<PAGE> PAGE 1
000 B000000 03/31/2000
000 C000000 0000742094
000 D000000 N
000 E000000 NF
000 F000000 Y
000 G000000 N
000 H000000 N
000 I000000 6.1
000 J000000 U
001 A000000 REDWOOD MICROCAP FUND, INC.
001 B000000 811-03986
001 C000000 7195932111
002 A000000 6180 LEHMAN DRIVE, SUITE 103
002 B000000 COLORADO SPRINGS
002 C000000 CO
002 D010000 80918
003 000000 N
004 000000 N
005 000000 N
006 000000 N
007 A000000 N
007 B000000 0
007 C010100 1
007 C010200 2
007 C010300 3
007 C010400 4
007 C010500 5
007 C010600 6
007 C010700 7
007 C010800 8
007 C010900 9
007 C011000 10
013 A000001 STOCKMAN KAST RYAN & COMPANY, LLP
013 B010001 COLORADO SPRINGS
013 B020001 CO
013 B030001 80903
013 B040001 1418
019 B000000 0
020 A000001 D.E. FREY
020 B000001 84-1098795
020 C000001 1
020 A000002 YEE, DESMOND, SCHROEDER, & ALLEN, INC.
020 B000002 86-0698163
020 C000002 3
020 C000003 0
020 C000004 0
020 C000005 0
020 C000006 0
020 C000007 0
020 C000008 0
020 C000009 0
<PAGE> PAGE 2
020 C000010 0
021 000000 4
022 A000001 M. H. MYERSON & CO., INC.
022 B000001 13-1924455
022 C000001 18
022 D000001 353
022 A000002 HERZOG, HEINE, GEDULD, INC.
022 B000002 13-1955436
022 C000002 0
022 D000002 67
022 A000003 D. E FREY
022 B000003 84-1098795
022 C000003 0
022 D000003 6
022 A000004 PRIVATE TRANSACTIONS
022 B000004 84-0937822
022 C000004 1
022 D000004 21
022 C000005 0
022 D000005 0
022 C000006 0
022 D000006 0
022 C000007 0
022 D000007 0
022 C000008 0
022 D000008 0
022 C000009 0
022 D000009 0
022 C000010 0
022 D000010 0
023 C000000 19
023 D000000 447
025 D000001 0
025 D000002 0
025 D000003 0
025 D000004 0
025 D000005 0
025 D000006 0
025 D000007 0
025 D000008 0
045 000000 N
048 000000 0.000
048 A010000 0
048 A020000 0.000
048 B010000 0
048 B020000 0.000
048 C010000 0
048 C020000 0.000
048 D010000 0
048 D020000 0.000
048 E010000 0
<PAGE> PAGE 3
048 E020000 0.000
048 F010000 0
048 F020000 0.000
048 G010000 0
048 G020000 0.000
048 H010000 0
048 H020000 0.000
048 I010000 0
048 I020000 0.000
048 J010000 0
048 J020000 0.000
048 K010000 0
048 K020000 0.000
055 A000000 N
055 B000000 N
056 000000 N
057 000000 N
061 000000 0
062 A000000 N
062 B000000 0.0
062 C000000 0.0
062 D000000 0.0
062 E000000 0.0
062 F000000 0.0
062 G000000 0.0
062 H000000 0.0
062 I000000 0.0
062 J000000 0.0
062 K000000 0.0
062 L000000 0.0
062 M000000 0.0
062 N000000 0.0
062 O000000 0.0
062 P000000 0.0
062 Q000000 0.0
062 R000000 0.0
063 A000000 0
063 B000000 0.0
066 A000000 Y
066 E000000 Y
067 000000 N
068 A000000 N
068 B000000 N
069 000000 N
071 A000000 466
071 B000000 922
071 C000000 2929
071 D000000 16
072 A000000 12
072 B000000 58
072 C000000 0
<PAGE> PAGE 4
072 D000000 0
072 E000000 207
072 F000000 0
072 G000000 0
072 H000000 108
072 I000000 3
072 J000000 2
072 K000000 4
072 L000000 2
072 M000000 5
072 N000000 0
072 O000000 0
072 P000000 21
072 Q000000 42
072 R000000 19
072 S000000 9
072 T000000 0
072 U000000 0
072 V000000 0
072 W000000 92
072 X000000 307
072 Y000000 0
072 Z000000 -42
072AA000000 504
072BB000000 76
072CC010000 0
072CC020000 797
072DD010000 0
072DD020000 0
072EE000000 0
073 A010000 0.0000
073 A020000 0.0000
073 B000000 0.0000
073 C000000 0.0000
074 A000000 33
074 B000000 0
074 C000000 0
074 D000000 0
074 E000000 0
074 F000000 2913
074 G000000 0
074 H000000 0
074 I000000 0
074 J000000 0
074 K000000 733
074 L000000 0
074 M000000 1
074 N000000 3680
074 O000000 0
074 P000000 225
074 Q000000 0
<PAGE> PAGE 5
074 R010000 0
074 R020000 0
074 R030000 0
074 R040000 255
074 S000000 0
074 T000000 3200
074 U010000 2412000
074 U020000 0
074 V010000 1.33
074 V020000 0.00
074 W000000 0.0000
074 X000000 431
074 Y000000 0
075 A000000 0
075 B000000 3579
076 000000 1.38
077 A000000 Y
