<PAGE>
The registrant is filing restated 1994-1997 financial statements. These
restatements reflect changes discussed in Note 7 to the consolidated financial
statements.
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10 K-A
(Mark One)
[X] Annual report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 (Fee Required) For the fiscal year ended December
31, 1997
[ ] Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange act of 1934 (No Fee Required).
For the transition from _________to____________
-----------------
COMMISSION FILE NO. 33-39238
TMP LAND MORTGAGE FUND, LTD.,
A CALIFORNIA LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0451040
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
801 N. PARKCENTER DRIVE, SUITE 235 92705
SANTA ANA, CALIFORNIA (Zip Code)
(Address of principal executive office)
(714) 836-5503
(Registrant's telephone number, including area code)
--------------------
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
N/A N/A
Securities to be registered pursuant to Section 12 (g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during 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 [X] No [ ]
<PAGE>
Table of Contents
Report of Independent Auditors 1
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statements of Partners' Capital 4
Consolidated Statements of Cash Flows 5-6
Notes to Consolidated Financial Statements 7-13
Supplementary Information 14-20
<PAGE>
Independent Auditor's Report
To the Partners
TMP Land Mortgage Fund, Ltd.
(A California Limited Partnership)
We have audited the accompanying consolidated balance sheets of TMP Land
Mortgage Fund, Ltd. (A California Limited Partnership) as of December 31, 1997
and 1996, and the related consolidated statements of operations, partners'
capital, and cash flows for the years ended December 31, 1997, 1996, and 1995.
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated 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 consolidated financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall consolidated
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of TMP Land Mortgage
Fund, Ltd. (A California Limited Partnership) as of December 31, 1997 and 1996,
and the results of its operations and its cash flows for the years ended
December 31, 1997, 1996 and 1995, in conformity with generally accepted
accounting principles.
Our audit was made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The supplementary
information contained in Schedule I and II is presented for purposes of
additional analysis and is not a required part of the basic consolidated
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is stated fairly in all material respects in relation to the basic
consolidated financial statements taken as a whole.
Balser, Horowitz, Frank & Wakeling
/s/ BALSER, HOROWITZ, FRANK & WAKELING
An Accountancy Corporation
Santa Ana, California
February 3, 1998, except for note 7, for which the date is May 15, 1999
-1-
<PAGE>
<TABLE>
<CAPTION>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Consolidated Balance Sheets
December 31, 1997 and 1996
Assets
------
1997 1996
---- ----
<S> <C> <C>
Cash $ 960,479 $ 361,515
Other Receivable 125,337 18,507
Due From Affiliates (net of unamortized
discount of $103,136 and $123,668,
respectively) 182,603 162,051
Investments 607,590 1,610,019
Investment in Unimproved Land (net of
valuation allowance of $3,983,798 and
$3,978,272, respectively) (Schedule II) 10,687,386 10,575,184
---------- ----------
Total Assets $ 12,563,395 $ 12,727,276
============== ===============
Liabilities and Partners' Capital
---------------------------------
Accounts Payable $ 74,594 $ 4,754
Due to Affiliates 29,294 23,885
Property Taxes Payable 4,206,068 3,251,916
Accrued Expenses 800 800
---------- ----------
Total Liabilities 4,310,756 3,281,355
---------- ----------
Minority Interest 309,533 216,173
Partners' Capital (Note 3)
General Partners (77,771) (64,906)
Limited Partners; 20,000 Equity Units
Authorized, 15,715 Outstanding at
December 31, 1996 and 1995, respectively 8,020,877 9,294,654
---------- ----------
Total Partners' Capital 7,943,106 9,229,748
---------- ----------
Total Liabilities and Partners' Capital $ 12,563,395 $ 12,727,276
============== ===============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-2-
<PAGE>
<TABLE>
<CAPTION>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Consolidated Statements of Operations
For the Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
---- ---- ----
Income
- ------
<S> <C> <C> <C>
Mortgage Loan Interest Income $ 0 $ 152,733 $697,431
Other Interest Income 48,916 13,585 19,740
Gain on Sale of Land 505,740 0 0
Gain on Sale of Investment 521,110 0 0
Loss on Investments (93,722) (192,224) (64,417)
Investment Income 1,370 146,011 11,662
Other Income 3,600 4,600 3,600
--------- --------- -------
Total Income 987,014 124,705 668,016
--------- --------- -------
Expenses
- --------
Loss on Decline in Market
Value of Property 5,526 95,742 46,306
Discount on Due from Affiliates 0 126,881 0
