principal
distributions of $1,361,360 ($.71 per Unit) were disbursed in January, April and
October 1997, respectively. The Partnership does not intend to make additional
Mortgage Loans.
Item 6. Management's Discussion and Analysis or Plan of Operation.
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 comprised of a mix of first and
junior Mortgage Loans, secured by health care related properties.
Partnership assets decreased to $1,835,800 at December 31, 1998 from $2,204,339
at December 31, 1997. The decrease from 1997 to 1998 ($368,539 or approximately
17%) resulted primarily from a decrease of cash and cash equivalents by $352,355
which with interest income received of $255,620 allowed the partnership to make
distributions to the limited partners of $572,651, and the fact that there were
no repayments of Mortgage Loan receivables. As of December 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 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, and to pay normal operating
expenses as they arise. Reference is made to "Item 1. Description of Business"
and the "Notes to the Financial Statements" in "Item 7. Financial Statements"
for further information regarding such Mortgage Loan investments.
The Partnership's balance of cash and cash equivalents at December 31, 1998 and
1997 was $241,487 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 a payment of $572,691 ($.30 per Unit) in
dividend distributions to limited partners which was offset by income of
$158,558. The Partnership is required to maintain reserves not less than 1% of
gross offering proceeds (not less than $191,291), but currently maintains a
reserve in excess of that amount, $241,487 at December 31, 1998. The amount of
cash and cash equivalents currently maintained by the Partnership is primarily
the result of proceeds from the repayment of mortgage loans.
The Partnership's success and the resultant rate of return to Unitholders is
dependent upon, among other things, the continued ability of the remaining
borrowers to pay the current interest, additional interest and principal on the
Mortgage Loans.
As a result of the loan payoffs to date, the Partnership's rates of return have
been and will continue to be impacted, as discussed in Results of Operations
below.
Results of Operations. The Partnership was organized in August 1986. As of
December 31, 1998, the Partnership had one remaining Mortgage Loan. Since
commencement of operations in July of 1987, the Partnership invested available
funds (funds not invested in Mortgage Loans) in short-term 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 years ended December 31, 1998 and 1997, the Partnership had net
income of $158,558 and $149,220, based on total revenues of $239,436 and
$280,134 and total expenses of $80,878 and $130,914, respectively. The
Partnership's net income per Limited Partner Unit was $.08 per Unit in 1998 and
in 1997. The Partnership's distributions, including returns of principal, to
Limited Partners were $.30 per Unit in 1998 and $1.14 per Unit in 1997. The 1997
distribution included $1,361,360 in principal payments ($.71 per Unit).
Eliminating the effect of the principal repayments to the Limited Partners, the
dividend distributions to Limited Partners were $.30 per Unit in 1998 and $.43
per Unit in 1997.
The distributions may not remain at the present level (9.256% financial capital)
as a result of loan payoffs. The General Partners are currently reviewing the
distribution policy and the matters of the additional reserves now being held.
The Partnership receives a lesser rate of return from its short-term investments
than it would receive from the loans, thereby reducing funds available for
distribution.
Expenses decreased in 1998 by $50,036 primarily because of a decrease of $7,626
in management fees caused by the drop in mortgage balances being serviced.
Expenses also decreased in 1998 by $13,516 in professional fees and a decrease
of $28,894 in miscellaneous expenses.
Additionally, under the terms of the Partnership agreement, the Partnership is
required to reimburse the Managing General Partner for certain operating
expenses paid on behalf of the Partnership. In 1998 and 1997, the Managing
General Partner was reimbursed by the Partnership for $54,566 and $93,763
respectively. The Managing General Partner believes that such charges have not
adversely affected the current yield to the Limited Partners.
Year 2000 Compliance.
Information provided within this note constitute a year 2000 readiness
disclosure pursuant to the provisions of the Year 2000 Information Readiness and
Disclosure Act.
