##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

|  |  |                                                  
|- |  | -------------------------------------------------
|x |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
|  |  | SECURITIES EXCHANGE ACT OF 1934                  

| |                                |              
| | ------------------------------ | -------------
| | For the quarterly period ended | June 30, 2002

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

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Delaware

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38-3304095

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24 Frank Lloyd Wright Drive, Lobby L, 4th Floor
P.O. Box 544, Ann Arbor, Michigan 48106-0544

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(734) 994-5505

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Not Applicable

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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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to filing
requirements for the past 90 days

| |  | Yes x No o
| |  | ----------

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court: Not applicable

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers classes of
common equity, as of the latest practicable date: Not applicable





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TABLE OF CONTENTS



|                                                                                             |                                                                                   |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                                                                
|Item 1 Financial Statements:                                                                
|                                                                                             | Balance Sheets, June 30, 2002 and December 31, 2001                              
|                                                                                             | Statement of Operations for the three and six months ended June 30, 2002 and 2001
|                                                                                             | Statement of Changes in Partners' Capital for the six months ended June 30, 2002 
|                                                                                             | Statement of Cash Flows for the six months ended June 30, 2002 and 2001          
|                                                                                             | Notes to Financial Statements                                                    
|Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations
|PART II OTHER INFORMATION                                                                   
|                                                                                             | Other Information                                                                
|SIGNATURES                                                                                  
|CERTIFICATION                                                                               



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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV

Index to Form 10-Q

|         |  |                                                                                       |  |  |       |      |  | 
|-------- |  | ------------------------------------------------------------------------------------- |  |  | ----- | ---- |  | 
|Item No. |  |                                                                                       |  |  |       | Page | 
|         |  |                                                                                       |  |  |       |      | 
|Item 1   |  | Financial Statements:                                                                 |  |  |       |     
|         |  | Statement of Operations for the three and six months                                  |  |  |       |     
|         |  | ended June 30, 2002 and 2001                                                          |  |  | 4     |     
|         |  | Statement of Cash Flows for the six months ended June 30, 2002 and 2001               |  |  | 6     |     
|Item 2   |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  |  | 911  |     
|         |  | Other Information                                                                     |  |  | 1213 |     

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Captec Franchise Capital Partners L.P. IV
Balance Sheet




|                                     |                                       |                                         |  |  |  |   |            |             |            |   |              |            |            | 
|------------------------------------ | ------------------------------------- | --------------------------------------- |  |  |  | - | ---------- | ----------- | ---------- | - | ------------ | ---------- | ---------- | 
|                                     |                                       |                                         |  |  |  |   |            | (Unaudited) |            |   |              |            |           
|                                     |                                       |                                         |  |  |  |   |            | June 30,    |            |   | December 31, |           
|                                     |                                       |                                         |  |  |  |   |            | 2002        |            |   | 2001         |           
|                                     |                                       |                                         |  |  |  |   |            |             |            |   |              |           
|                                     |                                       | Assets                                  |  |  |  |   |            |             |            |  
|Cash and cash equivalents            |                                       |                                         |  |  |  | $ | 1,065,360  |             |            | $ | 1,257,402    |           
|Restricted cash                      |                                       |                                         |  |  |  |   | 263,717    |             |            |   | 203,445      |           
|Investment in property under leases: |                                       |                                         |  |  |  |   |            |             |            |   |              |           
|                                     | Operating leases, net                 |                                         |  |  |  |   |            | 29,154,879  |            |   |              | 29,400,369 |           
|                                     | Financing leases, net                 |                                         |  |  |  |   |            | 3,343,277   |            |   |              | 3,993,432  |           
|                                     | Impaired financing leases, net        |                                         |  |  |  |   |            | 210,542     |            |   |              | 210,542    |           
|Accounts receivable                  |                                       |                                         |  |  |  |   | 26,892     |             |            |   | 20,697       |           
|Unbilled rent, net                   |                                       |                                         |  |  |  |   | 1,160,845  |             |            |   | 1,044,659    |           
|Due from related parties             |                                       |                                         |  |  |  |   | 37         |             |            |   | 3,667        |           
|Deferred financing costs, net        |                                       |                                         |  |  |  |   | 415,613    |             |            |   | 455,515      |           
|                                     |                                       |                                         |  |  |  |   |            |             |            |  
|                                     |                                       | Total assets                            |  |  |  |   |            | $           | 35,641,162 |   |              | $          | 36,589,728 | 
|                                     |                                       |                                         |  |  |  |   |            |             |            |  
|                                     |                                       | Liabilities and Partners' Capital       |  |  |  |   |            |             |            |  
|Liabilities:                         |                                       |                                         |  |  |  |   |            |             |            |   |              |           
|                                     | Notes payable                         |                                         |  |  |  |   | $          | 14,509,268  |            |   | $            | 14,678,290 |           
|                                     | Accounts payable and accrued expenses |                                         |  |  |  |   |            | 135,774     |            |   |              | 166,359    |           
|                                     | Due to related parties                |                                         |  |  |  |   |            | 16,103      |            |   |              | 84,174     |           
|                                     |                                       |                                         |  |  |  |   |            |             |            |  
|                                     |                                       | Total liabilities                       |  |  |  |   |            |             | 14,661,145 |   |              |            | 14,928,823 | 
|                                     |                                       |                                         |  |  |  |   |            |             |            |  
|Partners capital:                   |                                       |                                         |  |  |  |   |            |             |            |   |              |           
|Limited partners capital            |                                       |                                         |  |  |  |   | 20,955,546 |             |            |   | 21,645,283   |           
|General partners capital            |                                       |                                         |  |  |  |   | 24,471     |             |            |   | 15,622       |           
|                                     |                                       |                                         |  |  |  |   |            |             |            |  
|                                     |                                       | Total partners capital                 |  |  |  |   |            |             | 20,980,017 |   |              |            | 21,660,905 | 
|                                     |                                       |                                         |  |  |  |   |            |             |            |  
|                                     |                                       | Total liabilities and partners capital |  |  |  |   |            | $           | 35,641,162 |   |              | $          | 36,589,728 | 
|                                     |                                       |                                         |  |  |  |   |            |             |            |  

