-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OlyO3LYSBl0qKiLLPSbGlWjvY89OjbfieYaR67hYai6Zt74Oewn8Z4JuqAl1tmbh NUFlg2rfDrnplOI5U5/qGw== 0000811592-97-000011.txt : 19971017 0000811592-97-000011.hdr.sgml : 19971017 ACCESSION NUMBER: 0000811592-97-000011 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19971016 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: REDWOOD MORTGAGE INVESTORS VI CENTRAL INDEX KEY: 0000811592 STANDARD INDUSTRIAL CLASSIFICATION: MORTGAGE BANKERS & LOAN CORRESPONDENTS [6162] IRS NUMBER: 943031211 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-17573 FILM NUMBER: 97696521 BUSINESS ADDRESS: STREET 1: 650 EL CAMINO REAL STE K CITY: REDWOOD CITY STATE: CA ZIP: 94063 BUSINESS PHONE: 4153655341 MAIL ADDRESS: STREET 1: 650 EL CAMINO REAL SUITE K CITY: REDWWOD CITY STATE: CA ZIP: 94063 10-K/A 1 REVISED 10K REDWOOD MORTGAGE INVESTORS VI (a California Limited Partnership) Index to Form 10-K December 31, 1996 Part I Page No. Item 1 - Business 4 Item 2 - Properties 5-6 Item 3 - Legal Proceedings 7 Item 4 - Submission of Matters to a vote of Security Holders (partners) 7 Part II Item 5 - Market for the Registrants Partners Capital and related 7 matters. Item 6 - Selected Financial Data 8-9 Item 7 - Managements Discussion and Analysis of Financial Condition and Results of Operations 10-11 Item 8 - Financial Statements and Supplementary Data 12-35 Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 36 Part III Item 10 - Directors and Executive Officers of the Registrant 36 Item 11- Executive Compensation 37 Item 12 - Security Ownership of certain Beneficial Owners and Management 38 Item 13 - Certain Relationships and Related Transactions 38 Part IV Item 14 - Exhibits, Financial Statement Schedules, and Reports of Form 8-K 38-39 Signatures 40 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the year ended December 31, 1996 Commission File number 33-12519 - -------------------------------------------------------------------------------- REDWOOD MORTGAGE INVESTORS VI - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) California 94-3031211 - ------------------------------------------------------------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer Identification) or organization) 650 El Camino Real #G, Redwood City, CA 94063 - ------------------------------------------------------------------------------- (address of principal executive offices) (zip code) Registrants telephone No. Including area code (650) 365-5341 - ------------------------------------------------------------------------------- Securities registered pursuant to Section 12 (b) of the Act: None Title of each class Name of each exchange on which registered - -------------------------------------------------------------------------------- Limited Partnership Units None - ---------------------------- --------------------------------------------------- Securities registered pursuant to Section 12 (g) of the Act: Limited Partnership Units Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES XX NO --------------- ------------------ At the close of the sale of units in 1989, the limited partnership units purchased by non-affiliates was 97,715.94 units computed at $100.00 a unit for $9,771,594, excluding General Partners Contribution of $9,772. Documents incorporated by reference: Portions of the Prospectus for Redwood Mortgage Investors VI, included as part of the form S-11 Registration Statement, SEC File No. 33-12519 dated September 3, 1987 and Supplement No. 6 dated May 16, 1989, incorporated in Parts II, III, and IV. Part I Item 1 - Business Redwood Mortgage Investors VI is a California limited partnership (the Partnership), of which D. Russell Burwell, Michael R. Burwell and Gymno Corporation, a California corporation, are the General Partners. The address of the General Partners is 650 El Camino Real, Suite G, Redwood City, California 94063. The Partnerships primary purpose is to invest its capital in Mortgage Investments secured by Northern California properties. Mortgage Investments are arranged and serviced by Redwood Home Loan Co, dba Redwood Mortgage, an affiliate of the General Partners. The Partnership's objectives are to make investments, as referred to above, which will: (i) provide the maximum possible cash returns which Limited Partners may elect to (a) receive as monthly, quarterly or annual cash distributions or (b) have earnings credited to their capital accounts and used to invest in Partnership activities; and (ii) preserve and protect the Partnerships capital. The Partnerships general business is more fully described under the section entitled Investment Objectives and Criteria, pages 23-26 of the Prospectus, a part of the above-referenced Registration Statement, which is incorporated by reference. The Partnership was formed in September, 1987 and immediately began issuing units. It began investing in Mortgage Investments in October, 1987. At December 31, 1996, the Partnership had a balance of Mortgage Investments totalling $9,313,924 with interest rates thereon ranging from 4.00% to 14.75%. Currently First Trust Deeds comprise 52.92% of the Mortgage Investment portfolio. Second Mortgage Trust Deeds comprise 40.04% of Mortgage Investment portfolio, third Mortgage Trust Deeds have 4.36% and 4th Mortgage Trust Deeds have 2.68% of the Mortgage Investment portfolio. Owner-occupied homes, combined with non-owner occupied homes, total 25.95% of the Mortgage Investments. Mortgage Investments to apartments make up 8.44% of the total Mortgage Investments portfolio. Commercial Mortgage Investment origination increased from last year, now comprising 65.61% of the portfolio, an increase of 7.68%. The past year brought us many outstanding low loan to value lending opportunities in the commercial segment of the market. The major concentration of Mortgage Investments, comprising of 81.17% of the total loans, are in six counties of the Bay Area. The County of Stanislaus makes up 7.30% of the Mortgage Investment portfolio and the balance, as stated on page five of this report, are in primarily Northern California. Currently Mortgage Investment size is averaging $143,291 per Mortgage Investment. Some of the Mortgage Investments are fractionalized between affiliated partnerships with objectives similar to those of the Partnership to further reduce risk. Average equity per loan transaction stood at 34.09%. A 40% equity average on loan origination is generally considered very conservative. Generally, the more equity, the more protection for the lender. The Partnerships Mortgage Investment portfolio is in good condition with only three properties in foreclosure as of the end of December, 1996, totalling $549,356. Item 2 - Properties As of December 31, 1996, a summary of the Partnership's Mortgage Investment portfolio is set forth below. Mortgage Investments as a Percentage of Total Mortgage Investments First Trust Deeds $4,928,793.88 Appraised Value of Properties 7,572,407.00 Total Investment as a % of Appraisal 65.09% Second Trust Deed Mortgage Investments 3,729,581.41 Third Trust Deed Mortgage Investments 405,566.64 Fourth Trust Deed Mortgage Investments* 249,982.09 First Trust Deeds due other Lenders 15,847,471.00 Second Trust Deeds due other Lenders 1,174,343.00 Third Trust Deeds due other Lenders 178,571.00 Total Debt $26,514,309.02 Appraised Property Value $40,225,303.00 Total Investments as a % of Appraisal 65.91% Number of Mortgage Investments Outstanding 65 Average Investment 143,291.14 Average Investment as a % of Net Assets 1.36% Average Investment as a % of Net Assets 1.38% Largest Investment Outstanding 1,376,117.03 Largest Investment as a % of Net Assets 13.08% Largest Investment as a % of Net Assets 13.24% Mortgage Investments as a Percentage of Total Mortgage Investments First Trust Deeds 52.92% Second Trust Deeds 40.04% Third Trust Deeds 4.36% Fourth Trust Deeds 2.68% -------------------- 100.00% Total Mortgage Investments by Type Amount Percent of Property Owner Occupied Homes $1,443,834.69 15.50% Non-Owner Occupied Homes 973,497.96 10.45% Apartments 786,362.54 8.44% Commercial 6,110,228.83 65.61% ----------------- ----------- Total $9,313,924.02 100.00% *Footnote on following page The following is a distribution of loans outstanding as of December 31, 1996 by Counties. Santa Clara $2,814,972.31 30.22% Alameda 1,705,266.67 18.31% San Mateo 1,450,824.87 15.58% Contra Costa 769,837.13 8.26% Stanislaus 679,802.62 7.30% Sacramento 447,589.10 4.81% San Francisco 442,090.69 4.75% Sonoma 377,279.38 4.05% El Dorado 214,773.21 2.31% Ventura 195,000.00 2.09% Shasta 82,407.46 0.88% Monterey 72,380.95 0.78% Santa Cruz 38,157.67 0.41% Solano 23,541.96 0.25% ------------------- ----------- Total $9,313,924.02 100.00% * Redwood Mortgage Investors VI, together with other Redwood Partnerships hold a second and a fourth trust deed against the secured property. In addition, the principals behind the borrower corporation have given personal guarantees as collateral. The overall loan to value ratio on this loan is 76.52%. Besides the borrower paying an interest rate of 12.25%, the partnership and other lenders will also participate in profits. We have had previous loan activity with this borrower which had been concluded successfully, with extra earnings earned for the other partnerships involved. Statement of Condition of Mortgage Investments: Number of Mortgage Investments in Foreclosure 3 Item 3 - Legal Proceedings In the normal course of business, the Partnership may become involved in various types of legal proceedings such as assignments of rents, bankruptcy proceedings, appointments of receivers, unlawful detainers, judicial foreclosures, etc., to enforce the provisions of the deeds. Management anticipates that the ultimate outcome of these legal matters will not have a material adverse effect on the net assets of the Partnership in light of the Partnership's allowance for doubtful accounts. As of the date hereof, the Partnership is not involved in any legal proceedings other than those that would be considered part of the normal course of business. Item 4 - Submission of matters to vote of Security Holders (Partners). No matters have been submitted to a vote of the Partnership. Part II Item 5 - Market for the Registrants Partners Capital and Related Matters. 