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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 March 31, 2004 OR o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period fromto Commission file number: 333-9371 CAPTEC FRANCHISE CAPITAL PARTNERS L.P. IV  Delaware
(State or other jurisdiction of incorporation or organization) 38-3304096
(IRS Employer Identification Number) 24 Frank Lloyd Wright Drive, Lobby L, 4th FloorP.O. Box 544, Ann Arbor, Michigan 48106-0544
(Address of principal executive offices, including zip code) (734) 994-5505
(Issuers telephone number) Not Applicable
(Former name, former address and former fiscal year, if changed since last year) 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 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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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, 2004 and December 31, 2003
    
    
    3Statement of Operations for the three months ended March 31, 2004 and 2003
    
    
    4Statement of Changes in Partners Capital for the three months
ended March 31, 2004
    
    
    5Statement of Cash Flows for the three months
ended March 31, 2004 and 2003
    
    
    6Notes to Financial Statements
    
    
    7-9Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    9-12Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    12Item 4.
    
    Controls and Procedures
    
    
    12PART II
    
    OTHER INFORMATIONOther Information
    
    
    12-13SIGNATURES
    
    
    
    
    14CERTIFICATION Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
    
    
    16Certification Pursuant to Section 302Certification Pursuant to 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 Assets
    
    March 31,
    
    December 31,2004
    
    2003(Unaudited)Cash and cash equivalents
    
    $
    1,943,825
    
    
    $
    694,742Restricted cash
    
    
    248,667
    
    
    
    233,390Investment in leases:Operating leases, net
    
    
    27,880,246
    
    
    
    29,667,981Financing leases, net
    
    
    1,514,445
    
    
    
    1,579,536Impaired financing leases, net
    
    
    15,000
    
    
    
    15,000Accounts receivable
    
    
    334,983
    
    
    
    300,189Unbilled rent, net
    
    
    1,232,126
    
    
    
    1,446,046Deferred financing costs, net
    
    
    269,646
    
    
    
    309,259Total assets
    
    $
    33,438,938
    
    
    $
    34,246,143Liabilities and Partners CapitalLiabilities:Notes payable
    
    $
    14,394,909
    
    
    $
    14,948,390Accounts payable and accrued expenses
    
    
    106,505
    
    
    
    160,513Due to related parties
    
    
    7,313
    
    
    
    11,109Total liabilities
    
    
    14,508,727
    
    
    
    15,120,012Partners capital:Limited partners capital accounts
    
    
    18,939,715
    
    
    
    19,138,676General partners capital account
    
    
    (9,504
    )
    
    
    (12,545
    )Total partners capital
    
    
    18,930,211
    
    
    
    19,126,131Total liabilities and partners capital
    
    $
    33,438,938
    
    
    $
    34,246,143
 The accompanying notes are an integral part of the financial statements. 3




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Captec Franchise Capital Partners L.P. IV
Statements of Operations
for the three months ended March 31, 2004 and 2003
(Unaudited) 2004
    
    2003Operating revenue:Rental income
    
    $
    737,846
    
    
    $
    785,954Finance income
    
    
    39,270
    
    
    
    58,283Total operating revenue
    
    
    777,116
    
    
    
    844,237Operating costs and expenses:Interest expense
    
    
    302,653
    
    
    
    301,881Depreciation
    
    
    121,239
    
    
    
    115,464General and administrative
    
    
    122,569
    
    
    
    33,260Total operating costs and expenses
    
    
    546,461
    
    
    
    450,605Income from operations
    
    
    230,655
    
    
    
    393,632Other income:Interest income
    
    
    168
    
    
    
    27Gain on sale of equipment
    
    
    
    
    
    
    33Total other income
    
    
    168
    
    
    
    60Income from continuing operations
    
    
    230,823
    
    
    
    393,692Discontinued Operations:Net gain on sale of properties
    
    
    252,311
    
    
    
    Income from discontinued operations, net
    
    
    29,956
    
    
    
    37,789Debt Retirement Costs
    
    
    (209,010
    )
    
    
    Income from discontinued operations
    
    
    73,257
    
    
    
    37,789Net Income
    
    
    304,080
    
    
    
    431,481Net income allocable to general partner
    
    
    3,041
    
    
    
    4,315Net income allocable to limited partners
    
    $
    301,039
    
    
    $
    427,166Net income per limited partnership unit from continuing operations
    
    
    7.84
    
    
    
    13.28Net income
per limited partnership unit from discontinued operations
    
    
    2.49
    
    
    
    1.28Net income per limited partnership unit
    
    $
    10.33
    
    
    