The year 2000 issue is the result of computer programs being written and
microchips being programmed using two digits rather than four to define the
applicable year. If not corrected, any program having time-sensitive software or
equipment incorporating embedded microchips may recognize a date using "00" as
the year 1900 rather than the year 2000 or may not recognize the year 2000 as a
leap year. This could result in a variety of problems including miscalculations,
loss of data and failure of entire systems. Critical areas that could be
affected are accounts receivable, accounts payable, general ledger, cash
management, computer hardware, telecommunications and property operating
systems.
The Partnership receives quarterly interest payments from a single borrower. The
Partnership is in the process of obtaining documentation related to year 2000
readiness from its outside vendors, including its banks. The Partnership has
received documentation from an outside vendor that maintains its books and
records, indicating that the vendors is year 2000 compliant. The Partnership
expects to complete the documentation phase by September 30, 1999. The
Partnership expects to complete a contingency plan by September 30, 1999. The
Partnership believes that based on the status of the Partnership's portfolio and
its limited number of transactions, aside from catastrophic failures of banks,
governmental agencies, etc., it could carry out substantially all of its
critical administrative and accounting operations on a manual basis or easily
convert to systems that are year 2000 ready.
Some statements in this Form 10-KSB are forward looking and actual results may
differ materially from those stated. As discussed herein, among the factors that
may affect actual results are changes in the financial condition of the borrower
and/or anticipated changes in expenses or capital expenditures.
Item 7. Financial Statements.
See Financial Statements.
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
Table of Contents
Page
Independent Auditors' Reports.....................................F - 1
Financial Statements
Balance Sheet................................................F - 3
Statements of Income.........................................F - 4
Statements of Partners' Capital..............................F - 5
Statements of Cash Flows.....................................F - 6
Notes to Financial Statements.....................................F - 7
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
Common Goal Health Care
Participating Mortgage Fund L.P.
Penn Yan, New York
We have audited the accompanying balance sheet of Common Goal Health Care
Participating Mortgage Fund L.P. (a Delware limited partnership) as of December
31, 1998, and the related statements of income, partners' capital and cash flows
for the year then ended. These financial statements are the responsibility of
the management of Common Goal Health Care Participating Mortgage Fund L.P. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Common Goal Health Care
Participating Mortgage Fund L.P. as of December 31, 1998, and the results of its
operations and cash flows for the year then ended in conformity with generally
accepted accounting principles.
As discussed in Note 2 to the financial statements. Common Goal Health Care
Participating Mortgage Fund L.P. has its primary asset concentrated in one
mortgage loan.
/s/ Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
April 1, 1999
Denver, Colorado
F - 1
<PAGE>
Independent Auditors' Report
The Partners
Common Goal Health Care
Participating Mortgage Fund, L.P.:
We have audited the accompanying balance sheets of Common Goal Health Care
Participating Mortgage Fund, L.P. (a Delaware limited partnership) as of
December 31, 1997 and 1996, and the related statements of operations, partners'
capital, and cash flows for each of the years in the three-year period ended
December 31, 1997. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Common Goal Health Care
Participating Mortgage Fund, L.P. as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of the years in the
three-year period December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
KPMG LLP
Denver, Colorado
March 16, 1998
F - 2
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
Balance Sheet
December 31, 1998
Assets
Cash and cash equivalents ............................... $ 241,487
Accrued interest receivable ............................. 26,649
Mortgage loan receivable (Note 2) ....................... 1,567,664
----------
$1,835,800
==========
Liabilities and Partners' Capital
Accounts payable and accrued expenses ................... $ 4,000
Due to affiliates ....................................... 74,657
----------
Total liabilities .................................... 78,657
----------
Partners' capital
General partners ..................................... 67,204
Limited partners ..................................... 1,689,939
----------
Total partners' capital ........................... 1,757,143
----------
$1,835,800
==========
See notes to financial statements.
