================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------
FORM 8-K
CURRENT REPORT
------------
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 4, 1997
MATZEL & MUMFORD MORTGAGE FUNDING, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEW JERSEY 33-98178 22-3382016
- ---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
100 VILLAGE COURT, HAZLET, NEW JERSEY 07730
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(908) 888-1055
-----------------------------------------------------
(Registrant's telephone number, including area code)
================================================================================
<PAGE>
Item 5. Other Events
Section 13 of the Hills, L.L.C.
- -------------------------------
On February 7, 1997, Matzel & Mumford Mortgage Funding, Inc. (the "Funding
Company") made a first mortgage loan to Section 13 of the Hills, L.L.C.
("Section 13") , the entity organized to develop, market and build a 60 lot
subdivision known as Beacon Crest located on Allen Road in Basking Ridge,
Somerset County, New Jersey. Beacon Crest is part of a planned unit development
known as The Hills. The site is served by various commuter highways and is a
short driving distance from a commuter train that travels into Newark, New
Jersey and New York City. Basking Ridge is one of a few premier suburban
communities in central New Jersey and is close to corporate office centers such
as AT&T and Merck Pharmaceuticals.
As of January 31, 1997, Beacon Crest has written 51 contracts with
prospective homebuyers, and has taken another deposit which is expected to be
converted to a contract upon meeting certain conditions. Beacon Crest has closed
title to third party purchasers on 37 of the 51 contracts.
The Funding Company has issued a loan commitment to Section 13 in an amount
of $2,100,000 for a first mortgage on five building lots for construction of
spec homes. Part of the funds will be used to repay Amboy National Bank its
existing acquisition and improvement funding on those five building lots. The
Funding Company on February 7th funded the first advance request from Section 13
in the amount of $1,418,650 based on a percentage of completion basis. The
balance of the loan commitment will be funded as construction progresses.
Repayment of the loan from Section 13 to the Funding Company will come from
proceeds of the houses as they are closed with third party purchasers.
Matzel & Mumford at West Windsor, L.L.C.
- ----------------------------------------
On February 4, 1997, Matzel & Mumford Mortgage Funding, Inc. (the "Funding
Company") made a first mortgage loan to Matzel & Mumford at West Windsor, L.L.C.
("West Windsor") , the entity organized to develop, market and build a 38 lot
subdivision known as Windsor Crossing located on New Village Road in West
Windsor, Mercer County, New Jersey. West Windsor is conveniently located in the
Route 1 corridor near major thoroughfares, and is only 5 minutes from Princeton,
New Jersey which is a substantial base for white collar jobs. In addition,
another major advantage to the site is its proximity to the Princeton Junction
train station which is two miles away and travels to New York City.
As of January 31, 1997, Windsor Crossing has written 8 contracts with
prospective homebuyers, and has taken another deposit which is expected to be
converted to a contract upon meeting certain conditions. Closings to third party
purchasers are expected to commence in March 1997.
<PAGE>
The Funding Company has issued a loan commitment to West Windsor in an
amount of $850,000 for a first mortgage on two building lots for construction of
spec homes. Part of the funds will be used to repay First Savings Bank (first
mortgage holder) for its existing acquisition and improvement funding and Apple
Chase Investors, L.L.C. (second mortgage holder for its acquisition funding) on
those two building lots. The Funding Company on February 4th funded the first
advance request from West Windsor in the amount of $435,641 based on a
percentage of completion basis. The balance of the loan commitment will be
funded as construction progresses. Repayment of the loan from West Windsor to
the Funding Company will come from proceeds of the houses as they are closed
with third party purchasers.
Item 7(a). Financial Statements.
The audited financial statements of Section 13 of the Hills, L.L.C. for the
years ended December 31, 1996 and December 1995 and the audited financial
statements of Matzel & Mumford at West Windsor, L.L.C. for the period March 22,
1996 (date of inception) to December 31, 1996 are being filed as part of this
Current Report.
Item 7(c). Exhibits.
