REDWOOD MORTGAGE INVESTORS VI
(a California Limited Partnership)
Index to Form 10-K
December 31, 1996
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
Item 8 - Financial Statements and Supplementary Data 10-27
Item 9 - Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 28
Part III
Item 10 - Directors and Executive Officers of the Registrant 28
Item 11- Executive Compensation 29
Item 12 - Security Ownership of certain Beneficial Owners and Management 30
Item 13 - Certain Relationships and Related Transactions 30
Part IV
Item 14 - Exhibits, Financial Statement Schedules, and Reports of
Form 8-K 30-31
Signatures 32
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the year ended December 31, 1996 Commission File number 33-12519
- --------------------------------------------------------------------------------
REDWOOD MORTGAGE INVESTORS VI
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-3031211
- -------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification)
or organization)
650 El Camino Real #G, Redwood City, CA 94063
- -------------------------------------------------------------------------------
(address of principal executive offices) (zip code)
Registrants telephone No. Including area code (415) 365-5341
- --------------------------------------------------------------------------------
Securities registered pursuant to Section 12 (b) of the Act: None
Title of each class Name of each exchange on which registered
- --------------------------------------------------------------------------------
Limited Partnership Units None
- --------------------------------------------------------------------------------
Securities registered pursuant to
Section 12 (g) of the Act: Limited Partnership Units
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES XX NO
----- -------
At the close of the sale of units in 1989, the limited partnership units
purchased by non-affiliates was 97,715.94 units computed at $100.00 a unit for
$9,771,594, excluding General Partners Contribution of $9,772.
Documents incorporated by reference:
Portions of the Prospectus for Redwood Mortgage Investors VI, included as
part of the form S-11 Registration Statement, SEC File No. 33-12519 dated
September 3, 1987 and Supplement No. 6 dated May 16, 1989, incorporated in Parts
II, III, and IV.
<PAGE>
Part I
Item 1 - Business
Redwood Mortgage Investors VI is a California limited partnership (the
Partnership), of which D. Russell Burwell, Michael R. Burwell and Gymno
Corporation, a California corporation, are the General Partners. The address of
the General Partners is 650 El Camino Real, Suite G, Redwood City, California
94063. The Partnerships primary purpose is to invest its capital in Mortgage
Investments secured by Northern California properties. Mortgage Investments are
arranged and serviced by Redwood Home Loan Co, dba Redwood Mortgage, an
affiliate of the General Partners. The Partnership's objectives are to make
investments, as referred to above, which will: (i) provide the maximum possible
cash returns which Limited Partners may elect to (a) receive as monthly,
quarterly or annual cash distributions or (b) have earnings credited to their
capital accounts and used to invest in Partnership activities; and (ii) preserve
and protect the Partnerships capital. The Partnerships general business is
more fully described under the section entitled Investment Objectives and
Criteria, pages 23-26 of the Prospectus, a part of the above-referenced
Registration Statement, which is incorporated by reference.
The Partnership was formed in September, 1987 and immediately began issuing
units. It began investing in Mortgage Investments in October, 1987. At December
31, 1996, the Partnership had a balance of Mortgage Investments totalling
$9,313,924 with interest rates thereon ranging from 4.00% to 14.75%.
Currently First Trust Deeds comprise 52.92% of the Mortgage Investment
portfolio. Second Mortgage Trust Deeds comprise 40.04% of Mortgage Investment
portfolio, third Mortgage Trust Deeds have 4.36% and 4th Mortgage Trust Deeds
have 2.68% of the Mortgage Investment portfolio. Owner-occupied homes, combined
with non-owner occupied homes, total 25.95% of the Mortgage Investments.
Mortgage Investments to apartments make up 8.44% of the total Mortgage
Investments portfolio. Commercial Mortgage Investment origination increased from
last year, now comprising 65.61% of the portfolio, an increase of 7.68%. The
past year brought us many outstanding low loan to value lending opportunities in
the commercial segment of the market. The major concentration of Mortgage
Investments, comprising of 81.17% of the total loans, are in six counties of the
Bay Area. The County of Stanislaus makes up 7.30% of the Mortgage Investment
portfolio and the balance, as stated on page five of this report, are in
primarily Northern California. Currently Mortgage Investment size is averaging
$143,291 per Mortgage Investment. Some of the Mortgage Investments are
fractionalized between affiliated partnerships with objectives similar to those
of the Partnership to further reduce risk. Average equity per loan transaction
stood at 34.09%. A 40% equity average on loan origination is generally
considered very conservative. Generally, the more equity, the more protection
for the lender. The Partnerships Mortgage Investment portfolio is in good
condition with only three properties in foreclosure as of the end of December,
1996, totalling $549,356.
<PAGE>
Item 2 - Properties
As of December 31, 1996, a summary of the Partnership's Mortgage Investment
portfolio is set forth below.
Mortgage Investments as a Percentage of Total Mortgage Investments
First Trust Deeds $4,928,793.88
Appraised Value of Properties 7,572,407.00
Total Investment as a % of Appraisal 65.09%
Second Trust Deed Mortgage Investments 3,729,581.41
Third Trust Deed Mortgage Investments 405,566.64
Fourth Trust Deed Mortgage Investments* 249,982.09
First Trust Deeds due other Lenders 15,847,471.00
Second Trust Deeds due other Lenders 1,174,343.00
Third Trust Deeds due other Lenders 178,571.00
Total Debt $26,514,309.02
Appraised Property Value $40,225,303.00
Total Investments as a % of Appraisal 65.91%
Number of Mortgage Investments Outstanding 65
Average Investment 143,291.14
Average Investment as a % of Net Assets 1.36%
Largest Investment Outstanding 1,376,117.03
Largest Investment as a % of Net Assets 13.08%
Mortgage Investments as a Percentage of Total Mortgage Investments
First Trust Deeds 52.92%
Second Trust Deeds 40.04%
Third Trust Deeds 4.36%
Fourth Trust Deeds 2.68%
--------------------
100.00%
Total
Mortgage Investments by Type Amount Percent
of Property
Owner Occupied Homes $1,443,834.69 15.50%
Non-Owner Occupied Homes 973,497.96 10.45%
Apartments 786,362.54 8.44%
Commercial 6,110,228.83 65.61%
----------------- -----------
Total $9,313,924.02 100.00%
*Footnote on following page
<PAGE>
The following is a distribution of loans outstanding as of December 31,
1996 by Counties.
