- -------------------------------------------------------------------------------
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, 1999
( ) Transition Report Under Section 13 or 15(d) of the Exchange Act For the
Transition period from to
-------------------- --------------------
Commission File Number: 0-17600
--------------
Common Goal Health Care Participating Mortgage Fund L.P.
(Exact name of small business issuer as specified in its charter)
Delaware 52-1475268
-------- ----------
(State or other Jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
215 Main Street
Penn Yan, New York, 14527
-------------------------
(Address of principal executive offices)
(315) 536-5985
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES_X_ NO
<PAGE>
PART 1 - Financial Information
Item 1. Financial Statements
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
<TABLE>
<CAPTION>
Balance Sheets
June 30, December 31,
1999 1998
---- ----
(Unaudited)
Assets
------
<S> <C> <C>
Cash and cash equivalents ............................................................. $ 316,085 $ 241,487
Accrued interest receivable ........................................................... 26,649 26,649
Mortgage loan receivable .............................................................. 1,567,664 1,567,664
---------- ----------
Total Assets .......................................................................... $1,910,398 $1,835,800
========== ==========
Liabilities and Partners' Capital
---------------------------------
Liabilities
Accounts payable and accrued expenses ................................................. $ 4,000 $ 4,000
Due to affiliates ..................................................................... 95,839 74,657
---------- ----------
Total liabilities ....................................................... 99,839 78,657
Partners' capital:
General partners ............................................................. 68,272 67,204
Limited partners ............................................................. 1,742,287 1,689,939
---------- ----------
Total partners' capital ................................................. 1,810,559 1,757,143
---------- ----------
Total Liabilities and Partners' Capital ............................................... $1,910,398 $1,835,800
========== ==========
</TABLE>
See accompanying notes
2
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
<TABLE>
<CAPTION>
Statements of Income
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue
- -------
Interest Income ...................................... $ 50,051 $ 51,098 99,672 $ 112,687
---------- ---------- ---------- ----------
Total Revenue ............................... 50,051 51,098 99,672 112,687
Expenses
- --------
Professional fees .................................... 20,467 11,299 31,055 21,457
Fees to affiliates:
Management .......................................... 5,401 5,764 10,801 11,882
Mortgage servicing .................................. 980 980 1,960 1,960
Other ................................................ 2,005 1,439 2,440 3,007
---------- ---------- ---------- ----------
Total Expenses .............................. 28,853 19,482 46,256 38,306
---------- ---------- ---------- ----------
Net Income .................................. $ 21,198 $ 31,616 $ 53,416 $ 74,381
========== ========== ========== ==========
Net income allocated to
general partners .............................................. $ 424 $ 632 $ 1,068 $ 1,488
Net income allocated to
limited partners .............................................. 20,774 30,984 52,348 72,893
---------- ---------- ---------- ----------
$ 21,198 $ 31,616 $ 53,416 $ 74,381
========== ========== ========== ==========
Basic earnings per limited
partner unit ................................................. $ .01 $ .02 $ .03 $ .04
========== ========== ========== ==========
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 Delaware Limited Partnership)
<TABLE>
<CAPTION>
Statements of Partners' Capital
(Unaudited)
SIX MONTHS ENDED
JUNE 30,
1999 1998
--------------------------------------- ----------------------------------------
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 $ 67,204 $ 1,689,939 $ 1,757,143 $ 64,033 $ 2,107,203 $ 2,171,236
Net income ................... 1,068 52,348 53,416 1,488 72,893 74,381
Distributions to partners .... -- -- -- -- (378,540) (378,540)
----------- ----------- ----------- ----------- ----------- -----------
Balance at end of period ..... $ 68,272 $ 1,742,287 $ 1,810,559 $ 65,521 $ 1,801,556 $ 1,867,077
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
<PAGE>
COMMON GOAL HEALTH CARE PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
<TABLE>
<CAPTION>
Statements of Cash Flows
(Unaudited)
SIX MONTHS ENDED
----------------
JUNE 30, JUNE 30,
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................................ $ 53,416 $ 74,381
Adjustments to reconcile net income to net cash provided
by operating activities:
Decrease (increase) in interest receivable ................... -- 26,650
Increase (decrease) in due to affiliates ..................... 21,182 17,745
--------- ---------
Net cash provided by operating activities ................ 74,598 118,776
--------- ---------
Cash used in financing activities:
Distribution to limited partners ...................................... -- (378,540)
--------- ---------
Net cash used in financing activities ........................ -- (378,540)
--------- ---------
Net increase (decrease) in cash and cash equivalents: .......................... 74,598 (259,764)
Cash and cash equivalents, beginning of period ................................. 241,487 593,842
--------- ---------
Cash and cash equivalents, end of period ....................................... $ 316,085 $ 334,078
========= =========
</TABLE>
See accompanying notes.
5
<PAGE>
COMMON GOAL HEALTH CARE
PARTICIPATING MORTGAGE FUND L.P.
(A Delaware Limited Partnership)
Notes to Financial Statements
(Unaudited)
June 30, 1999
(1) Organization and Summary of Significant Accounting, Policies
------------------------------------------------------------
Common Goal Health Care Participating Mortgage Fund L.P. (the
"Partnership") was formed on August 20, 1986 to invest in and make
mortgage loans to third-parties involved in health care. On February
20, 1987, the Partnership commenced a public offering of limited
partner units (the "Public Offering"). On July 21, 1987, the
Partnership commenced operations, having previously sold more than the
specified minimum of 116,000 units ($1,160,000). The Partnership's
offering terminated on February 20, 1989 with the Partnership having
sold the specified maximum of 1,912,911 units ($19,129,110). The
Partnership has one remaining mortgage loan in its portfolio.
