-----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, Blz8Jx7zvjCBtXRUbyOEp/yvI6qJSrSPVocLj2c42Eaj5Zuj/IO2JK/NHhzSqJwa mcb1/UUsDqwaiIYOSvKuGw== 0000811592-99-000003.txt : 19990331 0000811592-99-000003.hdr.sgml : 19990331 ACCESSION NUMBER: 0000811592-99-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990330 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 SEC ACT: SEC FILE NUMBER: 000-17573 FILM NUMBER: 99576938 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 1 10K REDWOOD MORTGAGE INVESTORS VI (a California Limited Partnership) Index to Form 10-K December 31, 1998 Part I Page No. Item 1 - Business 3 Item 2 - Properties 4-5 Item 3 - Legal Proceedings 6 Item 4 - Submission of Matters to a vote of Security Holders (partners) 6 Part II Item 5 - Market for the Registrants Partners Capital and related matters. 6 Item 6 - Selected Financial Data 7-8 Item 7 - Managements Discussion and Analysis of Financial Condition and Results of Operations 9-13 Item 8 - Financial Statements and Supplementary Data 14-35 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, 1998 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 (I.R.S. Employer Identification) incorporation 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 97,725.94 units computed at $100.00 a unit for $9,772,594, 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, with an approved 120,000 Units of $100 each ($12,000,000). The Units were offered on a best efforts basis through broker/dealer member firms of the National Association of Securities Dealers, Inc. It immediately began issuing Units and began investing in Mortgage Investments in October, 1987. The offering terminated in September, 1989, and as of that date 97,725.94 Units were sold realizing proceeds of $9,772,594. At December 31, 1998, the Partnership had a balance of Mortgage Investments totalling $7,969,735 with interest rates thereon ranging from 4.00% to 17.25%. Currently First Trust Deeds comprise 55.61% of the total amount of Mortgage Investment portfolio. Second Mortgage Trust Deeds comprise 36.30% of Mortgage Investment portfolio, third Mortgage Trust Deeds have 4.95% and 4th Mortgage Trust Deeds have 3.14% of the Mortgage Investment portfolio. Owner-occupied homes, combined with non-owner occupied homes, total 16.55% of the Mortgage Investments. Mortgage Investments to apartments make up 10.26% of the total Mortgage Investments portfolio. Commercial Mortgage Investment origination increased from last year, now comprising 73.19% of the portfolio, an increase of 0.95% from 1997. The past year brought many outstanding low loan to value lending opportunities in the commercial segment of the market. The major concentration of Mortgage Investments, comprising of 74.71% of the total loans, are in six counties of the San Francisco Bay Area. The County of Stanislaus makes up 10.93% of the Mortgage Investment portfolio. Stanislaus County is a fringe county to the San Francisco Bay Area. In 1998 the Partnership received many good lending opportunities from this county. The balance, as stated on page five of this report, are primarily in Northern California. Currently Mortgage Investment size is averaging $142,317 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 34.73%. 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 no properties in foreclosure as of the end of December, 1998. Item 2 - Properties As of December 31, 1998, a summary of the Partnerships Mortgage Investment portfolio is set forth below. Mortgage Investments as a Percentage of Total Mortgage Investments First Trust Deeds $4,432,245.77 Appraised Value of Properties 6,301,807.00 Total Investment as a % of Appraisal 70.33% First Trust Deeds 4,432,245.77 Second Trust Deed Mortgage Investments 2,892,870.54 Third Trust Deed Mortgage Investments 394,619.60 Fourth Trust Deed Mortgage Investments* 249,999.40 -------------------- 7,969,735.31 First Trust Deeds due other Lenders 11,180,298.00 Second Trust Deeds due other Lenders 990,064.00 Third Trust Deeds due other Lenders 178,571.00 Total Debt $20,318,668.31 Appraised Property Value $31,128,892.00 Total Investments as a % of Appraisal 65.27% Number of Mortgage Investments Outstanding 56 Average Investment 142,316.70 Average Investment as a % of Net Assets 1.63% Largest Investment Outstanding 1,376,117.03 Largest Investment as a % of Net Assets 15.80% Mortgage Investments as a Percentage of Total Mortgage Investments First Trust Deeds 55.61% Second Trust Deeds 36.30% Third Trust Deeds 4.95% Fourth Trust Deeds 3.14% -------------------- 100.00% Total Mortgage Investments by Type Amount Percent of Property Owner Occupied Homes $944,491.33 11.85% Non-Owner Occupied Homes 374,408.39 4.70% Apartments 817,818.78 10.26% Commercial 5,833,016.81 73.19% ----------------- ----------- Total $7,969,735.31 100.00% *Footnote on following page. The following is a distribution of loans outstanding as of December 31, 1998 by Counties. Santa Clara $2,289,006.95 28.72% Alameda 1,173,232.37 14.72% San Mateo 969,458.58 12.16% Stanislaus 871,569.71 10.93% Contra Costa 768,318.32 9.64% San Francisco 676,147.60 8.48% Sacramento 595,505.84 7.47% Sonoma 253,096.02 3.18% Ventura 91,000.00 1.14% Shasta 81,033.44 1.02% Marin 78,854.34 0.99% Monterey 70,617.58 0.89% Santa Cruz 33,897.62 0.43% Solano 17,996.94 0.23% ------------------- ----------- Total $7,969,735.31 100.00% *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%. In addition to the borrower paying an interest rate of 12.25%, the Partnership and other lenders will also participate in profits. The General Partners 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 -0- Scheduled maturity dates of mortgage investments as of December 31, 1998 are as follows: Year Ending December 31, 1999 $4,470,166 2000 1,021,816 2001 1,004,686 2002 422,896 2003 437,684 Thereafter 612,487 ================ $7,969,735 ================ The scheduled maturities for 1999 include $2,080,024 in Mortgage Investments which are past maturity at December 31, 1998. $816,898 of those Mortgage Investments were categorized as delinquent over 90 days. Seven Mortgage Investments with principal outstanding of $994,735 had interest payments overdue in excess of 90 days. 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, legal actions against borrowers and other involved parties have been initiated by the Partnership to help assure payments against unsecured accounts receivable totaling $23,775. The Partnership is a defendant along with numerous defendants, including a developer, contractor, and other lenders, in a lawsuit involving the Partnerships attempt to recover its investment in real estate acquired through foreclosure. 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. Investors have the option of withdrawing earnings on a monthly, quarterly or annual basis or reinvesting and compounding earnings. Limited Partners may withdraw from the Partnership in accordance with the terms of the Partnership Agreement subject to early withdrawal penalties. There is no established public trading market for the Units. 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, 1998, there were 715 holders of record of the Partnerships Units. A decrease of 27 from 1997.
