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The following is an excerpt from a 10-K SEC Filing, filed by DVL INC /DE/ on 3/31/1998.
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DVL INC /DE/ - 10-K - 19980331 - AUDITORS_OPINION

INDEPENDENT AUDITORS' REPORT

Board of Directors and Shareholders
DVL, Inc.
Bogota, New Jersey

We have audited the accompanying consolidated balance sheets of DVL, Inc. and subsidiaries as of December 31, 1997 and 1996, and the related consolidated statements of operations, shareholders' equity (deficiency), and cash flows for each of the years in the three year period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of DVL, Inc. and subsidiaries as at December 31, 1997 and 1996, and the consolidated results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1997 in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has suffered significant losses from operations in each of the last three years and is continuing to have liquidity problems. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

RICHARD A. EISNER & COMPANY, LLP

New York, New York
March 19, 1998

F-1

                            DVL, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                  (in thousands)

                                                                 December 31,
                                                           ----------------------
                                                              1997        1996
                           ASSETS                          ----------  ----------
                           ------
Loans receivable, including amounts maturing after one
 year - principally pledged
  Affiliates:
     Wrap-around and other mortgages due from affiliated
      partnerships (net of underlying liens of $45,306
      and $49,749, respectively)                           $ 30,815    $ 42,163
     Unearned interest                                       (8,350)    (12,325)
                                                           --------    --------
     Net mortgage loans receivable from affiliated
      partnerships (including $2,711 and $5,104 of
      non-performing loans, respectively)                    22,465      29,838


  Others:
     Non-performing loans collateralized by limited
     partnership interests due from limited partners          1,690       3,066
                                                           --------    --------
  Total loans receivable                                     24,155      32,904
  Allowance for loan losses                                  10,142      12,854
                                                           --------    --------
  Net loans receivable                                       14,013      20,050

Cash (including restricted cash of $77 for 1997 and 1996)       496         355
Due from affiliated partnerships (net of an allowance
 for loss of $1,727 for 1997 and 1996)                          142         114
Investments
  Real estate at cost - pledged (net of an allowance for
   loss of $208 for 1997 and 1996)                              289         289
  Real estate lease interests                                 1,621       1,965
  Affiliated limited partnerships (net of an allowance for
   loss of $1,246 and $1,342, respectively)                   1,461       2,221
  Other investments (net of an allowance for loss of $400
   for 1997 and 1996)                                           648         667
Other assets                                                    966         973
                                                           --------    --------
    Total assets                                           $ 19,636    $ 26,634
                                                           ========    ========



See accompanying accountants' report and notes to consolidated financial statements.

F-2

                             DVL, INC. AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                         (in thousands except share data)


                                                                 December 31,
                                                           ----------------------
                                                             1997         1996
                                                           ---------    ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
  Long-term debt - NPM Capital LLC                          $ 5,310     $  7,502
  Long-term debt - Other                                      2,773        6,203
  Notes payable - litigation settlement                       4,060        6,635
  Convertible subordinated debentures                             -          334
  Accrued liability for indebtedness of Kenbee
   Management, Inc. and affiliates                                -          115
  Accounts payable and accrued liabilities                    1,918        1,942
                                                           --------     --------
     Total liabilities                                       14,061       22,731
                                                           --------     --------
Deferred credits                                                296          321
                                                           --------     --------

Commitments and contingencies

Shareholders' equity:
  Preferred stock $10.00 par value, authorized - 100
   shares, issued - 100 shares at December 31, 1997               1            1
  Common stock, $.01 par value authorized - 40,000,000
   shares at 1997 and 1996, issued - 16,232,450 shares
   and 15,479,450 shares at December 31, 1997 and 1996,
   respectively                                                 162          155
  Additional paid-in capital                                 95,240       95,146
  Deficit                                                   (90,124)     (91,720)
                                                           --------     --------
     Total shareholders' equity                               5,279        3,582
                                                           --------     --------
     Total liabilities and shareholders' equity            $ 19,636     $ 26,634
                                                           ========     ========











See accompanying accountants' report and notes to consolidated financial statements.

F-3
BROKERAGE PARTNERS