12-30-02

   The final quarter of 2002 was the busiest quarter since DenSco started. We closed 25 loans, and 28 new loans were funded. With the economy looking like it's turning the corner and everyone figuring the interest rates are not going to get any lower, people are making the decision to buy a home. In 2003, interest rates will go up. We are at 45-year lows. Even if rates go up 2%, they will still be at 30-year lows. As the economy gets going again, demand for housing will remain strong.

   We had 500k of new investor money added this quarter. We have $2.85 million in the portfolio holding 28 loans, valued at $4.5 million. We ended the quarter with a lot of cash, but we'll get it to work in the first days of the New Year. With all the turn over, we still maintained a 115 day average in the life of a loan. Now that we have completed 81 loans (funded and closed), I doubt that the average life of a loan will change much in the future.

   Going into the New Year, with the activity level as high as it is, we'll have no trouble expanding the loan portfolio. I think the economy will continue to improve. With the primary type of loan going to people that are buying foreclosure homes, there is an ample supply coming up for auction on a regular basis. Even if the economy comes out of recession, there will continue to be a large supply of these properties. As the portfolio grows larger, I will also do a few more short-term construction loans with a select number of builders.

   The New Year always brings a sense of rebirth and new opportunities. I will continue to focus on growing the portfolio. This will create a greater diversity of properties, while retaining the high return that DenSco provides to its investors. I appreciate your trust and support. Nearly all the new investors come from referrals. I hope everyone has a great New Year, and I'll do my part to make it a prosperous one.

   Denny J. Chittick