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. IV
Statement of Operations
(Unaudited)




|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |           |           |   |           |           |           |  
|---------------------------------------------- | -------------------------- | ---------------------------------- |  |  |  | - | ------- | ------------------ | ------- | - | ------- | ------- | ------- |  | ---------------- |  |  | ---- | ------- | --------- | --------- | - | --------- | --------- | --------- | -
|                                               |                            |                                    |  |  |  |   |         | Three months ended |         |   |         |         |         |  | Six months ended | 
|                                               |                            |                                    |  |  |  |   |         | June 30,           |         |   |         |         |         |  | June 30,         | 
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  | 
|                                               |                            |                                    |  |  |  |   |         | 2002               |         |   | 2001    |         |         |  |                  |  |  | 2002 |         |           | 2001      |  
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |           |           |  
|Operating revenue:                             |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |           |           |   |           |          
|                                               | Rental income              |                                    |  |  |  |   | $       | 840,954            |         |   | $       | 840,954 |         |  |                  |  |  |      | $       | 1,681,908 |           |   | $         | 1,681,908 |          
|                                               | Finance income             |                                    |  |  |  |   |         | 78,448             |         |   |         | 119,938 |         |  |                  |  |  |      |         | 172,385   |           |   |           | 248,832   |          
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |          
|                                               |                            | Total operating revenue            |  |  |  |   |         |                    | 919,402 |   |         |         | 960,892 |  |                  |  |  |      |         |           | 1,854,293 |   |           |           | 1,930,740 |  
|Operating costs and expenses:                  |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |           |           |   |           |          
|                                               | Interest expense           |                                    |  |  |  |   |         | 316,428            |         |   |         | 305,654 |         |  |                  |  |  |      |         | 638,657   |           |   |           | 604,117   |          
|                                               | Depreciation               |                                    |  |  |  |   |         | 122,243            |         |   |         | 120,738 |         |  |                  |  |  |      |         | 245,490   |           |   |           | 241,477   |          
|                                               | General and administrative |                                    |  |  |  |   |         | 58,560             |         |   |         | 29,691  |         |  |                  |  |  |      |         | 86,191    |           |   |           | 55,761    |          
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |          
|                                               |                            | Total operating costs and expenses |  |  |  |   |         |                    | 497,231 |   |         |         | 456,083 |  |                  |  |  |      |         |           | 970,338   |   |           |           | 901,355   |  
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |          
|                                               |                            | Income from operations             |  |  |  |   |         |                    | 422,171 |   |         |         | 504,809 |  |                  |  |  |      |         |           | 883,955   |   |           |           | 1,029,385 |  
|Other income (expense):                        |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |           |           |   |           |          
|                                               | Interest and other income  |                                    |  |  |  |   |         |                   |         |   |         |        |         |  |                  |  |  |      |         |          |           |   |           |          |          
|                                               | Loss on sale of equipment  |                                    |  |  |  |   |         |                   |         |   |         |        |         |  |                  |  |  |      |         |          |           |   |           | (258      | )        