120,000 units at $100 each (minimum 20 units) were offered through broker-dealer member firms of the National Association of Securities Dealers on a best efforts basis (as indicated in Part I item 1). All units have been sold only in California. There is no established public trading market for the units. Investors are in two categories. Some have opted to withdraw earnings on a monthly, quarterly or annual basis while the others are reinvesting and compounding the earnings. A description of the Partnership's units, transfer restrictions, and withdrawal provisions is more fully described under the section entitled Description of Units and Summary of the Limited Partnership Agreement, pages 38-42 of the Prospectus, a part of the above-referenced Registration statement, which is incorporated by reference. As of December 31, 1996, there were 761 holders of record of the Partnerships units. A decrease of 11 from 1995. Item 6 - Selected Financial Data Redwood Mortgage Investors VI began operations in October 1987. Its financial condition and results of operation for three years to December 31, 1996 were: Balance Sheets Assets December 31, ------------------------------------------------------ 1996 1995 1994 -------------- -------------- -------------- Cash $180,597 $283,976 $447,804 Accounts Receivable: Mortgage loans, secured by Deeds of Trust 9,313,924 10,402,491 10,993,996 Accrued Interest & other fees 405,783 445,816 322,173 Advances on Real Estate Loans 108,019 131,936 30,273 Other 251,531 322,913 297,426 -------------- -------------- -------------- $10,079,257 $11,303,156 $11,643,868 Less Allowance for doubtful accounts 252,850 283,284 209,073 -------------- -------------- -------------- $9,826,407 $11,019,872 $11,434,795 Real Estate Owned acquired through foreclosure held for sale 1,441,007 1,501,712 2,231,592 Formation loan due from Redwood Mortgage. 121,849 184,177 246,505 Partnership Interest 496,040 456,821 0 Due from Related Companies 0 935 0 -------------- -------------- -------------- $12,065,900 $13,447,493 $14,360,696 ============== ============== ============== $11,944,051 $13,263,316 $14,114,191 ============== ============== ============== Liabilities and Partners Capital Liabilities: Notes Payable - Bank Line of Credit $1,530,511 $2,041,011 $2,376,511 Accounts payable & accrued expenses 0 0 0 Deferred interest on Mortgage Investments 18,522 0 0 -------------- -------------- -------------- Total Liabilities 1,549,033 2,041,011 2,376,511 -------------- -------------- -------------- Partners Capital: Limited Partners capital, subject to 10,385,252 11,212,539 11,727,914 redemption, General Partners capital 9,766 9,766 9,766 -------------- -------------- -------------- Total Partners Capital 10,395,018 11,222,305 11,737,680 $12,065,900 $13,447,493 $14,360,696 ============== ============== ============== Total Liabilities and Partners Capital $11,944,051 $13,263,316 $14,114,191 ============== ============== ==============
Statements of Income 1996 1995 1994 -------------- -------------- -------------- Gross Revenue $1,167,859 $1,277,782 $1,391,088 Expenses 579,697 659,434 726,386 ============== ============== ============== Net Income 588,162 618,348 664,702 ============== ============== ============== Net Income: to General Partners (1%) $5,882 $6,183 $6,647 to Limited Partners (99%) 582,280 612,165 658,055 -------------- -------------- -------------- $588,162 $618,348 $664,702 ============== ============== ============== Net Income per $1,000 invested by Limited Partners for entire period: - where income is reinvested and compounded 54 53 55 ============== ============== ============== -where partner receives income in monthly distributions 52 52 54 ============== ============== ==============
Item 7 - Managements Discussion and Analysis of Financial Condition and Results of Operations On December 31, 1996, the Partnerships net capital totalled $10,516,867 $10,395,018. The Partnership began funding Mortgage Investments in October 1987, and as of December 31, 1996 had distributed income at an average annualized (compounded) yield of 7.95%. Current earnings are lower than those prevalent at the outset, primarily because interest rates generally have dropped dramatically since 1988. The Partnership does not anticipate a significant increase or decrease in mortgage rates in the foreseeable future and expects the prevailing interest rates to fluctuate in a narrow range in the near future. Management expects the yield, net of provision for losses, to increase slightly in 1997. Currently, mortgage interest rates are lower than those prevalent at the inception of the Partnership. New Mortgage Investments are being originated at these lower interest rates. The result is a reduction of the average return across the entire Mortgage Investment portfolio held by the Partnership. In the future, interest rates likely will change from their current levels. The General Partners cannot at this time predict at what levels interest rates will be in the future. The General Partners believe the rates charged by the Partnership to its borrowers will not change significantly in the immediate future. Based upon the rates payable in connection with the existing Mortgage Investments, the current and anticipated interest rates to be charged by the Partnerships, and current reserve requirements, the General Partners anticipate that the annualized yield next year will range only slightly higher from its current rate. Each year, the Partnership negotiates a line of credit with a commercial bank which is secured by its Mortgage Investment portfolio. Currently, it has the capacity to borrow up to $2,500,000 at Prime plus 1%, (9.25%). Current borrowings of $1,530,511 have the effect of leveraging the portfolio about 15%. This added source of funds will help in maximizing the Partnership yield by allowing the Partnership to minimize the amount of funds in lower yield investment accounts when appropriate Mortgage Investments are not currently available because the Mortgage Investments made by the Partnership bear interest at a rate in excess of the rate payable to the bank which extended the line of credit. Interest and line of credit costs for the years ended 1994, 1995 and 1996 was $185,131, $212,915 and $158,175 respectively. The interest rate on the line of credit remained at prime plus one percent. An increase in the average overall usage of the credit line of approximately $310,000 for the years ended 1994 and 1995 resulted in the higher interest and line of credit costs. A decrease in average overall usage of the credit line for 1996 and 1995 of approximately $625,000 resulted in the decreased interest and line of credit costs. The Partnership's operating results and delinquencies are within the normal range of the General Partners expectations, based upon their experience in managing similar Partnerships over the last nineteen years. Foreclosures are a normal aspect of partnership operations and the General Partners anticipate that they will not have a material effect on liquidity. As of December 31, 1996, there were two properties in foreclosure. Cash is continually being generated from interest earnings, late charges, prepayment penalties, amortization of notes and pay-off of notes. Currently, this amount exceeds Partnership expenses and earnings and principal payout requirements. As Mortgage Investment opportunities become available, excess cash and available funds are invested in new Mortgage Investments. The General Partners regularly review the Mortgage Investment portfolio, examining the status of delinquencies, the underlying collateral securing these Mortgage Investments, REO expenses, sales activities, and borrowers payment records and other data relating to the Mortgage Investment portfolio. Data on the local real estate market, and on the national and local economy are studied. Based upon this information and more, Mortgage Investment loss reserves and allowance for doubtful accounts are increased or decreased. Because of the number of variables involved, the magnitude of possible swings and the General Partners inability to control many of these factors, actual results may and do sometimes differ significantly from estimates made by the General Partners. Management provided $472,967 and $344,807 as provision for doubtful accounts for the years ended December 31, 1994 and December 31, 1995. The decrease in the provision reflects the decrease in the amount of REO, unsecured receivables and the decreasing levels of delinquency within the portfolio. Additionally, the General Partners felt that the bottom of the real estate cycle had been reached, reflecting a decreasing need to set aside reserves for the continuously declining real estate values as had been the case in the early 1990s in the California