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, 1998 were: Balance Sheets Assets December 31, ------------------------------------------------------ 1998 1997 1996 -------------- -------------- -------------- Cash 299,775 $331,143 $180,597 -------------- -------------- -------------- Accounts Receivable: Mortgage Investments, secured by Deeds of Trust 7,969,735 8,104,984 9,313,924 Accrued Interest on Mortgage Investments 717,719 617,456 405,783 Advances on Mortgage Investments 162,083 127,519 108,019 Accounts receivables, unsecured 23,775 161,414 251,531 -------------- -------------- -------------- $8,873,312 $9,011,373 $10,079,257 Less allowance for doubtful accounts 202,344 28,614 252,850 -------------- -------------- -------------- $8,670,968 8,982,759 $ 9,826,407 -------------- -------------- -------------- Real estate owned, held for sale, acquired through Foreclosure 169,922 309,319 1,441,007 Investment in Partnership 0 708,141 496,040 -------------- -------------- -------------- $9,140,665 $10,331,362 $11,944,051 ============== ============== ============== Liabilities and Partners Capital Liabilities: Notes Payable - Bank Line of Credit 390,000 $899,011 $1,530,511 Accounts Payable 22,668 0 0 Deferred interest on Mortgage Investments 20,463 898 18,522 -------------- -------------- -------------- Total Liabilities 433,131 899,909 1,549,033 -------------- -------------- -------------- Partners Capital: Limited Partners capital, subject to 8,697,768 9,421,687 10,385,252 redemption General Partners capital 9,766 9,766 9,766 -------------- -------------- -------------- Total Partners Capital 8,707,534 9,431,453 10,395,018 -------------- -------------- -------------- Total Liabilities and Partners Capital $9,140,665 $10,331,362 $11,944,051 ============== ============== ==============
Statements of Income 1998 1997 1996 -------------- -------------- -------------- Gross Revenue $871,861 $1,036,596 $1,167,859 Expenses 359,356 507,409 579,697 ============== ============== ============== Net Income 512,505 529,187 588,162 ============== ============== ============== Net Income: to General Partners (1%) 5,125 $5,292 $5,882 to Limited Partners (99%) 507,380 523,895 582,280 -------------- -------------- -------------- $512,505 $529,187 $588,162 ============== ============== ============== Net Income per $1,000 invested by Limited Partners for entire period: - where income is reinvested and compounded $56 $53 $54 ============== ============== ============== -where partner receives income in monthly distributions $55 $52 $52 ============== ============== ============== In 1995 the annualized yield was 5.30%. In 1996, the annualized yield was 5.35%, in 1997 the annualized yield was 5.29% and in 1998 the annualized yield was 5.63%. The annualized yield since inception through December 31, 1998, was 7.52%.
Item 7 - Managements Discussion and Analysis of Financial Condition and Results of Operations On September 2, 1989, the Partnership had sold 97,725.94 Units and its contributed capital totalled $9,772,594 of the approved $12,000,000 issue, in Units of $100 each. As of that date the offering was formally closed. On December 31, 1998, the Partnerships net capital totalled $8,707,534. The Partnership began funding Mortgage Investments in October 1987. The Partnerships Mortgage Investments outstanding for the years ended December 31, 1996, 1997 and 1998, were $9,313,924, $8,104,984, and $7,969,735 respectively. The decrease in Mortgage Investments outstanding of $1,344,189 from December 31, 1996 to December 31, 1998, was again due primarily to the Partnership utilizing Mortgage Investment payoffs to meet Limited Partner capital liquidations and line of credit pay-down to save interest expense on the note. During the years 1996, 1997, and 1998, Mortgage Investment principal collections exceeded Limited Partner liquidations. Currently, general mortgage interest rates are lower than those prevalent at the inception of the Partnership. New Mortgage Investments will be originated at these lower interest rates. The result is to reduce 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. Although the rates charged by the Partnership are influenced by the level of interest rates in the market, the General Partners do not anticipate that rates charged by the Partnership to its borrowers will change significantly from the beginning of 1999 over the next 12 months. As of December 31, 1998 the Partnerships Real Estate Owned account and the Investment in Partnership account have been reduced to a combined $169,922 balance. These accounts had combined balances of $1,017,460 and $ 1,937,047 as of December 31, 1997 and 1996, respectively. The conversion of these non-earning assets will allow the Partnership to produce current income from previously non earning assets. The overall effect of these developments will allow the Partnerships yield to rise. The General Partners anticipate that the annualized yield for the forthcoming year 1999, will be higher than the current years performance level. Each year, the Partnership negotiates a line of credit with a commercial bank which is secured by its Mortgage Investment portfolio. The outstanding balance of the bank line of credit was $1,530,511, $899,011 and $390,000 for the years ended December 1996, 1997 and 1998, respectively. The interest rate on the bank line of credit has remained at Prime plus one percent for the preceding three years. For the years ended December 31, 1998, 1997and 1996 , interest on Note Payable-Bank was $43,170, $133,577and $158,175 respectively. The primary reason for this decrease was that the Partnership had a lower overall credit facility utilization from 1995 to 1996 and from 1996 to December 31, 1998. As of December 31, 1998, the Partnership has borrowed $390,000 at an interest rate of Prime plus one percent. 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 and because the Mortgage Investments made by the Partnership usually bear interest at a rate in excess of the rate payable to the bank which extended the line of credit, the amount to be retained by the Partnership, after payment of the line of credit cost, will be greater than without the use of the line of credit. The Partnerships 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 twenty- one 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, 1998, there were no 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 $312,684, $268,101 and $180,054 as provision for doubtful accounts for the years ended December 31, 1996, December 31, 1997, and December 31, 1998, respectively. 