Accounting and Legal 14,448 1,820 18,352
Advertising 0 0 642
California Franchise Tax 2,400 2,400 800
Loan Administration 0 151 0
Office Expenses 4,830 0 3,150
Interest Expense 1,082 0 598
Postage and Printing 2,779 0 5,502
Secretarial and Bookkeeping Support 9,087 0 9,460
--------- --------- -------
Total Expense 40,152 226,994 84,810
--------- --------- -------
Net Income (Loss) Before Minority Interest 946,862 (102,289) 583,206
Minority Interest in Income or (Loss)
of Subsidiary (1,139) (1,110) 27
--------- --------- -------
Net Income (Loss) $ 945,723 $(103,399) $583,233
========== ========= ========
Allocation of Net Income (Loss)
General Partners, in the Aggregate $ 9,457 $ (1,034) $ 5,832
========= ========= ========
Limited Partners, in the Aggregate $ 936,266 $(102,365) $577,401
========= ========= ========
Limited Partners, per Equity Unit $ 60 $ (7) $ 37
========= ========= ========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-3-
<PAGE>
<TABLE>
<CAPTION>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Consolidated Statements of Partners' Capital
For the Years Ended December 31, 1997, 1996 and
1995
General Limited
Partners Partners Total
<S> <C> <C> <C>
Partners' Capital (deficit),
December 31, 1994 (37,482) 12,009,430 11,971,948
Net Income for 1995 5,832 577,401 583,233
Distribution to Partners in 1995 (25,396) (2,514,068) (2,539,464)
----------- ----------- -----------
Partners' Capital (deficit),
December 31, 1995 (57,046) 10,072,763 10,015,717
Net Loss for 1996 (1,034) (102,365) (103,399)
Distribution to Partners in 1996 (6,826) (675,744) (682,570)
----------- ----------- -----------
Partners' Capital (deficit),
December 31, 1996 (64,906) 9,294,654 9,229,748
Net Income for 1997 9,457 936,266 945,723
Distribution to Partners in 1997 (22,323) (2,210,042) (2,232,365)
----------- ----------- -----------
Partners' Capital (deficit),
December 31, 1997 $ (77,772) $ 8,020,878 $ 7,943,106
=== ==== =========== ============ ============
</TABLE>
Distributions to Limited Partners, per equity unit, for 1997, 1996 and 1995 were
$141, $43, and $160, respectively, as determined by dividing the distribution to
limited partners for the year by number of units outstanding at the end of the
year.
See Accompanying Notes to Consolidated Financial Statements
-4-
<PAGE>
<TABLE>
<CAPTION>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Consolidated Statements of Cash Flows
For Years Ended December 31, 1997, 1996 and 1995
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Cash Flow from Operating Activities
Net Income (Loss) $ 945,723 $ (103,399) $ 583,233
Adjustments to Reconcile Net Income
(Loss) to
Net Cash Provided by (Used in)
Operating Activities:
Loss on Decline in Market Value of
Property 5,526 95,742 46,306
Gain on Sale of Investment (521,110) 0 0
Gain on Sale of Land (505,740) 0 0
Discount on Due from Affiliates 0 126,881 0
Amortization of Discount on Due
from Affiliates (20,552) (3,193) 0
Loss on Investments 93,722 199,224 64,417
Minority Interest in Income or
(Loss) of Subsidiary 1,139 1,110 27
Changes in Assets and Liabilities:
Decrease in Accrued Interest
Receivable 0 0 91,902
(Increase) Decrease in Other
Receivables (106,830) 139,459 (157,966)
Increase (Decrease) in Accounts
Payable 69,840 (28,668) 17,245
(Increase) Decrease in Mortgage
Loans 0 2,000,000 2,825,000
Increase or (Decrease) in Due to
Affiliates 5,409 (142,990) 166,006
---------- ----------- ----------
Net Cash Provided by (Used in)
Operating Activities (32,873) 2,276,056 3,636,222
---------- ----------- ----------
Cash Flows From Investing Activities:
Proceeds from Sale of Investment 1,725,096 0 0
Proceeds from Sale of Land 1,950,000 0 0
Increase in Minority Interest 92,221 179,927 35,136
Increase in Investments (295,279) (932,115) (1,220,363)
Payment for Development and
Carrying Costs (607,836) (643,384) (192,627)
---------- ----------- ----------
Net Cash Provided by (Used In)
Investing
Activities 2,864,202 (1,395,572) (1,377,854)
---------- ----------- ----------
Cash Flows From Financing Activities:
Distributions to Partners (2,232,365) (682,570) (2,539,464)
---------- ----------- ----------
Net Increase or (Decrease) in Cash 598,964 199,024 (281,096)
Cash, Beginning 361,515 162,491 443,587
---------- ----------- ----------
Cash, Ending $ 960,479 $ 361,515 $ 162,491
=========== ============ ===========
Cash paid for income taxes $ 800 $ 800 $ 800
=========== ============ ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
-5-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Consolidated Statements of Cash Flows - Continued
For Years Ended December 31, 1997, 1996 and 1995
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Non-cash investing and financing activities during the years ended December 31,
1997, 1996 and 1995 consist of the following:
During the years ended December 31, 1997, 1996 and 1995, the Partnership
recorded an increase in the carrying costs of foreclosed land equal to
additional property tax liabilities incurred of $954,152, $1,225,845, and
$1,046,875, respectively.