real estate market. The Northern California recession reached bottom in 1993. Since then, the California economy has been improving, slowly at first, but now, more vigorously. A wide variety of indicators suggest that the economy in California was strong in 1996, and the State is well - positioned for fast growth. This improvement is reflective in increasing property values, in job growth, personal income growth, etc., which should translate into more loan activity. Which of course, is healthy for our lending activity. At the time of subscription to the Partnership, Limited Partners make an irrevocable decision to either take distributions of earnings monthly, quarterly or annually or to compound earnings in their capital account. For the years ended December 31, 1995 and December 31, 1996 the Partnership made distributions of earnings to Limited Partners after allocation of syndication costs of, $296,915 and $288,796 respectively. Distribution of Earnings to Limited Partners after allocation of syndication costs for the years ended December 31, 1995 and December 31, 1996 to Limited Partners capital accounts and not withdrawn was $315,250 and $293,484 respectively. As of December 31, 1995 and December 31, 1996 Limited Partners electing to withdraw earnings represented 50 % and 49 % of the Limited Partners outstanding capital accounts. The Partnership also allows the Limited Partners to withdraw their capital account subject to certain limitations (see liquidation provisions of Partnership Agreement). For the years ended December 31, 1995 and December 31, 1996, $43,364 and $96,362 were liquidated subject to the 10% penalty for early withdrawal. These withdrawals are within the normally anticipated range that the General Partners would expect in their experience in this and other Partnerships. The General Partners expect that a small percentage of Limited Partners will elect to liquidate their capital accounts over one year with a 10% early withdrawal penalty. In originally conceiving the Partnership, the General Partners wanted to provide Limited Partners needing their capital returned a degree of liquidity. Generally, Limited Partners electing to withdraw over one year need to liquidate investment to raise cash. The trend we are experiencing in withdrawals by Limited Partners electing a one year liquidation program represents a small percentage of Limited Partner capital as of December 31, 1995 and December 31, 1996 respectively and is expected by the General Partners to commonly occur at these levels. Additionally, for the years ended December 31, 1995 and December 31,1996 $ 849,599 and $1,086,737 were liquidated by Limited Partners who have elected a liquidation program over a period of five years or longer. Once the initial five year hold period has passed the General Partners expect to see an increase in liquidations due to the ability of Limited Partners to withdraw without penalty. This ability to withdraw after five years by Limited Partners has the effect of providing Limited Partner liquidity which the General Partners then expect a portion of the Limited Partners to avail themselves of. This has the anticipated effect of the partnership growing, primarily through reinvestment of earnings in years one through five. The General Partners expect to see increasing numbers of Limited Partner withdrawals in years five through eleven, at which time the bulk of those Limited Partners who have sought withdrawal have been liquidated. After year eleven, the gross figures generally should subside and the Partnership capital again tends to increase. Item 8 - Financial Statements and Supplementary Data Redwood Mortgage Investors VI, a California Limited Partnerships list of Financial Statements and Financial Statement schedules: A- Financial Statements Independent Auditors Report, Balance Sheets - December 31, 1996, and December 31, 1995, Statements of Income for the three years ended December 31, 1996, Statements of Changes in Partners Capital for the three years ended December 31, 1996 Statements of Cash Flows for the three years ended December 31, 1996, Notes to Financial Statements - December 31, 1996. B. - Financial Statement Schedules The following financial statement schedules of Redwood Mortgage Investors VI are included in Item 8. Schedule II Amounts receivable from related parties and underwriters, promoters, and employees other than related parties Schedule VIII Valuation of Qualifying Accounts Schedule IX Short Term Borrowings Schedule XII Mortgage Investments on real estate All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) FINANCIAL STATEMENTS DECEMBER 31, 1996 (with Auditors Report Thereon) PARODI & CROPPER CERTIFIED PUBLIC ACCOUNTANTS 3658 Mount Diablo Blvd., Suite #205 Lafayette California 94549 (510) 284-3590 INDEPENDENT AUDITORS REPORT THE PARTNERS REDWOOD MORTGAGE INVESTORS VI We have audited the financial statements and related schedules of REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) listed in Item 8 on form 10-K including balance sheets as of December 31, 1996 and 1995 and the statements of income, changes in partners capital and cash flows for the three years ended December 31, 1996. These financial statements are the responsibility of the Partnerships management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of REDWOOD MORTGAGE INVESTORS VI as of December 31, 1996 and 1995, and the results of its operations and cash flows for the three years ended December 31, 1996 in conformity with generally accepted accounting principles. Further, it is our opinion that the schedules referred to above present fairly the information set forth therein in compliance with the applicable accounting regulations of the Securities and Exchange Commission. As explained in note 2(k) and 11 to the financial statements, the formation loan receivable from Redwood Mortgage has been reclassified as a reduction in Partners Capital until collections are received. There was no effect on net income. /S/ A. Bruce Cropper PARODI & CROPPER Lafayette, California February 28, 1997 REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) BALANCE SHEETS DECEMBER 31, 1996 AND 1995 ASSETS
1996 1995 --------------- --------------- Cash $180,597 $283,976 --------------- --------------- Accounts receivable: Mortgage Investments, secured by deeds of trust 9,313,924 10,402,491 Accrued Interest on Mortgage Investments 405,783 445,816 Advances on Mortgage Investments 108,019 131,936 Accounts receivables, unsecured 251,531 322,913 --------------- --------------- 10,079,257 11,303,156 Less allowance for doubtful accounts 252,850 283,284 --------------- --------------- 9,826,407 11,019,872 --------------- --------------- Real estate owned, held for sale, acquired through foreclosure 1,441,007 1,501,712 Investment in Partnership 496,040 456,821 Formation loan due from Redwood Mortgage. 121,849 184,177 Prepaid expenses and other assets 0 935 --------------- --------------- $12,065,900 $13,447,493 =============== =============== Total Assets $11,944,051 $13,263,316 =============== =============== LIABILITIES AND PARTNERS CAPITAL Liabilities: Deferred Interest $18,522 $0 Note payable - bank line of credit 1,530,511 2,041,011 --------------- --------------- Total Liabilities 1,549,033 2,041,011 Partners Capital 10,516,867 11,406,482 --------------- --------------- $12,065,900 $13,447,493 =============== =============== Partners Capital: Limited Partners capital, subject to redemption, (note 4D): net of formation loan receivable of $121,849 and $184,177, for 1996 and 1995 respectively 10,385,252 11,212,539 General Partners Capital: 9,766 9,766 --------------- --------------- Total Partners capital 10,395,018 11,222,305 Total Liabilities and Partners capital $11,944,051 $13,263,316 =============== =============== See accompanying notes to financial statements.
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) STATEMENTS OF INCOME FOR THE THREE YEARS ENDED DECEMBER 31, 1996
YEARS ENDED DECEMBER 31, --------------------------------------------------- 1996 1995 1994 ------------- -------------- ------------- Revenues: Interest on Mortgage Investments $1,135,218 $1,256,499 $1,363,898 Interest on bank deposits 4,750 5,206 10,798 Late charges, prepayment penalties, and fees 27,891 16,077 16,392 ------------- -------------- ------------- 1,167,859 1,277,782 1,391,088 ------------- -------------- ------------- Expenses: Mortgage servicing fees 44,565 42,056 0 General partners asset management fees 0 0 8,942 Clerical costs through Redwood Mortgage 31,838 23,341 0 Interest and line of credit costs 158,175 212,915 185,131 Provision for doubtful accounts and losses on real estate acquired through foreclosure 312,684 344,807 472,967 Professional services 17,825 19,452 45,256 Other 14,610 16,863 14,090 ------------- -------------- ------------- 535,132 617,378 726,386 579,697 659,434 726,386 ------------- -------------- ------------- Net Income $588,162 $618,348 $664,702 ============= ============== ============= Net income: To General Partners(1%) $5,882 $6,183 $6,647 To Limited Partners (99%) $582,280 $612,165 $658,055 ============= ============== ============= $588,162 $618,348 $664,702 ============= ============== ============= Net income per $1,000 invested by Limited Partners for entire period: -where income is reinvested and compounded $54 $53 $55 ============= ============== ============= -where partner receives income in monthly distributions $52 $52 $54 ============= ============== ============= See accompanying notes to financial statements.