|                                               | Other expense              |                                    |  |  |  |   |         | 990                |         |   |         |        |         |  |                  |  |  |      |         | 990       |           |   |           | (182      | )        
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |          
|                                               |                            | Total other income (expense)       |  |  |  |   |         |                    | 990     |   |         |         |        |  |                  |  |  |      |         |           | 990       |   |           |           | (440      | )
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |          
|Net income                                     |                            |                                    |  |  |  |   | 423,161 |                    |         |   | 504,809 |         |         |  |                  |  |  |      | 884,945 |           |           |   | 1,028,945 |          
|Net income allocable to general partner        |                            |                                    |  |  |  |   | 4,232   |                    |         |   | 5,048   |         |         |  |                  |  |  |      | 8,849   |           |           |   | 10,289    |          
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |          
|Net income allocable to limited partners       |                            |                                    |  |  |  | $ | 418,929 |                    |         | $ | 499,761 |         |         |  |                  |  |  | $    | 876,096 |           |           | $ | 1,018,656 |          
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |          
|Net income per limited partnership unit        |                            |                                    |  |  |  | $ | 14.26   |                    |         | $ | 16.95   |         |         |  |                  |  |  | $    | 29.82   |           |           | $ | 34.47     |          
|                                               |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |          
|Weighted average number of limited partnership |                            |                                    |  |  |  |   |         |                    |         |   |         |         |         |  |                  |  |  |      |         |           |           |   |           |          
|                                               | units outstanding          |                                    |  |  |  |   |         | 29,371             |         |   |         | 29,486  |         |  |                  |  |  |      |         | 29,381    |           |   |           | 29,555    |          

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
for the six months ended June 30, 2002
(Unaudited)




|                                        |  |           |        |   |           |   |            |           |  |   |           |  |  |  |         |  |  |   |            |  
|--------------------------------------- |  | --------- | ------ | - | --------- | - | ---------- | --------- |  | - | --------- |  |  |  | ------- |  |  | - | ---------- | -
|                                        |  | Limited   |        |   | Limited   |   |            | General   |  |   |           |  |  |  | Total   | 
|                                        |  | Partners' |        |   | Partners' |   |            | Partner's |  |   | Partners' | 
|                                        |  | Units     |        |   | Accounts  |   |            | Accounts  |  |   |           |  |  |  | Capital | 
|                                        |  |           |        |   |           |   |            |           |  |   |           |  |  |  |         | 
|Balance, December 31, 2001              |  |           | 29,391 |   |           | $ | 21,645,283 |           |  | $ | 15,622    |  |  |  |         |  |  | $ | 21,660,905 |  
|Distributions  ($52.77 per unit)       |  |           |       |   |           |   | (1,550,004 | )         |  |   |          |  |  |  |         |  |  |   | (1,550,004 | )
|Repurchase of limited partnership units |  |           | (20    | ) |           |   | (15,829    | )         |  |   |           |  |  |  |         |  |  |   | (15,829    | )
|Net income                              |  |           |       |   |           |   | 876,096    |           |  |   | 8,849     |  |  |  |         |  |  |   | 884,945    |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  |  |  |         | 
|Balance, June 30, 2002                  |  |           | 29,371 |   |           | $ | 20,955,546 |           |  | $ | 24,471    |  |  |  |         |  |  | $ | 20,980,017 |  
|                                        |  |           |        |   |           |   |            |           |  |   |           |  |  |  |         | 

The accompanying notes are an integral part of the financial statements.