Santa Clara $2,814,972.31 30.22%
Alameda 1,705,266.67 18.31%
San Mateo 1,450,824.87 15.58%
Contra Costa 769,837.13 8.26%
Stanislaus 679,802.62 7.30%
Sacramento 447,589.10 4.81%
San Francisco 442,090.69 4.75%
Sonoma 377,279.38 4.05%
El Dorado 214,773.21 2.31%
Ventura 195,000.00 2.09%
Shasta 82,407.46 0.88%
Monterey 72,380.95 0.78%
Santa Cruz 38,157.67 0.41%
Solano 23,541.96 0.25%
------------------- -----------
Total $9,313,924.02 100.00%
* Redwood Mortgage Investors VI, together with other Redwood Partnerships
hold a second and a fourth trust deed against the secured property. In addition,
the principals behind the borrower corporation have given personal guarantees as
collateral. The overall loan to value ratio on this loan is 76.52%. Besides the
borrower paying an interest rate of 12.25%, the partnership and other lenders
will also participate in profits. We have had previous loan activity with this
borrower which had been concluded successfully, with extra earnings earned for
the other partnerships involved.
Statement of Condition of Mortgage Investments:
Number of Mortgage Investments in Foreclosure 3
<PAGE>
Item 3 - Legal Proceedings
In the normal course of business, the Partnership may become involved in
various types of legal proceedings such as assignments of rents, bankruptcy
proceedings, appointments of receivers, unlawful detainers, judicial
foreclosures, etc., to enforce the provisions of the deeds. Management
anticipates that the ultimate outcome of these legal matters will not have a
material adverse effect on the net assets of the Partnership in light of the
Partnership's allowance for doubtful accounts. As of the date hereof, the
Partnership is not involved in any legal proceedings other than those that would
be considered part of the normal course of business.
Item 4 - Submission of matters to vote of Security Holders (Partners).
No matters have been submitted to a vote of the Partnership.
Part II
Item 5 - Market for the Registrants Partners Capital and Related Matters.
120,000 units at $100 each (minimum 20 units) were offered through
broker-dealer member firms of the National Association of Securities Dealers on
a best efforts basis (as indicated in Part I item 1). All units have been sold
only in California. There is no established public trading market for the units.
Investors are in two categories. Some have opted to withdraw earnings on a
monthly, quarterly or annual basis while the others are reinvesting and
compounding the earnings.
A description of the Partnership's units, transfer restrictions, and
withdrawal provisions is more fully described under the section entitled
Description of Units and Summary of the Limited Partnership Agreement, pages
38-42 of the Prospectus, a part of the above-referenced Registration statement,
which is incorporated by reference.
As of December 31, 1996, there were 761 holders of record of the
Partnerships units. A decrease of 11 from 1995.
<PAGE>
Item 6 - Selected Financial Data
Redwood Mortgage Investors VI began operations in October 1987. Its
financial condition and results of operation for three years to December 31,
1996 were:
<TABLE>
Balance Sheets
Assets
<CAPTION>
December 31,
---------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
Cash ..................................................................................... $ 180,597 $ 283,976 $ 447,804
Accounts Receivable:
Mortgage loans, secured by Deeds of Trust .............................................. 9,313,924 10,402,491 10,993,996
Accrued Interest & other fees .......................................................... 405,783 445,816 322,173
Advances on Real Estate Loans .......................................................... 108,019 131,936 30,273
Other .................................................................................. 251,531 322,913 297,426
----------- ----------- -----------
$10,079,257 $11,303,156 $11,643,868
Less Allowance for doubtful accounts ..................................................... 252,850 283,284 209,073
----------- ----------- -----------
$ 9,826,407 $11,019,872 $11,434,795
Real Estate Owned acquired through foreclosure
at estimated net realizable value ...................................................... 1,441,007 1,501,712 2,231,592
Formation loan due from Redwood Mortgage ................................................. 121,849 184,177 246,505
Partnership Interest ..................................................................... 496,040 456,821 0
Due from Related Companies ............................................................... 0 935 0
=========== =========== ===========
$12,065,900 $13,447,493 $14,360,696
=========== =========== ===========
Liabilities and Partners Capital
Liabilities:
Notes Payable - Bank Line of Credit .................................................... $ 1,530,511 $ 2,041,011 $ 2,376,511
Accounts payable & accrued expenses .................................................... 0 0 0
Deferred interest on Mortgage Investments .............................................. 18,522 0 0
----------- ----------- -----------
1,549,033 2,041,011 2,376,511
Partners Capital ......................................................................... 10,516,867 11,406,482 11,984,185
----------- ----------- -----------
$12,065,900 $13,447,493 $14,360,696
=========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
Statements of Income
1996 1995 1994
---------- ---------- -----------
<S> <C> <C> <C>
Gross Revenue ....................................................... $1,123,294 $1,235,726 $1,391,088
Expenses ............................................................ 535,132 617,378 726,386
========== ========== ==========
Net Income .......................................................... 588,162 618,348 664,702
========== ========== ==========
Net Income: to General Partners (1%) ................................ $ 5,882 $ 6,183 $ 6,647
to Limited Partners (99%) ...................... 582,280 612,165 658,055
---------- ---------- ----------
$ 588,162 $ 618,348 $ 664,702
========== ========== ==========
Net Income per $1,000 invested by Limited
Partners for entire period:
- where income is reinvested and compounded ....................... 54 53 55
========== ========== ==========
-where partner receives income in monthly
distributions .................................................. 52 52 54
========== ========== ==========
</TABLE>
<PAGE>
Item 7 - Managements Discussion and Analysis of Financial Condition and
Results of Operations
On December 31, 1996, the Partnerships net capital totalled $10,516,867.
The Partnership began funding Mortgage Investments in October 1987, and as
of December 31, 1996 had distributed income at an average annualized
(compounded) yield of 7.95%. Current earnings are lower than those prevalent at
the outset, primarily because interest rates generally have dropped dramatically
since 1988. The Partnership does not anticipate a significant increase or
decrease in mortgage rates in the foreseeable future and expects the prevailing
interest rates to fluctuate in a narrow range in the near future. Management
expects the yield, net of provision for losses, to increase slightly in 1997.
Currently, mortgage interest rates are lower than those prevalent at the
inception of the Partnership. New Mortgage Investments are being originated at
these lower interest rates. The result is a reduction of the average return
across the entire Mortgage Investment portfolio held by the Partnership. In the
future, interest rates likely will change from their current levels. The General
Partners cannot at this time predict at what levels interest rates will be in
the future. The General Partners believe the rates charged by the Partnership to
its borrowers will not change significantly in the immediate future. Based upon
the rates payable in connection with the existing Mortgage Investments, the
current and anticipated interest rates to be charged by the Partnerships, and
current reserve requirements, the General Partners anticipate that the
annualized yield next year will range only slightly higher from its current
rate.