4(a) Indenture (including form of Notes), dated as of January 25, 1996,
between Matzel & Mumford Mortgage Funding, Inc. (the "Funding Company")
and First Union National Bank, as Trustee (incorporated by reference to
Exhibit 4(a) of Registration Statement on Form SB-2 of the Funding
Company (Registration No. 33-98178)).
4(b) Resolutions of the Board of Directors of the Funding Company respecting
terms of Intermediate Term Secured Notes (incorporated by reference to
Exhibit 4(b) of Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996 of the Funding Company).
27 Financial Data Schedules.
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
================================================================================
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
CONTENTS
================================================================================
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS:
Balance sheet 4
Statements of operations and members' equity (deficit) 5
Statements of cash flows 6
Statements of members' equity (deficit) 7
Notes to financial statements 8-12
2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Members
Section 13 of the Hills, L.L.C.
Hazlet, New Jersey
We have audited the accompanying balance sheet of Section 13 of the Hills,
L.L.C. as of December 31, 1996, and the related statements of operations,
members' equity (deficit) and cash flows for the two years in the period ended
December 31, 1996. These financial statements are the responsibility of the
Company's 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 audits 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 statements 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 Section 13 of the Hills, L.L.C.
as of December 31, 1996 and the results of its operations and cash flows for the
two years in the period ended December 31, 1996 in conformity with generally
accepted accounting principles.
January 9, 1997
3
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
BALANCE SHEET
===============================================================================
December 15, 1996
- -------------------------------------------------------------------------------
ASSETS
Cash $ 27,124
Cash-restricted 63,029
Inventory (Notes 2 and 3) 6,560,237
- -------------------------------------------------------------------------------
TOTAL ASSETS $6,650,390
===============================================================================
LIABILITIES AND MEMBERS' EQUITY
Accounts payable $1,850,996
Customer deposits 334,085
Due to affiliates (Note 4) 400,000
Notes and mortgages payable (Note 3) 4,202,697
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 6,787,778
- -------------------------------------------------------------------------------
MEMBERS' EQUITY (DEFICIT) (137,388)
- -------------------------------------------------------------------------------
TOTAL MEMBERS' EQUITY (DEFICIT) (137,388)
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND MEMBERS' EQUITY $6,650,390
===============================================================================
See accompanying notes to financial statements.
4
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
STATEMENTS OF OPERATIONS
===============================================================================
Years ended December 31, 1996 1995
- -------------------------------------------------------------------------------
SALES $17,532,688 $1,690,920
COST OF SALES 16,118,386 1,411,790
- -------------------------------------------------------------------------------
GROSS PROFIT 1,414,302 279,130
- -------------------------------------------------------------------------------
MANAGEMENT FEES 609,789 59,722
OTHER (INCOME) EXPENSE, NET (8,522) (27,955)
- -------------------------------------------------------------------------------
NET INCOME FROM OPERATIONS $ 813,035 $ 247,363
================================================================================
See accompanying notes to financial statements.
5
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
STATEMENT OF MEMBERS' EQUITY (DEFICIT)
================================================================================
M&M at Basking
Years ended December 31, Ridge KMG TOTAL
- --------------------------------------------------------------------------------
MEMBERS' EQUITY JANUARY 1, 1995 $ -- $ -- $ --
NET INCOME 153,681 93,682 247,363
- --------------------------------------------------------------------------------
MEMBERS' EQUITY DECEMBER 31, 1995 153,681 93,682 247,363
- --------------------------------------------------------------------------------
NET INCOME 716,518 96,517 813,035
DISTRIBUTIONS (821,786) (376,000) (1,197,786)
- --------------------------------------------------------------------------------
MEMBERS' EQUITY DECEMBER 31, 1996 $ 48,413 $(185,801) $ (137,388)
================================================================================
See accompanying notes to financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
SECTION 13 OF THE HILLS, L.L.C.