F - 3
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
Statements of Income
For the Years Ended
December 31,
-------------------------
1998 1997
---------- ----------
Revenue
Interest income ...................... $ 239,436 $ 280,134
---------- ----------
Total revenues ..................... 239,436 280,134
---------- ----------
Expenses
Professional fees .................... 48,703 62,219
Fees to affiliates
Management ......................... 22,870 30,496
Mortgage servicing ................. 3,919 3,919
Other ................................ 5,386 34,280
80,878 130,914
---------- ----------
Net income ............................. $ 158,558 $ 149,220
========== ==========
Net income allocated to general partners $ 3,171 $ 2,983
Net income allocated to limited partners 155,387 146,237
---------- ----------
$ 158,558 $ 149,220
========== ==========
Basic earnings per limited partner unit $ .08 $ .08
========== ==========
Weighted average limited partner units
outstanding ........................... 1,911,411 1,911,411
========== ==========
See notes to financial statements.
F - 4
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
Statements of Partners' Capital
For the Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
Total
General Limited Partners'
Partners Partners Capital
----------- ----------- -----------
<S> <C> <C> <C>
Balance at December 31, 1996 .......... $ 61,050 $ 4,151,772 $ 4,212,822
Distributions to limited partners
($.43 per unit) ...................... -- (829,446) (829,466)
Return of principal to limited partners
($.71 per unit) ...................... -- (1,361,360) (1,361,360)
Net income ............................ 2,983 146,237 149,220
----------- ----------- -----------
Balance at December 31, 1997 .......... 64,033 2,107,203 2,171,236
Distributions to limited partners ($.30 -- (572,651) (572,651)
per unit)
Net income ............................ 3,171 155,387 158,558
----------- ----------- -----------
Balance at December 31, 1998 .......... $ 67,204 $ 1,689,939 $ 1,757,143
=========== =========== ===========
</TABLE>
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended
December 31,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income .................................. $ 158,558 $ 149,220
Adjustments to reconcile net income to net
cash provided by operating activities -
Decrease in due from affiliates .......... -- 2,664
Decrease (increase) in interest and
other receivables ....................... 16,184 (30,515)
Decrease in accounts payable and accrued
expenses ................................ -- (7,150)
Increase in due to affiliates ............ 45,554 16,562
----------- -----------
61,738 (18,439)
----------- -----------
Net cash provided by operating
activities ......................... 220,296 130,781
----------- -----------
Cash flows from financing activities
Distributions and returns of principal
to partners ................................ (572,651) (2,190,806)
----------- -----------
Net cash used in financing activities (572,651) (2,190,806)
----------- -----------
Net decrease in cash and cash equivalents ...... (352,355) (2,060,025)
Cash and cash equivalents, beginning of year ... 593,842 2,653,867
----------- -----------
Cash and cash equivalents, end of year ......... $ 241,487 $ 593,842
=========== ===========
</TABLE>
Supplemental disclosure of cash flow information: Interest paid was $0 for 1998
and 1997.
Income taxes paid were $0 for 1998 and 1997.
See notes to financial statements.
F - 6
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
Notes to Financial Statements
Note 1 - Organization and Summary of Significant Accounting Policies
Common Goal Health Care Participating Mortgage Fund L.P. (the Partnership), a
Delaware Limited Partnership, was formed on August 20, 1986 to invest in and
make mortgage loans to third parties and affiliates involved in health care.
Having sold more than the specified minimum of 116,000 units ($1,160,000), the
Partnership commenced operations on July 21, 1987. 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). There is no active public trading
market for the units. At December 31, 1998, there were 1,577 unit holders.
The General Partners include Common Goal Capital Group, Inc., the Managing
General Partner, and Common Goal Limited Partnership I, the Minority General
Partner. Under the terms of 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 term of the Partnership agreement, the Partnership reimbursed the
General Partners for certain offering and organizational expenses incurred in
connection with the issuance and distribution of the units in an amount fixed at
3.5% of gross offering proceeds. These offering and organizational expenses
excluded broker/dealer selling commissions and included accountable due
diligence expense reimbursements. Broker/dealer selling commissions of 9.5% of
gross proceeds were also paid by the Partnership. Common Goal Securities, Inc.
