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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2006ORo
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
  333-9371
 CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
  Delaware
 38-3304096
 th  P.O. Box 544, Ann Arbor, Michigan 48106-0544
 (734) 994-5505
 Not Applicable
 þ o
  o o þ
 o þ
 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
 Not applicable
 APPLICABLE ONLY TO CORPORATE ISSUERS
 Not applicable




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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
 Index to Form 10-Q
 Item No.
    
    
    
    PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial Statements:Balance Sheets, March 31, 2006 and December 31, 2005
    
    
    3Statements of Operations for the three months ended March 31, 2006 and 2005
    
    
    4Statement of Changes
in Partners Capital for the three months ended March 31, 2006
    
    
    5Statements of Cash Flows for the three months ended March 31, 2006 and 2005
    
    
    6Notes to Financial Statements
    
    
    7 - 10Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10 - 13Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    13Item 4.
    
    Controls and Procedures
    
    
    13PART II
    
    OTHER INFORMATIONOther Information
    
    
    14SIGNATURES
    
    
    
    
    15CERTIFICATION Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
    
    
    16-18Certification Pursuant to Section 302Certification Pursuant to Section 906
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##### Table of Contents



Captec Franchise Capital Partners L.P. IV
Balance Sheets
 March 31,
    
    
    December 31,2006
    
    
    2005(Unaudited)AssetsCash and cash equivalents
    
    $
    961,275
    
    
    $
    896,164Assets held for sale:Operating leases, net
    
    
    740,469
    
    
    
    743,750Unbilled rent, net
    
    
    46,652
    
    
    
    45,920Investment in leases:Operating leases, net
    
    
    3,534,887
    
    
    
    3,551,707Financing leases, net
    
    
    1,208,560
    
    
    
    1,217,585Unbilled rent, net
    
    
    3,206
    
    
    
    7,517Accounts receivable
    
    
    3,500
    
    
    
    3,500Total assets
    
    $
    6,498,549
    
    
    $
    6,466,143Liabilities and Partners CapitalLiabilitiesAccounts payable and accrued expenses
    
    $
    34,929
    
    
    $
    63,800Due to related parties
    
    
    6,936
    
    
    
    20,872Total liabilities
    
    
    41,865
    
    
    
    84,672Partners capital:Limited partners capital accounts
    
    
    6,451,461
    
    
    
    6,377,000General partners capital account
    
    
    5,223
    
    
    
    4,471Total partners capital
    
    
    6,456,684
    
    
    
    6,381,471Total liabilities and partners capital
    
    $
    6,498,549
    
    
    $
    6,466,143
 The accompanying notes are an integral part of the financial statements.
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Captec Franchise Capital Partners L.P. IV
Statements of Operations
 2006
    
    
    2005Operating revenue:Rental income
    
    $
    111,863
    
    
    $
    111,863Finance income
    
    
    29,475
    
    
    
    32,155Total operating revenue
    
    
    141,338
    
    
    
    144,018Operating costs and expenses:Depreciation
    
    
    16,821
    
    
    
    General and administrative
    
    
    76,815
    
    
    
    105,577Total operating costs and expenses
    
    
    93,636
    
    
    
    105,577Income from continuing operations
before other income
    
    
    47,702
    
    
    
    38,441Other income:Interest and other income
    
    
    9,297
    
    
    
    Total other income
    
    
    9,297
    
    
    
    Income from continuing operations
    
    
    56,999
    
    
    
    38,441Discontinued operations:Net income from discontinued operations, net
    
    
    18,214
    
    
    
    303,651Gain on sale of equipment
    
    
    
    
    
    
    1,997Income from discontinued operations
    
    
    18,214
    
    
    
    305,648Net income
    
    $
    75,213
    
    
    $
    344,089Net income allocable to general partner
    
    $
    752
    
    
    $
    3,441Net income allocable to limited partners
    
    $
    74,461
    
    
    $
    340,648Net income from continuing operations per limited partnership unit
    
    $
    1.95
    
    
    $
    1.32Net income from discontinued operations per limited partnership unit
    
    $
    0.62
    
    
    $
    10.44Net income per limited partnership unit
    
    $
    2.57
    
    
    $
    11.76Weighted average number of limited partnership
units outstanding
    
    
    28,975
    
    
    
    28,975
 The accompanying notes are an integral part of the financial statements.
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Captec Franchise Capital Partners L.P. IV
Statement of Changes in Partners Capital
 Limited
    
    
    Limited
    
    
    General
    
    
    TotalPartners'
    
    
    Partners'
    
    
    Partner's
    
    
    Partners'Units
    
    
    Accounts
    
    
    Account
    
    
    CapitalBalance, December 31, 2005
    
    
    28,975
    
    
    $
    6,377,000
    
    
    $
    4,471
    
    
    $
    6,381,471Net income
    
    
    
    
    
    
    74,461
    
    
    
    752
    
    
    