Each year, the Partnership negotiates a line of credit with a commercial
bank which is secured by its Mortgage Investment portfolio. Currently, it has
the capacity to borrow up to $2,500,000 at Prime plus 1%, (9.25%). Current
borrowings of $1,530,511 have the effect of leveraging the portfolio about 15%.
This added source of funds will help in maximizing the Partnership yield by
allowing the Partnership to minimize the amount of funds in lower yield
investment accounts when appropriate Mortgage Investments are not currently
available because the Mortgage Investments made by the Partnership bear interest
at a rate in excess of the rate payable to the bank which extended the line of
credit.
The Partnership's operating results and delinquencies are within the normal
range of the General Partners expectations, based upon their experience in
managing similar Partnerships over the last nineteen years. Foreclosures are a
normal aspect of partnership operations and the General Partners anticipate that
they will not have a material effect on liquidity. As of December 31, 1996,
there were two properties in foreclosure. Cash is continually being generated
from interest earnings, late charges, prepayment penalties, amortization of
notes and pay-off of notes. Currently, this amount exceeds Partnership expenses
and earnings and principal payout requirements. As Mortgage Investment
opportunities become available, excess cash and available funds are invested in
new Mortgage Investments.
The General Partners regularly review the Mortgage Investment portfolio,
examining the status of delinquencies, the underlying collateral securing these
Mortgage Investments, REO expenses, sales activities, and borrowers payment
records and other data relating to the Mortgage Investment portfolio. Data on
the local real estate market, and on the national and local economy are studied.
Based upon this information and more, Mortgage Investment loss reserves and
allowance for doubtful accounts are increased or decreased. Because of the
number of variables involved, the magnitude of possible swings and the General
Partners inability to control many of these factors, actual results may and do
sometimes differ significantly from estimates made by the General Partners.
The Northern California recession reached bottom in 1993. Since then, the
California economy has been improving, slowly at first, but now, more
vigorously. A wide variety of indicators suggest that the economy in California
was strong in 1996, and the State is well - positioned for fast growth. This
improvement is reflective in increasing property values, in job growth, personal
income growth, etc., which should translate into more loan activity. Which of
course, is healthy for our lending activity.
<PAGE>
Item 8 - Financial Statements and Supplementary Data
Redwood Mortgage Investors VI, a California Limited Partnerships list of
Financial Statements and Financial Statement
schedules:
A- Financial Statements
Independent Auditors Report,
Balance Sheets - December 31, 1996, and December 31, 1995,
Statements of Income for the three years ended December 31, 1996,
Statements of Changes in Partners Capital for the three years ended
December 31, 1996,
Statements of Cash Flows for the three years ended December 31, 1996,
Notes to Financial Statements - December 31, 1996.
B. - Financial Statement Schedules
The following financial statement schedules of Redwood Mortgage Investors
VI are included in Item 8.
Schedule II Amounts receivable from related parties and underwriters,
promoters, and employees other than related parties
Schedule VIII Valuation of Qualifying Accounts
Schedule IX Short Term Borrowings
Schedule XII Mortgage Investments on real estate
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
FINANCIAL STATEMENTS
DECEMBER 31, 1996
(with Auditors Report Thereon)
<PAGE>
PARODI & CROPPER
CERTIFIED PUBLIC ACCOUNTANTS
3658 Mount Diablo Blvd., Suite #205
Lafayette California 94549
(510) 284-3590
INDEPENDENT AUDITORS REPORT
THE PARTNERS
REDWOOD MORTGAGE INVESTORS VI
We have audited the financial statements and related schedules of REDWOOD
MORTGAGE INVESTORS VI (A California Limited Partnership) listed in Item 8 on
form 10-K including balance sheets as of December 31, 1996 and 1995 and the
statements of income, changes in partners capital and cash flows for the three
years ended December 31, 1996. These financial statements are the responsibility
of the Partnerships management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of REDWOOD MORTGAGE INVESTORS
VI as of December 31, 1996 and 1995, and the results of its operations and cash
flows for the three years ended December 31, 1996 in conformity with generally
accepted accounting principles. Further, it is our opinion that the schedules
referred to above present fairly the information set forth therein in compliance
with the applicable accounting regulations of the Securities and Exchange
Commission.
/S/ A. Bruce Cropper
PARODI & CROPPER
Lafayette, California
February 28, 1997
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash ........................................................................................... $ 180,597 $ 283,976
----------- -----------
Accounts receivable:
Mortgage Investments, secured by deeds of trust .............................................. 9,313,924 10,402,491
Accrued Interest on Mortgage Investments ..................................................... 405,783 445,816
Advances on Mortgage Investments ............................................................. 108,019 131,936
Accounts receivables, unsecured .............................................................. 251,531 322,913
----------- -----------
10,079,257 11,303,156
Less allowance for doubtful accounts ......................................................... 252,850 283,284
----------- -----------
9,826,407 11,019,872
----------- -----------
Real estate owned, acquired through foreclosure, at estimated net
realizable value ............................................................................ 1,441,007 1,501,712
Investment in Partnership ...................................................................... 496,040 456,821
Formation loan due from Redwood Mortgage ....................................................... 121,849 184,177
Prepaid expenses and other assets .............................................................. 0 935
----------- -----------
$12,065,900 $13,447,493
=========== ===========
LIABILITIES AND PARTNERS CAPITAL
Liabilities:
Deferred Interest ............................................................................ $ 18,522 $ 0
Note payable - bank line of credit ........................................................... $ 1,530,511 $ 2,041,011
----------- -----------
Total Liabilities ............................................................................ $ 1,549,033 $ 2,041,011
Partners Capital ............................................................................... 10,516,867 11,406,482
----------- -----------
$12,065,900 $13,447,493
=========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF INCOME
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1996 1995 1994
------------- -------------- -------------
<S> <C> <C> <C>
Revenues:
Interest on Mortgage Investments ........................................ $1,090,653 $1,214,443 $1,363,898
Interest on bank deposits ............................................... 4,750 5,206 10,798
Late charges, prepayment penalties, and fees ............................ 27,891 16,077 16,392
---------- ---------- ----------
1,123,294 1,235,726 1,391,088
---------- ---------- ----------
Expenses:
General partners asset management fees .................................. 0 0 8,942
Clerical costs through Redwood Mortgage ................................. 31,838 23,341 0
Interest and line of credit costs ....................................... 158,175 212,915 185,131
Provision for doubtful accounts and losses
on real estate acquired through foreclosure ......................... 312,684 344,807 472,967
Professional services ................................................... 17,825 19,452 45,256
Other ................................................................... 14,610 16,863 14,090
---------- ---------- ----------
535,132 617,378 726,386
---------- ----------
----------
Net Income ................................................................ $ 588,162 $ 618,348 $ 664,702
========== ========== ==========
Net income: To General Partners(1%) ...................................... $ 5,882 $ 6,183 $ 6,647
To Limited Partners (99%) ........................... $ 582,280 $ 612,165 $ 658,055
========== ========== ==========
$ 588,162 $ 618,348 $ 664,702
========== ========== ==========
Net income per $1,000 invested by Limited
Partners for entire period:
-where income is reinvested and compounded .............................. $ 54 $ 53 $ 55
========== ========== ==========
-where partner receives income in monthly distributions ................. $ 52 $ 52 $ 54
========== ========== ==========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF CHANGES IN PARTNERS CAPITAL
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<CAPTION>
PARTNERS CAPITAL
GENERAL LIMITED
PARTNERS PARTNERS TOTAL
-------------- --------------- ---------------
<S> <C> <C> <C>
Balances at December 31, 1993 ........................... 9,773 12,342,173 12,351,946
Net income ............................................ 6,647 658,055 664,702
Early withdrawal penalties ............................ 0 (12,790) (12,790)
Partners withdrawals ................................. (6,654) (1,013,019) (1,019,673)
----------- ----------- -----------
Balances at December 31, 1994 ........................... $ 9,766 11,974,419 11,984,185
Net income ............................................ 6,183 612,165 618,348
Early withdrawal penalties ............................ 0 (4,336) (4,336)
Partners withdrawals ................................. (6,183) (1,185,532) (1,191,715)
----------- ----------- -----------
Balances at December, 1995 .............................. $ 9,766 11,396,716 11,406,482
Net income ............................................ 5,882 582,280 588,162
Early withdrawal penalties ............................ 0 (8,721) (8,721)
Partners withdrawals ................................. (5,882) (1,463,174) (1,469,056)
----------- ----------- -----------
Balances at December 31, 1996 ........................... $ 9,766 10,507,101 10,516,867
=========== =========== ===========
<FN>
See accompanying notes to financial statements
</FN>
</TABLE>
<PAGE>
<TABLE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
FOR THE THREE YEARS ENDED DECEMBER 31, 1996
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------
1996 1995 1994
--------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ........................................................ $ 588,162 $ 618,348 $ 664,702
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase (decrease) in allowance for doubtful accts ............. (30,434) 74,211 (61,467)
(Increase) decrease in assets:
Accrued interest & advances .................................. 63,950 (225,306) 157,963
Prepaid expenses and other assets ............................ 935 (935) 1,524
Increase (decrease) in liabilities:
Accounts payable and accrued expenses ........................ 0 0 (29,328)
Deferred Interest on Mortgage Investments .................... 18,522 0 (8,456)
----------- ----------- -----------
Net cash provided by operating activities ..................... 641,135 466,318 724,938
----------- ----------- -----------
Cash flows from investing activities:
Net (increase) decrease in real estate acquired
through foreclosure ............................................ 60,705 729,880 (1,277,985)
Net (increase) decrease in Mortgage Investments ................... 1,088,567 591,505 1,300,201
Decrease in formation loan ........................................ 62,328 62,328 39,266
(Increase) decrease in accounts receivable, unsecured ............. 71,382 (25,487) (140,753)
Investment in Partnership ......................................... (39,219) (456,821) 0
----------- ----------- -----------
Net cash provided by (used in) investing activities ............. 1,243,763 901,405 (79,271)
----------- ----------- -----------
Cash flows from financing activities:
Net increase (decrease) in note payable-bank ....................... (510,500) (335,500) 412,295
Partners withdrawals ............................................... (1,469,056) (1,191,715) (1,019,673)
Early withdrawal penalties, net .................................... (8,721) (4,336) (12,790)
----------- ----------- -----------
Net cash provided by (used in) financing activities ............. (1,988,277) (1,531,551) (620,168)
----------- ----------- -----------
Net increase (decrease) in cash ..................................... (103,379) (163,828) 25,499
Cash - beginning of period .......................................... 283,976 447,804 422,305
----------- ----------- -----------
Cash - end of period ................................................ $ 180,597 $ 283,976 $ 447,804
=========== =========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 1 ORGANIZATION AND GENERAL Redwood Mortgage Investors VI, (the
Partnership) is a California Limited partnership, of which the General Partners
are D. Russell Burwell, Michael R. Burwell and Gymno Corporation, a California
corporation owned and operated by the individual General Partners. The
partnership was organized to engage in business as a mortgage lender for the
primary purpose of making Mortgage Investments secured by Deeds of Trust on
California real estate. Mortgage Investments are being arranged and serviced by
Redwood Home Loan Co. (RHL Co.), dba Redwood Mortgage, an affiliate of the
General Partners. The offering was closed with contributed capital totaling
$9,781,366.
Each months income is distributed to partners based upon their
proportionate share of partners capital. Some partners have elected to withdraw
income on a monthly, quarterly or annual basis.
A. Sales Commissions - Formation Loan Sales commissions ranging from 0%
(units sold by General Partners) to 10% of gross proceeds were paid to Redwood
Mortgage., an affiliate of the General Partners that arranges and services the
Mortgage Investments. To finance the sales commissions, the Partnership loaned
to Redwood Mortgage $623,255 (the Formation Loan) relating to contributed
capital of $9,781,366. The Formation Loan is unsecured, and is being repaid,
without interest, in ten annual installments of principal, commencing December
31, 1989.
The following reflects transactions in the Formation Loan account through
December 31, 1996:
Amount loaned during 1987,1988 and 1989 $623,255
Less:
Cash repayments $459,462
Allocation of early withdrawal penalties 41,944 501,406
=========== ----------
Balance December 31, 1996 $121,849
===========
B. Other Organizational and Offering Expenses Organizational and offering
expenses, other than sales commissions, (including printing costs, attorney and
accountant fees, and other costs), paid by the Partnership from the offering
proceeds totaled $360,885 or 3.69% of the gross proceeds contributed by the
Partners.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenues and expenses are accounted for on the accrual basis of accounting.