STATEMENT OF CASH FLOWS
================================================================================================
Years ended December 31, 1996 1995
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 813,035 $ 247,363
Adjustments to reconcile net income to net cash
used in operating activities:
(Increase) decrease in cash-restricted 56,152 (119,181)
(Increase) decrease in inventories 4,118,462 (6,445,027)
Increase in accounts payable 128,091 1,703,462
Increase (decrease) in customer deposits (311,775) 645,860
- --------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 4,803,965 (3,967,998)
- --------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to members (1,197,786) --
Proceeds from mortgages payable 10,219,694 6,492,539
Repayments of notes and mortgages payable (14,739,747) (1,494,789)
Advances from affiliates 425,000 (425,000)
Increase (decrease) in due to affiliates 303,500 (393,120)
- --------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (4,989,339) 4,179,630
- --------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH (185,374) 211,632
CASH, BEGINNING OF PERIOD 212,498 866
- --------------------------------------------------------------------------------------------------
CASH, END OF PERIOD $ 27,124 $ 212,498
==================================================================================================
NON-CASH INVESTING AND FINANCING ACTIVITIES:
The acquisition of the land was partially financed by the seller in the amount
of $1,566,000 and $1,974,000 in 1996 and 1995, respectively.
==================================================================================================
See accompanying notes to financial statements.
</TABLE>
7
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SUMMARY OF Nature of Business and Organization
ACCOUNTING
POLICIES Section 13 of the Hills, L.L.C. ("Section 13") is a New
Jersey limited liability company formed on May 12, 1994 for
the purpose of purchasing land in Bernards Township, New
Jersey, and developing and constructing 60 single-family
homes on the land.
The members of the L.L.C. are Matzel & Mumford at Basking
Ridge, L.L.C. ("M&M at Basking Ridge") and KMG Associates,
L.L.C. ("KMG"). Profits are allocated first to M&M at
Basking Ridge $20,000 per house closing as a preference
distribution with remaining amounts allocated equally to
each member.
Revenue Recognition
Revenues arising from home sales will be recognized under
the accrual method. Under this method, income will be
recognized when all terms relating to the sale of a unit are
complete, consideration is exchanged and title is conveyed
to the buyer.
Restricted Cash
Restricted cash represents amounts on deposit as collateral
for project improvements.
Inventories
Inventories are stated at the lower of cost or estimated net
realizable value, which is determined by reducing the
anticipated net sales proceeds by the estimated costs
necessary to complete or improve the property to the
condition used in arriving at the anticipated selling price.
Inventory costs are comprised of land, project overhead
direct unit and allocated costs. Development costs are
capitalized until the property is complete and title has
been conveyed to the buyer. Development costs generally
include land and improvements, house construction, project
overhead, interest and a portion of construction management
fees. Interest capitalized is based upon the interest rate
on specifically related debt. A portion of the management
fees to a related party are paid and capitalized by the
Company.
8
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
===============================================================================
Income Taxes
The Company is organized and operates as a limited liability
company which is not subject to Federal or state income
taxes. Accordingly, no provision for income taxes has been
made. The earnings or losses of the Company are included on
each member's tax return, according to the terms of the
operating agreement.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results
could differ from those estimates.
2. INVENTORIES Inventories relating to the development of single-family
homes consist of the following at December 31, 1996:
-----------------------------------------------------------
Land and land development $3,948,332
Direct construction 1,158,956
Project overhead 326,225
Sales and marketing 618,231
Financing 508,493
-----------------------------------------------------------
$6,560,237
============================================================
All expenses incurred for the development of the project
will be capitalized. Selling expenses, which do not benefit
future periods, and general and administrative expenses are
treated as period costs and are expensed as incurred.