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Captec Franchise Capital Partners L.P. IV
Statement of Cash Flows
for the six months ended June 30, 2002 and 2001
(Unaudited)




|                                               |                                                   |                           |                                                              |            |      |          |            |            |     |          |  
|---------------------------------------------- | ------------------------------------------------- | ------------------------- | ------------------------------------------------------------ | ---------- | ---- | -------- | ---------- | ---------- | --- | -------- | -
|                                               |                                                   |                           |                                                              |            | 2002 |          |            | 2001       |    
|                                               |                                                   |                           |                                                              |            |      |          |            |            |    
|Cash flows from operating activities:          |                                                   |                           |                                                              |            |      |          |            |           
|                                               | Net Income                                        |                           | $                                                            | 884,945    |      |          | $          | 1,028,945  |    
|                                               | Adjustments to net income:                        |                           |                                                              |            |      |          |            |            |    
|                                               |                                                   |                           | Depreciation                                                 |            |      | 245,490  |            |            |     | 241,477  |  
|                                               |                                                   |                           | Amortization of debt issuance costs                          |            |      | 39,903   |            |            |     | 29,760   |  
|                                               |                                                   | Loss on sale of equipment |                                                              |            |     |          |            |            | 258 |         
|                                               |                                                   |                           | Increase in unbilled rent                                    |            |      | (116,186 | )          |            |     | (168,143 | )
|                                               |                                                   |                           | (Increase) decrease in accounts receivable                   |            |      | (6,195   | )          |            |     | 9,895    |  
|                                               |                                                   |                           | (Decrease) increase in accounts payable and accrued expenses |            |      | (30,585  | )          |            |     | 13,598   |  
|                                               |                                                   |                           | Decrease (increase) in due from related parties              |            |      | 3,630    |            |            |     | (11,302  | )
|                                               |                                                   |                           | Decrease in due to related parties                           |            |      | (68,071  | )          |            |     | (180,772 | )
|                                               |                                                   |                           | Increase in restricted cash                                  |            |      | (60,272  | )          |            |     | (50,001  | )
|                                               |                                                   |                           |                                                              |            |      |         
|Net cash provided by operating activities      |                                                   |                           | 892,659                                                      |            |      |          | 913,715    |           
|                                               |                                                   |                           |                                                              |            |      |         
|Cash flows from investing activities:          |                                                   |                           |                                                              |            |      |          |            |           
|                                               | Purchase and construction advances for properties |                           |                                                              |            |      |          |            |            |    
|                                               |                                                   |                           | subject to operating leases                                  |            |      |         |            |            |     | (14,000  | )
|                                               | Proceeds from sale of equipment                   |                           |                                                              | 21,211     |      |          |            |           |    
|                                               | Principal collections on financing leases         |                           |                                                              | 628,943    |      |          |            | 614,359    |    
|                                               |                                                   |                           |                                                              |            |      |         
|Net cash provided by investing activities      |                                                   |                           | 650,154                                                      |            |      |          | 600,359    |           
|                                               |                                                   |                           |                                                              |            |      |         
|Cash flows from financing activities:          |                                                   |                           |                                                              |            |      |          |            |           
|                                               | Proceeds from issuance of notes payable           |                           |                                                              |           |      |          |            | 703,000    |    
|                                               | Repayments of notes payable                       |                           |                                                              | (169,022   | )    |          |            | (87,458    | )  
|                                               | Repurchase of limited partnership units           |                           |                                                              | (15,829    | )    |          |            | (115,442   | )  
|                                               | Distributions to limited partners                 |                           |                                                              | (1,550,004 | )    |          |            | (1,665,000 | )  
|                                               | Distributions to general partner                  |                           |                                                              |           |      |          |            |           |    
|                                               |                                                   |                           |                                                              |            |      |         
|Net cash used in financing activities          |                                                   |                           | (1,734,855                                                   | )          |      |          | (1,164,900 | )         
|                                               |                                                   |                           |                                                              |            |      |         
|Net increase in cash and cash equivalents      |                                                   |                           | (192,042                                                     | )          |      |          | 349,174    |           
|Cash and cash equivalents, beginning of period |                                                   |                           | 1,257,402                                                    |            |      |          | 78,837     |           
|                                               |                                                   |                           |                                                              |            |      |         
|Cash and cash equivalents, end of period       |                                                   | $                         | 1,065,360                                                    |            |      | $        | 428,011    |           
|                                               |                                                   |                           |                                                              |            |      |         