The Partnership bears its own organization and syndication costs (other
than certain sales commissions and fees described above) including legal and
accounting expenses, printing costs, selling expenses, a 1% wholesale brokerage
fee and filing fees. Organizational costs of $14,750 were capitalized and were
amortized over a five year period. Syndication costs of $346,135 were charged
against partners capital and were allocated to individual partners consistent
with the partnership agreement over a five year period.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Property acquired through foreclosure will be held for prompt sale to
return the funds to the loan portfolio. Such property is recorded at cost which
includes the principal balance of the former Mortgage Investment made by the
Partnership plus accrued interest, payments made to keep the senior loans
current, costs of obtaining title and possession, less rental income or at
estimated net realizable value, if less. The difference between such costs and
estimated net realizable value is deducted from cost in the Balance Sheet to
arrive at the carrying value of such property.
In preparing the financial statements, management is required to make
estimates based on the information available that affect the reported amounts of
assets and liabilities as of the balance sheet date and revenues and expenses
for the related periods. Such estimates relate principally to the determination
of the allowance for doubtful accounts and the valuation of real estate acquired
through foreclosure. Actual results could differ significantly from these
estimates.
Mortgage Investments and the related accrued interest, fees and advances
are analyzed on a continuous basis for recoverability. Delinquencies are
identified and followed as part of the Mortgage Investment system. A provision
is made for doubtful accounts to adjust the allowance for doubtful accounts to
an amount considered by management to be adequate to provide for unrecoverable
accounts receivable.
Amounts reflected in the statements of income as net income per $1,000
invested by Limited Partners for the entire period are actual amounts allocated
to Limited Partners who have their investment throughout the period and have
elected to either leave their earnings to compound or have elected to receive
monthly distributions of their net income. Individual limited partner income is
allocated each month based on the limited partners pro rata share of
partnership capital. Because the net income percentage varies from month to
month, amounts per $1,000 will vary for those individuals who make or withdraw
investments during the period, or select other options. However, the net income
per $1,000 average invested has approximated those reflected for those whose
investments and options have remained constant.
No provision for Federal and State income taxes is made in the financial
statements since income taxes are the obligation of the partners if and when
income taxes apply.
NOTE 3 - GENERAL PARTNERS AND RELATED PARTIES The following are commissions
and/or fees which are paid to the General Partners and/or related parties.
A. Mortgage Brokerage Commissions Loan brokerage commissions for services
in connection with the review, selection, evaluation, negotiation and extension
of the Mortgage Investments were limited up to 12% of the principal amount of
the loans through the period ending 6 months after the termination date of the
offering. Thereafter, commissions are limited to an amount not to exceed 4% of
the total Partnership assets per year. Such commissions are paid by the
borrowers, thus, not an expense of the Partnership.
B. Mortgage Servicing Fees Monthly loan servicing fees are paid to Redwood
Mortgage up to 1/8 of 1% (1.5% annual) of the unpaid principal, or such lesser
amount as is reasonable and customary in the geographic area where the property
securing the Mortgage Investment is located (currently at 1/12 of 1% or 1%
annual). The amount remitted to the partnership and recorded as interest on
Mortgage Investments is net of such fees. In 1994 $123,758 of the total loan
service fees of $123,758, in 1995 $50,741 of the total loan service fees of
$92,797 and in 1996, $41,779 of the total loan service fees of $86,344 were
waived by the Redwood Mortgage.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
C. Asset Management Fee Pursuant to the partnership agreement, the General
Partners receive a monthly fee for managing the Partnerships Mortgage
Investment portfolio and operations equal to 1/32 of 1% (3/8 of 1% annual) of
the net asset value. Such fees were reduced from $45,974 to $8,942 in 1994,
$44,336 to $0.00 in 1995, and $41,802 to $0.00 in 1996, with the difference
being waived by the General Partners.
D. Other Fees The Partnership Agreement provides for other fees such as
reconveyance, mortgage assumption and mortgage extension fees. These fees are
paid by the borrowers to parties related to the General Partners.
E. Income and Losses All income is credited or charged to partners in
relation to their respective partnership interests. The partnership interest of
the General Partners (combined) is a total of 1%.
F. Operating Expenses The General Partners or their affiliate (Redwood
Mortgage) are reimbursed by the Partnership for all operating expenses actually
incurred by them on behalf of the Partnership, including without limitation,
out-of-pocket general and administration expenses of the Partnership, accounting
and audit fees, legal fees and expenses, postage and preparation of reports to
Limited Partners. In 1994, 1995, and 1996, clerical costs totaling $0.00,
$23,341, and $31,838 respectively, were reimbursed to Redwood Mortgage and are
included in expenses in the Statements of Income. The 1994 expenses were
absorbed by the Redwood Mortgage.
NOTE 4 OTHER PARTNERSHIP PROVISIONS A. Term of the Partnership The term of
the Partnership is approximately 40 years, unless sooner terminated as provided.
The provisions provided for no capital withdrawal for the first five years,
subject to the penalty provision set forth in (D) below. Thereafter, investors
have the right to withdraw over a five-year period, or longer.
B. Election to Receive Monthly, Quarterly or Annual Distributions Upon
subscriptions, investors elected either to receive monthly, quarterly or annual
distributions of earnings allocations, or to allow earnings to compound for at
least a period of 5 years.
C. Profits and Losses Profits and losses are allocated monthly among the
Limited Partners according to their respective capital accounts after 1% is
allocated to the General Partners.
D. Withdrawal From Partnership A Limited Partner had no right to withdraw
from the Partnership or to obtain the return of his capital account for at least
five years after such units are purchased which in all instances had occurred by
December 31, 1996. After that time, at the election of the Partner, capital
accounts can be returned over a five year period in 20 equal quarterly
installments or such longer period as is requested.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
Notwithstanding the above, in order to provide a certain degree of
liquidity to the Limited Partners, the General Partners will liquidate a Limited
Partners entire capital account in four quarterly installments beginning on the
last day of the calendar quarter following the quarter in which the notice of
withdrawal is given. Such liquidations shall, however, be subject to a 10% early
withdrawal penalty applicable to any sums withdrawn prior to the time when such
sums otherwise could have been withdrawn pursuant to the liquidation procedure
set forth above. The 10% early withdrawal penalty will be received by the
Partnership, and a portion of the sums collected as such penalty will be applied
toward the next installment(s) of principal under the Formation Loan owed to the
Partnership by Redwood Mortgage. Such portion shall be determined by the ratio
between the initial amount of Formation Loan and the total amount of other
organization and syndication costs incurred by the Partnership in this offering.
The balance of any such early withdrawal penalties shall be retained by the
Partnership for its own account and applied against syndication costs. Since the
syndication costs have been fully amortized as of December 31, 1993, the early
withdrawal penalties gained in the future will be applied on the same basis as
before with the amount otherwise being credited to the syndication costs being
credited to income for the period.
