<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-SB
(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, 1996
[ ] 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 INLAND 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 Identification No.)
incorporation or organization)
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
Notes to Consolidated Financial Statements 6-12
Supplementary Information 13-21
<PAGE>
Report of Independent Auditor's
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, 1996
and 1995, and the related consolidated statements of operations, partners'
capital, and cash flows for the years ended December 31, 1996, 1995, and 1994.
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 consolidated financial position of TMP
Land Mortgage Fund, Ltd. (A California Limited Partnership) as of December 31,
1996 and 1995, and the results of its operations and its cash flows for the
years ended December 31, 1996, 1995 and 1994, 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 Schedules 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
BALSER, HOROWITZ, FRANK & WAKELING
An Accountancy Corporation
Santa Ana, California
February 3, 1997, except for note 7, as to 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, 1996 and 1995
Assets
------
1996 1995
---- ----
<S> <C> <C>
Cash $ 361,515 $ 162,491
Other Receivable 18,507 157,966
Due from Affiliates (net of unamortized
discount of $123,688) Note 2 162,051 0
Mortgage Loans on Real Estate 0 3,320,000
Investments 1,610,019 1,155,867
Investment in Unimproved Land (net of
valuation allowance of $3,978,272 and
$3,882,530, respectively) 10,575,184 7,481,697
---------- ---------
Total Assets $ 12,727,276 $ 12,278,021
============== ===============
Liabilities and Partners' Capital
---------------------------------
Accounts Payable $ 4,754 $ 33,422
Due to Affiliates 23,885 166,875
Property Taxes Payable 3,251,916 2,026,071
Accrued Expenses 800 800
---------- ---------
Total Liabilities 3,281,355 2,227,168
Minority Interest 216,173 35,136
Partners' Capital (Note 3)
General Partners (64,906) (57,046)
Limited Partners; 20,000 Equity Units
Authorized, 15,715 Outstanding at
December 31, 1996 and 1995, respectively 9,294,654 10,072,763
---------- ---------
Total Partners Capital 9,229,748 10,015,717
---------- ---------
Total Liabilities and Partners' Capital $ 12,727,276 $ 12,278,021
============== ===============
</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, 1996, 1995 and 1994
1996 1995 1994
Income
- ------
<S> <C> <C> <C>
Mortgage Loan Interest Income $ 152,733 97,431 1,216,528
Other Interest Income 13,585 19,740 37,103
Loss on Investments (192,224) 64,417) 0
Investment Income 146,011 11,662 0
Other Income 4,600 3,600 4,528
-------- ------- ----------
Total Income 124,705 68,016 1,258,159
-------- ------- ----------
Expenses
Loss on Decline in Market Value of Property 95,742 46,306 3,836,224
Discount on Due from Affiliates 126,881 0 0
Accounting and Legal 1,820 18,352 24,059
Advertising 0 642 0
California Franchise Tax 2,400 800 800
Foreclosure Costs 0 0 40,061
Loan Administration 151 0 35
Office Expenses 0 3,150 3,210
Interest Expense 0 598
Postage and Printing 0 5,502 6,677
Secretarial and Bookkeeping Support 0 9,460 11,651
-------- ------- ----------
Total Expense 226,994 84,810 3,922,717
-------- ------- ----------
Net Income (Loss) before Minority Interest (102,289) 583,206 (2,664,558)
-------- ------- ----------
Minority Interest in Income or Loss of
Subsidiary (1,110) 27 0
-------- ------- ----------
Net Income (Loss) $ (103,399) $ 583,233 $(2,664,558)
========== ========= ===========
Allocation of Net Income or (Loss)
General Partners, in the Aggregate $ (1,034) $ 5,832 $ (26,646)
========== ========= ===========
Limited Partners, in the Aggregate $ (102,365) $ 577,401 $(2,637,912)
========== ========= ===========
Limited Partners, per Equity Unit $ (7) $ 37 $ (168)
========== ========= ===========
</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, 1996, 1995 and 1994
General Limited
Partners Partners Total
-------- -------- -----
<S> <C> <C> <C>
Partners' Capital, December 31, 1993 1,408 14,605,314 14,606,722
Capital Contributed in 1994 0 1,254,000 1,254,000
Net Loss for 1994 (26,646) (2,637,912) (2,664,558)
Distribution to Partners in 1994 (12,244) (1,211,972) (1,224,216)
------ --------- ---------
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
=== ==== ======== ============= ============
</TABLE>
Distributions to limited partners, per equity unit, for 1996, 1995 and 1994 were
$43, $160, and $77, 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, 1996, 1995 and 1994
1996 1995 1994
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Income (Loss) $ (103,399)$ 583,233 $ (2,664,558)
Adjustments to Reconcile Net Income
(Loss) to
Net Cash Provided by (Used in)
Operating Activities:
Loss on Decline in Market Value
of Property 95,742 46,306 3,836,224
Discount on Due from Affiliates 126,881 0 0
Loss on Investments 192,224 64,523 0
Minority Interest in Income Loss of
Subsidiary 1,110 (27) 0
Amortization of Discount on Due from
Affiliates (3,193) 0 0
Changes in assets and liabilities:
Decrease in Accrued Interest
Receivable 0 91,902 42,415
(Increase) Decrease in Other
Receivables 139,459 (157,966) 0
Increase (Decrease) in Accounts
Payable (28,668) 17,245 12,612
(Increase) Decrease in Mortgage Loans 2,000,000 2,825,000 (2,125,000)
Increase (Decrease) in Due to
Affiliates (142,990) 166,006 (2,476)
--------- --------- --------
Net Cash Provided by (Used in)
Operating Activities 2,277,166 3,636,222 (900,783)
--------- --------- --------
Cash Flows From Investing Activities:
Increase in Investments (932,115) (1,220,363) 0
Increase in Minority Interest 179,927 35,136
Payment for Development and
Carrying Costs (643,384) (192,627) (275,529)
--------- --------- --------
Net Cash Used In
Investing Activities (1,395,572) (1,377,854) (275,529)
--------- --------- --------
Cash Flows From Financing Activities:
Capital Contributions 0 0 1,254,000
Distributions to Partners (682,570) (2,539,464) (1,224,216)
--------- --------- --------
Net Cash Provided by (Used in)
Financing Activities (682,570) (2,539,464) 29,784
--------- --------- --------
Net Increase or (Decrease) in Cash 199,024 (281,096) (1,146,528)
Cash, Beginning 162,491 443,587 1,590,115
--------- --------- --------
Cash, Ending $ 361,515 $ 162,491 $ 443,587
========== =========== =============
Cash paid for income taxes $ 800 $ 800 $ 800
</TABLE>
Supplemental Schedule of Non-Cash Investing and Financing Activities:
- ---------------------------------------------------------------------
Non-cash investing and financing activities during the years ended December 31,
1996, 1995 and 1994 consist of the following:
During the years ended December 31, 1996, 1995 and 1994, the Partnership
recorded an increase in the carrying costs of properties held for sale equal to
additional property tax liabilities incurred during those years of $1,225,845,
$1,046,875 and $979,196, respectively.
During the years ended December 31, 1996, 1995 and 1994, the Partnership
foreclosed on two, two and four mortgage loans receivable with unpaid balances
of $1,320,000, $2,125,000 and $6,745,000, 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, 1996, 1995 and 1994, the valuation
allowance totaled $3,978,272, $3,882,530 and $3,836,224, respectively.
See Accompanying Notes to Consolidated Financial Statements
-5-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
Note 1 - Organization 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, 1998 and 1997 was
$2,400 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.
-6-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
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.
New Accounting Standards - In June 1998 the Financial Accounting Standards Board
- -----------------------
issued Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and hedging Activities". The new statement requires all
derivatives to be recorded on the balance sheet at fair value and establishes
new accounting rules for hedging instruments. This statement will have no effect
on the consolidated financial statements of the Partnership.
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
-7-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
Note 4 - Allocation of Profits and Losses and Cash Distributions, continued:
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.
No distributions were made during 1998. Distributions made during 1997 are shown
on the accompanying consolidated statements of partners' capital.
Note 5 - Related Party Transactions
Unaffiliated borrowers paid broker loan placement fees to TMP Realty, Inc., an
affiliate of the General Partners, of $40,000, $88,000, and $258,750, during
1996, 1995 and 1994, 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 $33,000, and $69,375 during 1996,
1995 and 1994, respectively. At December 31, 1995, the Partnership owed TMP
Investments, Inc. $22,000 for loan servicing fees.
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
returns.
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 1996, 1995 and 1994, respectively, the Partnership was charged $21,421,
$17,624, and $21,381, respectively, (of which $105, $0, and $869 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. 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 1996 was $3,193.
-8-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
Note 6 - Mortgage loans on real estate
The mortgage 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.
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, less any costs of disposal. 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
b) retained control of the collateral but, because of the current financial
condition of of the 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.
-9-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
Note 6 - Mortgage loans on real estate, Continued
If this occurred, the collateral would be considered foreclosed and would be
recorded at its fair value, less any costs of disposal.
The PR Equities loans for $2,400,000 and $1,150,000 matured January 14, 1994 and
May 30, 1994, went into default and were foreclosed on June 2, 1994 and August
11, 1994, respectively. The collateral (land) was recorded in the accounts of
the Partnership at the gross loan amounts, less a valuation allowance, to record
the net book value of the land at its fair value at the date of foreclosure.
The Sunset Crossing loan for $1,875,000 matured August 27, 1994, went into
default and was foreclosed December 21, 1994. The collateral (land) was recorded
in the accounts at the loan amount and unpaid property taxes at the time of
foreclosure, which approximated the fair value of the land.
The Olson loan for $1,320,000 matured June 24, 1994, went into default and was
foreclosed November 2, 1994. The collateral (land) was recorded in the accounts
at the loan amount that approximated the fair value of the land.
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 that 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.
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 an interest in a project.
The Peppertree loan for $2,000,000 matured June 28, 1995 and was paid July 30,
199
6. $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.