During the years ended December 31, 1996 and 1995, the Partnership foreclosed on
two loans in each year with aggregate unpaid balances of $1,320,000, and
$2,125,000, respectively, and recorded the acquisition of the properties at
their fair values on the dates of foreclosure, net of a valuation allowance. At
December 31, 1997, 1996 and 1995, the valuation allowance totaled $3,983,798,
$3,978,272, and $3,882,530, respectively.
See Accompanying Notes to Consolidated Financial Statements
-6-
<PAGE>
TMP Land Mortgage
Fund,, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
Note 1 - General and Summary of Significant Accounting Policies
General - TMP Land Mortgage Fund, Ltd., A California Limited Partnership (the
- ------
"Partnership"), was organized in 1991 in accordance with the provisions of the
California Uniform Limited Partnership Act. The purpose of the Partnership is to
make short-term (generally one to three-year) loans to unaffiliated parties
secured by first trust deeds (mortgages) on unimproved real property primarily
in the Inland Empire area of Southern California and to provide cash
distributions on a current basis to the limited partners, primarily from
interest earned on the mortgage loans.
Principles of Consolidation - The consolidated financial statements include the
- ---------------------------
accounts of the Partnership and its majority-owned investments, TMP Homes
Remington, LLC (Remington) and TMP Homes Flowerfield-Sun City, LLC (Sun City).
All significant intercompany accounts and transactions have been eliminated in
consolidation. (See Note 7.)
Investment in Unimproved Land - Investment in unimproved land is stated at the
- ------------------------------
balance of the foreclosed loan plus carrying and improvement costs incurred
subsequent to foreclosure, net of a valuation allowance, as necessary, to state
the properties at their fair value. All costs associated with the acquisition
and improvement of a property are capitalized including all direct carrying
costs; such as interest expense and property taxes.
Syndication Costs - Syndication costs (such as commissions, printing, and legal
- ----------------
fees) were paid by an affiliate of the Partnership, TMP Realty, Inc. (See Notes
2 and 6.)
Income Taxes - No provision for federal income taxes has been made in the
- ------------
accompanying consolidated financial statements as all profits and losses flow
through to the respective partners and are recognized on their individual income
tax returns. However, the minimum California franchise tax paid by the
Partnership and it's consolidated entities at December 31, 1997 and 1996 was
$800 per year.
Cash and Cash Equivalents - For purposes of the Consolidated Statements of Cash
- -------------------------
Flows, the Partnership considers all highly liquid investments with a maturity
of three months or less to be cash equivalents. During the normal course of its
business, the Partnership accumulates cash and maintains deposits at various
banks. Occasionally, the cash deposit at a particular bank may exceed the
federally insured limit. Any accounting loss or cash requirement resulting from
the failure of a bank would be limited to such excess amounts.
Use of Estimates - In the preparation of financial statements in conformity with
- ---------------
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities as of the
date of the financial statements and revenues and expenses during the reporting
period. Actual results could differ from these estimates.
-7-
<PAGE>
TMP Land Mortgage
Fund,, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
Note 1 - General and Summary of Significant Accounting Policies, continued:
Concentration - All unimproved land parcels held for sale are located in the
Inland Empire area of Southern California. The eventual sales price of all
parcels is highly dependent on the real estate market conditions. The
Partnership attempts to mitigate any potential risk by monitoring the market
condition and holding the land parcels until the real estate market recovers.