    75,213Balance, March 31, 2006
    
    
    28,975
    
    
    $
    6,451,461
    
    
    $
    5,223
    
    
    $
    6,456,684
 The accompanying notes are an integral part of the financial statements.
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Captec Franchise Capital Partners L.P. IV
Statements of Cash Flows
 2006
    
    
    2005Cash flows from operating activities:Net income
    
    $
    75,213
    
    
    $
    344,089Adjustments to net income:Depreciation
    
    
    20,102
    
    
    
    Amortization of debt issuance costs
    
    
    
    
    
    
    14,895Gain on sale of equipment
    
    
    
    
    
    
    (1,997
    )Increase in unbilled rent
    
    
    3,579
    
    
    
    (60,436
    )Decrease in accounts receivable
    
    
    
    
    
    
    16,170Decrease in accounts payable and accrued expenses
    
    
    (28,872
    )
    
    
    (52,322
    )Decrease in due to related parties
    
    
    (13,936
    )
    
    
    (5,320
    )Increase in other assets
    
    
    
    
    
    
    (29,643
    )Decrease in restricted cash
    
    
    
    
    
    
    96,753Net cash provided by operating activities
    
    
    56,086
    
    
    
    322,189Cash flows from investing activities:Proceeds from sale of equipment
    
    
    
    
    
    
    15,000Principal collections on financing leases
    
    
    9,025
    
    
    
    30,318Net cash provided by investing activities
    
    
    9,025
    
    
    
    45,318Cash flows from financing activities:Repayments of notes payable
    
    
    
    
    
    
    (89,398
    )Distributions to limited partners
    
    
    
    
    
    
    (375,000
    )Net cash used in financing activities
    
    
    
    
    
    
    (464,398
    )Net (decrease) increase in cash and cash equivalents
    
    
    65,111
    
    
    
    (96,891
    )Cash and cash equivalents, beginning of
period
    
    
    896,164
    
    
    
    143,463Cash and cash equivalents, end of period
    
    $
    961,275
    
    
    $
    46,572
 The accompanying notes are an integral part of the financial statements.
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NOTES TO FINANCIAL STATEMENTS
 1.
    
    THE PARTNERSHIP AND ITS SIGNIFICANT ACCOUNTING PRINCIPLES:
        7




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2.
    
    LAND AND BUILDING SUBJECT TO OPERATING LEASES:
  March 31, 2006
    
    
    December 31, 2005Land
    
    $
    1,705,200
    
    
    $
    1,705,200Building and improvements
    
    
    3,214,980
    
    
    
    3,214,9804,920,180
    
    
    
    4,920,180
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Less accumulated depreciation
    
    
    (644,825
    )
    
    
    (624,723
    )Total
    
    $
    4,275,356
    
    
    $
    4,295,457
 3.
    
    NET INVESTMENT IN FINANCING LEASES:
  March 31, 2006
    
    
    December 31, 2005Minimum lease payments to be received
    
    $
    1,871,463
    
    
    $
    1,880,854Less unearned income
    
    
    (662,903
    )
    
    
    (663,268
    )Net investment in financing leases
    
    $
    1,208,560
    
    
    $
    1,217,585
 4.
    
    NOTES PAYABLE:
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  RESULTS OF OPERATIONS
 Three Months Ended March 31, 2006.
  10




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2006
    
    
    2005Revenues
    
    $
    21,495
    
    
    $
    592,387Depreciation
    
    
    3,281
    
    
    
    0Interest expense
    
    
    0
    
    
    
    288,736Income from discontinued operations, net
    
    $
    18,214
    
    
    $
    303,651
    LIQUIDITY AND CAPITAL COMMITMENTS
    11




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12




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   13




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PART II  OTHER INFORMATION
 ITEM 1. LEGAL PROCEEDINGS.
 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS .
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 ITEM 5. OTHER INFORMATION.
 ITEM 6. EXHIBITS.
  Number
    
    Exhibit2
    
    Plan of Liquidation and Dissolution (Incorporated by reference to the
Registrants Definitive Proxy Statement on Schedule 14A, filed on September 21, 2004)4
    
    Amended Agreement of Limited Partnership of Registrant. (Incorporated by
reference to the Registrants Definitive Proxy Statement on Schedule 14A, filed on
September 21, 2004 and the corresponding exhibit in the Registrants Form 10-K for the
year ended December 31, 1998)10.1
    
    Promissory Note dated November 28, 1998 between Registrant and National
Realty Funding L.C. (Incorporated by reference to the corresponding exhibit in the
Registrants Form 10-K for the year ended December 31, 1998)10.2
    
    Promissory Note dated March 31, 1999 between Registrant and National Realty
Funding L.C. (Incorporated by reference to the corresponding exhibit in the
Registrants Form 10-Q for the quarter ended March 31, 1999)31
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section
906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
  By:
    Captec Franchise Capital Partners L.P. IVGP4 Asset Acquisition, LLCIts Manager By:
    /s/ Patrick L. BeachPatrick L. BeachPresidentDate: May 12, 2006 15