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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 1934
 For the quarterly period ended September 30, 2005
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from _____ to _____
 Commission
file number: 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
 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, September 30, 2005 and December 31, 2004
    
    
    3Statements of Discontinued Operations for the three and nine months ended September 30, 2005 and 2004
    
    
    4Statement of Changes in Partners' Capital for the nine months ended September 30, 2005
    
    
    5Statements of Cash Flows for the nine months ended September 30, 2005 and 2004
    
    
    6Notes to Financial Statements
    
    
    7  10Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10  14Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    14Item 4.
    
    Controls and Procedures
    
    
    14PART II
    
    OTHER INFORMATIONOther Information
    
    
    15SIGNATURES
    
    
    16Certification Pursuant to Section 302Certification Pursuant to 18 U.S.C. Section 1350
  2




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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
 
 PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 Captec Franchise Capital Partners L.P. IV
 
 Balance Sheets
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)AssetsCash and cash equivalents
    
    $
    4,182,959
    
    
    $
    143,463Restricted cash
    
    
    
    
    
    
    333,006Assets Held for Sale:Operating leases, net
    
    
    4,375,864
    
    
    
    25,905,039Financing leases, net
    
    
    1,213,106
    
    
    
    1,326,425Unbilled rent, net
    
    
    68,017
    
    
    
    1,075,996Other Assets
    
    
    
    
    
    
    258,339Due from Related Parties
    
    
    
    
    
    
    Accounts receivable
    
    
    3,500
    
    
    
    178,011Total assets
    
    $
    9,843,446
    
    
    $
    29,220,279Liabilities and Partners CapitalLiabilities Held for Sale:Notes payable
    
    $
    
    
    
    $
    13,597,961Accounts payable and accrued expenses
    
    
    26,577
    
    
    
    171,715Due to related parties
    
    
    
    
    
    
    10,969Total liabilities
    
    
    26,577
    
    
    
    13,780,645Partners capital:Limited partners capital accounts
    
    
    9,812,801
    
    
    
    15,444,197General partners capital account
    
    
    4,068
    
    
    
    (4,563
    )Total partners capital
    
    
    9,816,869
    
    
    
    15,439,634Total liabilities and partners capital
    
    $
    9,843,446
    
    
    $
    29,220,279
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Captec Franchise Capital Partners L.P. IV
 
 Statements of Discontinued Operations
  Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Operating revenue:Rental income
    
    $
    233,993
    
    
    $
    667,574
    
    
    $
    1,510,921
    
    
    $
    2,194,235Finance income
    
    
    30,815
    
    
    
    35,658
    
    
    
    94,947
    
    
    
    112,317Total operating revenue
    
    
    264,808
    
    
    
    703,232
    
    
    
    1,605,868
    
    
    
    2,306,552Operating costs and expenses:Interest expense
    
    
    43,619
    
    
    
    284,246
    
    
    
    555,865
    
    
    
    892,706Depreciation
    
    
    
    
    
    
    112,597
    
    
    
    
    
    
    
    360,512Debt retirement costs
    
    
    329,765
    
    
    
    
    
    
    
    1,690,354
    
    
    
    209,010General and administrative
    
    
    92,777
    
    
    
    85,939
    
    
    
    282,286
    
    
    
    390,783Total operating costs and expenses
    
    
    466,161
    
    
    
    482,782
    
    
    
    2,528,505
    
    
    
    1,853,011Income (loss) from discontinued operations before other income
    
    
    (201,353
    )
    
    
    220,450
    
    
    
    (922,637
    )
    
    
    453,541Other income :Gain on sale of equipment
    
    
    
    
    
    
    
    
    
    
    1,997
    
    
    
    8,040Gain on sale of real estate
    
    
    1,522,516
    
    
    
    500
    
    
    
    4,754,452
    
    
    
    262,045Interest and other income
    
    
    77,749
    
    
    
    29
    
    
    
    93,423
    
    
    
    5,078Total other income
    
    
    1,600,265
    
    
    
    529
    
    
    
    4,849,872
    
    
    
    275,163Net Income from discontinued operations
    
    
    1,398,912
    
    
    
    220,979
    
    
    
    3,927,235
    
    
    
    728,704Net income from discontinued operations allocable to general partner
    
    
    2,062
    
    
    
    2,210
    
    
    
    8,631
    
    
    
    7,287Net income from discontinued operations allocable to limited partners
    
    $
    1,396,850
    
    
    $
    218,769
    
    
    $
    3,918,604
    
    
    $
    721,417Net income from discontinued operations per limited partnership unit
    