Note 2 - Organization of the Partnership
TMP Properties (A California General Partnership) and TMP Investments, Inc. (A
California Corporation) originally formed the Partnership on November 15, 1991
as the general partners. The partners of TMP Properties are William O. Passo,
Anthony W. Thompson and Scott E. McDaniel. William O. Passo and Anthony W.
Thompson were the shareholders of TMP Investments, Inc. until October 1, 1995,
when they sold their shares to TMP Group, Inc. and then became the shareholders
of TMP Group, Inc.
The general partners manage and control the affairs of the Partnership,
including final approval of all loans and investments, and have ultimate
authority for matters affecting the interests of the Partnership. All
organization and offering expenses of the Partnership were paid by TMP Realty,
an affiliate of the general partners, in exchange for loan fees (or points) on
each mortgage loan.
The partnership agreement provides for two types of investments: Individual
Retirement Accounts (IRA) and others. The IRA minimum purchase requirement was
$2,000 and all others were a minimum purchase requirement of $5,000. The maximum
liability of the limited partners is the amount of their capital contribution.
Note 3 - Partners' Contributions
The Partnership raised capital through a public offering of units at $1,000 per
unit. The minimum offering size was 1,000 units or $1,000,000. The maximum
offering size was 20,000 units or $20,000,000. As of April 21, 1994, 15,715
units were sold for total capital contributions of $15,715,000 and the offering
was closed.
Note 4 - Allocation of Profits and Losses and Cash Distributions
Profit, losses, and cash distributions are allocated ninety-nine percent to the
limited partners and one percent to the general partners until the limited
partners have received an amount equal to their capital contributions plus a
cumulative, non-compounded return of eight percent per annum based on their
adjusted capital account balances, at which time, remaining profits, losses and
cash distributions are allocated seventy-six percent to the limited partners and
twenty-four percent to the general partners. Distributions of cash from
operations, if any, are made monthly within 30 days after the end of the month.
Distributions made during 1997, 1996 and 1995 are shown on the accompanying
consolidated statements of partners' capital.
-8-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
Note 5 - Related Party Transactions
Unaffiliated borrowers paid broker loan placement fees to TMP Realty, Inc., an
affiliate of the General Partners, of $0, $40,000 and $88,000, during 1997, 1996
and 1995, respectively, for assistance in negotiating loan terms with the
Partnership. TMP Realty, Inc. pays all organization and offering expenses,
including all legal, accounting, printing, registration and other costs. In
addition, the borrowers paid loan servicing fees to TMP Investments, Inc., a
General Partner of the Partnership, of $10,000 and $33,000 during 1996 and 1995,
respectively. At December 31, 1995, the Partnership owed TMP Investments, Inc.
$22,000 for loan servicing fees. During 1997 the Partnership paid $42,693 to TMP
Investments, Inc, for accrued servicing fees on the La Monte loan. This payment
was included in the cost of sale of the land.
Under the terms of the Agreement, if the General Partners or their affiliates
provide a substantial amount of services in connection with the sale of a
property, or a portion of it, acquired through foreclosure or otherwise, they
shall be paid a commission not to exceed the lesser of 1) one-half of the normal
and competitive percentage of gross sales price charged for similar services by
an unaffiliated partner; or 2) 3% of the gross sales price of the property. The
payment shall be subordinate to a return of all of the limited partners' capital
contributions and the payment to the limited partners of their cumulative unpaid
priority returns. During 1997 the partnership paid $216,250 to TMP Realty, Inc.
for brokers fees from the sale of an investment.
Units were offered to the public through TMP Capital Corp. ("TMP Capital"), an
affiliate of the General Partners, as managing broker-dealer. As the managing
broker-dealer, TMP Capital received a sales commission of up to 10% of the gross
proceeds, up to 8% of which was reallocated to soliciting dealers on units sold
by them. These sales commissions were paid by TMP Realty, Inc.