9
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
================================================================================
3. NOTES AND 1996
MORTGAGES ------------------------------------------------------------
PAYABLE Land and construction loan Phase I (a) $ 259,152
Land and construction loan Phase II (b) 2,527,545
2nd mortgage (c) 75,000
3rd mortgage,less unamortized discount
of $85,000(d) 1,037,000
Note payable (e(i)) 204,000
Note payable (e(ii)) 100,000
------------------------------------------------------------
$ 4,202,697
============================================================
(a) The Company has a commitment from a bank for land
acquisition and construction not to exceed $6,100,000
as follows:
o Note 1 in the maximum amount of $2,600,000 is to fund
land acquisition, improvements and construction of
one model. The note is payable interest only at the
prime rate, plus 1 1/2%. Interest is payable monthly
and principal is payable with each closing at 120% of
the amounts advanced. The note matures on August 21,
1997.
o Note 2 in the maximum amount of $3,500,000 is for
construction of dwelling units. The note is payable
interest only at the prime rate plus 1 1/2%. Interest
is payable monthly and principal is payable with each
closing in an amount equal to all related funds
advanced for construction.
The loan is collateralized by a first mortgage on the
land and improvements of Phase I (24 lots) of the
project and is guaranteed by the members of M&M at
Basking Ridge and KMG.
10
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
================================================================================
(b) The Company has a commitment from a bank for land
acquisition and construction not to exceed $6,880,000 as
follows:
o Note 1 in the maximum amount of $3,380,000 is to fund
land acquisition, improvements and construction of one
model. The note is payable interest only at the prime
rate, plus 1 1/2%. Interest is payable monthly and
principal is payable with each closing at 120% of the
amounts advanced. Any unpaid balance at September 26,
1997 will be due on demand.
o Note 2 in the maximum amount of $3,500,000 is for
construction of dwelling units. The note is payable
interest only at the prime rate plus 1 1/2%. Interest
is payable monthly and principal is payable with each
closing in an amount equal to all related funds
advanced for construction.
The loan is collateralized by a first mortgage on the
land and improvements of phase II (36 lots) of the
project and is guaranteed by the members of M&M at
Basking Ridge and KMG.
(c) The Company has a loan from a bank in the maximum
amount of $300,000. The loan is payable interest only
at the prime rate, plus 1 1/2%, monthly through
September 26, 1997 at which time the unpaid balance
becomes payable on demand. Principal is payable $15,000
for each lot closing. The loan is collateralized by a
second mortgage on the land and improvements of phase
II of the project and is guaranteed by the members of
M&M at Basking Ridge and KMG.
(d) The Company has a subordinated third mortgage to the
seller, who is also the managing member of KMG, in the
original amount of $1,836,000. The loan is non-interest
bearing and principal is payable $51,000 per closing in
Phase II. This note has been discounted using an
imputed interest rate of 15%. The original loan amount
and the land were reduced by $270,000 as a result of
this discount. The loan is collateralized by a third
mortgage on Phase II.
11
<PAGE>
SECTION 13 OF THE HILLS, L.L.C.
NOTES TO FINANCIAL STATEMENTS
================================================================================
(e) The Company has notes payable to the seller as follows:
(i) Note 1 in the original amount of $1,224,000 is
non-interest bearing and is payable $51,000 per
closing in Phase I.
(ii) Note 2 in the original amount of $750,000 bears
interest at 15% payable annually. Principal is
payable at a minimum of $30,000 per month,
however, after the sale of the first unit, this
amount may be satisfied by payments in connection
with Note 1 as provided in the loan documents. The
Note matured on August 27, 1996 and is currently
due on demand.
Notes 1 and 2 are guaranteed by the members of
M&M at Basking Ridge.
4. RELATED PARTY The Company has an agreement with the Matzel & Mumford
TRANSACTIONS Organization, Inc. ("MMO"), whereby MMO provides
construction management services at a fee of 4% of the gross
selling price of each house up to $20,000 per house. MMO is
entitled to draws of $25,000 per month.
Included in due to/from affiliates are transfers of costs
incurred by affiliated companies of the managing member of
the Company. The amounts are short term in nature and bear
no interest. The amounts are to be repaid as cash flow
allows.
5. COMMITMENTS The Company is contingently liable for performance bonds
AND totalling $342,000 at December 31, 1996.
CONTINGENCIES
12
<PAGE>
MATZEL & MUMFORD AT
WEST WINDSOR, L.L.C.