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS CAPITAL FOR THE THREE YEARS ENDED DECEMBER 31, 1996
PARTNERS CAPITAL GENERAL LIMITED PARTNERS PARTNERS TOTAL -------------- ---- --------------- ---- --------------- Balances at December 31, 1993 9,773 12,342,173 12,351,946 Net income 6,647 658,055 664,702 Early withdrawal penalties 0 (12,790) (12,790) Partners withdrawals (6,654) (1,013,019) (1,019,673) -------------- --------------- --------------- Balances at December 31, 1994 $9,766 11,974,419 11,984,185 Net income 6,183 612,165 618,348 Early withdrawal penalties 0 (4,336) (4,336) Partners withdrawals (6,183) (1,185,532) (1,191,715) -------------- --------------- --------------- Balances at December, 1995 $9,766 11,396,716 11,406,482 Net income 5,882 582,280 588,162 Early withdrawal penalties 0 (8,721) (8,721) Partner s withdrawals (5,882) (1,463,174) (1,469,056) -------------- --------------- --------------- Balances at December 31, 1996 $9,766 10,507,101 10,516,867 ============== =============== =============== See accompanying notes to financial statements
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) STATEMENTS OF CHANGES IN PARTNERS CAPITAL FOR THE THREE YEARS ENDED DECEMBER 31, 1996
PARTNERS CAPITAL ------------------------------------------------------------------------------------- LIMITED PARTNERS CAPITAL GENERAL PARTNERS CAPIAL ------------------------------------------------ ------------------------------------ Capital Account Formation Limited Loan General Partners Receivable Total Partners Total -------------- ------------- --------------- ------------ -------------- Balances at December 31, 1993 $12,342,173 $(285,771) $12,056,402 $9,773 $12,066,175 Formation loan collections 0 31,164 31,164 0 31,164 Net income 658,055 0 658,055 6,647 664,702 Early withdrawal penalties (12,790) 8,102 (4,688) 0 (4,688) Partners withdrawals (1,013,019) 0 (1,013,019) (6,654) (1,019,673) -------------- ------------- ------------ -------------- Balances at December 31, 1994 11,974,419 (246,505) 11,727,914 $9,766 11,737,680 Formation loan collections 0 59,581 59,581 0 59,581 Net income 612,165 0 612,165 6,183 618,348 Early withdrawal penalties (4,336) 2,747 (1,589) 0 (1,589) Partners withdrawals (1,185,532) 0 (1,185,532) (6,183) (1,191,715) -------------- ------------- ------------ -------------- Balances at December 31, 1995 11,396,716 (184,177) 11,212,539 $9,766 11,222,305 Formation loan collections 0 56,803 56,803 0 56,803 Net income 582,280 0 582,280 5,882 588,162 Early withdrawal penalties (8,721) 5,525 (3,196) 0 (3,196) Partners withdrawals (1,463,174) 0 (1,463,174) (5,882) (1,469,056) -------------- ------------- --------------- ------------ -------------- Balances at December 31, 1996 $10,507,101 $(121,849) $10,385,252 $9,766 $10,395,018 ============== ============= =============== ============ ============== See accompanying notes to financial statements
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED DECEMBER 31, 1996
YEARS ENDED DECEMBER 31, ----------------------------------------------------- 1996 1995 1994 --------------- ------------- ------------- Cash flows from operating activities: Net income $588,162 $618,348 $664,702 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts 65,804 74,718 277,594 Early withdrawal penalty credited to income (3,196) (1,589) (4,688) Provision for Losses on real estate held for sale 246,880 270,089 195,373 (Increase) decrease in assets: Accrued interest & advances 63,950 (225,306) 157,963 Prepaid expenses and other assets 935 (935) 1,524 Increase (decrease) in liabilities: Accounts payable and accrued expenses 0 0 (29,328) Deferred Interest on Mortgage Investments 18,522 0 (8,456) -------------- ------------- ------------- Net cash provided by operating activities 984,253 736,914 1,259,372 -------------- ------------- ------------- Net cash provided by operating activities 981,057 735,325 1,254,684 -------------- ------------- ------------- Cash flows from investing activities: Principal collected on Mortgage Investments 3,295,834 2,273,233 2,769,970 Mortgage Investments made (2,474,843) (2,062,626) (3,299,838) Formation loan collections 62,328 62,328 39,266 Additions to real estate held for sale (242,869) (169,015) (390,566) Dispositions of real estate held for sale 299,414 526,889 267,463 Investment in Partnership (39,219) 0 0 -------------- ------------- ------------- Net cash provided by (used in) investing activities 900,645 630,809 (613,705) -------------- ------------- ------------- Net cash provided by (used in) investing activities 838,317 568,481 (652,971) -------------- ------------- ------------- Cash flows from financing activities: Net increase (decrease) in note payable-bank (510,500) (335,500) 412,295 Partners withdrawals (1,469,056) (1,191,715) (1,019,673) Early withdrawal penalties, net (8,721) (4,336) (12,790) -------------- ------------- ------------- Formation loan collections 56,803 59,581 31,164 -------------- ------------- ------------- Net cash provided by (used in) financing activities (1,988,277) (1,531,551) (620,168) -------------- ------------- ------------- Net cash provided by (used in) financing activities (1,922,753) (1,467,634) (576,214) -------------- ------------- ------------- Net increase (decrease) in cash (103,379) (163,828) 25,499 Cash - beginning of period 283,976 447,804 422,305 -------------- ------------- ------------- Cash - end of period $180,597 $283,976 $447,804 ============== ============= ============= See accompanying notes to financial statements.
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 NOTE 1 ORGANIZATION AND GENERAL Redwood Mortgage Investors VI, (the Partnership) is a California Limited partnership, of which the General Partners are D. Russell Burwell, Michael R. Burwell and Gymno Corporation, a California corporation owned and operated by the individual General Partners. The partnership was organized to engage in business as a mortgage lender for the primary purpose of making Mortgage Investments secured by Deeds of Trust on California real estate. Mortgage Investments are being arranged and serviced by Redwood Home Loan Co. (RHL Co.), dba Redwood Mortgage, an affiliate of the General Partners. The offering was closed with contributed capital totaling $9,781,366. Each months income is distributed to partners based upon their proportionate share of partners capital. Some partners have elected to withdraw income on a monthly, quarterly or annual basis. A. Sales Commissions - Formation Loan Sales commissions ranging from 0% (units sold by General Partners) to 10% of gross proceeds were paid to Redwood Mortgage., an affiliate of the General Partners that arranges and services the Mortgage Investments. To finance the sales commissions, the Partnership loaned to Redwood Mortgage $623,255 (the Formation Loan) relating to contributed capital of $9,781,366. The Formation Loan is unsecured, and is being repaid, without interest, in ten annual installments of principal, commencing December 31, 1989. The following reflects transactions in the Formation Loan account through December 31, 1996: Amount loaned during 1987,1988 and 1989 $623,255 Less: Cash repayments $459,462 Allocation of early withdrawal penalties 41,944 501,406 =========== ----------- Balance December 31, 1996 $121,849 =========== The formation loan, which is receivable from Redwood Mortage, an affiliate of the General Partners, has been deducted from Limited Partners capital in the balance sheet. As amounts are collected from Redwood Mortgage, the deduction from capital will be reduced. (See Note 11) B. Other Organizational and Offering Expenses Organizational and offering expenses, other than sales commissions, (including printing costs, attorney and accountant fees, and other costs), paid by the Partnership from the offering proceeds totaled $360,885 or 3.69% of the gross proceeds contributed by the Partners. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenues and expenses are accounted for on the accrual basis of accounting. The Partnership bears its own organization and syndication costs (other than certain sales commissions and fees described above) including legal and accounting expenses, printing costs, selling expenses, a 1% wholesale brokerage fee and filing fees. Organizational costs of $14,750 were capitalized and were amortized over a five year period. Syndication costs of $346,135 were charged against partners capital and were allocated to individual partners consistent with the partnership agreement over a five year period. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 Property acquired through foreclosure will be held for prompt sale to return the funds to the loan portfolio. Such property is recorded at cost which includes the principal balance of the former Mortgage Investment made by the Partnership plus accrued interest, payments made to keep the senior loans current, costs of obtaining title and possession, less rental income or at estimated net realizable value, if less. The difference between such costs and estimated net realizable value is deducted from cost in the Balance Sheet to arrive at the carrying value of such property. In preparing the financial statements, management is required to make estimates based on the information available that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the related periods. Such estimates relate principally to the determination of the allowance for doubtful accounts and the valuation of real estate acquired through foreclosure. Actual results could differ significantly from these estimates. Mortgage Investments and the related accrued interest, fees and advances are analyzed on a continuous basis for recoverability. Delinquencies are identified and followed as part of the Mortgage Investment system. A provision is made for doubtful accounts to adjust the allowance for doubtful accounts to an amount considered by management to be adequate to provide for unrecoverable accounts receivable. Amounts reflected in the statements of income as net income per $1,000 invested by Limited Partners for the entire period are actual amounts allocated to Limited Partners who have their investment throughout the period and have elected to either leave their earnings to compound or have elected to receive monthly distributions of their net income. Individual limited partner income is allocated each month based on the limited partners pro rata share of partnership capital. Because the net income percentage varies from month to month, amounts per $1,000 will vary for those individuals who make or withdraw investments during the period, or select other options. However, the net income per $1,000 average invested has approximated those reflected for those whose investments and options have remained constant. No provision for Federal and State income taxes is made in the financial statements since income taxes are the obligation of the partners if and when income taxes apply. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Accrual Basis Revenues and expenses are accounted for on the accrual basis of accounting wherein income is recognized as earned and expenses are recognized as incurred. Once a loan is categorized as impaired, interest is no longer accrued thereon. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 B. Management Estimates In preparing the financial statements, management is required to make estimates based on the information available that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the related periods. Such estimates relate principally to the determination of the allowance for doubtful accounts, including the valuation of impaired mortgage investments, and the valuation of real estate acquired through foreclosure. Actual results could differ significantly from these estimates. C. Mortgage Investments, Secured by Deeds of Trust The Partnership has both the intent and ability to hold the mortgage investments to maturity, i.e., held for long-term investment. They are therefore valued at cost for financial statement purposes with interest thereon being accrued by the simple interest method. Financial Accounting Standards Board Statements (SFAS) 114 and 118 (effective January 1, 1995) provide that if the probable ultimate recovery of the carrying amount of a mortgage investment, with due consideration for the fair value of collateral, is less than the recorded investment and related amounts due and the impairment is considered to be other than temporary, the carrying amount of the investment (cost) shall be reduced to the present value of future cash flows. The adoption of these statements did not have a material effect on the financial statements of the Partnership because that was the valuation method previously used on impaired loans. At December 31, 1996, 1995 and 1994, reductions in the cost of loans categorized as impaired by the Partnership totalled $13,006, $45,933 and $45,000, respectively. The reduction in stated value was accomplished by increasing the allowances for doubtful accounts. As presented in Note 8 to the financial statements as of December 31, 1996, the average mortgage investment to appraised value of security at the time the loans were consummated was 65.91%. When a loan is valued for impairment purposes, an updating is made in the valuation of collateral security. However, such a low loan to value ratio tends to minimize reductions for impairment. D. Cash and Cash Equivalents For purposes of the statements of cash flows, cash and cash equivalents include interest bearing and non-interest bearing bank deposits. E. Real Estate Owned, Held for Sale Real estate owned, held for sale, includes real estate acquired through foreclosure and is stated at the lower of the recorded investment in the property, net of any senior indebtedness, or at the propertys estimated fair value, less estimated costs to sell. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 The following schedule reflects the costs of real estate acquired through foreclosure and the recorded reductions to estimated fair values, less estimated costs to sell as of December 31, 1996 and 1995: December 31, ----------------------------------------------- 1996 1995 --------------- --------------- Costs of properties $1,743,382 $1,588,879 Reduction in value 302,375 87,167 -------------- --------------- Fair value reflected in financial statements $1,441,007 $1,501,712 =============== =============== Effective January 1, 1996, the Partnership adopted the provisions of statement No 121 (SFAS 121) of the Financial Accounting Standards Board, Accounting for the Impairment of Long Lived Assets and for Long Lived Assets to be disposed of. The adoption of SFAS 121 did not have a material impact on the Partnerships financial position because the methods indicated were essentially those previously used by the Partnership. F. Investment in Partnership (see note 5) The Partnership accounts for its investment in a partnership as an investment in real estate, which is at the lower of costs or fair value, less estimated costs to sell. At December 31, 1996, cost is considered less than fair value and the investment is stated at cost in the financial statements. G. Income Taxes No provision for Federal and State income taxes is made in the financial statements since income taxes are the obligation of the partners if and when income taxes apply. H. Organization and Syndication Costs The Partnership bears its own organization and syndication costs (other than certain sales commissions and fees described above) including legal and accounting expenses, printing costs, selling expenses, a 1% wholesale brokerage fee and filing fees. Organizational costs of $14,750 were capitalized and were amortized over a five year period. Syndication costs of $346,135 were charged against partners capital and were allocated to individual partners consistent with the Partnership Agreement. I. Allowance for Doubtful Accounts Mortgage Investments and the related accrued interest, fees and advances are analyzed on a continuous basis for recoverability. Delinquencies are identified and followed as part of the Mortgage Investment system. A provision is made for doubtful accounts to adjust the allowance for doubtful accounts to an amount considered by management to be adequate with due consideration to collateral value to provide for unrecoverable accounts receivable, including impaired mortgage investments, unspecified mortgage investments, accrued interest and advances on mortgage investments, and other accounts receivable (unsecured). The composition of the allowance for doubtful accounts as of December 31, 1996 and 1995 was a follows: REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 December 31, ------------------------------------------ 1996 1995 ------------ --------------- Impaired mortgage investments $13,006 $45,933 Unspecified mortgage investments 59,844 37,351 Accounts receivable, unsecured 180,000 200,000 ------------ --------------- $252,850 $283,284 =========== =============== J. Net Income Per $1,000 Invested Amounts reflected in the statements of income as net income per $1,000 invested by Limited Partners for the entire period are actual amounts allocated to Limited Partners who have their investment throughout the period and have elected to either leave their earnings to compound or have elected to receive monthly distributions of their net income. Individual income is allocated each month based on the Limited partners pro rata share of Partners Capital. Because the net income percentage varies from month to month, amounts per $1,000 will vary for those individuals who made or withdrew investments during the period, or select other options. However, the net income per $1,000 average invested has approximated those reflected for those whose investments and options have remained constant. K. Reclassifications and Changes in Presentation Certain reclassifications not affecting net income have been made to prior year amounts to conform to the current year presentation. In addition, the formation loan receivable, previously categorized as an asset, has been deducted from Limited Partners capital until collected from Redwood Mortgage, an affiliate of the General Partners (see Note 11). NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES The following are commissions and/or fees which are paid to the General Partners and/or related parties. A. Mortgage Brokerage Commissions Loan brokerage commissions for services in connection with the review, selection, evaluation, negotiation and extension of the Mortgage Investments were limited up to 12% of the principal amount of the loans through the period ending 6 months after the termination date of the offering. Thereafter, commissions are limited to an amount not to exceed 4% of the total Partnership assets per year. Such commissions are paid by the borrowers, thus, not an expense of the Partnership. B. Mortgage Servicing Fees Monthly mortgage servicing fees are paid to Redwood Mortgage up to 1/8 of 1% (1.5% annual) of the unpaid principal, or such lesser amount as is reasonable and customary in the geographic area where the property securing the Mortgage Investment is located. (currently at 1/12 of 1% or 1% annual). The amount remitted to the partnership and recorded as interest on Mortgage Investments is net of such fees. In 1994 $123,758 of the total loan service fees of $123,758, in 1995 $50,741 of the total loan service fees of $92,797 and in 1996, $41,779 of the total loan service fees of $86,344 were waived by the Redwood Mortgage. Mortgage servicing fees of $44,565, $42,056 and $0 were incurred for years 1996, 1995 and 1994, respectively. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 C. Asset Management Fee Pursuant to the partnership agreement, The General Partners receive a monthly fees for managing the Partnerships Mortgage Investment portfolio and operations equal of up to 1/32 of 1% (3/8 of 1% annual). of the net asset value. Such fees were reduced from $45,974 to $8,942 in 1994, $44,336 to $0.00 in 1995, and $41,802 to $0.00 in 1996, with the difference being waived by the General Partners. Management fees of $0, $0 and $8,942 were incurred for years 1996, 1995 and 1994, respectively. D. Other Fees The Partnership Agreement provides for other fees such as reconveyance, mortgage assumption and mortgage extension fees. These fees are paid by the borrowers to parties related to the General Partners. E. Income and Losses All income is credited or charged to partners in relation to their respective partnership interests. The partnership interest of the General Partners (combined) is a total of 1%. F. Operating Expenses The General Partners or their affiliate (Redwood Mortgage) are reimbursed by the Partnership for all operating expenses actually incurred by them on behalf of the Partnership, including without limitation, out-of-pocket general and administration expenses of the Partnership, accounting and audit fees, legal fees and expenses, postage and preparation of reports to Limited Partners. In 1994, 1995, and 1996, clerical costs totaling $0.00, $23,341, and $31,838 respectively, were reimbursed to Redwood Mortgage and are included in expenses in the Statements of Income. The 1994 expenses were absorbed by the Redwood Mortgage. NOTE 4 OTHER PARTNERSHIP PROVISIONS A. Term of the Partnership The term of the Partnership is approximately 40 years, unless sooner terminated as provided. The provisions provided for no capital withdrawal for the first five years, subject to the penalty provision set forth in (D) below. Thereafter, investors have the right to withdraw over a five-year period, or longer. B. Election to Receive Monthly, Quarterly or Annual Distributions Upon subscriptions, investors elected either to receive monthly, quarterly or annual distributions of earnings allocations, or to allow earnings to compound for at least a period of 5 years. C. Profits and Losses Profits and losses are allocated monthly among the Limited Partners according to their respective capital accounts after 1% is allocated to the General Partners. D. Withdrawal From Partnership A Limited Partner had no right to withdraw from the Partnership or to obtain the return of his capital account for at least five years after such units are purchased which in all instances had occurred by December 31, 1996. After that time, at the election of the Partner, capital accounts can be returned over a five year period in 20 equal quarterly installments or such longer period as is requested. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 Notwithstanding the above, in order to provide a certain degree of liquidity to the Limited Partners, the General Partners will liquidate a Limited Partners entire capital account in four quarterly installments beginning on the last day of the calendar quarter following the quarter in which the notice of withdrawal is given. Such liquidations shall, however, be subject to a 10% early withdrawal penalty applicable to any sums withdrawn prior to the time when such sums otherwise could have been withdrawn pursuant to the liquidation procedure set forth above. The 10% early withdrawal penalty will be received by the Partnership, and a portion of the sums collected as such penalty will be applied toward the next installment(s) of principal under the Formation Loan owed to the Partnership by Redwood Mortgage. Such portion shall be determined by the ratio between the initial amount of Formation Loan and the total amount of other organization and syndication costs incurred by the Partnership in this offering. The balance of any such early withdrawal penalties shall be retained by the Partnership for its own account and applied against syndication costs. Since the syndication costs have been fully amortized as of December 31, 1993, the early withdrawal penalties gained in the future will be applied on the same basis as before with the amount otherwise being credited to the syndication costs being credited to income for the period. The Partnership will not establish a reserve from which to fund withdrawals and, accordingly, the Partnership's capacity to return a Limited Partners capital account is restricted to the availability of Partnership cash flow. Furthermore, no more than 20% of the total Limited Partners capital accounts outstanding at the beginning of any year shall be liquidated during any calendar year. NOTE 5 - INVESTMENT IN PARTNERSHIP. The Partnerships interest in land acquired through foreclosure, located in East Palo Alto with costs totalling $496,040 has been invested with that of two other Partnerships (total cost to date, primarily land, of $1,021,798) in a partnership which is in the process of constructing approximately 72 single family homes for sale. Redwood Mortgage Investors V, VI, and VII have first priority on return of investment plus interest thereon, in addition to a share of profits realized. NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT The Partnership has a bank line of credit secured by its Mortgage Investment portfolio up to $2,500,000 at 1% over prime. The balances were $2,041,011 and $1,530,511 at December 31, 1995 and 1996, respectively, and the interest rate at December 31, 1996 was 9.25% (8.25% prime + 1%). NOTE 7 - LEGAL PROCEEDINGS The Partnership is not a defendant in any legal actions. However, legal actions against borrowers and other involved parties have been initiated by the Partnership to help assure payments against unsecured accounts receivable totaling $251,531. Management anticipates that the ultimate outcome of the legal matters will not have a material adverse effect on the net assets of the Partnership, with due consideration having been given in arriving at the allowance for doubtful accounts. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 NOTE 8 - INCOME TAXES The following reflects a reconciliation from net assets (Partners Capital) reflected in the financial statements to the tax basis of those net assets: December 31, -------------------------------------- 1996 1995 ---------------- --------------- Net assets - Partners Capital per financial statements $10,395,018 $11,222,305 121,849 184,177 Allowance for doubtful accounts 252,850 283,284 ---------------- --------------- Net assets tax basis $10,769,717 $11,689,766 ================ =============== In 1996, approximately 73% of taxable income was allocated to tax exempt organizations i.e., retirement plans. Such plans do not have to file income tax returns unless their unrelated business income exceeds $1,000. Applicable amounts become taxable when distribution is made to participants. NOTE 9 - FAIR VALUE OF FINANCIAL INSTRUMENTS The following methods and assumptions were used to estimate the fair value of financial instruments: (a) Cash and Cash Equivalents - The carrying amount equals fair vale. All amounts, including interest bearing, are subject to immediate withdrawal. (b) The Carrying Value of Mortgage Investments - (see note 2 (c)) is $9,313,924. The December 31, 1996 fair value of these investments of $9,811,158 is estimated based upon projected cash flows discounted at the estimated current interest rates at which similar loans would be made. The applicable amount of the allowance for doubtful accounts along with accrued interest and advances related thereto should also be considered in evaluating the fair value versus the carrying value. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1996 NOTE 8 10- ASSET CONCENTRATIONS AND CHARACTERISTICS The Mortgage Investments are secured by recorded deeds of trust. At December 31, 1996, there were 65 Mortgage Investments outstanding with the following characteristics: Number of Mortgage Investments outstanding 65 Total Mortgage Investments outstanding $9,313,924 Average Mortgage Investment outstanding $143,291 Average Mortgage Investment as percent of total 1.54% Average Mortgage Investment as percent of Partners Capital 1.36% Average Mortgage Investment as percent of Partners Capital 1.38% Largest Mortgage Investment outstanding $1,376,117 Largest Mortgage Investment as percent of total 14.77% Largest Mortgage Investment as percent of Partners Capital 13.08% Largest Mortgage Investment as percent of Partners Capital 13.24% Number of counties where security is located (all California) 14 Largest percentage of Mortgage Investments in one county 30.22% Average Mortgage Investment to appraised value of security at time Mortgage Investment was consummated 65.91% Number of Mortgage Investments in foreclosure 2 The cash balance at December 31, 1996 of $180,597 was in two banks with interest bearing balances totalling $149,247. The balances exceeded FDIC insurance limits (up to $100,000 per bank) by $49,247. The following categories of mortgage investments are pertinent at December 31, 1996 and 1995: December 31, ------------------------------------------ 1996 1995 ----------------- --------------- First Trust Deeds $4,928,794 $4,449,229 Second Trust Deeds 3,729,581 5,187,807 Third Trust Deeds 405,567 531,527 Fourth Trust Deeds 249,982 233,928 ----------------- --------------- Total mortgage investments 9,313,924 10,402,491 Prior liens due other lenders 17,200,385 21,437,338 ----------------- --------------- Total debt $26,514,309 $31,839,829 ================= =============== Appraised property value at time of loan $40,225,303 $49,439,750 ================= =============== Total investments as a percent of appraisals 65.91% 64.40% ================= =============== Investments by Type of Property Owner occupied homes $1,443,835 $2,323,009 Non-Owner occupied homes 973,498 612,008 Apartments 786,362 1,129,878 Commercial 6,110,229 6,337,596 ================= =============== $9,313,924 $10,402,491 ================= =============== Scheduled maturity dates of mortgage investments as of December 31, 1996 are as follows: Year Ending December 31, ------------------- 1997 $2,516,933 1998 2,264,238 1999 1,999,100 2000 415,140 2001 555,380 Thereafter 1,563,133 =============== $9,313,924 =============== The scheduled maturities for 1997 include approximately $1,631,054 in loans which are past maturity at December 31, 1996. $334,583 of those loans were categorized as delinquent over 90 days. Five loans with principal outstanding of $549,356 had interest payments overdue in excess of 90 days. Two loans had impaired provisions totalling $13,006 at December 31, 1996. The cash balance at December 31, 1996 of $180,597 was in two banks with interest bearing balances totalling $149,247. The balances exceeded FDIC insurance limits (up to $100,000 per bank) by $49,247. NOTE 11 - CHANGE IN PRESENTATION The formation loan receivable from Redwood Mortgage, an affiliate of the General Partners, has been categorized as a reduction in Limited Partners Capital, the source of the funds. It was previously reflected as an asset. As payments are received, or early withdrawal penalties realized, the formation loan balance will be reduced and restored to Limited Partners Capital. The total of the formation loan outstanding was $121,849 and $184,177 at December 31, 1996 and 1995, respectively. In addition, Limited Partners Capital and General Partners Capital are reflected separately in the Balance Sheet, whereas they were previously reflected separately in the Statement of Changes in Partners Capital. SCHEDULE II AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES. RULE 12-03 Column A Column B Column C Column D Column E Name of Debtor Balance Beg. Additions Deductions Balance at end of period of period 12/31/95 (1) (2) (1) (2) Amounts Amounts Current Not Current collected written 12/31/96 off * Redwood Mortgage. $184,177 $0.00 $56,803 $5,525 $0.00 $121,849 The above schedule represents the Formation Loan borrowed by Redwood Mortgage from the Partnership to pay for the selling commissions on units. It is an unsecured loan and bears no interest. It is being repaid to the Partnership in ten equal annual installments of principal only commencing December 31, 1989. * The amount written off is comprised of the application of the applicable portion of early withdrawal penalties as provided in the prospectus.