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. As of December 31, 1998, the Partnership reduced the REO balance from $1,501,712 as of December 31, 1995, to $169,922 through December 31, 1998. This reduction assisted the Partnership in increasing yields in 1998, as assets previously lying idle, now produced current income. The December 1998 issue of Western Economic Developments, published by the Federal Reserve Bank of San Francisco, said the following about the California economy: The pace of economic growth in California was solid in recent months, despite continued contraction in some major industries. Total payroll employment rose 3.2 percent on an annual basis in October and November. This is above the average growth rate for the first eleven months of 1998, but it is below the 3.8 percent pace from last year. Faced by declining export demand and rising import competition, durable goods manufacturers cut employment in November. Manufacturers of computers and electronic components have been particularly hard hit this year, and aerospace employment has contracted. However, the pace of job creation has remained strong in sectors other than manufacturing, and this has helped to lower the state unemployment rate to 5.7 percent in November. Californias state and local governments have created new jobs at about a 2.5 percent annual pace this year, a pickup from prior years that is due in part to improved fiscal capacity. About 21,000 of the 29,000 jobs created this year were for educators at local schools. To the Partnership, the above evaluation of the California economy means an increase in property values, job growth, personal income growth, etc., which all translates into more loan activity, which of course, is healthy for the Partnerships lending activity. The Partnerships interest in land located in East Palo Alto, Ca, was acquired through foreclosure. The Partnerships interest is invested with that of two other Partnerships. The Partnerships basis of $0, $708,141 and $496,040 for the years ended December 31, 1998, December 31, 1997 and 1996 respectively, has been invested with that of two other Partnerships. The Partnership had been attempting to develop property into an approximately 63 units residential subdivision, (the Development). The proposed Development had gained significant public awareness as a result of certain environmental, fish and wildlife density, and other concerns. Incorporated into the proposed Development were various mitigation measures included remediation of hazardous material existing on the property and protection of potentially affected species due to the proximity to the San Francisco Baylands. These issues and others sparked significant public controversy. Opposition against and support for the proposed Development existed. Among those in opposition to the project was Rhone Poulanc, Inc., which is responsible for a nearby hazardous waste site. Rhone Poulanc, Inc. has been identified as the Responsible Party for the Arsenic Contamination which affected a portion of the property. On May 8, 1998, the Partnership, in order to resolve disputes which arose during the course of attempts to obtain entitlements for this Development, entered into agreements with Rhone-Poulanc, Inc., which among other things, restricted the property to non residential uses, provided for appropriate indemnification and included other consideration including a cash payment to the Partnership. The Partnership has retained ownership of the property, which is subject to various deed restrictions, options and or first rights of refusal. The General Partners are pleased with this outcome to the residential development attempt. The General Partners may now explore other available options with respect to alternative uses for the property. In order to pursue these options, rezoning of the propertys existing residential zoning classification will be required. The Partnership is continuing to explore remediation options available to mitigate the pesticide contamination, which affects the property. This pesticide contamination appears to be the result of agricultural operations by prior owners, and is unrelated to the Arsenic Contamination for which Rhone Poulanc, Inc. remains responsible. The General Partners do not believe at this time that remediation of the pesticide contaminants will have a material adverse effect on the financial condition of the Partnership. At the time of subscription to the Partnership, Limited Partners made 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, 1996, 1997, and 1998, the Partnership made distributions of earnings to Limited Partners after allocation of syndication costs of, $288,796, $252,378 and $230,712 respectively. Distribution of Earnings to Limited Partners after allocation of syndication costs for the years ended December 31, 1996, December 31, 1997, and December 31, 1998 to Limited Partners capital accounts and not withdrawn was $293,484, $271,517 and $276,668 respectively. As of December 31, 1996, December 31, 1997, and December 31, 1998, Limited Partners electing to withdraw earnings represented 49 %, 46% and 43% respectively 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, 1996, December 31, 1997, and December 31, 1998, $96,362, $159,732 and $122,069 respectively, were liquidated subject to the 10% and/or 8% 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% and/or 8% 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 investments to raise cash. The trend the Partnership is experiencing in withdrawals by Limited Partners electing a one year liquidation program represents a small percentage of Limited Partner capital as of December 31, 1996, December 31, 1997, and December 31, 1998, respectively and is expected by the General Partners to commonly occur at these levels. Additionally, for the years ended December 31, 1996, December 31, 1997, and December 31, 1998, $1,086,737, $1,137,677 and $938,040 respectively, 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 will have been liquidated. After year eleven, liquidation generally subsides and the Partnership capital again tends to increase.