FINANCIAL STATEMENTS
PERIOD MARCH 22, 1996 (DATE OF INCEPTION)
TO DECEMBER 31, 1996
<PAGE>
MATZEL & MUMFORD AT
WEST WINDSOR, L.L.C.
================================================================================
FINANCIAL STATEMENTS
PERIOD MARCH 22, 1996 (DATE OF INCEPTION)
TO DECEMBER 31, 1996
1
<PAGE>
MATZEL & MUMFORD AT WEST WINDSOR, L.L.C.
CONTENTS
================================================================================
INDEPENDENT AUDITORS' REPORT 3
FINANCIAL STATEMENTS:
Balance sheet 4
Statement of cash flows 5
Notes to financial statements 6-8
2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Members
Matzel & Mumford at West Windsor, L.L.C.
Hazlet, New Jersey
We have audited the accompanying balance sheet of Matzel & Mumford at West
Windsor, L.L.C. as of December 31, 1996 and the related statement of cash flows
for the period March 22, 1996 (date of inception) to December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 statements presentation.
We believe that our audit provides 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 Matzel & Mumford at West
Windsor, L.L.C. as of December 31, 1996 and its cash flows for the period March
22, 1996 (date of inception) through December 31, 1996 in conformity with
generally accepted accounting principles.
January 9, 1997
3
<PAGE>
MATZEL & MUMFORD AT WEST WINDSOR, L.L.C.
BALANCE SHEET
===============================================================================
December 31, 1996
- -------------------------------------------------------------------------------
ASSETS
Cash $ 35,171
Cash-restricted 10,000
Inventory (Notes 2 and 3) 2,603,466
- -------------------------------------------------------------------------------
TOTAL ASSETS $2,648,637
===============================================================================
LIABILITIES AND MEMBERS' EQUITY
Accounts payable $ 484,680
Due to affiliates (Note 4) 439,587
Mortgages payable (Note 3) 1,620,848
Customer deposits 103,522
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 2,648,637
- -------------------------------------------------------------------------------
MEMBERS' EQUITY 1,000
RECEIVABLE FROM MEMBERS (1,000)
- -------------------------------------------------------------------------------
TOTAL MEMBERS' EQUITY --
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND MEMBERS' EQUITY $2,648,637
===============================================================================
See accompanying notes to financial statements.
4
<PAGE>
MATZEL & MUMFORD AT WEST WINDSOR, L.L.C.
STATEMENT OF CASH FLOWS
================================================================================
For the period March 22, 1996 (date of inception) to December 31, 1996
- --------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ --
Adjustments to reconcile net income to net cash used in
operating activities:
Increase in cash-restricted (10,000)
Increase in inventories (2,603,466)
Increase in accounts payable 484,680
Increase in customer deposits 103,522
- --------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (2,025,264)
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from mortgages payable 1,620,848
Advances from affiliates 439,587
- --------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,060,435
- --------------------------------------------------------------------------------
INCREASE IN CASH 35,171
CASH, BEGINNING OF PERIOD --
- --------------------------------------------------------------------------------
CASH, END OF PERIOD $ 35,171
================================================================================
See accompanying notes to financial statements.
5
<PAGE>
MATZEL & MUMFORD AT WEST WINDSOR, L.L.C.
NOTES TO FINANCIAL STATEMENTS
================================================================================
1. SUMMARY OF Nature of Business and Organization
ACCOUNTING
POLICIES Matzel & Mumford at West Windsor, L.L.C. ("M&M at West Windsor")
is a New Jersey limited liability company formed on March 22,
1996 for the purpose of purchasing land in West Windsor, New
Jersey and developing and constructing 38 single-family homes on
the land. On March 25, 1996, M&M at West Windsor closed title to
11 lots and has an option to purchase the remaining 27 lots.
Through December 31, 1996, there has been no operating
activities.
Revenue Recognition
Revenues arising from home sales will be recognized under the
accrual method. Under this method, income will be recognized when
all terms relating to the sale of a unit are complete,
consideration is exchanged and title is conveyed to the buyer.