(CGSI), an affiliate acting as managing dealer, received selling commissions of
2% of the gross offering proceeds and an additional 7.5% of the purchase price
of all units sold directly by CGSI. Additionally, CGSI was reimbursed for all
expenses incurred in connection with the offering and also received an amount
equal to .5% of the gross offering proceeds for accountable expenses. Offering
and organizational expenses were recorded as a reduction of partners' capital.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
For entities investing in and making mortgage loans to businesses in the health
care industry, certain inherent risks may increase the possibility of actual
results differing from management's estimates. These inherent risks include,
among other things, the following:
o Substantial dependence on revenues derived from reimbursement by the
Federal Medicare and state Medicaid programs;
o Government regulation, government budgetary constraints and proposed
legislative and regulatory changes; and
F - 7
<PAGE>
Note 1 - Organization and Summary of Significant Accounting Policies
(continued)
o Lawsuits alleging malpractice and related claims.
Partnership Management Fees and Operating Expenses
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 paid on behalf of the Partnership. In 1998, the Managing General
Partner was reimbursed by the Partnership for $54,566 of these expenses. The
remaining expenses were paid directly by the Partnership.
Partnership Allocation of Income and Loss and Distributions
Net Income and Net Losses
Net income (except with respect to a Disposition, as defined, which includes any
Partnership transaction not in the ordinary course of its business, including
without limitation, collections of principal payments, equity participation
payments, prepayments, prepayment penalties, sales, exchanges, foreclosures
other dispositions of Mortgage Loans held by the Partnership, recoveries of
damage awards and insurance proceeds (other than the receipt of subscriptions
for Units, all forms of interest payments when due on Mortgage Loans or business
or rental interruption insurance proceeds) and net loss of the Partnership is
allocated 98% to Limited Partners and 2% to the General Partners.
Net income arising from a Disposition is allocated 98% to Limited Partners and
2% to the General Partners to the extent of any negative balances in the capital
accounts of the Limited Partners, and then 100% to Limited Partners in an amount
necessary to bring the Limited Partners' capital accounts up to an amount equal
to their original contributions, as defined, which means the amount of $10.00
for each unit less the return of any amount of uninvested funds returned, as
defined, plus the 11% per annum preferred cumulative return thereon (less
previous distributions to the Limited Partners in repayment of such amounts).
Remaining net income is allocated 85% to the Limited Partners and 5% to the
General Partners.
<PAGE>
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Partnership Allocation of Income and Loss and Distributions (continued)
Net Income and Net Loss (continued)
Distributions of adjusted cash from operations, defined as all receipts of
interest payments on mortgage loans less cash receipts used to pay operating
expenses and to repurchase any units (cash flow) less any amount set aside for
the restoration or creation of working capital reserves, are distributed 98% to
the limited partners and 2% to the general partners, and are apportioned
quarterly among limited partners of record as of the record date declared within
30 days after the end of each quarter and are paid quarterly. No distributions
of adjusted cash from operations with respect to any calendar year are made to
the general partners until the following occurs:
First, distributions to the limited partners equal to the 8% annual
cumulative return on their adjusted contributions , defined as original
contributions attributable to a unit, reduced by the total of cash
distributed from disposition proceeds and from working capital reserves, for
such year (plus any amounts accrued from prior years) have been made to the
limited partners; and
Second, payments of all previously subordinated management fees, if any,
have been made.
Thereafter, all previously subordinated amounts payable to the general partners
with respect to their 2% interest are paid in full to the extent funds are
available, and if not available, are deferred and paid out of disposition
proceeds, defined as receipts from dispositions net of related expenses, amounts
necessary for the payment of debts and obligations of the partnership and any
amount set aside for working capital reserves. The partnership has been making
distributions to the limited partners in excess of the 8% annual cumulative
return on adjusted contributions.