    14.56Weighted average number of limited partnership
units outstanding
    
    
    29,155
    
    
    
    29,341
 The accompanying notes are an integral part of the financial statements. 4




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Captec Franchise Capital Partners L.P. IV
Statements of Changes in Partners Capital
for the three months ended March 31, 2004
(Unaudited) Limited
    
    Limited
    
    General
    
    TotalPartners'
    
    Partners'
    
    Partner's
    
    Partners'Units
    
    Accounts
    
    Account
    
    CapitalBalance, December 31, 2003
    
    
    29,155
    
    
    $
    19,138,676
    
    
    $
    (12,545
    )
    
    $
    19,126,131Distributions  ($17.15 per limited partnership unit)
    
    
    
    
    
    
    (500,000
    )
    
    
    
    
    
    
    (500,000
    )Net income
    
    
    
    
    
    
    301,039
    
    
    
    3,041
    
    
    
    304,080Balance, March 31, 2004
    
    
    29,155
    
    
    $
    18,939,715
    
    
    $
    (9,504
    )
    
    $
    18,930,211
 The accompanying notes are an integral part of the financial statements. 5




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Captec Franchise Capital Partners L.P. IVStatements of Cash Flowsfor the three months ended March 31, 2004 and 2003(Unaudited) 2004
    
    2003Cash flows from operating activities:Net Income
    
    $
    304,080
    
    
    $
    431,481Adjustments to net income:Depreciation
    
    
    126,675
    
    
    
    122,243Amortization of debt issuance costs
    
    
    39,613
    
    
    
    19,951Gain on sale of equipment
    
    
    
    
    
    
    (33
    )Gain on sale of real estate
    
    
    (252,311
    )
    
    
    Increase in unbilled rent
    
    
    (3,084
    )
    
    
    (35,873
    )Increase in accounts receivable
    
    
    (34,794
    )
    
    
    (62,384
    )Decrease in accounts payable and accrued expenses
    
    
    (54,008
    )
    
    
    (41,726
    )Increase in due from related parties
    
    
    
    
    
    
    (14,031
    )Decrease in due to related parties
    
    
    (3,796
    )
    
    
    (16,364
    )Increase in restricted cash
    
    
    (15,277
    )
    
    
    (17,002
    )Net cash provided by operating activities
    
    
    107,098
    
    
    
    386,262Cash flows from investing activities:Proceeds from sale of real estate
    
    
    2,130,375
    
    
    
    Principal collections on financing leases
    
    
    65,091
    
    
    
    276,513Net cash provided by investing activities
    
    
    2,195,466
    
    
    
    276,513Cash flows from financing activities:Repayments of notes payable
    
    
    (553,481
    )
    
    
    (79,714
    )Distributions to limited partners
    
    
    (500,000
    )
    
    
    (750,000
    )Distributions to general partner
    
    
    
    
    
    
    Net cash used in financing activities
    
    
    (1,053,481
    )
    
    
    (829,714
    )Net increase (decrease) in cash and cash equivalents
    
    
    1,249,083
    
    
    
    (166,939
    )Cash and cash equivalents, beginning of period
    
    
    694,742
    
    
    
    1,132,891Cash and cash equivalents, end of period
    
    $
    1,943,825
    
    
    $
    965,952
 The accompanying notes are an integral part of the financial statements. 6




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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 initial general partners 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, Captec
Net Lease Realty, Inc. (Captec Net Lease), an affiliate, acquired the
General Partnership interest of the Partnership. In December 2001, Captec
Net Lease merged with and into Commercial Net Lease Realty, Inc.
(Commercial Net Lease). In connection with the merger, Commercial Net
Lease agreed to sell and assign its General Partnership interest in the
Partnership to GP4 Asset Acquisition, LLC (GP4 Asset Acquisition), which
is wholly-owned by Mr. Beach and is an affiliate of Captec. Effective
January 15, 2002, the limited partners consented to the transfer of the
General Partnership interest. On September 11, 2003, the Partnerships
secured lender consented to the transfer of the general partnership
interest to GP4 Asset Acquisition. Upon receipt of the secured lenders
consent, the general partnership interest was immediately transferred to
GP4 Asset Acquisition. Therefore, as of September 11, 2003, GP4 Asset
Acquisition became the general partner of the Partnership. The Partnership commenced a public offering (the Offering) of up to
30,000 limited partnership units (the Units), priced at $1,000 per Unit,
registered under the Securities Act of 1933, as amended, by means of a
Registration Statement filed on Form S-11, which 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 was fully
subscribed in December 1998. Since 1999, 845 Units have been repurchased
by the Partnership pursuant to the terms of the Repurchase Plan set forth
in the Partnerships December 23, 1996 prospectus with respect to the
Offering. At March 31, 2004, the Partnership had 29,155 Units issued and
outstanding. The principal investment objectives of the Partnership are: (i)
preservation and protection of capital; (ii) distribution of cash flow
generated by the Partnerships leases; (iii) capital appreciation of
Partnership properties; (iv) generation of increased income and protection
against inflation through escalation of base rents or participation in
gross revenues of tenants of Partnership properties; and (v) deferred
taxation of cash distributions to the limited partners. 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. Net income per limited partnership interest is calculated using the
weighted average number of limited partnership Units outstanding during
the period and the limited partners allocable share of the net income. Distributions per limited partnership Unit is calculated using the actual
distributions disbursed during the period and the weighted average number
of limited partnership Units outstanding during the period. Actual
individual limited partner distributions realized may vary from this
calculation as a result of a variety of factors including: (i) actual
distributions are computed based 7