Actual liquidation of both capital and earnings from year five (1992) through year eleven (1998) is shown hereunder: Years ended December 31, 1992 1993 1994 1995 1996 1997 1998 ----------- ---------- ----------- ----------- ----------- ----------- -------------- Earnings $323,037 377,712 303,014 303,098 294,678 257,670 235,837 Capital *$232,370 528,737 729,449 892,953 1,183,099 1,297,410 1,060,109 =========== ========== =========== =========== =========== =========== ============== Total $555,407 $906,449 $1,032,463 $1,196,051 $1,477,777 $1,555,080 $1,295,946 =========== ========== =========== =========== =========== =========== ============== *These amounts represent gross of early withdrawal penalties. The Year 2000 will be a challenge for the entire world, with respect to the conversion of existing computerized operations. The Partnership is completing an assessment of Year 2000 hardware and software issues. This assessment is not yet fully complete. The Partnership relies on Redwood Mortgage Corp., an affiliate of the Partnership, and third parties to provide loan and investor services and other computerized functions, effected by Year 2000 computerized operations. Major services provided to the Partnership by these companies are loan servicing, accounting and investor services. The vendors that supply the software for loan servicing have already confirmed compliance with Year 2000 issues. Installation of accounting software that is Year 2000 compliant will begin after the 1998-year ends. The investor servicing software Year 2000 compliance is still under assessment. Existing investor servicing software maintenance agreements provide for conversion to Year 2000 compliance to be provided by the vendor. Additionally, the Partnership has contacted several vendors that provide investor services as a possible alternative to continuing to provide investors services in house. It would appear that these service providers would be more expensive than the current in house systems but they do provide a back-up alternative in the event of our own failure to fully convert. Hardware utilized by Redwood Mortgage Corp., is currently being tested to insure that modifications necessary to be made prior to Year 2000 can be accomplished. At this juncture, existing hardware appears to be substantially compliant with Year 2000 issues. The costs of updating the various software systems will be borne by the various companies that supply the Partnership with services. Therefore, no significant capital outlays are anticipated and the Partnership expects only incidental costs of conversion for Year 2000 issues. The Partnership is in the business of making Mortgage Investments secured by real estate. The most important factor in making the Mortgage Investments is the value of the real estate security. Year 2000 issues have some potential to effect industries and businesses located in the marketplaces in which the Partnership places its Mortgage Investments. This would only have an affect on the Partnership if Year 2000 issues cause a significant downturn in the northern California economy. In fact, Silicon Valley is located in our marketplace. There may be significant increased demand for Silicon Valley type services and goods as companies make ready for the Year 2000 conversion. Although not fully developed, if all or any accounting, loan servicing and investor services conversions should fail, the size and scope of the Partnerships activities are such that they could be handled at an equal or higher cost on a manual basis or outsourced to other servicers existing in the industry, while correcting the systems problems and are likely to be temporarily in nature. While this would entail some initial set up costs, these costs would likely not be so significant as to have a material effect upon the Partnership, shifting portions of daily operations to manual or outsourced systems may result in time delays. Time delays in providing accurate and pertinent information could negatively affect customer relations and lead to the potential loss of new loans and Limited Partner investments. The foregoing analysis of Year 2000 issues includes forward-looking statements and predictions about possible or future events, results of operations and financial condition. As such, this analysis may prove to
be inaccurate because of the assumptions made by the General Partner or the actual development of future events. No assurance can be given that any of these forward-looking statements and predictions will ultimately prove to be correct or even substantially correct. Various other risks and uncertainties could also affect the Year 2000 analysis causing the effect on the Partnership to be more severe than discussed above. The General Partners Year 2000 compliance testing cannot guarantee that all computer systems will function without error beyond the Year 2000. Risks also exist with respect to Year 2000 compliance by external parties who may have no relationship to the Partnership or the General Partner, but who have a significant relationship with one or more third parties, and may have a system failure that adversely affects the Partnerships ability to conduct business. While the General Partner is attempting to identify such external parties, no assurance can be given that it will be able to do so. Furthermore, third parties with direct relationships with the Partnership, whose systems have been identified as likely to be Year 2000 compliant, may suffer a breakdown due to unforeseen circumstances. It is also possible that the information collected by the General Partner for these third parties regarding their compliance with Year 2000 issues may be incorrect. Finally, it should be noted that the foregoing discussion of Year 2000 issues assumes that to the extent the General Partners systems fail, whether because of unforeseen complications or because of third parties failure, switching to manual operations will allow the Partnership to continue to conduct its business. While the General Partner believes this assumption to be reasonable, if it is incorrect, the Partnerships results of operations would likely be adversely affected. 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, 1998, and December 31, 1997, Statements of Income for the three years ended December 31, 1998, Statements of Changes in Partners Capital for the three years ended December 31, 1998, Statements of Cash Flows for the three years ended December 31, 1998, Notes to Financial Statements - December 31, 1998. 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, 1998 (with Auditors Report Thereon) PARODI & CROPPER CERTIFIED PUBLIC ACCOUNTANTS 3658 Mount Diablo Blvd., Suite #205 Lafayette California 94549 (925) 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, 1998 and 1997 and the statements of income, changes in partners capital and cash flows for the three years ended December 31, 1998. 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, 1998 and 1997, and the results of its operations and cash flows for the three years ended December 31, 1998 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. /S/ Bruce Cropper PARODI & CROPPER Lafayette, California March 3, 1999 REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) BALANCE SHEETS DECEMBER 31, 1998 AND 1997 ASSETS
1998 1997 --------------- --------------- Cash $299,775 $331,143 --------------- --------------- Accounts receivable: Mortgage Investments, secured by deeds of trust 7,969,735 8,104,984 Accrued Interest on Mortgage Investments 717,719 617,456 Advances on Mortgage Investments 162,083 127,519 Accounts receivables, unsecured 23,775 161,414 --------------- --------------- 8,873,312 9,011,373 Less allowance for doubtful accounts 202,344 28,614 --------------- --------------- 8,670,968 8,982,759 --------------- --------------- Real estate owned, held for sale, acquired through foreclosure 169,922 309,319 Investment in Partnership 0 708,141 --------------- --------------- Total Assets $9,140,665 $10,331,362 =============== =============== LIABILITIES AND PARTNERS CAPITAL Liabilities: Accounts Payable $22,668 $0 Deferred Interest 20,463 898 Note payable - bank line of credit 390,000 899,011 --------------- --------------- Total Liabilities 433,131 899,909 --------------- --------------- Partners Capital: Limited Partners capital, subject to redemption, (note 4D): net of Formation Loan receivable of $0 and $59,521, for 1998 and 1997, respectively 8,697,768 9,421,687 General Partners Capital: 9,766 9,766 --------------- --------------- Total Partners capital 8,707,534 9,431,453 --------------- --------------- Total Liabilities and Partners capital $9,140,665 $10,331,362 =============== =============== See accompanying notes to financial statements.