    $
    48.21
    
    
    $
    7.55
    
    
    $
    135.24
    
    
    $
    24.83Weighted average number of limited partnership
units outstanding
    
    
    28,975
    
    
    
    28,975
    
    
    
    28,975
    
    
    
    29,065
 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, 2004
    
    
    28,975
    
    
    $
    15,444,197
    
    
    $
    (4,563
    )
    
    $
    15,439,634Distributions  ($329.59 per limited partnership unit)
    
    
    
    
    
    
    (9,550,000
    )
    
    
    
    
    
    
    (9,550,000
    )Net income
    
    
    
    
    
    
    3,918,604
    
    
    
    8,631
    
    
    
    3,927,235Balance, September 30, 2005
    
    
    28,975
    
    
    $
    9,812,801
    
    
    $
    4,068
    
    
    $
    9,816,869
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Captec Franchise Capital Partners L.P. IV
 
 Statements of Cash Flows
 
 2005
    
    
    2004Cash flows from operating activities:Net income from discontinued operations
    
    $
    3,927,235
    
    
    $
    728,704Adjustments to net income:Depreciation
    
    
    
    
    
    
    360,512Amortization of debt issuance costs
    
    
    25,749
    
    
    
    66,041Gain on sale of equipment
    
    
    (1,997
    )
    
    
    (8,040
    )Gain on sale of real estate
    
    
    (4,754,452
    )
    
    
    (262,045
    )Loss on investments in financing leases
    
    
    9,961
    
    
    
    Increase in unbilled rent
    
    
    (81,384
    )
    
    
    (59,735
    )Decrease in accounts receivable
    
    
    (85,678
    )
    
    
    138,347Decrease in accounts payable and accrued expenses
    
    
    (115,236
    )
    
    
    (51,141
    )Decrease in due to related parties
    
    
    (10,969
    )
    
    
    (140
    )Decrease (increase) in restricted cash
    
    
    333,006
    
    
    
    (71,498
    )Net cash (used in) provided by operating activities
    
    
    (753,765
    )
    
    
    841,005Cash flows from investing activities:Proceeds from sale of equipment
    
    
    15,000
    
    
    
    40,200Proceeds from sale of real estate
    
    
    27,895,673
    
    
    
    3,849,338Payment of lease commissions
    
    
    (59,805
    )
    
    
    Principal collections on financing leases
    
    
    90,355
    
    
    
    183,324Net cash provided by investing activities
    
    
    27,941,223
    
    
    
    4,072,862Cash flows from financing activities:Repayments of notes payable
    
    
    (13,597,961
    )
    
    
    (1,263,983
    )Repurchase of limited partnership units
    
    
    
    
    
    
    (124,716
    )Distributions to limited partners
    
    
    (9,550,000
    )
    
    
    (3,984,933
    )Net cash used in financing activities
    
    
    (23,147,961
    )
    
    
    (5,373,632
    )Net increase (decrease) in cash and cash equivalents
    
    
    4,039,496
    
    
    
    (459,765
    )Cash and cash equivalents, beginning of period
    
    
    143,463
    
    
    
    694,742Cash and cash equivalents, end of period
    
    $
    4,182,959
    
    
    $
    234,977
 The accompanying notes are an integral part of the financial statements.
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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
 
 NOTES TO FINANCIAL STATEMENTS
 1. THE PARTNERSHIP AND ITS SIGNIFICANT ACCOUNTING PRINCIPLES:
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2. LAND AND BUILDING SUBJECT TO OPERATING LEASES:
  Land
    
    $
    1,705,200Building and improvements
    
    
    3,214,9804,920,180Less accumulated depreciation
    
    
    (544,316
    )Total
    
    $
    4,375,864
 3. NET INVESTMENT IN FINANCING LEASES:
  Minimum lease payments to be received
    
    $
    1,906,520Less unearned income
    
    
    (693,414
    )Net investment in financing leases
    
    $
    1,213,106
 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 September 30, 2005.
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Nine Months Ended September 30, 2005.
  11




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LIQUIDITY AND CAPITAL COMMITMENTS
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
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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 June 30, 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 June 30, 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 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
  By:
    
    Captec Franchise Capital Partners L.P. IVGP4 Asset Acquisition, LLCIts ManagerBy:
    
    /s/ Patrick L. BeachPatrick L. BeachPresidentDate:
    
    November 14, 2005
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EXHIBIT INDEX
 Number
    
    Exhibit31
    
    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 of the Sarbanes-Oxley Act of 2002
 17