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:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Captec Franchise Capital Partners L.P. IV (the Partnership), a Delaware
limited partnership, was organized on July 23, 1996 for the purpose of
acquiring income-producing commercial real properties and equipment
leased on a triple net or double net basis, primarily to operators of
national and regional chain franchised fast food and family style
restaurants, as well as other national and regional retail chains.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | The general partners upon formation of the Partnership were Captec
Franchise Capital Corporation IV (the Corporation), a wholly owned
subsidiary of Captec Financial Group, Inc. (Captec), an affiliate and
Patrick L. Beach, the Chairman of the Board of Directors, President and
Chief Executive Officer of the Corporation and Captec. In August 1998,
the general partnership interest of the Partnership was acquired by
Captec Net Lease Realty, Inc., an affiliate. In December 2001, Captec Net
Lease Realty, Inc. merged with and into Commercial Net Lease Realty, Inc.
In connection with the merger, Commercial Net Lease Realty agreed to sell
and assign its general partnership interest in the Partnership to GP4
Asset Acquisition, LLC, which is wholly-owned by Mr. Beach and is an
affiliate of Captec. The Limited Partners have consented to the transfer
of the general partner interest. In accordance with the terms of an
agreement with Commercial Net Lease, immediately upon the closing of the
merger and until such time as the consent of the Partnerships secured
lender is obtained, GP4 Asset Acquisition has assumed all of the General
Partners obligations and liabilities under the terms of the Partnership
Agreement.
|  
|   |  | The Partnership commenced a public offering of 30,000 limited partnership
interests (units), priced at $1,000 per unit, on December 31, 1996. The
Partnership commenced operations on March 5, 1997. At December 31, 1998,
the Partnership had accepted subscriptions for all 30,000 units. During
1999 the Partnership repurchased a total of 117 units for $105,399, or
approximately $901 per unit on average. In 2000, the Partnership
repurchased a total of 258 units for $230,362, or approximately $893 per
unit on average. In 2001, the Partnership repurchased a total of 234
units for $189,450, or approximately $810 per unit on average. In April
2002, the Partnership repurchased a total of 20 units for $15,829, or
approximately $791 per unit on average. At June 30, 2002, the Partnership
had 29,371 units issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | Allocation of profits, losses and cash distributions from operations and
cash distributions from sale or refinancing are made pursuant to the
terms of the Partnership Agreement. Profits and losses from operations
are allocated among the limited partners based upon the number of units
owned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  
|   |  | The balance sheet of the Partnership as of June 30, 2002, the statements
of operations and cash flows for the period ending June 30, 2002 and June
30, 2001 and the statements of changes in partners capital for the
period ending June 30, 2002 have not been audited. In the opinion of
management, these unaudited financial statements contain all adjustments
necessary to present fairly the financial position and results of
operations and cash flows of the Partnership for the periods then ended.
Results of operations for the interim periods are not necessarily
indicative of results for the full year. These unaudited financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Partnerships annual report on Form
10-K for the year ended December 31, 2001 filed with the United States
Securities and Exchange Commission on March 29, 2002.                                                                                                                                                                                                                                                                                                                                       

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CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
NOTES TO FINANCIAL STATEMENTS (continued)



|2. |  | LAND AND BUILDING SUBJECT TO OPERATING LEASES:                                           
|-- |  | -----------------------------------------------------------------------------------------
|  
|   |  | The net investment in operating leases as of June 30, 2002 is comprised
of the following:

|                              |  |   |            |  
|----------------------------- |  | - | ---------- | -
|Land                          |  | $ | 11,197,200 |  
|Building and improvements     |  |   | 19,549,581 |  
|                              |  |   |           
|                              |  |   | 30,746,781 |  
|Less accumulated depreciation |  |   | (1,591,902 | )
|                              |  |   |           
|Total                         |  | $ | 29,154,879 |  
|                              |  |   |           



|3. |  | NET INVESTMENT IN FINANCING LEASES:                                                      
|-- |  | -----------------------------------------------------------------------------------------
|  
|   |  | The net investment in financing leases as of June 30, 2002 is comprised
of the following:

|                                      |  |   |            |  
|------------------------------------- |  | - | ---------- | -
|Minimum lease payments to be received |  | $ | 4,438,067  |  
|Estimated residual value              |  |   | 211,485    |  
|                                      |  |   |           
|Gross investment in financing leases  |  |   | 4,649,552  |  
|Less unearned income                  |  |   | (1,272,029 | )
|Less direct origination costs         |  |   | (34,246    | )
|                                      |  |   |           
|Net investment in financing leases    |  | $ | 3,343,277  |  
|                                      |  |   |           



|4. |  | NOTES PAYABLE:                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | In December 1998, the Partnership entered into a $6.4 million term note.
The note has a ten-year term, is collateralized by certain properties
subject to operating leases, and bears interest at a rate of 8.13% per
annum.                    
|  
|   |  | In March 1999, the Partnership entered into an additional $3.3 million
term note. The note has a ten-year term, is collateralized by certain
properties subject to operating leases, and bears interest at a rate of
8.5% per annum.            
|  
|   |  | In October 2000, the Partnership assumed a $3.7 million term note in
connection with a property acquisition. The note has a ten-year term, and
bears interest at a rate of 8.35% per annum.                                                     
|  
|   |  | In November 2001, the Partnership entered into an additional $1.5 million
term note. The note has a two-year term, is collateralized by certain
properties subject to operating leases, and bears interest at a rate of
prime plus 2% per annum.
|  
|   |  | Debt issuance costs of $622,434 in the aggregate were incurred in
connection with the issuance of the notes, and are being amortized to
interest expense using the straight-line method over the term of the
notes.                             

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##### Table of Contents









CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART I  FINANCIAL INFORMATION

|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

This Quarterly Report or Form 10-Q contains forward-looking statements which
represent the Partnerships beliefs or expectations with respect to matters
which may arise in the future. Any statements in the Form 10-Q which are not
statements of historical fact may be deemed to be forward-looking statements.
When used in this discussion, words such as intends, anticipates,
expects, will, could, estimate and similar expressions are intended to
identify forward-looking statements. Such statements are subject to certain
risks and uncertainties which could cause actual results to differ materially
from those discussed herein. Such risks and uncertainties, some of which are
beyond the Partnerships control, include the following: (i) tenant defaults
in making rent payments, (ii) fire or other casualty may interrupt the cash
flow stream from a property, (iii) properties may not be able to be leased at
the assumed rental rates, (iv) unexpected expenses may be incurred and (v)
properties may not be able to be sold at the presently anticipated prices and /
or times.

As a result of these and other factors, the Partnership may experience material
fluctuations in future operating results on a quarterly or annual basis, which
could materially and adversely affect its business, financial condition and
operating results. Undue reliance should not be placed on these forward-looking
statements which speak only as of the date hereof. The Partnership undertakes
no obligation to publicly release the results of any revisions to these
forward-looking statements which may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2002.During the three months ended June 30, 2002
total operating revenue decreased 4.3% to approximately $919,000 as compared to
approximately $961,000 for the three months ended June 30, 2001. Rental
revenue from operating leases for the three months ended June 30, 2002 remained
unchanged at $840,954. Earned income from financing leases for the three
months ended June 30, 2002 decreased 34.6% to approximately $78,000 as compared
to approximately $120,000 for the three months ended June 30, 2001 due to the
amortization of principal balances and the suspension of income on an impaired
equipment lease.

Operating expenses increased 9.0% to approximately $497,000 for the three
months ended June 30, 2002 as compared to approximately $456,000 for the three
months ended June 30, 2001. Total operating expenses for the three months
ended June 30, 2002 is comprised of approximately $122,000 of depreciation
expense, $59,000 of general and administrative expenses and $316,000 of
interest expense. The increase in operating expenses for the three months
ended June 30, 2002 as compared to the three months ended June 30, 2001 is due
to a full period of depreciation for properties leased in preceding periods and
increased interest expense resulting from the $1.5 million term note that the
Partnership entered into in November 2001. The note was used to fund property
purchases and provide cash for future property acquisitions.

As a result of the foregoing, the Partnerships net income decreased 16.2% to
$423,000 for the three months ended June 30, 2002 as compared to $505,000 for
the three months ended June 30, 2001.