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) STATEMENTS OF INCOME FOR THE THREE YEARS ENDED DECEMBER 31, 1998
YEARS ENDED DECEMBER 31, --------------------------------------------------- 1998 1997 1996 ------------- -------------- ------------- Revenues: Interest on Mortgage Investments $847,960 $1,011,621 $1,135,218 Interest on bank deposits 8,487 6,563 4,750 Late charges, prepayment penalties, and fees 15,414 18,412 27,891 ------------- -------------- ------------- 871,861 1,036,596 1,167,859 ------------- -------------- ------------- Expenses: Mortgage servicing fees 70,630 39,918 44,565 Asset management fee 6,640 0 0 Clerical costs through Redwood Mortgage 24,440 27,786 31,838 Interest and line of credit costs 43,170 133,577 158,175 Provision for doubtful accounts and losses on real estate acquired through foreclosure 180,054 268,101 312,684 Professional services 18,831 23,517 17,825 Other 15,591 14,510 14,610 ------------- -------------- ------------- 359,356 507,409 579,697 ------------- -------------- ------------- Net Income $512,505 $529,187 $588,162 ============= ============== ============= Net income: To General Partners(1%) $5,125 $5,292 $5,882 To Limited Partners (99%) $507,380 $523,895 $582,280 ============= ============== ============= $512,505 $529,187 $588,162 ============= ============== ============= Net income per $1,000 invested by Limited Partners for entire period: -where income is reinvested and compounded $56 $53 $54 ============= ============== ============= -where partner receives income in monthly distributions $55 $52 $52 ============= ============== ============= 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, 1998
PARTNERS CAPITAL ------------------------------------------------------------------------------------ LIMITED PARTNERS CAPITAL -------------------------------------------------- Capital Account Formation General Limited Loan Partners Partners Receivable Total Capital Total -------------- ------------- --------------- ------------ ------------- 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 Formation Loan collections 0 53,833 53,833 0 53,833 Net Income 523,895 0 523,895 5,292 529,187 Early withdrawal penalties (13,409) 8,495 (4,914) 0 (4,914) Partners withdrawals (1,536,379) 0 (1,536,379) (5,292) (1,541,671) -------------- ------------- -------------- ------------ -------------- Balances at December 31, 1997 $9,481,208 ($59,521) $9,421,687 $9,766 $9,431,453 Formation Loan collections 0 53,291 53,291 0 53,291 Net Income 507,380 0 507,380 5,125 512,505 Early withdrawal penalties (9,834) 6,230 (3,604) 0 (3,604) Partners withdrawals (1,280,986) 0 (1,280,986) (5,125) (1,286,111) -------------- ------------- -------------- ------------ -------------- Balances at December 31, 1998 $8,697,768 0 $8,697,768 $9,766 $8,707,534 ============== ============= ============== ============ ============== 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, 1998
YEARS ENDED DECEMBER 31, ---------------------------------------------------- 1998 1997 1996 -------------- ------------- ------------- Cash flows from operating activities: Net income $512,505 $529,187 $588,162 Adjustments to reconcile net income to net cash provided by operating activities: Provision for doubtful accounts 268,764 264,484 65,804 Provision for Losses (recovery) on real estate held for sale (88,710) 3,617 246,880 Early withdrawal penalty credited to income (3,604) (4,914) (3,196) (Increase) decrease in assets: Accrued interest & advances (134,827) (231,173) 63,950 Prepaid expenses and other assets 0 0 935 Increase (decrease) in liabilities: Accounts payable and accrued expenses 22,668 0 0 Deferred Interest on Mortgage Investments 19,565 (17,624) 18,522 -------------- ------------- ------------- Net cash provided by operating activities 596,361 543,577 981,057 -------------- ------------- ------------- Cash flows from investing activities: Principal collected on Mortgage Investments 1,934,071 1,634,128 3,295,834 Mortgage Investments made (1,798,822) (557,796) (2,474,843) Additions to real estate held for sale (2,785) (47,415) (242,869) Dispositions of real estate held for sale 85,449 909,491 299,414 Investment in Partnership (215,281) (212,101) (39,219) Proceeds from Partnership 1,068,865 0 0 Proceeds from unsecured accounts receivable 42,605 0 0 -------------- ------------- ------------- Net cash provided by (used in) investing activities 1,114,102 1,726,307 838,317 -------------- ------------- ------------- Cash flows from financing activities: Net increase (decrease) in note payable-bank (509,011) (631,500) (510,500) Partners withdrawals (1,286,111) (1,541,671) (1,469,056) Formation Loan collections 53,291 53,833 56,803 -------------- ------------- ------------- Net cash provided by (used in) financing activities (1,741,831) (2,119,338) (1,922,753) -------------- ------------- ------------- Net increase (decrease) in cash (31,368) 150,546 (103,379) Cash - beginning of period 331,143 180,597 283,976 -------------- ------------- ------------- Cash - end of period $299,775 $331,143 $180,597 ============== ============= ============= See accompanying notes to financial statements.
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 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 Mortgage Corp., (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 by 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 was repaid without interest, in ten annual installments of principal, commencing December 31, 1989. The last payment was made during 1998. The following reflects transactions in the Formation Loan account through December 31, 1998: Amount loaned during 1987,1988 and 1989 $623,255 Less: Cash repayments $566,586 Allocation of early withdrawal penalties 56,669 623,255 ============ --------- Balance December 31, 1998 $0 ========= The Formation Loan, which is receivable from Redwood Mortgage, an affiliate of the General Partners, was deducted from Limited Partners capital in the balance sheet. As amounts were collected from Redwood Mortgage, the deduction from capital was reduced. As of December 31, 1998 there was no longer a deduction. 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. Such costs have been fully amortized and allocated to the Partners. 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 Mortgage Investment is categorized as impaired, interest is no longer accrued thereon. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 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, 1998, 1997 and 1996, reductions in the cost of Mortgage Investments categorized as impaired by the Partnership totalled $84,736, $0 and $13,006, respectively. The reduction in stated value was accomplished by increasing the allowances for doubtful accounts. As presented in Note 10 to the financial statements as of December 31, 1998, the average mortgage investment to appraised value of security at the time the loans were consummated was 65.27%. When a loan is valued for impairment purposes, an updating is made in the valuation of collateral security. However, 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, 1998
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, 1998 and 1997: December 31, ----------------------------------------------- 1998 1997 --------------- --------------- Costs of properties $366,655 $449,319 Reduction in value 196,733 140,000 --------------- --------------- Fair value reflected in financial statements $169,922 $309,319 =============== =============== 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) 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, 1998 and 1997 was as follows:
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998
December 31, ----------------------------------------------- 1998 1997 --------------- --------------- Impaired Mortgage Investments $84,736 $0 Unspecified Mortgage Investments 93,732 13,432 Accounts receivable, unsecured 23,776 15,182 --------------- =============== $202,244 $28,614 =============== =============== 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. 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 Mortgage 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. Such commissions totalled $36,700 and $10,000 for the years ended December 31, 1998 and 1997, respectively. 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. Mortgage servicing fees of $70,630, $39,918, and $44,565 were incurred for years 1998, 1997 and 1996, respectively.
