Attached files
| file | filename |
|---|---|
| 8-K - Redwood Mortgage Investors IX | rmiix-20120605_8k.htm |
CONSOLIDATED BALANCE SHEET
MARCH 31, 2012
(Unaudited)
REDWOOD MORTGAGE CORP.
and Subsidiaries
900 Veterans Blvd, Suite 500
Redwood City, CA 94063
Phone 650-365-5341 Fax 650-364-3978
REDWOOD MORTGAGE CORP.
and Subsidiaries
CONSOLIDATED BALANCE SHEET
March 31, 2012
(unaudited)
CONTENTS
Page No.
Consolidated Balance Sheet (unaudited) 1
Notes to the Consolidated Balance Sheet (unaudited) 2 - 8
REDWOOD MORTGAGE CORP.
and Subsidiaries
CONSOLIDATED BALANCE SHEET
March 31, 2012
(unaudited)
ASSETS
|
Cash and cash equivalents
|
$
|
2,313,664
|
||
|
Tax refunds receivable
|
84,200
|
|||
|
Receivables, due from affiliates/related parties
|
||||
|
Mortgage servicing fees, RMI VIII
|
436,872
|
|||
|
Other
|
339,111
|
|||
|
Prepaid expenses
|
40,136
|
|||
|
Loans, net of discount of $10,451
|
301,372
|
|||
|
Real estate owned (REO) held as investment, net
|
3,120,165
|
|||
|
Advances, RMI IX, syndication costs
|
1,184,433
|
|||
|
Brokerage-related rights, loan originations, net
|
7,726,096
|
|||
|
Investments in affiliates
|
171,771
|
|||
|
Fixed assets, net
|
34,568
|
|||
|
Total assets
|
$
|
15,752,388
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
Liabilities
|
||||
|
Accrued compensated absences
|
$
|
211,532
|
||
|
Accrued liabilities, other
|
20,359
|
|||
|
Due to related parties
|
91,412
|
|||
|
Mortgage notes payable
|
1,637,442
|
|||
|
Loans (formation) from affiliates, net
|
7,079,438
|
|||
|
Deferred income taxes
|
2,214,000
|
|||
|
Total liabilities
|
11,254,183
|
|||
|
Stockholders’ equity
|
||||
|
Common stock: 100,000 shares authorized,
|
||||
|
1,000 shares issued and outstanding at stated value
|
4,000
|
|||
|
Additional paid-in capital
|
550,152
|
|||
|
Retained earnings
|
3,944,053
|
|||
|
Total stockholders’ equity
|
4,498,205
|
|||
|
Total liabilities and stockholders’ equity
|
$
|
15,752,388
|
The accompanying notes are an integral part of the consolidated balance sheet
1
REDWOOD MORTGAGE CORP.
and Subsidiaries
NOTES TO THE CONSOLIDATED BALANCE SHEET
March 31, 2012 (unaudited)
NOTE 1 – GENERAL
In the opinion of management, the accompanying unaudited consolidated balance sheet contains all adjustments, consisting of normal, recurring adjustments, necessary to present fairly the financial information herein. This consolidated balance sheet should be read in conjunction with the audited consolidated balance sheet for the fiscal year ended September 30, 2011, appearing in Redwood Mortgage Investors IX, LLC’s Post-Effective Amendment No. 6 to Form S-11. These notes include only those items for which updates are needed.
Throughout this document Redwood Mortgage Corp. will be referred to as RMC, Gymno LLC as Gymno, and Redwood Mortgage Investors (RMI) will refer to limited partnerships or LLCs sponsored by RMC.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
See the notes accompanying the audited consolidated balance sheet of RMC as of September 30, 2011.
NOTE 3 – GENERAL PARTNER, MANAGING MEMBER AND RELATED PARTIES
Brokerage-related rights, loan originations, net/formation loans
Brokerage-related rights are summarized in the following table at March 31, 2012.
|
Brokerage-
|
||||||||||||||||
|
Related
|
Accumulated
|
Years
|
||||||||||||||
|
Partnership/LLC
|
Rights
|
Amortization
|
Net
|
Remaining
|
||||||||||||
|
RMI VII
|
914,413
|
(888,576
|
)
|
25,837
|
3
|
|||||||||||
|
RMI VIII
|
17,634,435
|
(10,610,418
|
)
|
7,024,017
|
22
|
|||||||||||
|
RMI IX
|
740,953
|
(64,711
|
)
|
676,242
|
25
|
|||||||||||
|
Total
|
$
|
19,289,801
|
$
|
(11,563,705
|
)
|
$
|
7,726,096
|
|||||||||
Additions to the brokerage-related rights (RMI IX only), net of discount, were $92,172 for the six months ended March 31, 2012.
