6.0. EDSR 06-10-2002 - Laserfiche WebLink

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Sources of Revenue The primary sources of revenue of MCCF are loan closing fees payable by borrowers upon closing of loans made from the Loan Fund and interest upon the Loan Fund which is estimated at 1.25%per annum. Loan closing fees are initially intended to be 1.75%of the principal amount of the loan. In addition to the loan closing fee,MCCF will be entitled to receive from the borrower direct out of pocket expenses with respect to the loan transaction, including legal fees incurred by MCCF. Working Capital MCCF will not receive any funds upon the Closing of this Participation. All Member Funds payable pursuant to this Participation shall be paid to the Loan Fund Escrow Account for purposes of funding the Loan Fund. There are no commissions or other expenses applicable to this Participation. All expenses relating to MCCF prior to the Initial Closing date will have either been paid for by the Northland Institute or from grants awarded to the Northland Institute for such purpose. The payment of the expenses of MCCF by the Northland Institute is not reimbursable by MCCF to the Northland Institute. See"Capitalization". Projections and Assumptions The following should be read in conjunction with the Proforma Income Statements and MCCF Proforma Assumptions("Projections and Assumptions")contained in Exhibit A of this Prospectus. The discussion contained in this section reflects management's plans, estimates and beliefs. Actual results could differ materially from those discussed in the Projections and Assumptions. Factors that could cause or contribute to these difficulties include, but are not limited to,those discussed below and elsewhere in this Prospectus,particularly in"Risk Factors". The Projections and Assumptions reflect losses from operations of$83,550 during the period of July 2002 through June 2003 and an operating loss of$51,560 for the 12 month period of July 2003 through June 2004. During the period of July 2004 through June 2005 the Projections and Assumptions reflect a profit from operations of$6,113. • The operating profit or loss of MCCF is dependent largely upon the number of loan closings and size of loans made during any reporting period. The Projections and Assumptions are based upon assumptions concerning the number of loan closings as shown during each of the periods and receipt of a loan closing fee of 1.75% of the principal amount of each Development Loan closed. The other primary source of revenue of MCCF as shown in the Projections and Assumptions is interest upon the Loan Fund,which is estimated at 1.25%per annum. The Projections and Assumptions reflect extraordinary costs with respect to professional services during July and August of 2002, which reflect one-time additional service fees payable to the Northland Institute for start-up services following the Initial Closing(which is intended to occur on July 1,2002). Thereafter,professional services are based upon a contracted fee with Northland Institute of$4,000 per month for management services and$1,400 per loan closing. See"Summary of Management Agreement". The projected losses from operations during the first three fiscal years, as shown in the Projections and Assumptions,will be funded by grant proceeds in the amount of$200,000. In the event this working capital and the revenues from operations are insufficient to provide necessary working capital, MCCF will either raise additional working capital or will be required to reduce or terminate its operations. The Projections and Assumptions assume the Initial Closing will occur on July 1, 2002. In the event of a delay in the Initial Closing, the Projections and Assumptions should be viewed as commencing as of the date of the actual Initial Closing. Loan Activity Dependent on Member Origination MCCF will rely upon its Members to originate Development Loans in order to achieve the loan activity level necessary for MCCF to be profitable. It is anticipated that the number of loans made by MCCF will continue to increase during the three year period following the Initial Closing. • 10