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 C. Asset Management Fee The General Partners are authorized to receive monthly fees for managing the Partnerships Mortgage Investment portfolio and operations of up to 1/32 of 1% (3/8 of 1% annual). There were no management fees incurred for years 1997 and 1996, respectively. Management fees totalled $6,640 for 1998. 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 1998, 1997, and 1996, clerical costs totaling $24,440, $27,786 and $31,838 respectively, were reimbursed to Redwood Mortgage and are included in expenses in the Statements of Income. 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, 1998. 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, 1998 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, and the formation loan was paid in 1998, the early withdrawal penalties gained in the future will be credited to income for the period received. 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 located in East Palo Alto, CA., was acquired through foreclosure. The Partnership interest is invested with that of two other Partnerships. The Partnerships had been attempting to develop the property into single family residences. Significant community resistance, as well as environmental, and fish and wildlife concerns affected efforts to obtain the required approvals. The Partnership, in resolving disputes which arose during the course of the Partnerships attempt to obtain entitlements to develop the property, entered into agreements on May 8, 1998 with Rhone-Poulanc, Inc. These agreements, among other things, restrict the property to non-residential uses, provide for appropriate indemnifications, and include other consideration including the payment of cash. The Partnership still retains liability for the remediation of pesticide contamination affecting the property. Investigation of remediation options are ongoing. At this time management does not believe that remediation of the pesticide contaminants will have a material adverse effect on the financial condition of the Partnership. As of December 31, 1998, the Partnership has received $145,443 in excess of its cost. NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT The Partnership had a bank line of credit secured by its Mortgage Investment portfolio up to $2,000,000 at 1% over prime. The balances were $390,000 and $899,011 at December 31, 1998 and 1997, respectively, and the interest rate at December 31, 1998 was 8.75% (7.75% prime + 1%). The line of credit expired December 31, 1998 and was replaced by a line of credit of $1,000,000 at 8.75% which will expire December 31, 1999. REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 NOTE 7 - LEGAL PROCEEDINGS Legal actions against borrowers and other involved parties have been initiated by the Partnership to help assure payments against unsecured accounts receivable totaling $23,775. The Partnership is a defendant along with numerous defendants, including a developer, contractor, and other lenders, in a lawsuit involving the Partnerships attempt to recover its investment in real estate acquired through foreclosure. 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. 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, ----------------------------------------------- 1998 1997 ---------------- --------------- Net assets - Partners Capital per financial statements $8,707,534 $9,431,453 Formation Loan receivable 0 59,521 Allowance for doubtful accounts 202,344 28,614 ================ =============== Net assets tax basis $8,909,878 $9,519,588 ================ =============== In 1998 and 1997, approximately 71% and 72%, respectively, 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 value. All amounts, including interest bearing, are subject to immediate withdrawal. (b) The Carrying Value of Mortgage Investments - (see note 2 (c)) was $7,969,735 at December 31, 1998. The fair value of these investments of $7,945,380 was 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, 1998 NOTE 10- ASSET CONCENTRATIONS AND CHARACTERISTICS
The Mortgage Investments are secured by recorded deeds of trust. At December 31, 1998, there were 56 Mortgage Investments outstanding with the following characteristics: Number of Mortgage Investments outstanding 56 Total Mortgage Investments outstanding $7,969,735 Average Mortgage Investment outstanding $142,317 Average Mortgage Investment as percent of total 1.79% Average Mortgage Investment as percent of Partners Capital 1.63% Largest Mortgage Investment outstanding $1,376,117 Largest Mortgage Investment as percent of total 17.27% Largest Mortgage Investment as percent of Partners Capital 15.80% Number of counties where security is located (all California) 14 Largest percentage of Mortgage Investments in one county 28.72% Average Mortgage Investment to appraised value of security at time Mortgage Investment was consummated 65.27% Number of Mortgage Investments in foreclosure 0 The following categories of mortgage investments are pertinent at December 31, 1998 and 1997: December 31, ------------------------------------------ 1998 1997 ----------------- --------------- First Trust Deeds 4,432,246 $4,588,169 Second Trust Deeds 2,892,870 2,869,543 Third Trust Deeds 394,620 397,273 Fourth Trust Deeds 249,999 249,999 ----------------- --------------- Total mortgage investments 7,969,735 8,104,984 Prior liens due other lenders 12,348,933 11,075,429 ----------------- --------------- Total debt $20,318,668 $19,180,413 ================= =============== Appraised property value at time of loan $31,128,892 $28,422,684 ================= =============== Total investments as a percent of appraisals 65.27% 67.48% ================= =============== Investments by Type of Property Owner occupied homes 944,491 $1,057,067 Non-Owner occupied homes 374,408 380,142 Apartments 817,819 791,755 Commercial 5,833,017 5,876,020 ================= =============== $7,969,735 $8,104,984 ================= ===============
REDWOOD MORTGAGE INVESTORS VI (A California Limited Partnership) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 Scheduled maturity dates of mortgage investments as of December 31, 1998 are as follows: Year Ending December 31, ------------------- 1999 $4,470,166 2000 1,021,816 2001 1,004,686 2002 422,896 2003 437,684 Thereafter 612,487 ================ $7,969,735 ================ The scheduled maturities for 1999 include $2,080,024 in Mortgage Investments which are past maturity at December 31, 1998. $816,898 of those Mortgage Investments were categorized as delinquent over 90 days. Seven Mortgage Investments with principal outstanding of $994,735 had interest payments overdue in excess of 90 days. The cash balance at December 31, 1998 of $299,775 were in two banks with interest bearing balances totalling $296,563. The balances exceeded FDIC insurance limits (up to $100,000 per bank) by $99,775. As and when deposits in the Partnerships bank accounts increase significantly beyond the insured limit, the funds are generally either placed in new Mortgage Investments or used to pay down on the line of credit balance.