Distributions of Disposition Proceeds
The managing general partner has the right to reinvest or distribute all
disposition proceeds, through the end of the eleventh year after the date of the
prospectus which is 1987. Non-liquidating distributions of disposition proceeds
are distributed in the following order of priority, except as otherwise required
by law:
First, 100% to the limited partners until the limited partners have received
an amount which, when added to prior distributions of disposition proceeds
and cash from reserves attributable thereto, equals the original
contributions of the limited partners;
<PAGE>
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Distributions of Disposition Proceeds (continued)
Second, 100% to the limited partners until each limited partner has received
an amount which, when added to all prior distributions to limited partners
from all sources (including prior distributions in satisfaction of the 8%
annual cumulative return but excluding distributions pursuant to above),
equals the 11% per annum preferred cumulative return on their adjusted
contributions, (calculated from the first day of the calendar quarter
succeeding the quarter in which capital contributions were received);
Third, 100% to the general partners until they have been paid 100% of the
subordinated portion, if any, of (a) the partnership management fee, if any,
and then (b) their 2% interest in adjusted cash from operations; and
Fourth, the remainder, 85% to the limited partners and 15% to the
general partners.
Dissolution and Returns of Principal
Since it was the intention of the managing general partner to liquidate the
Partnership's assets between 1999 and 2004, the managing general partner will
not reinvest loan proceeds in new mortgage loans. The partnership's last
remaining mortgage loan, the joint venture loan, will mature on January 1, 2000.
The partnership expects to commence an orderly liquidation in thereafter.
Proceeds from the liquidation will be applied and distributed in the following
order:
First, to the payment of creditors of the partnership but excluding secured
creditors whose obligations will be assumed or otherwise transferred on the
liquidation of partnership assets; and
Second, after allowance for the expenses of liquidation and the setting up
of any reserves for contingencies which the managing general partner
considers necessary, to the general partners and limited partners in
proportion to and to the extent of the positive balances in their capital
accounts, after net income or loss arising from a disposition has been
allocated, with any excess being distributed in accordance with the order of
priority for non-liquidating distributions.
Notwithstanding anything to the contrary, the managing general partner has the
right to defer liquidation if, in the opinion of the managing general partner,
the sale of partnership assets in liquidation would result in a material
underrealization on the Partnership's assets. The managing general partner also
has the right to determine the rate at which returns of principal (returns of
original contributions) are distributed to the limited partners.
<PAGE>
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Allowance for Losses
An allowance for loan losses is provided, if necessary, at a level
which the partnership's management considers adequate based upon an
evaluation of known and inherent risks in the loan portfolio. There
was no allowance for losses at December 31, 1998.
Federal Income Taxes
No income tax provision has been included in the financial statements since
income or loss of the Partnership is required to be reported by the partners on
their respective income tax returns. Net income for financial reporting purposes
did not differ from net income for federal income tax purposes for the year
ended December 31, 1998 and 1997.
Basic Earnings Per Limited Partner Unit
Basic earnings per limited partner unit is computed based on the weighted
average limited partner units outstanding for the year dividend into the net
income applicable to the Limited Partners.
There were no dilutive limited partnership units during 1998 or 1997.
Cash and Cash Equivalents
The partnership classifies all short-term investments with maturities of three
months or less at the date of purchase as cash equivalents.
Concentration of Credit Risk
The Partnership's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents, accrued interest
receivable and a mortgage loan receivable. The Partnership maintains cash
balances in bank deposit accounts which, at times, may exceed federally insured
limits. At December 31, 1998, the Partnership's cash and cash equivalent
balances were in excess of such limits by approximately $125,000.
The entire accrued interest receivable and mortgage loan receivable balance at
December 31, 1998 are from a ten year, 13.7% mortgage loan provided by the
Partnership to Honey Brook Medical Investors, Ltd. In order to mitigate the
potential credit risk, the Partnership has also obtained a guaranty from an
unrelated entity.
<PAGE>
Note 1 - Organization and Summary of Significant Accounting Policies (continued)
Recently Issued Accounting Pronouncements
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS 130), which establishes standards
for reporting and display of comprehensive income, its components and
accumulated balances. Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS 130 requires that all items that are
required to be recognized under current accounting standards as components of
comprehensive income, be reported in a financial statement that is displayed
with the same prominence as other financial statements. Currently the Company's
only component, which would comprise comprehensive income, is its results of
operations.