During 1997, 1996 and 1995, respectively, the Partnership was charged $15,152,
$21,421, and $17,624, respectively, (of which $1,096, $105, and $0 is included
in the due to affiliates balance at year-end) by TMP Investments, Inc. for cost
reimbursements for office and secretarial expenses
In November, 1996, the Partnership sold a parcel of land (including the
capitalized interest costs and the related property taxes payable) to an
affiliated partnership, TMP Mortgage Income Plus, LTD (MIP) for $286,000 and
recorded a note receivable for a five year period without interest with a 12%
discount (imputed interest). The total sales price represented the Partnerships'
original interest of $100,000, as well as $186,000 of other advances and
capitalized costs for the development of the land. In 1996, the Partnership
recognized a $126,881 discount on the note as a charge to operations for the
difference between the total value of the land and the face value of the note.
The amortization into income for 1997 and 1996 was $20,552 and $3,193,
respectively.
-9-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
Note 6 - Mortgage loans on real estate
The loan agreements require borrowers to place funds from the loan proceeds in a
restricted bank account equal to the total interest payments over the term of
the loan.
The Partnership receives a first security interest in said account as additional
collateral for the payment of the note. The borrowers instruct the bank to pay
to the Partnership the amount of the monthly loan payment. In view of this, the
only accrual of interest on the loans is for the portion of each month the loan
is earning interest until the first of the following month when the funds are
released from the restricted account.
In the event of foreclosure, the collateral would be recorded at its fair value
at the time of foreclosure. Fair value would be considered to be the lower of
(a) appraised value determined by an independent real estate appraiser, or (b)
the General Partners' determination of the value of the property based on their
analysis.
The Partnership would consider collateral for a loan in substance foreclosed if
all of the following criteria are met:
1. The borrower has little or no equity in the collateral, considering the
current fair value of the collateral; and
2. Proceeds for repayment of the loan can be expected to come only from the
operation or sale of the collateral; and
3. The borrower has either:
a) formally or effectively abandoned control of the collateral to the
Partnership, or of the
b) retained control of the collateral but, because of the current financial
condition of borrower, or the economic prospects for the borrower and/or
the collateral in the foreseeable future, it is doubtful that the
borrower will be able to rebuild equity in the collateral or otherwise
repay the loan in the foreseeable future.
If this occurred, the collateral would be considered foreclosed and would be
recorded at its fair value
The Olson #2 note for $500,000 matured December 17, 1994 and then went into
default and was foreclosed on April 26, 1995. The collateral (land) was recorded
in the accounts at the loan amount that approximated the fair value of the land.
The Environmental Development loan for $1,625,000 matured October 15, 1994, went
into default and was foreclosed on August 23, 1995. The collateral (land) was
recorded in the accounts at the loan amount, which approximated the fair value
of the land.
During the year ended December 31, 1995 the Singletary loan for $2,200,000 and
the Lansing loan for $625,000 were paid in full.
-10-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Financial Statements
December 31, 1997 and 1996
Note 6 - Mortgage loans on real estate, Continued
The LaMonte loan for $1,220,000 defaulted on April 26, 1995 and was foreclosed
January 17, 1996. The collateral (land) was recorded in the accounts at the loan
amount, which approximated the fair value of the land.
The Rockfield Development loan for $100,000 defaulted on April 13, 1995 and
foreclosure was completed on January 17, 1996. The Partnership acquired the
collateral (land) and transferred it to TMP Mortgage Income Plus, Ltd. in
exchange for a note receivable. See Note 6.
The Peppertree loan for $2,000,000 matured June 28, 1995 and was paid July 30,
1996. $1,500,000 was received in cash and $500,000 was received in the form of a
20% interest in a 163.33 acre project named Village One.
Note 7 - Restatements and reissuances of 1994 - 1997 Financial Statements
In 1992, the Partnership made two loans totaling $3,500,000 to PR Equities,
Ltd., a California Limited Partnership. The loans were secured by first trust
deeds on residential property located in San Jacinto, California. In 1994, the
Partnership foreclosed on the properties securing these loans and continues to
own these properties. In accordance with generally accepted accounting
principles, assets acquired through foreclosure should be recorded at the lower
of cost or fair value less costs of disposal at the date of foreclosure. The
1994-1997 financial statements originally issued reported this property at the
amount of the outstanding mortgage balances due on these loans at the time of
foreclosure, which did not represent their fair value less costs of disposal.
Management has subsequently determined that a valuation allowance for these
properties should have been established for approximately $3.8 million at the
date of foreclosure in 1994. The valuation allowance should have been adjusted
each year thereafter such that the only value for these properties is the
capitalized direct carrying costs that represent the total accumulated property
taxes and Mello-Roos bond assessments. Therefore, the consolidated financial
statements for 1994 through 1997 have been restated to record the valuation
allowance and to adjust these properties to their fair value for those years.