SCHEDULE VIII VALUATION AND QUALIFYING ACCOUNTS REDWOOD MORTGAGE INVESTORS VI Col. A Col. B Col. C Col. D Col. E Description Balance Additions Deductions Balance at -------------------------------- Beginning (1) (2) Describe End of Period of Period Charged to Charged to Costs Other & Expenses Accounts - Describe
Year Ended 12/31/96 Deducted from Asset Accounts: Allowance for Doubtful Accounts $283,284 $65,804 $0.00 $96,238 $252,850 Cumulative write-down of Real Estate held for sale (REO) $87,167 246,880 $0.00 31,672 302,375 Total $370,451 312,684 0.00 127,910 555,225 ============= ================ =============== ==================== =====================
SCHEDULE IX SHORT-TERM BORROWINGS REDWOOD MORTGAGE INVESTORS VI - RULE 12-10 Col. A Col. B Col. C Col. D Col. E Col. F Category of Balance at end Weighted Maximum Amount Average Amount Weighted Aggregate of Period Average Outstanding Outstanding Average Short-Term Interest Rate During the During the Interest Rate Borrowings Period Period During the
Period ================== ================= ================= ================= ================= ================= Year-Ended 12/31/96 $1,530,511 9.30% $2,041,011 $1,697,816 9.30%
SCHEDULE XII MORTGAGE LOANS ON REAL ESTATE. RULE 12-29 MORTGAGE INVESTMENTS ON REAL ESTATE Col. A Col. B Col. C Col. D Col. E Col. F Col. G Col. H Col. I Col. J Descp. Interest Final Periodic Prior Face Amt. Carrying Principal Type of Geographic Rate Maturity Payment Liens of amount of amount of Lien County Date Terms Mortgage Mortgage Mortgage Location Investment Investment Investments (original subject to amount) Delinq. Principal or Interest - --------- --------- --------- ---------- ---------- ------------ ------------ ------------ --------- --------------
Comm. 14.750% 09/01/95 $2,241.96 $250,000 $185,000.00 $182,034.79 0.00 2nd Mtg San Mateo Res. 13.750% 10/01/96 1,833.33 369,163 160,000.00 160,000.00 0.00 2nd Mtg San Mateo Comm 13.750% 10/01/96 644.53 0.00 56,250.00 56,250.00 0.00 1st Mtg Santa Clara Res. 12.500% 02/01/07 554.63 0.00 45,000.00 38,157.67 0.00 1st Mtg Santa Cruz Res. 10.000% 12/24/01 545.86 0.00 67,257.75 61,767.97 0.00 1st Mtg Alameda Res. 7.375% 02/01/99 602.96 0.00 87,300.00 82,637.41 0.00 1st Mtg Alameda Res. 6.000% 04/01/96 106.81 10,470 21,361.99 21,361.99 0.00 2nd Mtg Sacramento Res. 4.000% 04/01/97 113.30 0.00 23,130.95 23,130.86 0.00 1st Mtg Sacramento Res. 4.000% 04/01/97 120.00 0.00 24,384.59 23,946.78 0.00 1st Mtg Sacramento Comm 7.000% 08/06/02 551.36 30,802 82,873.25 78,851.88 0.00 2nd Mtg Alameda Res. 7.000% 11/01/97 844.85 0.00 115.140.00 107,900.06 0.00 1st Mtg San Mateo Comm 12.500% 01/01/08 1,343.45 64,620 109,000.00 96,802.83 0.00 2nd Mtg Santa Clara Comm 12.250% 01/01/98 5,104.16 442,592 499,998.81 499,998.81 0.00 2nd Mtg Contra Costa Comm 12.000% 06/01/98 497.08 0.00 58,500.00 47,774.46 0.00 1st Mtg Sonoma Apts 2.000% 05/01/06 540.83 89,904 100,000.00 96,893.59 0.00 2nd Mtg Sacramento Res. 12.000% 07/01/98 2,417.24 67,312 235,000.00 214,773.21 214,773.21 2nd Mtg El Dorado Res. 13.500% 09/01/08 280.90 18,085 21,635.32 19,856.23 0.00 2nd Mtg Contra Costa Comm. 12.000% 11/01/98 2,057.23 11,864 200,000.00 74,423.44 0.00 2nd Mtg Sacramento Comm. 10.000% 12/01/98 1,755.14 0.00 200,000.00 197,660.10 0.00 1st Mtg Stanislaus Comm 12.250% 01/01/98 2,601.02 1,126,508 249,999.40 249,982.09 0.00 4th Mtg Contra Costa Comm 10.000% 12/01/98 5,046.04 0.00 575,000.00 567,649.23 0.00 1st Mtg Alameda Comm. 7.000% 12/01/03 1,151.48 562,500 99,172.75 83,132.89 0.00 2nd Mtg Alameda Comm. 12.000% 02/01/99 14,025.08 0.00 1,376,117.03 1,376,117.03 0.00 1st Mtg Santa Clara Res. 12.000% 06/01/04 1,053.22 50,205 100,000.00 98,077.41 0.00 2nd Mtg Santa Clara Land 12.000% 07/01/96 1,352.50 679,258 135,250.00 135,250.00 135,250.00 3rd Mtg Sonoma Comm 8.500% 11/07/99 515.73 0.00 72,809.59 72,809.59 0.00 1st Mtg Sonoma Land 11.500% 12/20/96 4,620.53 146,582 567,856.74 482,142.52 0.00 2nd Mtg Stanislaus Res. 8.000% 12/01/00 500.00 148,004 52,500.00 48,474.54 0.00 2nd Mtg Santa Clara Apts 7.000% 02/10/05 234.06 80,250 40,125.00 40,125.00 0.00 2nd Mtg San Francisco Res. 12.000% 06/25/94 100.00 0.00 10,000.00 10,000.00 0.00 1st Mtg Sacramento Res. 12.000% 03/01/98 1,500.29 0.00 280,000.00 147,206.50 0.00 1st Mtg Alameda Apts 11.500% 04/01/05 723.24 0.00 150,000.00 73,034.37 0.00 1st Mtg San Francisco Comm. 9.000% 05/10/02 670.52 0.00 83,333.33 82,407.46 0.00 1st Mtg Shasta Comm. 12.000% 12/31/99 2,500.00 2,439,050 450,000.00 250,000.00 0.00 2nd Mtg Santa Clara Res 8.000% 09/27/00 482.54 96,429 72,380.95 72,380.95 0.00 2nd Mtg Monterey Comm. 12.000% 12/01/11 756.11 0.00 63,000.00 61,680.63 0.00 1st Mtg Alameda Comm 11.875% 12/01/06 1,566.00 0.00 150,000.00 149,146.45 0.00 1st Mtg San Mateo Comm 12.000% 12/31/01 3,486.42 1,955,550 348,641.64 348,641.64 0.00 2nd Mtg Santa Clara Res. 7.000% 05/15/01 850.00 0.00 145,000.00 144,970.32 0.00 1st Mtg San Mateo Land 12.000% 02/01/97 3,822.50 0.00 382,250.00 382,250.00 0.00 1st Mtg Santa Clara Res 8.000% 09/18/03 166.58 0.00 22,655.51 22,655.51 0.00 1st Mtg Sonoma Res 8.000% 09/30/03 170.67 0.00 23,211.95 23,211.95 0.00 1st Mtg Sonoma Res. 8.000% 04/10/97 247.04 0.00 37,055.61 37,055.61 0.00 1st Mtg San Mateo Comm 12.000% 02/01/99 232.27 1,279,200 49,200.00 22,536.11 0.00 2nd Mtg Santa Clara Col. A Col. B Col. C Col. D Col. E Col. F Col. G Col. H Col. I Col. J Descp. Interest Final Periodic Prior Face Amt. Carrying Principal Type of Geographic Rate Maturity Payment Liens of amount of amount of Lien County Date Terms Mortgage Mortgage Mortgage Location Investment Investment Investments (original subject to amount) Delinq. Principal or Interest - --------- --------- --------- ---------- ----------- ------------ ----------- ------------ --------- -------------- Res. 13.000% 12/01/99 704.17 0.00 65,000.00 65,000.00 0.00 1st Mtg Ventura Res. 13.000% 12/01/99 704.17 0.00 65,000.00 65,000.00 0.00 1st Mtg Ventura Res. 13.000% 12/01/99 704.17 0.00 65,000.00 65,000.00 0.00 1st Mtg Ventura Res. 13.500% 03/01/03 467.39 0.00 36,000.00 23,541.96 0.00 1st Mtg Solano Apts 10.000% 12/01/00 1,487.60 4,125,105 275,000.00 134,601.37 0.00 2nd Mtg Alameda Res. 10.000% 08/01/03 576.96 262,720 49,000.00 33,271.52 0.00 2nd Mtg San Mateo Apts. 13.000% 09/01/98 807.53 0.00 73,000.00 66,937.61 0.00 1st Mtg Alameda Apts. 13.000% 11/01/03 759.15 341,094 60,000.00 41,115.41 0.00 2nd Mtg San Francisco Comm. 13.750% 11/01/03 2,202.61 0.00 167,500.00 109,205.55 0.00 1st Mtg Alameda Apts. 14.000% 03/01/92 1,184.87 960,000 100,000.00 96,971.58 0.00 2nd Mtg Santa Clara Comm. 14.500% 05/01/04 4,233.05 532,392 310,000.00 228,570.86 0.00 2nd Mtg San Mateo Res. 11.500% 06/01/97 3,113.39 0.00 314,000.00 311,595.63 0.00 1st Mtg Alameda Comm prime+3 11/20/95 1,052.47 185,351 200,000.00 199,332.60 199,332.60 3rd Mtg San Mateo Apts. 14.000% 06/01/92 473.95 196,000 40,000.00 38,851.17 0.00 3rd Mtg Santa Clara Res. 15.250% 07/01/04 984.46 78,672 73,000.00 55,683.04 0.00 2nd Mtg San Francisco Comm 14.500% 08/01/04 1,365.50 0.00 100,000.00 75,577.87 0.00 1st Mtg Sonoma Res. 14.500% 04/01/05 546.20 150,804 40,000.00 32,132.87 0.00 3rd Mtg San Francisco Res. 14.500% 07/01/92 2,416.67 340,827 200,000.00 200,000.00 0.00 2nd Mtg San Francisco Apts 11.000% 06/29/98 2,004.26 0.00 210,459.34 197,832.44 0.00 1st Mtg Sacramento Res. 10.000% 08/01/00 1,428.14 0.00 160,000.00 159,682.86 0.00 1st Mtg San Mateo Res. 14.500% 08/01/92 604.17 109,072 50,000.00 48,859.80 0.00 2nd Mtg San Mateo Total $98,350.34 17,200,385.00 10,480,351.50 9,313,924.02 549,355.81 Notes: - -------------------------------------------------------------------------------- Two loans had impaired provisions totalling $13,006 included in the allowance for doubtful accounts of $72,850 relating to mortgage investments at December 31, 1996. Impaired loans are defined as loans where the costs of related balances exceeds the anticipated fair value less costs to collect. - -------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Amounts reflected in column G (carrying amount of mortgage investments) represents both costs and the tax basis of the loans. - ------------------------------------------------------------------------------