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on quarterly operating results and
outstanding limited partnership units, which are disbursed in the
subsequent quarter; (ii) certain limited partners have elected to receive
monthly distributions versus quarterly distributions which creates timing
differences between comparative calculations, and (iii) the calculation
ignores the timing of repurchases. The balance sheet of the Partnership as of March 31, 2004, the statements
of operations and cash flows for the periods ending March 31, 2004 and
March 31, 2003 and the statements of changes in partners capital for the
period ending March 31, 2004 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, 2003 filed with the United States Securities
and Exchange Commission on March 30, 2004.  2.
    
    LAND AND BUILDING SUBJECT TO OPERATING LEASES: The net investment in operating leases as of March 31, 2004 is comprised
of the following: Land
    
    $
    10,681,650Building and improvements
    
    
    19,360,66130,042,311Less accumulated depreciation
    
    
    (2,162,065
    )Total
    
    $
    27,880,246
  3.
    
    NET INVESTMENT IN FINANCING LEASES: The net investment in financing leases as of March 31, 2004 is comprised
of the following: Minimum lease payments to be received
    
    $
    2,389,038Estimated residual value
    
    
    32,160Gross investment in financing leases
    
    
    2,421,198Less unearned income
    
    
    (906,753
    )Net investment in financing leases
    
    $
    1,514,445
  4.
    
    NOTES PAYABLE: In December 1998, the Partnership entered into a $6.4 million term note.
The note has a 10-year term, is collateralized by certain properties which
have a carrying value of approximately $11.7 million subject to operating
leases, and bears an interest rate of 8.13% per annum. In March 1999, the Partnership entered into an additional $3.3 million
term note. The note has a 10-year term, is collateralized by certain
properties subject to operating leases which have a carrying value of
approximately $3.5 million, and bears interest at a rate of 8.5% per
annum. In March 2004 the partnership defeased approximately $466,000 of
this note payable with proceeds from the sale of the Capital Foods
property at a cost of approximately $209,000. In October 2000, the Partnership assumed a $3.75 million term note,
collaterized by a certain property which has a carrying value of
approximately $4.7 million. The note has a 10-year term, and bears
interest at a rate of 8.35% per annum. 8




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In April 2003, the Partnership entered into an $862,500 term note. The
note has a 5-year term, is collaterized by a certain property subject to
an operating lease which has a carrying value of $1.1 million, and bears
interest at a rate of 6.25%, per annum.
In April 2003, the Partnership entered into a $57,500 unsecured revolving
note. The note has a 2-year term and bears interest at a variable rate
equivalent to the Wall Street Journal (WSJ) prime rate plus 1/2%. The
interest rate is adjusted monthly for changes in the WSJ prime rate. In November 2003, the Partnership extended the term of a $1.5
million term note. The extended note has an additional 2-year term, is
collaterized by certain properties subject to operating leases which has a
carrying value of $3.2 million, and bears interest at a rate of prime plus
2% per annum. Debt issuance costs of $646,349 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.  5.
    