In addition, management has determined that the amount of property taxes payable
as recorded in June, 1994, and subsequent periods through December 31, 1997,
were understated by a total of $368,000. Accordingly, the consolidated financial
statements for those periods have been restated for this understatement by
adjusting the carrying value of the land and the property taxes payable in the
appropriate fiscal years.
In accordance with generally accepted accounting principles, the financial
statements of majority-owned investments are required to be consolidated. The
1995, 1996, and 1997 financial statements originally issued did not properly
account for the consolidation of all significant majority-owned investments.
Therefore, the financial statements of these material majority owned entities
have been consolidated with the financial statements of the Partnership's and
-11-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
Note 7 - Restatements and reissuances of 1994 - 1997 Financial Statements,
continued
have been restated for fiscal years 1995, 1996, and 1997 to reflect the
consolidation and related minority interests of $310,000 for Remington and Sun
City as of December 31, 1997.
In November, 1996, the Partnership entered into a non-interest bearing note for
$286,000. In accordance with generally accepted accounting principles, the note
should have been discounted at the date of execution and interest accreted over
the period of the note for $127,000. The consolidated financial statements have
been restated for this discount and accretion of interest.
Note 8 - Investments
Following is a summary of the investments of the Partnership as of December 31,
1997 and 1996:
1997 1996
<TABLE>
<CAPTION>
<S> <C> <C>
TMP Flowerfield, LLC $ 107,589 $ 103,811
Steadfast HSC, LLC 0 1,006,206
Peppertree Park, LLC 500,000 500,000
------- -------
$ 607,590 $ 1,610,019
========== ============
</TABLE>
The Partnership has a 75% membership interest in Flowerfield, which was
organized for the purpose of acquiring, owning and developing certain parcels of
land into single family home developments in San Jacinto, California. The equity
method is used to account for the Partnership's share of Flowerfield's earnings
or losses which is not materially different than the consolidation of this
majority owned investment.
The Partnership has a 20% interest in Peppertree, which was formed to acquire
and develop certain property in San Diego, California. The Partnership's 20%
interest is stated at its cost of $500,000. During 1998, Peppertree sold a
parcel of land for a total sales price of $5,455,000. The Partnership recorded
$50,000 for their portion of the gain on the sale of this property which is
included in other income on the consolidated statements of operations.
-12-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1997 and 1996
Note 9 - Gain on Sale of Land
During 1997 the property acquired through foreclosure of the La Monte loan was
sold.
<TABLE>
<CAPTION>
<S> <C>
Sales Price $1,950,000
----------
Cost of property (balance of foreclosed loan) 1,220,000
Foreclosure costs 135,580
Carrying costs capitalized 82,778
Closing costs 5,902
----------
Total costs 1,444,260
----------
Gain on sale $ 505,740
==========
Note 10 - Gain on Sale of Investments
During 1995 the Partnership invested in Steadfast H.S.C., LLC which was formed
to acquire and operate an apartment building. During 1997 the building was sold
and the proceeds distributed to the members of the Limited Liability Company.