Restricted Cash
Restricted cash represents amounts on deposit as collateral for
project improvements.
Inventories
Inventories are stated at the lower of cost or estimated net
realizable value, which is determined by reducing the anticipated
net sales proceeds by the estimated costs necessary to complete
or improve the property to the condition used in arriving at the
anticipated selling price.
Inventory costs are currently comprised of land and project
overhead. Inventory costs will be comprised of direct unit and
allocated costs. Development costs will be capitalized until the
property is complete and title has been conveyed to the buyer.
Development costs generally include land and improvements, house
construction, project overhead, interest and a portion of
construction management fees. Interest capitalized is based upon
the interest rate on specifically related debt. A portion of the
management fees to a related party are paid and capitalized by
the Company.
6
<PAGE>
MATZEL & MUMFORD AT WEST WINDSOR, L.L.C.
NOTES TO FINANCIAL STATEMENTS
================================================================================
Members' Capital
The two managing members have pledged a total of $1,000 in
capital contributions.
Income Taxes
The Company is organized and operates as a limited liability
company which is not subject to Federal or state income taxes.
Accordingly, no provision for income taxes has been made. The
earnings or losses of the Company are included on each member's
tax return, according to the terms of the operating agreement.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
2. INVENTORIES Inventories relating to the development of single-family homes
consist of the following at December 31, 1996:
-----------------------------------------------------------------
Land and land development $1,261,470
Direct construction 350,549
Project overhead 469,879
Sales and marketing 274,483
Financing 247,285
-----------------------------------------------------------------
$2,603,466
=================================================================
All expenses incurred for the development of the project will be
capitalized. Selling expenses which do not benefit future
periods, and general and administrative expenses, will be treated
as period costs and will be expensed as incurred.
7
<PAGE>
MATZEL & MUMFORD AT WEST WINDSOR, L.L.C.
NOTES TO FINANCIAL STATEMENTS
================================================================================
3. LOANS AND -----------------------------------------------------------------
MORTGAGES Land and construction loan (a) $1,235,848
PAYABLE 2nd mortgage (b) 385,000
-----------------------------------------------------------------
$1,620,848
=================================================================
(a) The Company has a commitment from a bank for land
acquisition and construction not to exceed $3,800,000.
Interest is payable monthly at the prime rate, plus 1 1/2%.
Principal is payable with each closing at the rate of 120%
of the amount advanced for land acquisition and 100% of
construction advances. The loan matures on October 25, 1997,
with the availability of a six month extension at the
option of the lender after which time the balance will be
due on demand. The loan is collateralized by a first
mortgage on the land and improvements of the project and is
guaranteed by the members of M&M at West Windsor and The
Matzel & Mumford Organization ("MMO"), an entity under
common control.
(b) The Company has a mortgage in the maximum amount of
$805,000. Interest is payable quarterly at 14%, plus an
additional 1% of the sales price of each lot. Principal is
payable with the closing of each lot at $35,000 per lot with
any unpaid balance due on May 1, 1998. The note is
collateralized by a second mortgage on the project and the
guarantee of the members of M&M at West Windsor and MMO.
4. RELATED The Company has an agreement with the Matzel & Mumford Organiza-
PARTY tion, Inc. ("MMO"), whereby MMO provides construction management
TRANSACTIONS services at a fee of 4% of the gross selling price of each house
MMO is entitled to draws of $30,000 per month. During the period
March 22 through December 31, 1996, $330,000 of management fees
have been incurred.
Included in due to/from affiliates are transfers of costs
incurred by affiliated companies of the managing member of the
Company. The amounts are short term in nature and bear no
interest. The amounts are to be repaid as cash flow allows.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned hereunto duly authorized.
MATZEL & MUMFORD MORTGAGE FUNDING, INC.
By: /s/ ROGER MUMFORD
-----------------------------------
Roger Mumford
President
Dated: February 14, 1997
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Document Page
------ -------- ----
27 Financial Data Schedules
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 90,153
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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