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 12/31/97 (1) (2) (1) (2) Amounts Amounts Current Not Current collected written 12/31/98 12/31/98 off * Redwood Mortgage $59,521 $0.00 $53,291 $6,230 $0.00 $0.00 The above schedule represents the Formation Loan borrowed by Redwood Mortgage from the Partnership to pay for the selling commissions on units. It was an unsecured loan and bore no interest. It was repaid to the Partnership in ten equal annual installments of principal only which began December 31, 1989. As of December 31, 1998, it was fully repaid. * The amount written off represents the proportionate amount of early withdrawal penalties allocated to the Formation Loan, as provided for 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 Describe End of Period of Period (1) (2) Charged to Charged to Costs Other & Expenses Accounts - Describe Year Ended 12/31/98 Deducted from Asset Accounts: Allowance for Doubtful Accounts $28,614 $268,764 $0 $95,034 $202,344 Cumulative write-down of Real Estate held for sale (REO) $140,000 ($88,710) $0 $196,733 ($145,443) ---------- ----------- ------------ -------------- ----------------- Total $168,614 $180,054 $0 (a) $399,077 ($50,409) ========== =========== ============ ============== ================= (a) represents net loss (or gain) on Mortgage Investments and Real Estate held for sale.
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 12/31/98 $390,000 9.45% $1,068,000 $456,874 9.45%
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 Liens Face Amt. of Carrying Prin. amt. Type of Geographic Rate Maturity Payment Mortgage amount of of Lien County Date Terms Investment Mortgage Mortgage Location (original Investment Investments amt) subject to Delinq. Prin. or Interest - -------- --------- --------- ---------- ------------ -------------- ------------ ------------ --------- ------------- Comm 14.75% 09/01/95 2,241.96 250,000.00 185,000.00 180,618.12 2nd Mtg San Mateo Res 13.75% 10/01/96 275.00 55,374.00 24,000.00 24,000.00 2nd Mtg San Mateo Comm 13.75% 10/01/96 644.53 0.00 56,250.00 56,250.00 1st Mtg San Mateo Res 12.50% 02/01/07 554.63 0.00 45,000.00 33,897.62 lst Mtg Santa Cruz Res 6.00% 04/01/96 106.81 10,470.00 20,000.00 19,738.80 4,913.26 2nd Mtg Sacramento Res 4.00% 04/01/97 113.30 0.00 22,500.00 23,130.86 5,325.10 1st Mtg Sacramento Res 4.00% 04/01/97 120.00 0.00 24,000.00 22,646.50 lst Mtg Sacramento Comm 10.00% 08/06/02 709.38 30,802.00 82,873.25 76,863.12 2nd Mtg Alameda Comm 12.50% 01/01/08 1,343.45 64,620.00 109,000.00 90,605.96 2nd Mtg Santa Clara Comm 14.50% 01/01/00 6,157.52 442,592.00 499,998.80 499,998.81 2nd Mtg Contra Costa Apts 7.00% 08/01/03 1,022.35 0.00 153,660.00 153,151.57 lst Mtg Sacramento Apts 6.50% 05/01/06 540.83 89,904.00 100,000.00 96,716.11 8,112.45 2nd Mtg Sacramento Res 13.50% 09/01/08 280.90 18,085.00 21,635.32 18,320.11 2nd Mtg Contra Costa Comm 12.00% 11/01/98 2,057.23 11,864.00 200,000.00 35,656.54 2nd Mtg San Francisco Comm 10.00% 12/01/98 1,755.14 0.00 200,000.00 197,333.47 10,530.84 1st Mtg Stanislaus Comm 14.00% 01/01/00 3,450.33 1,126,508.00 249,999.40 249,999.40 4th Mtg Contra Costa Comm 10.00% 12/01/98 5,046.04 0.00 575,000.00 566,694.43 25,230.20 lst Mtg Alameda Comm 7.00% 12/01/03 1,151.48 562,500.00 99,172.75 81,121.58 5,757.40 2nd Mtg Alameda Comm 12.00% 02/01/99 14,025.12 0.00 1,376,117.03 1,376,117.03 lst Mtg Santa Clara Land 12.00% 07/01/96 1,352.50 494,979.00 135,250.00 135,250.00 3rd Mtg Sonoma Comm 8.50% 11/07/99 515.73 0.00 72,809.59 72,809.59 1st Mtg Sonoma Land 13.75% 12/20/98 5,524.55 54,724.00 567,856.74 174,236.24 11,049.10 2nd Mtg Stanislaus Res 8.00% 12/01/00 500.00 148,004.00 52,500.00 44,094.59 2nd Mtg Santa Clara Apts 7.00% 02/10/05 234.06 80,250.00 40,125.00 40,125.00 2nd Mtg San Francisco Res 12.00% 06/25/94 100.00 0.00 10,000.00 10,000.00 4,500.00 lst Mtg Sacramento Apts 11.50% 04/01/05 123.79 0.00 150,000.00 12,499.99 lst Mtg San Francisco Comm 9.00% 05/10/02 670.52 0.00 83,333.33 81,033.44 1st Mtg Shasta Res 8.00% 09/27/00 482.54 96,429.00 72,380.95 70,617.58 2nd Mtg Monterey Comm 12.00% 02/01/11 756.11 0.00 63,000.00 58,595.01 lst Mtg Alameda Comm 12.00% 12/31/01 3,598.27 1,955,550.00 340,000.00 359,827.21 2nd Mtg Santa Clara Res 7.00% 05/15/01 850.00 0.00 145,000.00 144,858.86 lst Mtg San Mateo Land 14.00% 02/01/97 3,822.50 0.00 382,250.00 235,381.46 1st Mtg Santa Clara Res 8.00% 09/18/03 166.58 0.00 22,701.51 22,237.39 lst Mtg Sonoma Res 8.00% 09/30/03 170.67 0.00 23,259.09 22,799.04 lst Mtg Sonoma Comm 12.00% 02/01/99 508.40 1,279,200.00 49,200.00 49,200.00 2nd Mtg Santa Clara Res 13.00% 12/01/99 704.17 0.00 65,000.00 65,000.00 1,408.34 lst Mtg Ventura Res 13.00% 12/01/99 140.83 0.00 65,000.00 13,000.00 281.66 lst Mtg Ventura Res 13.00% 12/01/99 140.83 0.00 65,000.00 13,000.00 281.66 1st Mtg Ventura Apts 7.00% 08/01/02 1,545.83 0.00 265,000.00 265,000.00 lst Mtg Sacramento Land 11.00% 07/01/99 3,879.29 1,452,282.00 700,000.00 409,543.57 2nd Mtg San Francisco