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##### Table of Contents



CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART I  FINANCIAL INFORMATION

Six Months Ended June 30, 2002.During the six months ended June 30, 2002
total operating revenue decreased 4.0% to approximately $1,854,000 as compared
to approximately $1,931,000 for the six months ended June 30, 2001. Rental
revenue from operating leases for the six months ended June 30, 2002 remained
unchanged at $1,681,908. Earned income from financing leases for the six
months ended June 30, 2002 decreased 30.7% to approximately $172,000 as
compared to approximately $249,000 for the six months ended June 30, 2001 due
to the amortization of principal balances and the suspension of income on an
impaired equipment lease.

Operating expenses increased 7.7% to approximately $970,000 for the six months
ended June 30, 2002 as compared to approximately $901,000 for the six months
ended June 30, 2001. Total operating expenses for the six months ended June
30, 2002 is comprised of approximately $245,000 of depreciation expense,
$86,000 of general and administrative expenses and $639,000 of interest
expense. The increase in operating expenses for the six months ended June 30,
2002 as compared to the six months ended June 30, 2001 is due to a full period
of depreciation for properties leased in preceding periods and increased
interest expense resulting from the $1.5 million term note that the Partnership
entered into in November 2001. The note was used to fund property purchases and
provide cash for future property acquisitions.

As a result of the foregoing, the Partnerships net income decreased 14.0% to
$885,000 for the six months ended June 30, 2002 as compared to $1,029,000 for
the six months ended June 30, 2001.

Distributions.The Partnership announced second quarter distributions of
$756,774, including net sale proceeds of $6,774, of which $658,101 was
distributed to limited partners on July 15, 2002 and the remaining $98,673 will
be distributed to those limited partners who elected to receive distributions
on a monthly basis.

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##### Table of Contents



CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART I  FINANCIAL INFORMATION

LIQUIDITY AND CAPITAL COMMITMENTS

The Partnership commenced an offering of up to 30,000 units registered under
the Securities Act of 1933, as amended, by means of a Registration Statement
filed on Form S-11 that was declared effective by the Securities and Exchange
Commission on December 23, 1996. The Partnership accepted subscriptions for the
Minimum Number of Units on March 5, 1997 and immediately commenced operations.
The offering reached final funding in December 1998 with subscriptions for the
entire 30,000 units. Net proceeds after offering expenses were approximately
$26.1 million.

In December 1998, the Partnership entered into a $6.4 million term note. The
Partnership entered into an additional $3.3 million term note in March 1999.
Proceeds from the notes were used to acquire additional properties. The notes
have a ten-year term, are collateralized by certain properties subject to
operating leases, and bear interest at rates ranging from 8.13% to 8.5% per
annum. Debt issuance costs of approximately $595,000 incurred in connection
with the issuance of the notes are being amortized into interest expense over
the life of the notes using the straight-line method.

The Partnership purchased one net leased real estate property in October 2000
and assumed a $3.75 million term note in connection with the acquisition. The
note has a ten-year term and bears interest at the rate of 8.35% per annum.

In November 2001, the Partnership entered into an additional $1.5 million term
note. The note has a two-year term, is collateralized by certain properties
subject to operating leases and bears interest at the rate of prime plus 2% per
annum. Proceeds from this note were used to repay approximately $700,000 of
short-term borrowings and to provide working capital intended to be used to
fund unit repurchases and potential property acquisitions.

As of June 30, 2002, the Partnership had invested $31.9 million in 21 net
leased real estate properties and $6.9 million in 20 equipment packages. Three
equipment leases expired during the second quarter of 2002 and the related
equipment was sold to the former lessees for total proceeds of $21,211, which
amount equaled the book value of those assets. As of June 30, 2002, the
Partnership has not made any commitments to purchase additional properties, but
will continue to consider property purchases to the extent that it has capital
available to invest.

