<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1995 Commission File Number 0-15537
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Keystone Mortgage Fund II, a California Limited Partnership
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(Exact name of registrant as specified in its charter.)
California 95-4061580
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(State of Incorporation) (I.R.S. Employer Identification No.)
11340 W. Olympic Boulevard 90064-1661
Suite 300 ---------------------------------------
Los Angeles, California (Zip Code)
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(Address of principal
executive offices)
Registrant's telephone number, including area code: (310) 479-4121
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 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
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KEYSTONE MORTGAGE FUND II,
A California Limited Partnership
INDEX
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
(a) Condensed Balance Sheets, December 31, 1994 and
March 31, 1995. 3
(b) Condensed Statements of Income, three months
ended March 31, 1995 and 1994. 4
(c) Condensed Statements of Partners' Capital (Deficit)
for the year ended December 31, 1994 and for the three
months ended March 31, 1995. 5
(d) Condensed Statements of Cash Flows, three months ended
March 31, 1995 and 1994. 6
(e) Notes to condensed financial statements. 7 & 8
Item 2. Management's discussion and analysis of financial
condition and results of operations. 9
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K. 10
</TABLE>
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KEYSTONE MORTGAGE FUND II, A California Limited Partnership
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31 March 31
1994 1995
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 207,216 60,682
Short-term investments 1,003,965 1,253,622
Interest receivable on trust deed notes receivable 21,408 22,115
Current portion of trust deed notes receivable (note B) 1,483,373 1,455,251
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TOTAL CURRENT ASSETS 2,715,962 2,791,670
Trust deed notes receivable, net (note B) 1,467,525 1,456,892
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$4,183,487 $4,248,562
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LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Due General Partners $ 241,500
Accounts Payable 1,852 1,569
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TOTAL CURRENT LIABILITIES $ 1,852 $ 243,069
PARTNERS' CAPITAL:
General Partners (207,816) (209,577)
Limited Partners-41,454 units outstanding 1994 and
1995, respectively 4,389,451 4,215,070
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NET PARTNERS' CAPITAL 4,181,635 4,005,493
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$4,183,487 $4,248,562
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</TABLE>
See accompanying notes to financial statements
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<PAGE>
CONDENSED STATEMENTS OF INCOME (UNAUDITED)
KEYSTONE MORTGAGE FUND II, A California Limited Partnership
<TABLE>
<CAPTION>
Three Months Ended
March 31
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1995 1994
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<S> <C> <C>
Revenue:
Interest on mortgage loans $ 66,066 $129,949
Interest on short-term investments 15,511 9,214
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81,577 139,163
Expenses:
Servicing related expenses 13,816 20,422
General and administrative expenses 243,903 1,534
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257,719 21,956
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NET INCOME (Loss) $(176,142) $117,207
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Weighted average number of limited
partnership units outstanding 41,459 41,459
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Net income (loss) per limited partnership
unit $ (4.25) $ 2.83
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</TABLE>
See notes to financial statements.
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<PAGE>
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
KEYSTONE MORTGAGE FUND II, A California Limited Partnership
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
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<S> <C> <C> <C>
Balance at December 31, 1994 $(207,816) $4,389,451 $4,181,635
Net income (Loss)three months ended March
31, 1995 (1,761) (174,381) (176,142)
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Balance at March 31, 1995
(unaudited) $(209,577) $4,215,070 $4,005,493
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</TABLE>
See notes to financial statements.
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<PAGE>
STATEMENTS OF CASH FLOWS
KEYSTONE MORTGAGE FUND II, A California Limited Partnership
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $(176,142) $ 117,207
Changes in operating assets and liabilities:
Amortization of net origination fees (427) (600)
Increase in interest receivable (707) (9,041)
Increase in due general partners 241,500
Increase (decrease) in accounts payable (283) 2,885
Decrease in other assets 324
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NET CASH PROVIDED BY
OPERATING ACTIVITIES 63,941 110,775
INVESTING ACTIVITIES:
Decrease in notes receivable 39,182 106,065
Increase in short term investments (249,657)
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NET CASH PROVIDED BY INVESTING
ACTIVITIES (210,475) 106,065
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Increase in cash and cash equivalents (146,534) 216,840
Cash and cash equivalents at beginning of year 207,216 1,069,015
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 60,682 $1,285,855
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</TABLE>
See notes to financial statements.