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 Liens Face Amt. Carrying Principal Type Geographic Rate Maturity Payment of Mortgage amount of amount of of Lien County Date Terms Investment Mortgage Mortgage Location (original Investment Investments amount) subject to Delinq. Principal or Interest - -------- --------- --------- ---------- ------------ ------------- ------------ ------------- -------- -------------- Apts 12.00% 08/01/99 773.59 0.00 80,000.00 78,854.34 1st Mtg Marin Res 11.00% 10/01/01 4,583.33 0.00 500,000.00 500,000.00 lst Mtg Stanislaus Res 13.50% 03/01/03 467.39 0.00 36,000.00 17,996.94 lst Mtg Solano Res 10.00% 08/01/03 576.96 262,720.00 49,000.00 25,345.46 2nd Mtg San Mateo Apts 13.00% 11/01/03 759.15 341,094.00 60,000.00 32,569.07 2nd Mtg San Francisco Res 13.75% 11/01/03 2,202.61 0.00 167,500.00 82,462.54 1st Mtg Alameda Apts 14.00% 03/01/92 1,184.87 960,000.00 100,000.00 95,498.69 2nd Mtg Santa Clara Comm 14.50% 05/01/04 4,233.05 532,392.00 310,000.00 187,893.17 2nd Mtg San Mateo Comm 11.50% 05/01/99 3,113.39 0.00 314,000.00 307,495.69 1st Mtg Alameda Comm 17.25% 11/20/95 2,533.19 185,351.00 200,000.00 193,387.36 3rd Mtg San Mateo Apts 14.00% 06/01/92 473.95 1,060,000.00 40,000.00 38,282.01 3rd Mtg Santa Clara Res 14.25% 07/01/04 984.46 78,672.00 73,000.00 46,134.38 2nd Mtg San Francisco Res 14.50% 04/01/05 546.20 150,804.00 40,000.00 27,700.23 3rd Mtg San Francisco Res 14.50% 07/01/92 2,416.67 340,827.00 200,000.00 71,918.82 2nd Mtg San Francisco Comm 10.00% 08/01/00 1,428.14 59,402.00 160,000.00 157,105.61 2nd Mtg San Mateo Apts 9.00% 02/01/99 38.42 153,534.00 5,122.00 5,122.00 2nd Mtg Sacramento Total $93,698.54 $12,348,933.0$9,748,494.76 $7,969,735.31 $77,390.01 Notes: Mortgage Investments classified as impaired had principal balances totalling $614,978. Impaired Mortgage Investments are defined as Mortgage Investments where the costs of related balances exceeds the anticipated fair value less costs to collect. Interest is no longer accrued thereon. Amounts reflected in column G (carrying amount of Mortgage Investments) represents both costs and the tax basis of the Mortgage Investments.
Schedule XII Reconciliation of carrying amount (cost) of Mortgage Investments at close of periods Year ended December 31, ---------------------------------------------------------- 1998 1997 1996 --------------- --------------- --------------- Balance at beginning of year 8,104,984 $9,313,924 $10,402,491 --------------- --------------- --------------- Additions during period: New Mortgage Investments 1,798,822 557,796 2,474,843 Other 0 0 0 --------------- --------------- --------------- Total Additions $1,798,822 $557,796 $2,474,843 --------------- --------------- --------------- Deductions during period: Collections of principal 1,934,071 1,634,128 3,295,834 Foreclosures 0 0 267,576 Cost of Mortgage Investments sold 0 0 0 Amortization of Premium 0 0 0 Other 0 132,608 0 --------------- --------------- --------------- Total Deductions 1,934,071 1,766,736 3,563,410 --------------- --------------- --------------- Balance at close of year $7,969,735 $8,104,984 $9,313,924 =============== =============== ===============
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, 1998. All such compensation is in compliance with the guidelines and limitations set forth in the Prospectus. Entity Receiving Description of Compensation Compensation and Services Rendered Amount - ---------------------- ------------------------------- ---------- I. Redwood Mortgage Mortgage Servicing Fee for servicing Mortgage Investments $70,630 General Partners &/or Affiliates Asset Management Fee for managing assets $6,640 General Partners 1% interest in profits $5,125 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 $36,700 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 $749 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....................................................$24,440 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 Wilson, Ryan & Campilongo(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 the 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 25th day of March, 1999. 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 25th day of March, 1999. Signature Title Date /S/ D. Russell Burwell - ----------------------- D. Russell Burwell General Partner March 25, 1999 /S/ Michael R. Burwell - ----------------------- Michael R. Burwell General Partner March 25, 1999 /S/ D. Russell Burwell - ----------------------- D. Russell Burwell President of Gymno Corporation, March 25, 1999 (Principal Executive Officer); Director of Gymno Corporation /S/ Michael R. Burwell - ----------------------- Michael R. Burwell Secretary/Treasurer of Gymno March 25, 1999 Corporation (Principal Financial and Accounting Officer); Director of Gymno Corporation EX-27 2 FDS --
5 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 299775 0 8873312 202344 0 0 0 0 9140665 0 0 433131 0 0 8707534 9140665 0 871861 0 136132 0 180054 43170 512505 0 512505 0 0 0 512505 .00 .00
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