UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 1998
Commission file number 33-2-8491
THE MORTGAGE BANCFUND OF America II, L.P., a California Limited Partnership
(exact name of registrant as specified in its charter)
California 33-0369995
(State or other jurisdiction of I.R.S. Employer
Incorporation or organization ) Identification No.
2402 Michelson Drive, Suite 255, Irvine, CA 92612-1323
(address of principal executive office)
(714) 253-2900
(registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last
report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: N/A
Name of Each Exchange on Which Registered: N/A
Securities registered pursuant to Section 12(g) of the Act:
Title of Class: N/A
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 or 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 reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO_______
Partnership units outstanding: 71,307
The Mortgage Bancfund of America II, L.P.
(a California Limited Partnership)
Index to Form 10-K
December 31, 1998
Part I
Item 1 - Business
Item 2 - Properties
Item 3 - Legal Proceedings
Item 4 - Submission of matters to a vote of security holders (partners)
Part II
Item 5 - Market for the registrant's Partnership units and related security
holder matters
Item 6 - Selected financial data
Item 7 - Management's discussion and analysis of financial condition and
results of operations
Item 8 - Financial statements and supplementary data
Item 9 - Disagreements with accountants on accounting and financial disclosure
Part III
Item 10 - Directors and executive officers of the registrant
Item 11 - Executive compensation
Item 12 - Security ownership of certain beneficial owners and management
Item 13 - Certain relationships and related transactions
Part IV
Item - 14 Exhibits, financial statement schedules and reports on Form 8-K
Signatures
PART 1
Item 1: Business
General
THE MORTGAGE BANCFUND OF AMERICA II, L.P. is a California Limited Partnership
(the "Partnership") of which the general partners are Robert Y. Strom and the
Mortgage BancFund Corporation (the Corporation), a California Corporation
wholly owned by Mr. Strom. The Partnership was organized to make first and
second trust deed commercial real estate loans in the southern California area.
State of the Economy
The southern California economy continues to be the most important factor
which affects the operations of the Partnership. Throughout 1994 and 1995
large industries announced large employee layoffs, plant closings and
relocation efforts to other states. All of this has depressed real estate
values in the local area. Management is of the opinion that the economy has
stopped this decline, however, the effects will be felt for at least the next
several years.
Employees
The Partnership does not directly employ personnel. The Corporate general
partner handles all the business affairs of the partnership with its
remaining full-time staff of one employee.
Item 2: Properties:
The Partnership does not own any real property other than foreclosed
properties acquired during the normal course of business which was disposed of
during 1996. Assets consist of unsecured notes receivable.
Item 3: Legal Proceedings
At December 31, 1998 the Partnership was not involved in any adverse legal
proceedings.
Item 4: Submission of Matters to a Vote of Security Holders
No matters have been submitted to a vote of the Partnership.
Part II
Item 5: Market for the Registrant's Partnership Units and Related Security
Holder Matters
a) There is no established trading market for these securities and no known
sales of the securities have taken place during fiscal 1998.
b) At December 31, 1998 there were 71,307 limited partnership units outstanding
which had been sold in prior years to approximately 512 limited partners.
c) No distributions were paid in fiscal 1998.
Item 6: Selected Financial Data
1996 1997 1998
Total Income $ 682,629 $ 68,002 $ 34,856
Net Income(Loss) (70,278) (338,022) (127,049)
Net Income(loss) per LP Unit (.99) (4.74) (1.78)
Total Assets 597,121 239,149 112,101
Total Liabilities $ 63,641 $ 43,891 $ 43,891
Distributions paid 0 0 0
Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations
General Overview:
The Partnership's management continues to collect the accounts receivable on
the Partnership books. The Partnership's interest in real estate will be
marketed in 1999. In 1996 the Partnership concluded a development of single
family housing addition acquired through foreclosure. Projection of
additional cash generated were not realized due to mismanagement of the budget
by the development partner in the joint venture.
Liquidity and Capital Resources:
Liquidity continues to be a problem for the Partnership. There are no
plans to seek additional capital from outside sources, either debt nor equity.
The capital account has eroded by over 96% of the original cost of $100.00 per
limited Partnership unit to a value of $.96 per Partnership unit outstanding.
This is due to losses experienced over the past several years.
Results of Operations:
The partnership continues to report poor operating results for
December 31, 1998. As discussed above, book value per Partnership unit
outstanding is down to $.96; a 99% decline in value. Management is operating
in a liquidation mode to sell all remaining assets and return whatever
investment remains to the limited partners.
Item 8: Financial Statements and Supplementary Data
Information required by this item is included under Item 14: Exhibits,
financial statement schedules and reports on Form 8-K and is incorporated herein
by reference.
Item 9: Disagreements with Accountants on Accounting and Financial Disclosure
None.
Part III
Item 10: Directors and Executive Officers of the Registrant.
The Partnership is managed by the general partner, Robert Y. Strom and by the
corporate general partner, Mortgage BancFund Corp. Mr. Strom is the
managing officer for the corporation. Sharon Wilhelm is Vice President and
Manager of Investor Services.
Item 11: Executive Compensation
Although the original prospectus allows the general partners to collect fees
under certain conditions, management has elected not to collect any of those
fees and has not for the past four years.
The corporate general partner does continue to be reimbursed for actual out of
expenses incurred to manage the partnership.
Item 12: Security ownership of Certain Beneficial Owners and Management
The general partners are to own a combined total of 1% of the Partnership
including a 1% portion of income and losses.
Item 13: Certain Relationships and Related Transactions
The Partnership does not make mortgage investments with any of the general
partners or affiliates of the general partners. Other related transactions are
referred to in Item 11 above.