Partnership share of net proceeds $ 1,725,096
----------
Amount invested 854,474
Share of income for 1995-1997 181,520
Share of sales commissions 167,992
----------
Total Costs 1,203,986
----------
Gain on sale $ 521,110
===========
</TABLE>
-13-
<PAGE>
SUPPLEMENTARY INFORMATION
-14-
<PAGE>
<TABLE>
<CAPTION>
TMP LAND MORTGAGE FUND, LTD
(A California Limited Partnership)
Schedule I - Mortgage Loans on Real Estate
(Schedule XII, Rule 12-29, for SEC Reporting Purposes
December 31, 1997
COLUMN A B C D E F G H
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount of
Loans Subject
Final Periodic Face Carrying to Delinquent
Description Interest Maturity Payment Prior Amount of Amount of Principal or
of Loans (A) Rate Date Term Liens Mortgages Mortgages Interest
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
None n/a n/a n/a n/a $ 0 $ 0 $ 0
Beginning Balance $ 0
Additions during period:
New mortgage loans 0
Reduction during period:
Loans paid off 0
Loans foreclosed 0
---------------
Ending Balance $ 0
===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TMP LAND MORTGAGE FUND, LTD
(A California Limited Partnership)
Schedule I - Mortgage Loans on Real Estate
(Schedule XII, Rule 12-29, for SEC Reporting Purposes
December 31, 1996
COLUMN A B C D E F G H
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount of
Loans Subject
Final Periodic Face Carrying to Delinquent
Description Interest Maturity Payment Prior Amount of Amount of Principal or
of Loans (A) Rate Date Term Liens Mortgages Mortgages Interest
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
None n/a n/a n/a n/a $ 0 $ 0 $ 0
Beginning Balance $ 3,320,000
Additions during period:
New mortgage loans 0
Reduction during period:
Loans paid off (2,000,000)
Loans foreclosed (1,320,000)
---------------
Ending Balance $ 0
===============
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
TMP LAND MORTGAGE FUND, LTD
(A California Limited Partnership)
Schedule I - Mortgage Loans on Real Estate
(Schedule XII, Rule 12-29, for SEC Reporting Purposes
December 31, 1995
COLUMN A B C D E F G H
- ------------------------------------------------------------------------------------------------------------------------------------
Principal
Amount of
Loans Subject
Final Periodic Face Carrying to Delinquent
Description Interest Maturity Payment Prior Amount of Amount of Principal or
of Loans (A) Rate Date Term Liens Mortgages Mortgages Interest
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Rockfield Development
(Note3) 12.5% 03/01/95 (B) None 100,000 100,000 $ 100,000
4. La Monte (Note 3) 12.5% 04/25/95 (B) None 1,220,000 1,220,000 1,220,000
6. Peppertree Land
Company (Note 3) 12.5% 06/28/95 (B) None 2,000,000 2,000,000 None
--------- --------- --------------
$ 3,320,000 $ 3,320,000 $ 1,320,000
Beginning Balance $ 8,270,000
Additions during period:
New mortgage loans 0
Reduction during period:
Loans paid off (2,825,000)
Loans foreclosed (2,125,000)
----------
Ending Balance $ 3,320,000
=============
<FN>
(A) All loans are first mortgage on unimproved property in the Southern California area.
(B) All loans provide for level monthly payments of interest only with the entire face amount of the mortgage due at
maturity.
(C) This loan was originally due on June 28, 1995 and was extended up to December 28, 1995. Currently under another
agreement it is on a month-to-month basis.
</FN>
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
TMP LAND MORTGAGE FUND, LTD
(A California Limited Partnership)
Schedule II - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, for SEC Reporting Purposes
For the Year Ended December 31, 1997
COLUMN A B C D E F G H I
- -----------------------------------------------------------------------------------------------------------------------------------
COSTS CAPITALIZED
SUBSEQUENT Gross
TO ACQUISITION amount at Estimated
Initial Carrying which Carried Accumulated Date of Date Depreciable
Description of Assets Encumbrances Cost Improvement Cost at Year-End Depreciation Construction Acquired Life
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved land -
San Jacinto $ 3,941,330 $ 3,550,000 $ 63,737 $ 4,311,391 $7,925,128 -0- N/A 06/02/94&
08/11/94 N/A
Unimproved land -
Sun City -0- 1,320,000 638 75,465 1,396,103 -0- N/A 11/02/94 N/A
Unimproved land -
Banning -0- 1,875,000 1,500 121,355 1,997,855 -0- N/A 12/21/94 N/A
Unimproved land -
Sun City -0- 159,871 4,780 6,291 666,162 -0- N/A 03/29/95 N/A
Unimproved land -