    EARNINGS FROM DISCONTINUED OPERATIONS: In accordance with SFAS No. 144, Accounting for Impairment or Disposal of
Long-Lived Assets, the Company has classified the operations of the
properties sold during the three months ended March 31, 2004 as discontinued
operations. Accordingly, the results of operations related to the two
properties have been reclassified to earnings from discontinued
operations. Discontinued Operations reflect the sale of two properties that were
triggered by the tenants exercise of purchase option clauses in the
lease agreements. The properties were sold for net cash proceeds of
approximately $2.1 million in March 2004, resulting in a gain
of approximately $252,000. There were approximately $209,000 in debt
retirement costs associated with the disposition of the Capital Food
property. Expenses include an allocation of interest expense based on
the prorated share of the outstanding debt. The following is a summary of
earnings from discontinued operations: 2004
    
    2003Revenues:Operating lease rents
    
    $
    45,730
    
    
    $
    55,000Expenses:Interest expense
    
    
    9,881
    
    
    
    9,881Provision for depreciation
    
    
    5,436
    
    
    
    6,779Management Fees
    
    
    457
    
    
    
    551Income from discontinued operation, net
    
    $
    29,956
    
    
    $
    37,789
 
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS When used in this discussion, words such as intends, anticipates,
expects, will, could, estimate, and similar expressions are
intended to identify forward-looking statements. Forward-looking
statements are subject to certain risks and uncertainties, which could
cause actual results to differ materially from those described herein.
Such risks and uncertainties, some of which are beyond the Partnerships
control, include, but are not limited to, the following: (i) the
possibility that tenants and lessees may default in making rent payments,
(ii) the risk of fire or other casualty interrupting cash flow from a
property, (iii) the inability to enter into leases at the assumed rental
rates, (iv) unexpected expenses, and (v) the inability to sell properties
at anticipated prices and/or times. Any statements contained in this
report or any document incorporated herein by reference that are not
statements of historical fact may be deemed to be forward-looking
statements. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this report. The
Partnership disclaims, except as may be required by law, any obligations
to update or release revisions to these forward-looking statements to
reflect events or circumstances after the date of this report or to
reflect the occurrence of unanticipated events. 9




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RESULTS OF OPERATIONS Three Months Ended March 31, 2004.During the three months ended March
31, 2004 total operating revenue decreased 8.0% to approximately $777,000
compared to approximately $844,000 for the three months ended March 31,
2003. Rental revenue from operating leases for the three months ended
March 31, 2004 decreased 6.1% to approximately $738,000 compared to
approximately $786,000 for the prior year period primarily due to the
vacant properties. Earned income from financing leases for the three
months ended March 31, 2004 decreased 32.6% to approximately $39,000 as
compared to approximately $58,000 for the three months ended March 31,
2003 due to the amortization of principal balances and the termination and
disposition of equipment leases in the third and fourth quarters of 2003. Operating expenses totaled approximately $546,000 for the three months
ended March 31, 2004, as compared to approximately $451,000 for the three
months ended March 31, 2003. The increase is primarily due to increased
general and administrative expenses as a result of increased property
taxes and professional fees. Depreciation expense increased for the three
months ended March 31, 2004 compared to the prior year period due to the
acquisition of a Taco Bell property in April 2003. As a result of the foregoing, the Partnerships net income from continuing
operations decreased 41.4% to approximately $231,000 for the three months
ended March 31, 2004, as compared to $394,000 for the three months ended
March 31, 2003 Discontinued Operations reflect the sale of two properties that were
triggered by the tenants exercise of purchase option clauses in the
lease agreements. The properties were sold for net cash proceeds of
approximately $2.1 million in March 2004, resulting in a gain
of approximately $252,000. There were approximately $209,000 in debt
retirement costs associated with the disposition of the Capital Food
property. As a result of the foregoing, the Partnerships net income decreased 29.5%
to approximately $304,000 for the quarter ended March 31, 2004, compared
to approximately $431,000 for the quarter ended March 31, 2003. The Partnership announced first quarter distributions of approximately
$1.9 million, of which approximately $1.6 million was distributed to its
limited partners on April 15, 2004 and the remainder of which will be
distributed to limited partners who elected to receive distributions on a
monthly basis. LIQUIDITY AND CAPITAL COMMITMENTS In December 1996, the Partnership commenced its Offering of up to 30,000
Units. 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 a rate of 8.13% and 8.5%
per annum, respectively. In March 2004 the partnership defeased
approximately $466,000 of this note payable with proceeds from the sale of
the Capital Foods property. 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 a rate of
8.35% per annum. 10