The Partnership has one impaired equipment lease at June 30, 2002, with a
recorded investment of $210,542 net of a related allowance of $65,000. The net
investment in the impaired lease represents the estimated net proceeds that the
Partnership expects to receive. Rental payments on this lease are delinquent by
more than 90 days, and income accrual has been suspended by the Partnership.
The tenant, a Dennys restaurant franchisee, filed for Chapter 11 bankruptcy
protection in September 2001 and subsequently converted to a Chapter 7 filing
in May 2002. The restaurant in which the equipment is located is a leased
facility and the restaurant is currently being operated by the landlord. It is
anticipated that the restaurants operations will be sold and that, as a
result, the restaurant in which the leased equipment is located will remain in
operation. However, if no buyer is found, the restaurant could close and the
Partnership could be forced to liquidate the equipment which could result in an
additional investment writedown. There is no definitive timetable for
resolution of this default.

The Partnership expects that only limited amounts of liquid assets will be
required for existing properties since its property and equipment leases
require lessees to pay all taxes, assessments, maintenance, repairs and
casualty and other insurance premiums thereby minimizing the Partnerships
operating expenses and capital requirements. The Partnership management expects
that the cash flow to be generated by the Partnerships properties and
equipment will provide adequate liquidity and capital resources to pay
operating expenses and provide distributions to limited partners.

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##### Table of Contents






CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART II  OTHER INFORMATION

|        |  |                                                            |  | 
|------- |  | ---------------------------------------------------------- |  | 
|ITEM 1. |  | LEGAL PROCEEDINGS. None.                                   |  | 
|        |  |                                                            |  | 
|ITEM 2. |  | CHANGES IN SECURITIES. None.                               |  | 
|        |  |                                                            |  | 
|ITEM 3. |  | DEFAULTS UPON SENIOR SECURITIES. None.                     |  | 
|        |  |                                                            |  | 
|ITEM 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. |  | 
|        |  |                                                            |  | 
|ITEM 5. |  | OTHER INFORMATION. None                                    |  | 

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##### Table of Contents



CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
PART II  OTHER INFORMATION

|        |  |                                 
|------- |  | --------------------------------
|ITEM 6. |  | EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | The following exhibits are included herein or incorporated by
reference:
| | --- |  | ------------------------------------------------------------------------

|       |  |  |  |  |  |                                                                                                                                                                                                                                                                                             
|------ |  |  |  |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number |  |  |  |  |  | Exhibit                                                                                                                                                                                                                                                                                     
|       |  |  |  |  |  |                                                                                                                                                                                                                                                                                             
|4.1    |  |  |  |  |  | Amended Agreement of Limited Partnership of Registrant.
(Incorporated by reference to the corresponding exhibit in the
Registrants Form 10-K for the year ended December 31, 1998)                                                                                                         
|       |  |  |  |  |  |                                                                                                                                                                                                                                                                                             
|10.1   |  |  |  |  |  | Promissory Note dated December 17, 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)                                                                          
|       |  |  |  |  |  |                                                                                                                                                                                                                                                                                             
|99.1   |  |  |  |  |  | Pages 35-42 of the final Prospectus dated December 23, 1997 as
supplemented. (Incorporated by reference from the final
Prospectus filed with the Securities and Exchange Commission
pursuant to Rule 424(b) promulgated under the Securities Act
of 1933, as amended. SEC File No. 333-9371)



| | (b)                                                                          |  | Reports on Form 8-K:
| | ---------------------------------------------------------------------------- |  | --------------------
|
| | There were no reports filed on Form 8-K for the quarter ended June 30,
2002.

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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.

| |  |  |                                           |                                                
| |  |  | ----------------------------------------- | -----------------------------------------------
| |  |  | CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV
|
| |  |  | By:                                       | GP4 Asset Acquisition, LLCIts Manager          
|
| |  |  | By:                                       | /s/ Patrick L. BeachPatrick L Beach
Sole Member
|
| |  |  | Date:                                     | August 14, 2002                                

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##### Table of Contents






CERTIFICATION



| |                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | I, Patrick L. Beach, the President of GP4 Asset Acquisition, LLC, the
manager of Captec Franchise Capital Partners L.P. IV (the Partnership),
certify that:



| |                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) The Quarterly Report on Form 10-Q of the Partnership for the period
ended June 30, 2002 which this certification accompanies fully complies
with the requirements of section 13(a) or 15(d) of the Securities Exchange
Act of 1934; and



| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
the Partnership.



| |                                                                          
| | -------------------------------------------------------------------------
| | /s/ Patrick L. Beach
President
GP4 Asset Acquisition, LLC
August 14, 2002

15