The Partnership will not establish a reserve from which to fund withdrawals
and, accordingly, the Partnerships capacity to return a Limited Partners
capital account is restricted to the availability of Partnership cash flow.
Furthermore, no more than 20% of the total Limited Partners capital accounts
outstanding at the beginning of any year shall be liquidated during any calendar
year.
NOTE 5 - INVESTMENT IN PARTNERSHIP. The Partnerships interest in land
acquired through foreclosure, located in East Palo Alto with costs totalling
$496,040 has been invested with that of two other Partnerships (total cost to
date, primarily land, of $1,021,798) in a partnership which is in the process of
constructing approximately 72 single family homes for sale. Redwood Mortgage
Investors V, VI, and VII have first priority on return of investment plus
interest thereon, in addition to a share of profits realized.
NOTE 6 - NOTE PAYABLE BANK - LINE OF CREDIT The Partnership has a bank line
of credit secured by its Mortgage Investment portfolio up to $2,500,000 at 1%
over prime. The balances were $2,041,011 and $1,530,511 at December 31, 1995 and
1996, respectively, and the interest rate at December 31, 1996 was 9.25% (8.25%
prime + 1%).
NOTE 7 - LEGAL PROCEEDINGS The Partnership is not a defendant in any legal
actions. However, legal actions against borrowers and other involved parties
have been initiated by the Partnership to help assure payments against unsecured
accounts receivable totaling $251,531.
Management anticipates that the ultimate outcome of the legal matters will
not have a material adverse effect on the net assets of the Partnership, with
due consideration having been given in arriving at the allowance for doubtful
accounts.
<PAGE>
REDWOOD MORTGAGE INVESTORS VI
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
NOTE 8 - ASSET CONCENTRATIONS AND CHARACTERISTICS The Mortgage Investments
are secured by recorded deeds of trust. At December 31, 1996, there were 65
Mortgage Investments outstanding with the following characteristics:
Number of Mortgage Investments outstanding 65
Total Mortgage Investments outstanding $9,313,924
Average Mortgage Investment outstanding $143,291
Average Mortgage Investment as percent of total 1.54%
Average Mortgage Investment as percent of Partners Capital 1.36%
Largest Mortgage Investment outstanding $1,376,117
Largest Mortgage Investment as percent of total 14.77%
Largest Mortgage Investment as percent of Partners Capital 13.08%
Number of counties where security is located (all California) 14
Largest percentage of Mortgage Investments in one county 30.22%
Average Mortgage Investment to appraised value of security at time
Mortgage Investment was consummated 65.91%
Number of Mortgage Investments in foreclosure 2
The cash balance at December 31, 1996 of $180,597 was in two banks with
interest bearing balances totalling $149,247. The balances exceeded FDIC
insurance limits (up to $100,000 per bank) by $49,247.
<PAGE>
<TABLE>
SCHEDULE II
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES. RULE 12-03
<CAPTION>
Column A Column B Column C Column D Column E
Name of Debtor Balance Beg. Additions Deductions Balance at end of period
of period
12/31/95
(1) (2) (1) (2)
Amounts Amounts Current Not Current
collected written 12/31/96
off *
<S> <C> <C> <C> <C> <C> <C>
Redwood Mortgage ................... $184,177 $ 0.00 $ 56,803 $ 5,525 $ 0.00 $121,849
<FN>
The above schedule represents the Formation Loan borrowed by Redwood
Mortgage from the Partnership to pay for the selling commissions on units. It is
an unsecured loan and bears no interest. It is being repaid to the Partnership
in ten equal annual installments of principal only commencing December 31, 1989.
* The amount written off is comprised of the application of the applicable
portion of early withdrawal penalties as provided in the prospectus.
</FN>
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VIII
VALUATION AND QUALIFYING ACCOUNTS
REDWOOD MORTGAGE INVESTORS VI
<CAPTION>
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 Costs Charged to Other
& Expenses Accounts -
Describe
Year Ended
12/31/96
Deducted from
Asset Accounts:
<S> <C> <C> <C> <C> <C>
Allowance for
Doubtful Accounts ...................... $283,284 $312,684 $ 0.00 $343,118 $252,850
</TABLE>
<PAGE>
<TABLE>
SCHEDULE IX
SHORT-TERM BORROWINGS
REDWOOD MORTGAGE INVESTORS VI - RULE 12-10
<CAPTION>
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
- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
Year-Ended
12/31/96 ....................... $1,530,511 9.30% $2,041,011 $1,697,816 9.30%
</TABLE>
<PAGE>
<TABLE>
SCHEDULE XII
MORTGAGE LOANS ON REAL ESTATE.
RULE 12-29 MORTGAGE INVESTMENTS ON REAL ESTATE
<CAPTION>
Col. A Col. B Col. C Col. D Col. E Col. F Col. G Col. H Col. I Col. J
Descp. Interest Final Periodic Prior Face Amt. Carrying Principal Type of Geographic
Rate Maturity Payment Liens of amount of amount of Lien County
Date Terms Mortgage Mortgage Mortgage Location
Investment Investment Investments
(original subject to
amount) Delinq.