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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. 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. In November 2003, the Partnership extended this note for an
additional two years. In April 2003, the Partnership entered into an $862,500 term note. The
note has a 5-year term, is collaterized by a certain property subject to an
operating lease which has a carrying value of $1.1 million, and bears an
interest rate of 6.25%, per annum. In April 2003, the Partnership entered
into a $57,500 unsecured revolving note. The note has a 2-year term and
bears interest at a variable rate equivalent to the Wall Street Journal
(WSJ) prime rate plus 1/2%. The interest rate is adjusted monthly for
charges in the WSJ prime rate. Debt issuance costs of approximately $646,349 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. As of March 31, 2004, the Partnership had a portfolio of 20 properties
located in 9 states, with a cost basis of $31.2 million, 7 performing
equipment leases with an original investment of $1.9 million and one
repossessed equipment package related to a defaulted equipment contract.
The remaining net investment in the Partnerships leased equipment is
$280,000, net of $1.6 million of aggregate principal collections on
financing leases during the life of those investments. Inclusive of the
above amount, the Partnership has received approximately $6.8 million of
aggregate principal collections on its financing leases during the life of
those investments. As of March 31, 2004, the Partnership has two
properties for which rental payments have been delinquent for approximately
17 months. The tenant experienced financial difficulties that resulted in
the stores recent closure. The Partnership is actively seeking to
re-tenant the properties as well as pursuing rights and remedies under the
leases to collect all the amounts owed. In addition, the lease for a third
property was terminated during the fourth quarter of 2003 and a lease
termination agreement was executed. The Partnership is actively seeking to
re-tenant the property. The General Partner does not have sufficient
evidence at this time to believe impairment exists on any of the vacant
properties. The Partnership semi-annually considers written requests to repurchase
Units pursuant to the terms of the repurchase plan set forth in the
Partnerships prospectus with respect to the Offering. Since 1999, 845
Units have been repurchased by the Partnership pursuant to the terms of the
Repurchase Plan set forth in the Partnerships December 23, 1996 prospectus
with respect to the Offering. At March 31, 2004, the Partnership had 29,155
Units issued and outstanding. The Partnership expects to fund any future
Unit repurchases out of working capital reserves and Net Sale or
Refinancing Proceeds, but may also fund such repurchases out of Cash Flow.
The Partnership is not obligated to accept Unit repurchase requests if the
Partnership does not have the liquidity to fund such requests and/or if the
Partnership does not have sufficient Cash Flow to distribute the 10%
Current Preferred Return. The Partnership expects that only limited amounts of liquid assets will be
required for existing properties since its property and equipment leases
require tenants and lessees to pay all taxes and assessments, maintenance
and repairs and insurance premiums, including casualty insurance, thereby
minimizing the Partnerships operating expenses and capital requirements.
The General Partner
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. 11




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK For quantitative and qualitative disclosures about market risk, see Item 7A
Quantitative and Qualitative Disclosures About Market Risk, of our annual
report on Form 10-K for the year ended December 31, 2003. Our exposures to
market risk have not changed materially since December 31, 2003. 
 ITEM 4. CONTROLS AND PROCEDURES Mr. Beach, acting in his capacity as the principal executive officer of GP4
Asset Acquisition, is ultimately responsible for the disclosure controls
and procedures of the Partnership. Disclosure controls and procedures are
established and maintained by the Partnership to ensure the information
required to be disclosed by the Partnership in the reports that it files or
submits pursuant to the Securities Exchange Act of 1934, as amended (the
Act), is recorded, processed, summarized and reported within the time
periods specified in the Commissions rules and forms. Mr. Beach has
evaluated the effectiveness of the Partnerships disclosure controls and
procedures as of the end of the period covered by the report, and has determined that the Partnerships disclosure controls and
procedures effectively communicate the information required to be disclosed
by the Partnership in the reports it files or submits under the Act in a
manner that allows timely decisions regarding such disclosure. There have been no significant changes in the Partnerships internal
controls or in other factors that could significantly affect these controls
subsequent to the evaluation date, including, but not limited to, any
corrective actions with regard to significant deficiencies and material
weaknesses. 
 PART II  OTHER INFORMATION ITEM 1.     LEGAL PROCEEDINGS.None ITEM 2.     CHANGES IN SECURITIES. USE OF PROCEEDS AND ISSUER PURCHASES OF
EQUITY 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 ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K.  (a)
    
    The following exhibits are included herein or incorporated by
reference: Number
    
    Exhibit4
    
    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 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)
 12




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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
of the Sarbanes-Oxley Act of 2002
  (b)
    
    Reports on Form 8-K: There were no reports filed on Form 8-K for the quarter ended March 31,
2004. 13




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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. By:
    Captec Franchise Capital Partners L.P. IVGP4 Asset Acquisition, LLCIts Manager By:
    /s/ Patrick L. BeachPatrick L. BeachPresidentDate: May 14, 2004 14




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Exhibit Index Number
    
    Description31
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
    
    Cerication Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
of the Sarbanes-Oxley Act of 2002
 15