Estimated amortization expense for each of the next five years and thereafter is presented in the following table.
|
Year ending September 30,
|
||||
|
2012 (remaining six months)
|
$
|
474,992
|
||
|
2013
|
874,076
|
|||
|
2014
|
743,150
|
|||
|
2015
|
662,420
|
|||
|
2016
|
585,908
|
|||
|
Thereafter
|
4,385,550
|
|||
|
$
|
7,726,096
|
RMC has determined no allowance for impairment was required against its brokerage-related rights.
2
REDWOOD MORTGAGE CORP.
and Subsidiaries
NOTES TO THE CONSOLIDATED BALANCE SHEET
March 31, 2012 (unaudited)
NOTE 3 – GENERAL PARTNER, MANAGING MEMBER AND RELATED PARTIES (continued)
Brokerage-related rights, loan originations, net/formation loans (continued)
The formation loans are non-interest bearing and are being repaid equally over an approximate ten-year period commencing the year after the close of a partnership/LLC offering. Interest has been imputed at the market rate of interest in effect during the offering. The effective interest rates range between 3.25% and 7.752%.
|
|
The formation loans are due as summarized in the following table, as of March 31, 2012.
|
|
Year ending September 30,
|
RMI VIII(1)
|
RMI IX (1)
|
Total
|
|||||||||
|
2012
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
|
2013
|
1,898,136
|
74,121
|
1,972,257
|
|||||||||
|
2014
|
1,674,153
|
74,121
|
1,748,274
|
|||||||||
|
2015
|
1,322,500
|
74,121
|
1,396,621
|
|||||||||
|
2016
|
1,162,799
|
74,121
|
1,236,920
|
|||||||||
|
2017
|
756,400
|
74,121
|
830,521
|
|||||||||
|
Thereafter
|
813,024
|
434,790
|
1,247,814
|
|||||||||
|
Total borrowings
|
7,627,012
|
805,395
|
8,432,407
|
|||||||||
|
Less discount on imputed interest
|
(1,237,823
|
)
|
(115,146
|
)
|
(1,352,969
|
)
|
||||||
|
Total loans (formation), net of discount
|
$
|
6,389,189
|
$
|
690,249
|
$
|
7,079,438
|
||||||
(1) The annual amounts due are based upon the loan balance at December 31, 2011.
If the general partners/managing members are removed and RMC is no longer receiving payments for services rendered, the debt on the related formation loan is forgiven, and would be an offset to any impairment resulting to the asset recognized for brokerage-related rights.
Advances to RMI IX, syndication costs
RMC advances certain organizational and offering expenses on behalf of RMI IX. RMI IX is obligated to reimburse RMC for these costs up to an amount equal to 4.5% of gross offering proceeds until RMC has been fully reimbursed.
Syndication cost transactions for the six months ended March 31, 2012 are summarized in the following table.
|
Balance, October 1, 2011
|
$
|
1,098,517
|
||
|
Advances made by RMC
|
161,496
|
|||
|
Repayments received from RMI IX
|
(75,580
|
)
|
||
|
Balance, March 31, 3012
|
$
|
1,184,433
|
3
REDWOOD MORTGAGE CORP.
and Subsidiaries
NOTES TO THE CONSOLIDATED BALANCE SHEET
March 31, 2012 (unaudited)
NOTE 3 – GENERAL PARTNER, MANAGING MEMBER AND RELATED PARTIES (continued)
Investments in affiliates
Gymno’s investment in affiliates is presented in the following table as of March 31, 2012.
|
Gymno
|
||||||||||||
|
Investment
|
||||||||||||
|
Gymno
|
Percent of
|
|||||||||||
|
Net Assets
|
Investment
|
Net Assets
|
||||||||||
|
RMI IV
|
$ | 3,610,868 | $ | 3,892 | 0.11 | % | ||||||
|
RMI V
|
1,579,641 | 4,512 | 0.29 | % | ||||||||
|
RMI VI
|
4,921,263 | 11,213 | 0.23 | % | ||||||||
|
RMI VII
|
6,496,002 | 5,874 | 0.09 | % | ||||||||
|
RMI VIII
|
203,587,414 | 95,423 | 0.05 | % | ||||||||
|
RMI IX, LLC
|
10,764,974 | 14,594 | 0.14 | % | ||||||||
|
Total investments in affiliates
|
$ | 233,960,162 | $ | 135,508 | ||||||||
RMC acquired an investment from a limited partner in RMI VIII. This investment is accounted for under the equity method. At March 31, 2012 the recorded value of the investment was $32,869.