The general partners are Common Goal Capital Group, Inc. as the
managing general partner and Common Goal Limited Partnership I as the
minority general partner. Under the terms of the Partnership's
agreement of limited partnership, (the "Partnership Agreement") the
general partners are not required to make any additional capital
contributions except under certain limited circumstances upon
termination of the Partnership.
Under the terms of the Partnership Agreement, the Partnership is
required to pay a quarterly management fee to the managing general
partner equal to .75% per annum of adjusted contributions, as defined.
Additionally, a mortgage servicing fee equal to .25% per annum of the
Partnership's outstanding mortgage loan principal amount is to be paid
to Common Goal Mortgage Company, an affiliate of the general partners.
Additionally, under the terms of the Partnership Agreement, the
Partnership is required to reimburse the managing general partner for
certain operating expenses.
The Partnership classifies all short-term investments with maturities
at dates of purchase of three months or less as cash equivalents.
Management considers the necessity of reserving an allowance for loan
losses based upon an evaluation of known and inherent risks in the
loan portfolio. Management believed no allowance was necessary as of
June 30, 1999.
No provision for income taxes has been recorded as the liability for
such taxes is that of the partners rather than the Partnership.
6
<PAGE>
Earnings per limited partner unit are computed based on the weighted
average limited partner units outstanding for the period.
The accompanying unaudited financial statements as of and for the three
and six months ended June 30, 1999 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. The results are not necessarily indicative of the results
for the entire year.
These financial statements should be read in conjunction with the
Company's financial statements and notes included in the Annual Report
on Form 10-K filed by the Company with the Securities and Exchange
Commission on April 15, 1999.
(2) Mortgage Loan Receivable
------------------------
Information concerning mortgage loan receivable as of June 30, 1999 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 June 30, 1999, the loan was current as to required regular interest
payments.
Item 2. Management's Discussion and Analysis or Plan of 0perations
----------------------------------------------------------
General
-------
Some statements in this Form 10-QSB 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, and compliance with year 2000
issues.
7
<PAGE>
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.
Liquidity and Capital Resources
- -------------------------------
Partnership assets increased from $1,835,800 at December 31, 1998 to
$1,910,398 at June 30, 1999. The increase of $74,598 resulted
primarily from net income for the period. As of June 30, 1999, the
Partnership's loan portfolio consisted of one mortgage loan, the
aggregate outstanding principal balance of which was $1,567,664.
The Partnership has structured its Mortgage Loans to provide for
payment of quarterly distributions from investment income. The interest
derived from the Mortgage Loans, repayments of Mortgage Loans and
interest earned on short-term investments contribute to the
Partnership's liquidity. These funds are used to make cash
distributions to Limited Partners, to pay normal operating expenses as
they arise.
The Partnership's balance of cash and cash equivalents at June 30,
1999 and December 31, 1998 was $316,085 and $241,487, respectively,
which consisted of operating cash and working capital reserves The
increase in cash and cash equivalents of $74,598 from December 31,
1998 resulted from net income of $53,416 and an increase in due to
affiliates of $21,182. 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 holders
of units of limited partnership interests is dependent upon, among
other things, the performance of the Partnership's last Mortgage Loan.
Results of Operations
---------------------
As of June 30, 1999, the Partnership had one Mortgage Loan. The
Partnership invests all available funds (funds not invested in
Mortgage Loans ) in short term, temporary investments pending
application to Partnership uses or distributions to limited partners.
The interest earned on these investments has been and is expected to
continue to be less than the interest rates achievable on Mortgage
Loans made by the Partnership.
8
<PAGE>
During the six months ended June 30, 1999 and 1998, the Partnership
had net earnings of $53,416 and $74,381 based on total revenues of
$99,672 and $112,687 and total expenses of $46,256 and $38,306,
respectively. For the six months ended June 30, 1999 and 1998, the the
net earnings per limited partner unit was $.03 and $.04 respectively.
For the three months ended June 30, 1999 and 1998, the Partnership had
net earnings of $21,198 and $31,616 based on total revenues of $50,051
and $51,098 and total expenses of $28,853 and $19,482 respectively.
For the three months ended June 30, 1999 and 1998, the net earnings
per limited partner unit was $.01 and $.02 respectively.
The decrease in net earnings for the six months ended June 30, 1999
compared to the six months ended June 30, 1998. is due to decreases in
interest income and an increase of $9,598 in professional fees, but is
offset partially by a decrease of $1,081 in management fees and a $567
decrease in other expenses. The one remaining Mortgage Loan was
current as to regular interest as of June 30, 1999.
Year 2000 Compliance
--------------------
Information provided within this note constitutes 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, telecommunication 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
vendor 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.
9
<PAGE>
PART II - Other Information
Items 1 through 5 are omitted because of the absence of conditions under which
they are required.
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K
Reports on Form 8-K, 8-K/A and 8-K/A-2 were filed on
March 24, 1999, April 2, 1999 and April 12, 1999,
respectively, to disclose a change in the
Registrant's accountants.
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 13, 1999 /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> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-1-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 316,085
<SECURITIES> 0
<RECEIVABLES> 1,594,313
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,910,398
<CURRENT-LIABILITIES> 99,839
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,810,559
<TOTAL-LIABILITY-AND-EQUITY> 1,910,398
<SALES> 0
<TOTAL-REVENUES> 50,051
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 28,853
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,198
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,198
<EPS-BASIC> .01
<EPS-DILUTED> .00
</TABLE>