-10-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
Note 7 - Restatements and reissuances of 1994 - 1996 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
1994-1996 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 1996 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, 1996,
were understated by a total of $556,000. 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 and 1996 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 have been
restated for fiscal years 1995 and 1996 to reflect the consolidation and related
minority interests of $216,000 for Remington and Sun City as of December 31,
1996.
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.
-11-
<PAGE>
TMP Land Mortgage Fund, LTD.
(A California Limited Partnership)
Notes to Consolidated Financial Statements
December 31, 1996 and 1995
Note 8 - Investments
<TABLE>
<CAPTION>
Following is a summary of the investments of the Partnership as of December 31,
1996 and 1995:
1996 1995
<S> <C> <C>
TMP Flowerfield, LLC $ 103,811 $ 86,293
Steadfast HSC, LLC 1,006,206 1,069,574
Peppertree Park, LLC 500,000 0
------------- --------------
$ 1,610,019 $ 1,155,867
============== ===============
</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.
-12-
<PAGE>
Supplementary Information
-13-
<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>
-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, 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>
-15-
<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, 1994
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. Olson #2 (Note 3) 12.5% 12/17/94 (B) None $ 500,000 $ 500.000 $ 500,000
2. Rockfield Development 12.5% 03/01/95 (B) None 100,000 100,000 None
3. Singletary 12.5% 04/12/95 (B) None 2,200,000 2,200,000 None
4. La Monte 12.5% 04/25/95 (B) None 1,220,000 1,220,000 None
5. Environmental
Development 12.5% 05/15/95 (B) None 1,625,000 1,625,000 None
6. Peppertree Land Company 12.5% 06/28/95 (B) None 2,000,000 2,000,000 None
7. Gregg Lansing 12.5% 09/23/95 (B) None 625,000 625,000 None
-------------- -------------- -----------
$ 8,270,000 $ 8,270,000 $ 500,000
Beginning Balance $ 12,890,000
Additions during period:
New mortgage loans 2,725,000
Reduction during period:
Loans paid off (600,000)
Loans foreclosed (6,745,000)
----------
Ending Balance $ 8,270,000
============
<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.
</FN>
</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, 1993
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. PR Equities (Note 3) 12.5% 01/14/94 (B) None $ 2,400,000 $ 2,400,000 None
2. Toman Company (Note 3) 12.5% 07/28/94 (B) None 600,000 600,000 None
3. Sunset Crossing
(Note 3) 12.5% 08/27/94 (B) None 1,875,000 1,875,000 None
4. PR Equities 12.5% 05/30/94 (B) None 1,150,000 1,150,000 None
5. Olson 12.5% 06/24/94 (B) None 1,320,000 1,320,000 None
6. Environmental
Development 12.5% 10/15/94 (B) None 1,625,000 1,625,000 None
7. Olson #2 12.5% 12/17/94 (B) None 500,000 500,000 None
8. Singletary 12.5% 04/12/95 (B) None 2,200,000 2,200,000 None
9. La Monte 12.5% 04/25/95 (B) None 1,220,000 1,220,000 None
--------- ---------
$ 12,890,000 $ 12,890,000
Beginning Balance $ 7,345,000
Additions during period:
New mortgage loans 5,545,000
--------------
Ending Balance $ 12,890,000
===============
<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.
</FN>
</TABLE>
-17-
<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, 1992
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. PR Equities 12.5% 01/13/94 (B) None $ 2,400,000 $ 2,400,000 None
2. Frame 12.5% 01/28/94 (B) None 600,000 600,000 None
3. Sunset Crossing 12.5% 08/27/94 (B) None 1,875,000 1,875,000 None
4. PR Equities 12.5% 05/30/94 (B) None 1,150,000 1,150,000 None
5. Olson 12.5% 06/24/94 (B) None 1,320,000 1,320,000 None
--------- ---------
$ 7,345,000 $ 7,345,000
<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.
</FN>
</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 encum-
brances 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>
nimproved 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
Carrying 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>
-20-
<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, 1994
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 $979,196 $2,400,000 $ 49,170 $1,198,263 $3,647,433 -0- n/a 06/02/94 n/a
Unimproved land -
San Jacinto, CA -0- 1,150,000 221 -0- 1,150,221 -0- n/a 08/11/94 n/a
Unimproved land -
Sun City, CA -0- 1,320,000 -0- -0- 1,320,000 -0- n/a 11/02/94 n/a
Unimproved land -
Banning, CA -0- 1,882,071 -0- -0- 1,882,071 -0- n/a 12/21/94 n/a
------ --------- ------ --------- --------
$979,196 $6,752,071 $ 49,391 $1,198,263 $7,999,725 -0-
======== ========== ======== ========== ========== ===
Less: Valuation
Allowance: 3,836,224
---------
Net Carrying Value: $4,163,501
==========
Reconciliation of
carrying amount
Beginning balance $ -0-
Additions
Initial Costs $6,752,071
Capitalized
Carrying Costs 1,198,263
Improvements 49,391
---------
Total Additions 7,999,725
Less: Valuation Allowance: 3,836,224
---------
Ending balance $4,163,501
==========
</TABLE>
-21-
<PAGE>