RMC, as a manager of RMI IX, has an investment in RMI IX of $3,394 at March 31, 2012.
Gymno LLC
Gymno’s balance sheet is presented in the following table as of March 31, 2012.
|
Assets
|
||||
|
Cash and cash equivalents
|
$
|
489,598
|
||
|
Investments in affiliates
|
135,508
|
|||
|
Total assets
|
$
|
625,106
|
||
|
Stockholders’ Equity
|
||||
|
Common stock, no par, authorized 1,000,000 shares; 500
|
||||
|
shares issued and outstanding
|
$
|
12,500
|
||
|
Retained earnings
|
612,606
|
|||
|
Total stockholders’ equity
|
$
|
625,106
|
4
REDWOOD MORTGAGE CORP.
and Subsidiaries
NOTES TO THE CONSOLIDATED BALANCE SHEET
March 31, 2012 (unaudited)
NOTE 4 – LOANS
Loans unpaid principal balance (principal)
Loan transactions are summarized in the following table for the six months ended March 31, 2012.
|
Secured
|
Unsecured
|
|||||||
|
Principal, October 1, 2011
|
$
|
—
|
$
|
313,547
|
||||
|
Originated for affiliates
|
2,162,271
|
—
|
||||||
|
Assigned to RMI IX
|
(2,162,271
|
)
|
—
|
|||||
|
Borrower repayments
|
—
|
(1,724
|
)
|
|||||
|
Principal, March 31, 2012
|
$
|
—
|
$
|
311,823
|
||||
At March 31, 2012, RMC had two unsecured loans. One loan is a demand note with a principal balance of $300,000 and an interest rate of 7.6%. The borrower is making monthly payments of interest only. The second loan is co-owned with four affiliated partnerships. RMC’s portion of the loan, net of a discount of $10,451, is $1,372. The borrower is making monthly payments to 2015.
Scheduled principal payments
Scheduled principal payment dates of the performing unsecured loans are summarized in the following table as of March 31, 2012.
|
Year ending September 30,
|
||||
|
2012 (remaining six months)
|
$
|
1,723
|
||
|
2013
|
3,446
|
|||
|
2014
|
3,446
|
|||
|
2015
|
3,208
|
|||
|
2016
|
—
|
|||
|
Thereafter
|
—
|
|||
|
Total
|
11,823
|
|||
|
Less discount
|
(10,451
|
)
|
||
|
Demand note
|
300,000
|
|||
|
Total loans, net of discount
|
$
|
301,372
|
Loans bear interest at rates ranging from zero to 10%. Interest is imputed on loans with no stated interest rate.
5
REDWOOD MORTGAGE CORP.
and Subsidiaries
NOTES TO THE CONSOLIDATED BALANCE SHEET
March 31, 2012 (unaudited)
NOTE 4 – LOANS (continued)
Matured loans
There were no loans past maturity as of March 31, 2012.
Delinquency
There were no delinquent loans as of March 31, 2012. RMC reports delinquency based upon the most recent contractual agreement with the borrower.
Loans designated impaired/in non-accrual status
There were no loans designated impaired or classified in non-accrual status as of March 31, 2012.
Allowance for loan losses
There is no allowance for loan losses as of March 31, 2012.
NOTE 5 – REAL ESTATE OWNED (REO) HELD AS INVESTMENT, NET
REO held as investment, net, had the activity and changes in the impairment reserves summarized in the following table for the six months ended March 31, 2012.
|
REO Held
|
||||||||||||
|
REO Held
|
Accumulated
|
As Investment,
|
||||||||||
|
As Investment
|
Depreciation
|
Net
|
||||||||||
|
Balance, October 1, 2011
|
$
|
3,278,607
|
$
|
(146,360
|
)
|
$
|
3,132,247
|
|||||
|
Acquisitions
|
—
|
—
|
—
|
|||||||||
|
Depreciation
|
—
|
(12,082
|
)
|
(12,082
|
)
|
|||||||
|
Balance, March 31, 2012
|
$
|
3,278,607
|
$
|
(158,442
|
)
|
$
|
3,120,165
|
|||||
|
Number of properties
|
3
|
2
|
3
|
|||||||||
RMC owns three California properties. Two of the properties (owned by RMC) are single-family residences and are rented. One single-family residence is located in San Mateo County and the other is located in Riverside County. The recorded investment in these assets at acquisition was $1,778,607. The third property is undeveloped land in San Mateo County (owned by Weeks, LLC), with a recorded investment at acquisition of $1,600,000.