Also, in June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
(SFAS 131), which supersedes Statement of Financial Accounting Standards No. 14,
"Financial Reporting for Segments of a Business Enterprise." SFAS 131
establishes standards for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. SFAS 131 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance.
SFAS No.'s 130 and 131 are effective for financial statements for periods
beginning after December 15, 1997, and require comparative information for
earlier periods to be restated.
In February of 1998, the FASB issued Statement of Financial Accounting Standards
No. 132, "Employers' Disclosures about Pensions and Other Postretirement
Benefits" (SFAS No. 132), which supercedes SFAS No.'s 87, 88, and 106. SFAS No.
132 addresses disclosure only and is effective for fiscal years beginning after
December 15, 1997. Restatement of disclosures for prior periods is required. The
adoption of SFAS No. 132 will have no current impact on the Company's financial
statements, as no prior disclosures under SFAS No. 87, 88, or 106 were
applicable.
In June of 1998, the FASB issued Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities"(SFAS No.
133). SFAS No. 133 addresses the accounting for derivative instruments,
including certain derivative instruments embedded in other contracts, and
hedging activities. SFAS No. 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15,1999. Initial application of SFAS No. 133
shall be as of the beginning of an entity's fiscal quarter, on that date,
hedging relationships shall be designated anew and documented under the
provisions of this statement. The adoption of SFAS No. 133 shall not be
retroactively applied. This statement currently has no impact on the financial
statements of the Company, as the Company does not hold any derivative
instruments or participate in any hedging activities.
<PAGE>
Note 2 - Mortgage Loan Receivable
Mortgage loan receivable as of December 31, 1998 is as follows:
Basic Face and
Interest Maturity Prior Carrying
Description Rate Date Liens Amount
- ------------------- ---------- --------------- ---------- ----------
Honey Brook loan 13.7% January 1, 2000 $8,810,000 $1,567,664
The Honey Brook loan is a second mortgage loan secured by a health care related
real property. Interest is payable monthly and the principal balance is due at
maturity. The loan provides for the payment of additional interest based upon
gross revenues of the property and the payment of a participation interest equal
to a percentage of the increase in the fair value of the underlying facility at
maturity or redemption, or pursuant to any sale of the facility, as defined.
Participation interests are recorded as revenue when they are determinable,
generally at maturity or redemption of the loan or pursuant to any sale of the
facility. The property is subject to a first mortgage lien.
In 1990, Common Goal Health Care Pension and Income Fund L.P. II ("Commission
Goal II"), an affiliated, publicly-offered limited partnership with investment
objectives that are substantially identical to those of the partnership and the
partnership participated in a ten-year second mortgage loan in the original
principal amount of $3,430,114 to an unaffiliated third party through a joint
venture between the Partnership and Common Goal II (the "Joint Venture Loan").
At December 31, 1998, the Partnership's mortgage loan receivable included
$1,567,664, representing the partnership's participation of 96.87% in the
remaining $1,618,254 principal balance of the loan.
All property securing the Partnership's mortgage loan at December 31, 1998 is
located in Pennsylvania.
Note 3 - Fair Value of Financial Instruments
The fair value of the Partnership's participation in the mortgage loan
receivable differed from its carrying value as follows:
Carrying Fair
Value Value
---------- ----------
December 31, 1998 $1,567,664 $1,614,678
========== ==========
The Partnership estimates the fair value of its participation in mortgage loan
receivable by discounting future cash flows using an appropriate interest rate.
<PAGE>
Note 3 - Fair Value of Financial Instruments (continued)
The carrying amounts at December 31, 1998 for cash and cash equivalents, accrued
interest receivable, other receivables, due from and to affiliates, and accounts
payable and accrued expenses approximated their fair values due to the short
maturity of these instruments.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
On March 20, 1999, the Partnership engaged Ehrhardt Keefe Steiner & Hottman PC
as its independent auditors for the 1998 fiscal year. Reports on Form 8-K, 8-K/A
and Form 8-K/A-2 reporting the event were filed on March 24, 1999, April 2, 1999
and April 9, 1999 respectively. There were no disagreements on financial
statement disclosures or accounting matters covering the prior two fiscal years
up through March 20, 1999 audited by the predecessor auditors.