Schedule XII Reconciliation of carrying amount of Mortgage Investment at close of period (12/31/96) Balance at beginning of period 12/31/95 $10,402,491 Additions during period: New Mortgage Investments 2,474,843 Other 0 2,474,843 - ------------------------------------------- ---------------- ---------------- $12,877,334 Deduction during period: Collections of principal $3,295,834 Foreclosures 267,576 Cost of Mortgage Investments sold 0 Amortization of Premium 0 Other 0 $3,563,410 - ------------------------------------------- ---------------- ---------------- Balance at close of period (12/31/96) $9,313,924 ---------------- Schedule XII Reconciliation of carrying amount (cost) of Mortgage Investments at close of periods Year ended December 31, ---------------------------------------------------------- 1996 1995 1994 --------------- --------------- --------------- Balance at beginning of year $10,402,491 $10,993,996 $12,294,197 --------------- --------------- --------------- Additions during period: New Mortgage Investments 2,474,843 2,062,626 3,299,838 Other 0 0 0 --------------- --------------- --------------- Total Additions $2,474,843 $2,062,626 $3,299,838 --------------- --------------- --------------- Deductions during period: Collections of principal 3,295,834 2,273,233 2,769,970 Foreclosures 267,576 357,461 1,525,819 Cost of Mortgage Investments sold 0 0 0 Amortization of Premium 0 0 0 Other 0 23,437 304,250 --------------- --------------- --------------- Total Deductions 3,563,410 2,654,131 4,600,039 --------------- --------------- --------------- Balance at close of year $9,313,924 $10,402,491 $10,993,996 =============== =============== ===============
Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. The Partnership has neither changed its accountants nor does it have any disagreement on any matter of accounting principles or practices and financial statement disclosures. Part III Item 10 - Directors and Executive Officers of the Registrant. The Partnership has no officers or directors. Rather, the activities of the Partnership are managed by the three General Partners of which two individuals are D. Russell Burwell and Michael R. Burwell. The third General Partner is Gymno Corporation, a California corporation, formed in 1986. The Burwells are the two shareholders of this corporation on an equal (50-50) basis. A description of the General Partners is set forth on page 22 of the Prospectus under the section Management. Item 11 - Executive Compensation COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP As indicated above in item 10, the Partnership has no officers or directors. The Partnership is managed by the General Partners. There are certain fees and other items paid to management and related parties. A more complete description of management compensation is found in the Prospectus, pages 11-12, under the section Compensation of the General Partners and the Affiliates, which is incorporated by reference. Such compensation is summarized below. The following compensation has been paid to the General Partners and affiliates for services rendered during the year ended December 31, 1996. All such compensation is in compliance with the guidelines and limitations set forth in the Prospectus. Entity Receiving Description of Compensation and Amount Compensation Services Rendered - ---------------------- ---------------------------------------------- ---------- I. Redwood Mortgage Mortgage Servicing Fee for servicing Mortgage Investments $44,565 General Partners &/or Affiliates Asset Management Fee for managing assets $0 General Partners 1% interest in profits $5,882 II. FEES PAID BY BORROWERS ON MORTGAGE INVESTMENTS PLACED BY COMPANIES RELATED TO THE GENERAL PARTNERS WITH THE PARTNERSHIP (EXPENSES OF BORROWERS NOT OF THE PARTNERSHIP): Redwood Mortgage Mortgage Brokerage Commissions for services in connection with the review, selection, evaluation, negotiation, and extension of the Mortgage Investments paid by the borrowers and not by the Partnership $28,943 Redwood Mortgage Processing and Escrow Fees for services in connection with notary, document preparation, credit investigation, and escrow fees payable by the borrowers and not by the Partnership $1,724 III. IN ADDITION, THE GENERAL PARTNER AND/OR RELATED COMPANIES PAY CERTAIN EXPENSES ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE STATEMENT OF INCOME....................................................$31,838 Item 12 - Security Ownership of Certain Beneficial Owners and Management The General Partners receive a combined total of a 1% interest in Partnership income and losses and distributions of cash available for distribution. Item 13 - Certain Relationships and Related Transactions Refer to footnote 3 of the notes to financial statements in Part II item 8 which describes related party fees and data. Also refer to sections of the Prospectus Compensation of General Partners and Affiliates, page 11, and Conflicts of Interest, page 13, as part of the above-referenced Registration Statement which is incorporated by reference. Part IV Item 14 - Exhibits, Financial Statements and Schedules, and Reports on Form 8-K (A) Documents filed as part of this report: 1. The financial statements are listed in Part II Item 8 under A-Financial Statements. 2. The Financial Statement Schedules are listed in Part II Item 8 under B-Financial Statement Schedules. 3. Exhibits. Exhibit No. Description of Exhibits 3.1 Limited Partnership Agreement 3.2 Form of Certificate of Limited Partnership Interest 3.3 Certificate of Limited Partnership 10.1 Escrow Agreement (1) 10.2 Servicing Agreement (1) 10.3 (a) Form of Note secured by Deed of Trust which provides for principal and interest payments (1) (b) Form of Note secured by Deed of Trust which provides principal and interest payments and right of assumption (1) (c) Form of Note secured by Deed of Trust which provides for interest only payments (1) (d) Form of Note (1) 10.4 (a) Deed of Trust and Assignment of Rents to accompany Exhibits 10.3 (a) and (c) (1) (b) Deed of Trust and Assignment of Rents to accompany Exhibits 10.3 (b) (1) (c) Deed of Trust to accompany Exhibit 10.3 (d) (1) 10.5 Promissory Note for Formation Loan (1) 10.6 Agreement to Seek a Lender (1) 24.1 Consent of Parodi & Cropper (1) 24.2 Consent of Stephen C. Ryan & Associates (1) All of these exhibits were previously filed as the exhibits to Registrants Statement on Form S-11 (Registration No. 33-12519) and incorporated by reference herein. (B) Reports on form 8-K No reports on Form 8-K have been filed during the last quarter of th period covered by this report. (C) See (A) 3 above (D) See (A) 2 above. Additional reference is made to prospectus (S-11) dated September 3, 1987 to pages 56 through 59 and supplement #6 dated May 16, 1989 pages 16-18, for financial data related to Gymno corporation, a General Partner. Signatures Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized on the 20th day of March, 1997. REDWOOD MORTGAGE INVESTORS VI By: /S/ D. Russell Burwell --------------------------------------------- D. Russell Burwell, General Partner By: /S/ Michael R. Burwell --------------------------------------------- Michael R. Burwell, General Partner By: Gymno Corporation, General Partner By: /S/ D. Russell Burwell --------------------------------------------- D. Russell Burwell, President By: /S/ Michael R. Burwell --------------------------------------------- Michael R. Burwell, Secretary/Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity indicated on the 20th day of March, 1997. Signature Title Date /S/ D. Russell Burwell - ---------------------- D. Russell Burwell General Partner March 20, 1997 /S/ Michael R. Burwell - ---------------------- Michael R. Burwell General Partner March 20, 1997 /S/ D. Russell Burwell - ---------------------- D. Russell Burwell President of Gymno Corporation, March 20, 1997 (Principal Executive Officer); Director of Gymno Corporation /S/ Michael R. Burwell - ---------------------- Michael R. Burwell Secretary/Treasurer of Gymno March 20, 1997 Corporation (Principal Financial and Accounting Officer); Director of Gymno Corporation EX-27 2 FDS --
5 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 180597 0 10079257 252850 0 0 0 0 11944051 0 0 1549033 0 0 10395018 11944051 0 1167859 0 108838 0 312684 158175 588162 0 588162 0 0 0 588162 .00 .00
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