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<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
KEYSTONE MORTGAGE FUND II, A California Limited Partnership
NOTE A - UNAUDITED BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared by
Keystone Mortgage Fund II in accordance with generally accepted accounting
principles, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements have been condensed or omitted pursuant to
such rules and regulations. In the opinion of management, the accompanying
condensed financial statements contain all adjustments necessary, which were of
normal recurring nature, for a fair statement of the results for the interim
periods presented. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and the notes thereto
included in Form 10-K for the year ended December 31, 1994 filed by the
Company under the Securities Exchange Act of 1934.
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KEYSTONE MORTGAGE FUND II,
A CALIFORNIA LIMITED PARTNERSHIP
Notes to Financial Statements, Continued
(B) Trust Deed Notes Receivable
<TABLE>
<CAPTION>
Monthly
payment,
including December 31, March 31
interest 1994 1995
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<S> <C> <C> <C>
First trust deed on industrial building, rate
of 10.75%, due October 1, 1995 $ 16,592 $1,449,254 $1,420,132
First trust deed on industrial building,
interest rate, adjusted every six months at
2.65% plus 11th District monthly weighted
average cost of funds, due February 1, 1999 $ 16,797 $1,572,584 $1,562,524
--------- ---------- ----------
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3,021,838 2,982,656
Less current portion 1,483,373 1,455,251
Less net deferred origination fees 6,940 6,513
Less allowance for loss 64,000 64,000
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Net concurrent trust deeds notes receivable $1,467,525 $1,456,892
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</TABLE>
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<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
KEYSTONE MORTGAGE FUND II, A California Limited Partnership
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Total revenue decreased $57,586 or 41.3% for the three months ended March 31,
1995 over the same period March 31, 1994. This decrease was due to a decrease
in interest income from mortgage loans.
The portion of partnership cash flow consisting of principal repayments is being
distributed to the limited partners less required reserves.
Total expenses increased $235,763 for the three months ended March 31, 1995 over
the same period March 31, 1994. Servicing related expenses decreased $6,606
and G & A expenses increased $242,369 for the three months ended March 31, 1995
over the same period March 31, 1994.
During the first quarter of 1995, a determination was made by the general
partners to seek reimbursement for which they were otherwise entitled. The
amount of general and administrative expenses were determined to be $241,500.
Net income decreased $293,349 for the three months ended March 31, 1995 over
the same period March 31, 1994. Net income per limited partnership unit
decreased $7.08 for the three months ended March 31, 1995 over the same 1994
period.
Working capital decreased $165,509 for three months ended March 31, 1995. The
Partnership has adequate working capital and cash reserves to carry on its
business.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The Registrant filed no reports on Form 8-K during the quarter ended
March 31, 1995.
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<PAGE>
SIGNATURES
Pursuant to the requirements 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.
Keystone Mortgage Fund II
a California Limited Partnership
Date: May 3, 1995 John P. Sullivan
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Keystone Mortgage Company
By: John P. Sullivan, President
Date: May 3, 1995 John P. Sullivan
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John P. Sullivan
General Partner
Date: May 3, 1995 Christopher E. Turner
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Christopher E. Turner
General Partner
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 60,682
<SECURITIES> 1,253,622
<RECEIVABLES> 1,477,366
<ALLOWANCES> 64,000
<INVENTORY> 0
<CURRENT-ASSETS> 2,791,670
<PP&E> 12,760
<DEPRECIATION> 12,760
<TOTAL-ASSETS> 4,248,562
<CURRENT-LIABILITIES> 243,069
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 4,005,493
<TOTAL-LIABILITY-AND-EQUITY> 4,248,562
<SALES> 0
<TOTAL-REVENUES> 81,577
<CGS> 0
<TOTAL-COSTS> 257,719
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (176,142)
<INCOME-TAX> 0
<INCOME-CONTINUING> (176,142)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (176,142)
<EPS-PRIMARY> (4.25)
<EPS-DILUTED> (4.25)
</TABLE>