Principal
or Interest
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Comm. 14.750% 09/01/95 $2,241.96 $250,000 $185,000.00 $182,034.79 0.00 2nd Mtg San Mateo
Res. 13.750% 10/01/96 1,833.33 369,163 160,000.00 160,000.00 0.00 2nd Mtg San Mateo
Comm 13.750% 10/01/96 644.53 0.00 56,250.00 56,250.00 0.00 1st Mtg Santa Clara
Res. 12.500% 02/01/07 554.63 0.00 45,000.00 38,157.67 0.00 1st Mtg Santa Cruz
Res. 10.000% 12/24/01 545.86 0.00 67,257.75 61,767.97 0.00 1st Mtg Alameda
Res. 7.375% 02/01/99 602.96 0.00 87,300.00 82,637.41 0.00 1st Mtg Alameda
Res. 6.000% 04/01/96 106.81 10,470 21,361.99 21,361.99 0.00 2nd Mtg Sacramento
Res. 4.000% 04/01/97 113.30 0.00 23,130.95 23,130.86 0.00 1st Mtg Sacramento
Res. 4.000% 04/01/97 120.00 0.00 24,384.59 23,946.78 0.00 1st Mtg Sacramento
Comm 7.000% 08/06/02 551.36 30,802 82,873.25 78,851.88 0.00 2nd Mtg Alameda
Res. 7.000% 11/01/97 844.85 0.00 115.140.00 107,900.06 0.00 1st Mtg San Mateo
Comm 12.500% 01/01/08 1,343.45 64,620 109,000.00 96,802.83 0.00 2nd Mtg Santa Clara
Comm 12.250% 01/01/98 5,104.16 442,592 499,998.81 499,998.81 0.00 2nd Mtg Contra Costa
Comm 12.000% 06/01/98 497.08 0.00 58,500.00 47,774.46 0.00 1st Mtg Sonoma
Apts 2.000% 05/01/06 540.83 89,904 100,000.00 96,893.59 0.00 2nd Mtg Sacramento
Res. 12.000% 07/01/98 2,417.24 67,312 235,000.00 214,773.21 214,773.21 2nd Mtg El Dorado
Res. 13.500% 09/01/08 280.90 18,085 21,635.32 19,856.23 0.00 2nd Mtg Contra Costa
Comm. 12.000% 11/01/98 2,057.23 11,864 200,000.00 74,423.44 0.00 2nd Mtg Sacramento
Comm. 10.000% 12/01/98 1,755.14 0.00 200,000.00 197,660.10 0.00 1st Mtg Stanislaus
Comm 12.250% 01/01/98 2,601.02 1,126,508 249,999.40 249,982.09 0.00 4th Mtg Contra Costa
Comm 10.000% 12/01/98 5,046.04 0.00 575,000.00 567,649.23 0.00 1st Mtg Alameda
Comm. 7.000% 12/01/03 1,151.48 562,500 99,172.75 83,132.89 0.00 2nd Mtg Alameda
Comm. 12.000% 02/01/99 14,025.08 0.00 1,376,117.03 1,376,117.03 0.00 1st Mtg Santa Clara
Res. 12.000% 06/01/04 1,053.22 50,205 100,000.00 98,077.41 0.00 2nd Mtg Santa Clara
Land 12.000% 07/01/96 1,352.50 679,258 135,250.00 135,250.00 135,250.00 3rd Mtg Sonoma
Comm 8.500% 11/07/99 515.73 0.00 72,809.59 72,809.59 0.00 1st Mtg Sonoma
Land 11.500% 12/20/96 4,620.53 146,582 567,856.74 482,142.52 0.00 2nd Mtg Stanislaus
Res. 8.000% 12/01/00 500.00 148,004 52,500.00 48,474.54 0.00 2nd Mtg Santa Clara
Apts 7.000% 02/10/05 234.06 80,250 40,125.00 40,125.00 0.00 2nd Mtg San Francisco
Res. 12.000% 06/25/94 100.00 0.00 10,000.00 10,000.00 0.00 1st Mtg Sacramento
Res. 12.000% 03/01/98 1,500.29 0.00 280,000.00 147,206.50 0.00 1st Mtg Alameda
Apts 11.500% 04/01/05 723.24 0.00 150,000.00 73,034.37 0.00 1st Mtg San Francisco
Comm. 9.000% 05/10/02 670.52 0.00 83,333.33 82,407.46 0.00 1st Mtg Shasta
Comm. 12.000% 12/31/99 2,500.00 2,439,050 450,000.00 250,000.00 0.00 2nd Mtg Santa Clara
Res 8.000% 09/27/00 482.54 96,429 72,380.95 72,380.95 0.00 2nd Mtg Monterey
Comm. 12.000% 12/01/11 756.11 0.00 63,000.00 61,680.63 0.00 1st Mtg Alameda
Comm 11.875% 12/01/06 1,566.00 0.00 150,000.00 149,146.45 0.00 1st Mtg San Mateo
Comm 12.000% 12/31/01 3,486.42 1,955,550 348,641.64 348,641.64 0.00 2nd Mtg Santa Clara
Res. 7.000% 05/15/01 850.00 0.00 145,000.00 144,970.32 0.00 1st Mtg San Mateo
Land 12.000% 02/01/97 3,822.50 0.00 382,250.00 382,250.00 0.00 1st Mtg Santa Clara
Res 8.000% 09/18/03 166.58 0.00 22,655.51 22,655.51 0.00 1st Mtg Sonoma
Res 8.000% 09/30/03 170.67 0.00 23,211.95 23,211.95 0.00 1st Mtg Sonoma
Res. 8.000% 04/10/97 247.04 0.00 37,055.61 37,055.61 0.00 1st Mtg San Mateo
Comm 12.000% 02/01/99 232.27 1,279,200 49,200.00 22,536.11 0.00 2nd Mtg Santa Clara
<PAGE>
Col. A Col. B Col. C Col. D Col. E Col. F Col. G Col. H Col. I Col. J
Descp. Interest Final Periodic Prior Face Amt. Carrying Principal Type of Geographic
Rate Maturity Payment Liens of amount of amount of Lien County
Date Terms Mortgage Mortgage Mortgage Location
Investment Investment Investments
(original subject to
amount) Delinq.