PART III
Item 9. Directors Executive Officers, Promoters and Control Persons, Compliance
With Section 16(a) of the Exchange Act.
The Partnership does not have directors or officers. The following is a list of
the officers and directors of the Managing General Partner as of March 31, 1999:
Name Age Position
Albert E. Jenkins III 51 Chairman of the Board, Chief
Executive Officer, President,
Treasurer and Director
Richard R. Wood 75 Director
William Jasper 82 Director
Albert E. Jenkins III is the President and Chief Executive Officer of the
Managing General Partner as well as the Executive Vice President and
Secretary/Treasurer of Common Goal Mortgage Company. He is also President and
Chief Executive Officer of Common Goal Capital Group, Inc. II ("CG Capital Group
II"), the managing general partner of Common Goal Health Care Pension and Income
Fund L.P. II, a Delaware limited partnership which commenced a public offering
of its securities in January 1990. Mr. Jenkins also serves on the boards of
directors of the above-referenced corporations. Mr. Jenkins is a co-general
partner of Common Goal Limited Partnership I and Common Goal Management Company.
Mr. Jenkins is also President, Chief Executive Officer and a director of St.
Catherine's of Seneca, Inc., St. Catherine's Care Center of Tiffin, St.
Catherine's Care Center of Bloomville and St. Catherine's Care Centers of
Fostoria. In addition, Mr. Jenkins is President and a director of St.
Catherine's Health Care Management, Inc. and St. Catherine's Care Centers of
Washington Court House Inc. Mr. Jenkins has been a licensed securities salesman
since 1971 and an investment advisor registered under the Investment Advisers
Act of 1940 since 1978.
Richard R. Wood is a director of the Managing General Partner and is president,
a director and owner of 80% of the outstanding stock of Renwood Properties, Inc.
Mr. Wood is also a co-general partner of Common Goal Limited Partnership I and a
director of Common Goal Capital Group Inc. II, the managing general partner of
Common Goal II. In addition, Mr. Wood is a member of the board of directors of
the St. Catherine's affiliated companies which currently own five health care
facilities in Ohio. Mr. Wood has, either individually or together with or
through Renwood, sponsored 31 prior private limited partnerships which have
acquired real estate. These partnerships have raised approximately $30,762,525,
with approximately 81% of the properties acquired being government-subsidized
low income housing projects for families and the elderly and handicapped. In
addition, Mr. Wood is a controlling shareholder of Renwood, Inc. and several of
the Renwood companies, which act as co-general partners of certain of the
above-referenced syndications. He is currently a member of the National Leased
Housing Association, Council for Rural Housing and the Real Estate Investment
Association. Mr. Wood received a B.A. from Harvard University in 1943 and
attended Massachusetts Institute of Technology from 1947-1948.
William E. Jasper, Jr. is a director of Common Goal Capital Group, Inc. II and
has been a member of the Board of Directors of Madison Square Federal Savings
Bank since 1964. Prior to 1980, when Mr. Jasper retired, he had served as
president of a multi-line insurance agency and brokerage. Mr. Jasper is a Deputy
Regional Director for a fraternal organization that is dedicated to the Maryland
Special Olympics which provides health-care training and specialized sports for
the mentally handicapped. Mr. Jasper attended Baltimore City College and has
taken numerous extended courses at Loyola College and Johns Hopkins University
in real estate, appraisals, inspections, financial planning, mortgages and
management.
Item 10. Executive Compensation.
The Partnership has no executive officers or directors. The Partnership is not
required to pay the officers and directors of the General Partners any current
nor any proposed compensation in such capacities. However, the Partnership is
required to pay certain fees, make distributions and allocate a share of the
profits or losses of the Partnership to the General Partners as described under
the caption "Management Compensation" on pages 9 through 13 of the Partnership's
Prospectus, which description is incorporated herein by reference. Set forth
below are the fees, compensation and other reimbursements paid or accrued to
Common Goal and its Affiliates for the year ended December 31, 1998.