Part IV
Item: 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) The following documents are filed as a part of the report
1. Unaudited financial statements
a. Balance Sheets
b. Income Statements
c. Statements of Partner's Equity
d. Statements of Cash Flows
2. Financial statement schedules:
None.
(b) Reports on Form 8-K
None
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.
The Mortgage BancFund of America II, L.P.
(a California Limited Partnership)
______________________________
Robert Y./Strom
General Partner
Date:____________
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.
By: Mortgage BancFund Corporation,
a California Corporation
General Partner of the Registrant
By:____________________________
Robert Y. Strom, President
Date:___________________________
By: _______________________________
Robert Y. Strom, General Partner,
Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer of
Registrant, and President and Director of
Mortgage BancFund Corporation
Date:___________________________
THE MORTGAGE BANCFUND OF AMERICA II, L.P.
(a California Limited Partnership)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS Dec 31, 1997 Dec 31, 1998
Cash 174,169 6,601
Loans receivable (Note 1) 0 0
Accounts receivable (Note 2) 64,980 105,500
Investments (Note 3), net of allowance 0 0
Total Assets 239,149 112,101
LIABILITIES & PARTNER'S EQUITY
Liabilities
Accounts payable 0 0
Due to affiliates 43,891 43,891
Total liabilities 43,891 43,891
Partner's equity 195,258 68,210
Total liabilities & partner's equity 239,149 112,101
Book value per limited partner
unit outstanding 2.73 .96
CONSOLIDATED INCOME STATEMENTS
For the Twelve Months Ended
12/31/95 12/31/96 12/31/97 12/31/98
Unaudited Unaudited Unaudited Unaudited
REVENUES:
Interest - Loans
& Investments 63,012 462,204 37,507 25,051
Loan Fees 0 0 0 0
Other Income 0 220,425 30,495 9,805
Total Income 63,012 682,629 68,002 34,856
COSTS & EXPENSES:
Cost of loans 41,050 225,941 16,856 22,772
Real estate owned expenses 28,162 0 0 0
General & Admin costs 85,512 126,966 127,150 139,132
Provision for loan Losses 804,693 0 262,018
Loss on Disposal of Assets 0 400,000 0 0
Total costs & expenses 959,417 752,907 406,024 161,904
Net Loss (896,405) (70,278) (338,022) (127,048)
Net loss per partnership
unit outstanding (12.57) (.99) (4.74) (1.78)
Partnership units outstanding 71,307 71,307 71,307 71,307
THE MORTGAGE BANCFUND OF AMERICA II, L.P.
(a California Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNER'S EQUITY
(Unaudited)
General Limited
Partner Partner Total
Balance, December 31, 1995 (169,656) 773,214 603,558
Allocation of net loss (3,514) (66,764) (70,278)
Balance, December 31, 1996 (173,170) 706,450 533,280
Allocation of net loss (16,901) (321,121) (338,022)
Balance, December 31, 1997 (190,071) 385,329 195,258
Allocation of net loss (6,352) (120,696) (127,048)
Balance, December 31, 1998 (196,423) 264,633 68,210
STATEMENTS OF CASH FLOW
For the Twelve Months Ended
CASH FLOWS FROM OPERATING ACTIVITIES: Dec.31,96 Dec.31,97 Dec.31,98
Net (loss) (70,278) (338,022) (127,048)
Loss on Disposal of Assets 400,000 0 0
Adjustments to reconcile net income to cash
provided by operating activities:
Decrease (increase) in accrued int. receiv. 13,084 0 0
(Decrease) increase in accounts payable (123,517) 0 0
(Increase) in accounts receivable 102,041 (46,001) (40,520)
(Increase) Dec. in due to general partner (91,480) (19,950) 0
Increase in provision for loan losses 0 0 0
NET CASH PROVIDED (USED) IN OPR.ACTIVITIES 229,850 (403,973) (167,568)
CASH FLOW FROM INVESTING ACTIVITIES:
Net change in loan receivable (303,893) 552,018 0
Proceeds from Disposal of real estate owned 100,000 0 0
Net change in other real estate owned 0 0 0
NET CASH PROVIDED BY INVESTING ACTIVITIES (203,893) 552,018 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in notes payable 0 0 0
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 0 0 0
NET INCREASE (DECREASE) IN CASH 25,957 148,045 (167,568)
Cash, Beginning of period 167 26,124 174,169
Cash, End of period 26,124 174,169 6,601
MORTGAGE BANCFUND OF AMERICA II, L.P.
(a California Limited Partnership)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Loans Receivable
Loans receivable are carried at the unpaid principal balance net of unearned
loan fees. Points and other loan fees are deferred over the life of the loan.
In management's opinion the book value of these loans is equal to
the estimated net realizable value.
Note 2 - Accounts Receivable
This account represents funds owed to the Partnership from affiliate
partnerships, projects which were acquired through foreclosure and on unsecured
loans made to unrelated third parties.
Note 3 - Investments in Partnerships
A prior loan receivable secured by a deed of trust has been converted to an
equity interest in a limited liability company which continues to own the
property. An allowance of $262,018 offsets the carrying value of the
investment.
Accounting Policy
All adjustments made to the financial statements are of normal recurring nature
necessary to present fairly the financial condition of the partnership.
Supplemental Disclosure of Cash Flows
Dec, 31, 1996
Proceeds from disposal of real estate owned 100,000
Change in Note Payable 902,877
Change in other real estate owned (1,402,877)
Net loss on disposal of real estate (400,000)