San Diego -0- 1,658,000 888,804 139,132 2,685,936 -0- N/A 08/23/95 N/A
- --------- ------- --------- --------- ---
Combined encum. -
other properties 264,738
----------
$ 4,206,068 $ 8,903,000 $1,114,550 $ 4,653,634 $14,671,184 -0-
=========== =========== ========== =========== ========== ===
Less valuation allow-
ance: $ 3,983,798
-----------
Net carrying value $10,687,386
===========
Reconciliation of
carrying amount
Beginning balance $ 10,575,184
Additions
Improvements $ 407,660
Carrying Costs/
Improv. 1,152,390
---------
Total Additions 1,560,050
Deductions:
Initial Costs 1,220,000
Improvements 72,794
Carrying costs 149,528
Increase in valu-
tion allowance 5,526
Total Deductions 1,447,848
---------
Ending balance $ 10,687,386
============
Ending balance $ 9,658,698
============
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
TMP LAND MORTGAGE FUND, LTD
(A California Limited Partnership)
Schedule II - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, for SEC Reporting Purposes
For the Year Ended December 31, 1996
COLUMN A B C D E F G H I
- -----------------------------------------------------------------------------------------------------------------------------------
COSTS CAPITALIZED
SUBSEQUENT Gross
TO ACQUISITION amount at Estimated
Initial Carrying which Carried Accumulated Date of Date Depreciable
Description of Assets Encumbrances Cost Improvement Cost at Year-End Depreciation Construction Acquired Life
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved land -
San Jacinto, CA $ 3,023,458 $ 3,550,000 $ 63,737 $ 3,387,993 $ 7,001,730 -0- n/a 06/02/94&
08/11/94 n/a
Unimproved land -
Sun City, CA -0- 1,320,000 96,096 47,147 1,463,243 -0- n/a 11/02/94 n/a
Unimproved land -
Banning, CA -0- 1,875,000 1,500 70,109 1,946,609 -0- n/a 12/21/94 n/a
Unimproved land -
San Diego -0- 1,658,000 540,777 85,398 2,284,175 -0- n/a 08/23/95 n/a
Unimproved land -
Sun City -0- 500,000 4,780 5,162 509,942 -0- n/a 04/26/95 n/a
Unimproved land -
Simi Valley -0- 1,220,000 72,794 54,963 1,347,757 -0- n/a 04/22/96 n/a
Combined encumbrances
of other prop. 163,874
-------
$ 3,187,332 $10,123,000 $779,684 $ 3,650,772 $14,553,456 -0-
=========== ============ ======== =========== =========== ===
Less valuation allowance: 3,978,272
---------
Net Carrying value: $10,575,184
==========
Reconciliation of carrying amount
Beginning balance $ 7,481,697
Additions
Initial Costs 1,220,000
Improvements 645,724
Carrying Cost 1,323,505
---------
Total Additions 3,189,229
---------
Less: Increase in
valuation allowance: 95,742
------
Ending balance $ 10,575,184
============
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
TMP LAND MORTGAGE FUND, LTD
(A California Limited Partnership)
Schedule II - Real Estate and Accumulated Depreciation
(Schedule XI, Rule 12-28, for SEC Reporting Purposes
For the Year Ended December 31, 1995
COLUMN A B C D E F G H I
- -----------------------------------------------------------------------------------------------------------------------------------
COSTS CAPITALIZED
SUBSEQUENT Gross
TO ACQUISITION amount at Estimated
Initial Carrying which Carried Accumulated Date of Date Depreciable
Description of Assets Encumbrances Cost Improvement Cost at Year-End Depreciation Construction Acquired Life
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unimproved land -
San Jacinto, CA $2,026,071 $ 3,550,000 $ 63,737 $2,254,803 $ 5,868,540 -0- n/a 06/02/94 &
08/11/94 n/a
Unimproved land -
Sun City, CA -0- 1,320,000 637 11,377 1,332,014 -0- n/a 11/02/94 n/a
Unimproved land -
Banning, CA -0- 1,875,000 -0- 25,739 1,900,739 -0- n/a 12/21/94 n/a
Unimproved land -
San Diego -0- 1,658,000 56,212 33,299 1,747,571 -0- n/a 8/23/95 n/a
Unimproved land -
Sun City -0- 500,000 4,780 2,049 506,829 -0- n/a 04/26/95 n/a
Unimproved land -
Simi Valley -0- -0- 8,534(A) -0- 8,534 -0- n/a (A) n/a
---------- ---------- ------- ---------- -------------- -
$2,026,071 $ 8,903,000 $133,960 $2,327,267 $ 11,364,227 -0-
========== =========== ======== ========== ============== ===
Less valuation allowance: 3,882,530
--------------
Net Carrying Value: $ 7,481,697
==============
Reconciliation of carrying amount
Beginning balance $4,163,501
Additions
Initial Costs $2,158,000
Improvements 84,569
Capitalized Carry-
ing Costs 1,121,933
---------
Total Additions 3,364,502
Less: Increase in
Valuation Allowance 46,306
---------
Ending balance $7,481,697
==========
<FN>
(A) Costs incurred for defaulted loan. The property is in foreclosure as of December 31, 1995. (See Note 3)
</FN>
</TABLE>