Capacities in
which Compensation
Name of Affiliate was Received Remuneration
Common Goal Management fee $22,870
Common Goal Mortgage Mortgage loan $ 3,919
Company servicing fees
No form of non-cash remuneration was paid by the Partnership.
For further information on compensation paid to Common Goal and its Affiliates,
see "Management Compensation" on pages 9-13 of the Prospectus.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The Partnership, as an entity, does not have any directors or officers. The
following is information concerning Unit ownership as of December 31, 1998.
To the best knowledge of the Partnership, no person owns more than 5% of the
outstanding Units. Messrs. Jenkins and Wood each own less than 1% of the total
outstanding Units and all officers and directors of the Managing General
Partner, as a group, own less than 1% of the total outstanding Units. No other
officer or director of the Managing General Partner owns any Units.
Item 12. Certain Relationships and Related Transactions.
The Partnership entered into the Joint Venture Loan with Common Goal II, an
affiliated, publicly-offered limited partnership. On August 1, 1990, the joint
venture made a $3,430,114 loan to an unaffiliated third party, which loan had a
remaining principal balance of $1,618,254 at December 31, 1998. For further
information concerning this Mortgage Loan, see "Item 1. Description of Business"
- - "Existing Mortgage Loan" - "The Joint Venture Loan.
"The Partnership engages the services of Common Goal Mortgage Company, an
affiliate of the General Partners, in connection with servicing Mortgage Loans
for which Common Goal Mortgage Company is paid a fee. See Item 10, Executive
Compensation, for the information concerning such fees.
Item 13. Exhibits and Reports on Form 8-K.
(a) (1) Financial Statements
The response to this portion of Item 13 is submitted as a separate
section of this report, commencing on page F-1.
(2) Financial Statement Schedules
Not applicable.
(3) Exhibits
See response to Item (c), below.
(b) Reports on Form 8-K
The Partnership did not file any reports on Form 8-K during the quarter
ended December 31, 1998.
(c) Exhibits
The following exhibits are included herein or incorporated by reference:
Number
3.1 Second Amended and Restated Agreement of Limited Partnership of
Registrant dated as of February 1, 1987 (incorporated by reference
from the Registrant's Registration Statement (File No. 33- 8531) on
Form S-11 filed under the Securities Act of 1933, as amended)
3.2 Pages 9-13 of the Registrant's final prospectus dated February 20,
1987, as filed with the Securities and Exchange Commission pursuant to
Rule 424(b) under the Securities Act of 1933, as amended.
(incorporated by reference from the Registrant's Registration
Statement (File No. 33- 8531) on Form S-11 filed under the Securities
Act of 1933, as amended)
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
COMMON GOAL HEALTH CARE PARTICIPATING
MORTGAGE FUND L.P.
By: Common Goal Capital Group, Inc.,
General Partner
By:/s/ Albert E. Jenkins
Albert E. Jenkins III
Chairman and Chief Executive Officer
Date: April 15, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Name Position Date
/s/ Albert E. Jenkins Chairman (Principal April 15, 1999
Albert E. Jenkins III Executive Officer),
President,
Principal Financial
and Accounting
Officer and
Director of
Managing General
Partner
/s/ Richard R. Wood Director of Managing April 15, 1999
Richard R. Wood General Partner
/s/ William E. Jasper,Jr.
Director of Managing April 15, 1999
William E. Jasper, Jr. General Partner
(A Majority of the Board of Directors of the Managing General Partner)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 241,487
<SECURITIES> 0
<RECEIVABLES> 1,594,313
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,835,800
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,757,143
<TOTAL-LIABILITY-AND-EQUITY> 1,835,800
<SALES> 0
<TOTAL-REVENUES> 239,436
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 80,878
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 158,558
<INCOME-TAX> 0
<INCOME-CONTINUING> 158,558
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 158,558
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