6
REDWOOD MORTGAGE CORP.
and Subsidiaries
NOTES TO THE CONSOLIDATED BALANCE SHEET
March 31, 2012 (unaudited)
NOTE 6 – FIXED ASSETS
Fixed assets are summarized in the following table at March 31, 2012.
|
Office equipment
|
$
|
258,256
|
||
|
Computer equipment
|
77,478
|
|||
|
Software
|
31,105
|
|||
|
Auto
|
71,297
|
|||
|
Leasehold improvements
|
22,684
|
|||
|
Total fixed assets
|
460,820
|
|||
|
Accumulated depreciation and amortization
|
(426,252
|
)
|
||
|
Fixed assets, net
|
$
|
34,568
|
NOTE 7 – MORTGAGE NOTES PAYABLE
Mortgage notes payable activity is summarized in the following table for the six months ended March 31, 2012.
|
Balance, October 1, 2011
|
$
|
1,655,462
|
||
|
Payments
|
(18,020
|
)
|
||
|
Balance, March 31, 2012
|
$
|
1,637,442
|
As of March 31, 2012, RMC has mortgage notes payable on two of the REO held as investment. One note (by RMC) is owed to an individual with an unpaid principal balance of $461,634 with an interest rate which increases annually from 4.0% to 5.0%, is interest only, and matures February 2013. The other note (by Weeks, LLC) is owed to three affiliated limited partnerships with an unpaid principal balance of $1,175,809, an interest rate of 7.0%, amortized for 20 years, and matures January 2016.
Future minimum principal payments are summarized in the following table at March 31, 2012.
|
Year ending September 30,
|
||||
|
2012 (remaining six months)
|
$
|
18,660
|
||
|
2013
|
500,966
|
|||
|
2014
|
42,175
|
|||
|
2015
|
45,224
|
|||
|
2016
|
1,030,417
|
|||
|
Thereafter
|
—
|
|||
|
Total mortgage notes payable
|
$
|
1,637,442
|
NOTE 8 – PROFIT-SHARING PLAN
RMC has a defined contribution profit-sharing plan which provides for RMC contributions of 5% of eligible wages, plus any discretionary additional RMC contributions.
7
REDWOOD MORTGAGE CORP.
and Subsidiaries
NOTES TO THE CONSOLIDATED BALANCE SHEET
March 31, 2012 (unaudited)
NOTE 9 – INCOME TAXES
The Company’s estimated net operating loss (“NOL”) carry forwards available are approximately $2,880,000 for federal taxes and $2,094,000 for California taxes at September 30, 2011. The NOLs can be carried forward twenty years for federal taxes and twenty years for California taxes and expire at various times through the year 2031.
NOTE 10 – COMMITMENTS AND GUARANTEES
RMC has contracted with an independent service bureau for computer processing services for the partnership and RMI IX accounting functions at approximately $8,337 per month. The contract is subject to renewal at the end of its term which is May 31, 2012, and is currently being negotiated. RMC receives reimbursement of a major portion of its computer processing expenses from the five affiliated limited partnerships and RMI IX.
At March 31, 2012, the principal balance of the bank loan to Redwood Mortgage Investors VIII, guaranteed by RMC and Gymno LLC was $10,250,000. As of June 5, 2012, the principal balance of the bank loan was $4,750,000.
RMC guaranteed two loans issued by four affiliated limited partnerships with balances totaling approximately $270,000 at March 31, 2012. RMC has guaranteed to cover losses, if any, incurred by the partnerships related to these loans to the extent such losses exceed the then existing reserves, as defined in the agreement, and related collateral value. The two loans are substantially reserved for in the partnership loan loss reserves. RMC owns directly $1,372, net, of one of the loans.
RMC rents its office space under a noncancelable operating lease agreement. In 2008, the lease was amended to provide additional space of approximately 2,300 square feet and the lease was extended until March 31, 2013. The amended lease requires monthly payments of $25,644 with stated annual increases. RMC has two, five year options to renew this lease.
Noncancelable future minimum lease payments under this lease are as follows as of March 31, 2012.
|
2012 (remaining six months)
|
$
|
184,369
|
||
|
2013
|
396,542
|
|||
|
2014
|
100,148
|
|||
|
Thereafter
|
—
|
|||
|
Total
|
$
|
681,059
|
NOTE 11 – SUBSEQUENT EVENTS
RMC has evaluated events through June 5, 2012, the date the balance sheet was available for issuance. There were no reportable events other than the events listed in other notes.
8