Principal
or Interest
Res. 13.000% 12/01/99 704.17 0.00 65,000.00 65,000.00 0.00 1st Mtg Ventura
Res. 13.000% 12/01/99 704.17 0.00 65,000.00 65,000.00 0.00 1st Mtg Ventura
Res. 13.000% 12/01/99 704.17 0.00 65,000.00 65,000.00 0.00 1st Mtg Ventura
Res. 13.500% 03/01/03 467.39 0.00 36,000.00 23,541.96 0.00 1st Mtg Solano
Apts 10.000% 12/01/00 1,487.60 4,125,105 275,000.00 134,601.37 0.00 2nd Mtg Alameda
Res. 10.000% 08/01/03 576.96 262,720 49,000.00 33,271.52 0.00 2nd Mtg San Mateo
Apts. 13.000% 09/01/98 807.53 0.00 73,000.00 66,937.61 0.00 1st Mtg Alameda
Apts. 13.000% 11/01/03 759.15 341,094 60,000.00 41,115.41 0.00 2nd Mtg San Francisco
Comm. 13.750% 11/01/03 2,202.61 0.00 167,500.00 109,205.55 0.00 1st Mtg Alameda
Apts. 14.000% 03/01/92 1,184.87 960,000 100,000.00 96,971.58 0.00 2nd Mtg Santa Clara
Comm. 14.500% 05/01/04 4,233.05 532,392 310,000.00 228,570.86 0.00 2nd Mtg San Mateo
Res. 11.500% 06/01/97 3,113.39 0.00 314,000.00 311,595.63 0.00 1st Mtg Alameda
Comm prime+3 11/20/95 1,052.47 185,351 200,000.00 199,332.60 199,332.60 3rd Mtg San Mateo
Apts. 14.000% 06/01/92 473.95 196,000 40,000.00 38,851.17 0.00 3rd Mtg Santa Clara
Res. 15.250% 07/01/04 984.46 78,672 73,000.00 55,683.04 0.00 2nd Mtg San Francisco
Comm 14.500% 08/01/04 1,365.50 0.00 100,000.00 75,577.87 0.00 1st Mtg Sonoma
Res. 14.500% 04/01/05 546.20 150,804 40,000.00 32,132.87 0.00 3rd Mtg San Francisco
Res. 14.500% 07/01/92 2,416.67 340,827 200,000.00 200,000.00 0.00 2nd Mtg San Francisco
Apts 11.000% 06/29/98 2,004.26 0.00 210,459.34 197,832.44 0.00 1st Mtg Sacramento
Res. 10.000% 08/01/00 1,428.14 0.00 160,000.00 159,682.86 0.00 1st Mtg San Mateo
Res. 14.500% 08/01/92 604.17 109,072 50,000.00 48,859.80 0.00 2nd Mtg San Mateo
Total $98,350.34 17,200,385.00 10,480,351.50 9,313,924.02 549,355.81
</TABLE>
<PAGE>
Schedule XII
Reconciliation of carrying amount of Mortgage Investment at close of period
(12/31/96)
Balance at beginning of period 12/31/95 $10,402,491
Additions during period:
New Mortgage Investments 2,474,843
Other 0 2,474,843
- ------------------------------------------- ---------------- ----------------
$12,877,334
Deduction during period:
Collections of principal $3,295,834
Foreclosures 267,576
Cost of Mortgage Investments sold 0
Amortization of Premium 0
Other 0 $3,563,410
- ------------------------------------------- ---------------- ----------------
Balance at close of period (12/31/96) $9,313,924
----------------
<PAGE>
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.
<PAGE>
Item 11 - Executive Compensation
COMPENSATION OF THE GENERAL PARTNERS AND AFFILIATES BY PARTNERSHIP
As indicated above in item 10, the Partnership has no officers or
directors. The Partnership is managed by the General Partners. There are certain
fees and other items paid to management and related parties. A more complete
description of management compensation is found in the Prospectus, pages 11-12,
under the section Compensation of the General Partners and the Affiliates,
which is incorporated by reference. Such compensation is summarized below.
The following compensation has been paid to the General Partners and
affiliates for services rendered during the year ended December 31, 1996. All
such compensation is in compliance with the guidelines and limitations set forth
in the Prospectus.
Entity Receiving Description of Compensation and Services Amount
Compensation Rendered
- ---------------- ---------------------------------------------------- ----------
I.
Redwood Mortgage Mortgage Servicing Fee for servicing Mortgage $44,565
Investments(Redwood Mortgage waived $41,779)
General Partners Asset Management Fee for managing assets $0
&/or Affiliates (General Partners waived $41,802)
General Partners 1% interest in profits $5,882
II. FEES PAID BY BORROWERS ON MORTGAGE INVESTMENTS PLACED BY COMPANIES
RELATED TO THE GENERAL PARTNERS WITH THE PARTNERSHIP (EXPENSES OF BORROWERS NOT
OF THE PARTNERSHIP):
Redwood Mortgage Mortgage Brokerage Commissions for services
in connection with the review, selection,
evaluation, negotiation, and extension of the
Mortgage Investments paid by the borrowers
and not by the Partnership $28,943
Redwood Mortgage Processing and Escrow Fees for services in
connection with notary, document preparation,
credit investigation, and escrow fees payable by
the borrowers and not by the Partnership $1,724
III. IN ADDITION, THE GENERAL PARTNER AND/OR RELATED COMPANIES PAY CERTAIN
EXPENSES ON BEHALF OF THE PARTNERSHIP FOR WHICH IT IS REIMBURSED AS NOTED IN THE
STATEMENT OF INCOME.......................................$31,838
<PAGE>
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.
<PAGE>
3. Exhibits.
Exhibit No. Description of Exhibits
3.1 Limited Partnership Agreement
3.2 Form of Certificate of Limited Partnership Interest
3.3 Certificate of Limited Partnership
10.1 Escrow Agreement (1)
10.2 Servicing Agreement (1)
10.3 (a) Form of Note secured by Deed of Trust which provides for
principal and interest payments (1)
(b) Form of Note secured by Deed of Trust which provides
principal and interest payments and right of assumption (1)
(c) Form of Note secured by Deed of Trust which provides for
interest only payments (1)
(d) Form of Note (1)
10.4 (a) Deed of Trust and Assignment of Rents to accompany
Exhibits 10.3 (a) and (c) (1)
(b) Deed of Trust and Assignment of Rents to accompany
Exhibits 10.3 (b) (1)
(c) Deed of Trust to accompany Exhibit 10.3 (d) (1)
10.5 Promissory Note for Formation Loan (1)
10.6 Agreement to Seek a Lender (1)
24.1 Consent of Parodi & Cropper (1)
24.2 Consent of Stephen C. Ryan & Associates (1)
All of these exhibits were previously filed as the exhibits to Registrants
Statement on Form S-11 (Registration No. 33-12519) and incorporated by reference
herein.
(B) Reports on form 8-K
No reports on Form 8-K have been filed during the last quarter of
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.
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934 the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized on the 20th day of March,
1997.
REDWOOD MORTGAGE INVESTORS VI
By: /S/ D. Russell Burwell
---------------------------------------------
D. Russell Burwell, General Partner
By: /S/ Michael R. Burwell
---------------------------------------------
Michael R. Burwell, General Partner
By: Gymno Corporation, General Partner
By: /S/ D. Russell Burwell
---------------------------------------------
D. Russell Burwell, President
By: /S/ Michael R. Burwell
---------------------------------------------
Michael R. Burwell, Secretary/Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the registrant
and in the capacity indicated on the 20th day of March, 1997.
Signature Title Date
/S/ D. Russell Burwell
- --------------------------
D. Russell Burwell General Partner March 20, 1997
/S/ Michael R. Burwell
- ---------------------------
Michael R. Burwell General Partner March 20, 1997
/S/ D. Russell Burwell
- ----------------------------
D. Russell Burwell President of Gymno Corporation, March 20, 1997
(Principal Executive Officer);
Director of Gymno Corporation
/S/ Michael R. Burwell
- ---------------------------
Michael R. Burwell Secretary/Treasurer of Gymno March 20, 1997
Corporation (Principal Financial
and Accounting Officer);
Director of Gymno Corporation
<PAGE>
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