077 B000000 Y
077 E000000 Y
080 A000000 NATIONAL UNION FIRE INS CO OF PITTSBURG, PA
080 C000000 425
081 A000000 Y
081 B000000 1
082 A000000 Y
082 B000000 0
083 A000000 N
083 B000000 0
084 A000000 N
084 B000000 0
085 A000000 N
085 B000000 N
SIGNATURE STAN PITTMAN
TITLE SECRETARY
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0000742094
<NAME> N/A
<SERIES>
<NUMBER> 01
<NAME> N/A
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 3357254
<INVESTMENTS-AT-VALUE> 3646231
<RECEIVABLES> 0
<ASSETS-OTHER> 1412
<OTHER-ITEMS-ASSETS> 32628
<TOTAL-ASSETS> 3680271
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 479977
<TOTAL-LIABILITIES> 479977
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1971146
<SHARES-COMMON-STOCK> 2412000
<SHARES-COMMON-PRIOR> 2412000
<ACCUMULATED-NII-CURRENT> (2362043)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3489836
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 101355
<NET-ASSETS> 3200294
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 58388
<OTHER-INCOME> 206375
<EXPENSES-NET> 306854
<NET-INVESTMENT-INCOME> (42091)
<REALIZED-GAINS-CURRENT> 428621
<APPREC-INCREASE-CURRENT> (797178)
<NET-CHANGE-FROM-OPS> (243648)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (243648)
<ACCUMULATED-NII-PRIOR> (1950982)
<ACCUMULATED-GAINS-PRIOR> 2655469
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 306854
<AVERAGE-NET-ASSETS> 3578573
<PER-SHARE-NAV-BEGIN> 1.428
<PER-SHARE-NII> (.017)
<PER-SHARE-GAIN-APPREC> (.084)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.327
<EXPENSE-RATIO> 8.57
</TABLE>
To the Board of Directors and Shareholders,
Redwood MicroCap Fund, Inc.
In planning and performing our audit of the financial statements of Redwood
MicroCap Fund, Inc. (the Fund) for the year ended March 31, 2000 (on which we
have issued our report dated May 15, 2000), we considered its internal control
structure, including procedures for safeguarding securities, in order to
determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and to comply with requirements of Form N-SAR, not to
provide assurance on the internal control structure.
The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgements by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. Two of the
objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors or
irregularities may occur and not be detected. Also, projection of any evaluation
of the structure to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of the
design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce to
a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
March 31, 2000.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
/s/Stockman Kast Ryan & Company, LLP
Colorado Springs, Colorado
May 15, 2000
lEGAL PROCEEDINGS EX-99
Pursuant to an examination of the Fund by the Securities and Exchange Commission
("SEC"), the SEC has issued a letter to the Fund identifying various asserted
deficiencies and violations of rules and regulations. The Fund has reviewed the
asserted deficiencies and violations and filed its response with the SEC. The
Fund's management does not believe that the outcome of these matters will have a
material impact on the Fund's financial condition or operations. However, the
ultimate outcome of these matters is not determinable at this time.
The Securities and Exchange Commission has filed an administrative action
against the Fund's President as a result of certain trading activity conducted
by him in his personal accounts during 1994. At the present time, it is not
known what impact or consequences this action or an unfavorable outcome to this
action might have on the future operations or management of the Fund.