REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)





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                                    CONTENTS





                                                                          Page

INDEPENDENT AUDITOR'S REPORT                                               1-2
FINANCIAL STATEMENTS:
      Balance Sheets                                                       3-4
      Statements of Operations and Changes in Partners' Equity             5
      Statements of Changes in Partners' Equity                            6
      Statements of Cash Flows                                             7-8
      Notes to Financial Statements                                        9-14
SUPPLEMENTARY INFORMATION:
      Supplemental Schedule of Expenses                                    15
      Supplemental Data Required by CHFA                                   16-18
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROLS                          19-20
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE
      WITH LAWS AND REGULATIONS                                            21
CERTIFICATION OF GENERAL PARTNER                                           22






<PAGE>






Partners
Regency Court Partners
Costa Mesa, California



                          INDEPENDENT AUDITOR'S REPORT


     I have audited the accompanying  balance sheet of Regency Court Partners, a
California  Limited  Partnership  (CHFA Project No. 92-002-S) as of December 31,
2001 and 2002, and the related statements of operations and changes in partners'
equity, and cash flows for the years then ended. These financial  statements are
the  responsibility  of the  partnership's  management.  My responsibility is to
express an opinion on these financial statements based on my audits.

     I conducted  my audits in  accordance  with  auditing  standards  generally
accepted  in the United  States,  Government  Auditing  Standards  issued by the
Comptroller  General of the United  States,  and the standards for financial and
compliance  audits  contained  in  California  Housing  Finance  Agency  Audited
Financial  Statements  Handbook (revised December 1991). Those standards require
that I plan and perform the audits 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.  I believe  that my
audits provide a reasonable basis for my opinion.

     In my opinion,  the financial  statements referred to above present fairly,
in all material respects,  the financial  position of Regency Court Partners,  a
California  Limited  Partnership  (RHCP Project No. 92-002-S) as of December 31,
2001 and 2002,  and the  results  of its  operations  and its cash flows for the
years then ended in conformity with accounting  principles generally accepted in
the United States.

     My audit was  conducted  for the  purpose  of  forming  an  opinion  on the
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  shown on pages 15 to 18 is presented  for the purpose of additional
analysis and is not a required part of the basic financial statements of Regency
Court Partners (RHCP Project No. 92-002-S).  Such information has been subjected
to  the  auditing  procedures  applied  in the  audit  of  the  basic  financial
statements  and, in my opinion,  is fairly  stated in all  material  respects in
relation to the financial statements taken as a whole.




<PAGE>


Regency Court Partners
CHFA Project No. 92-002-S
Independent Auditor's Report, December 31, 2002
Page 2
--------------------------------------------------------------------------------



     In accordance  with  Government  Auditing  Standards,  I have also issued a
report dated January 14, 2003 on my  consideration  of Regency  Court  Partners'
internal control structure and a report dated January 14, 2003 on its compliance
with laws and regulations.

     The accompanying  financial statements have been prepared assuming that the
Partnership  will  continue as a going  concern.  As  discussed in Note 2 to the
financial  statements,  the  Partnership  has suffered  recurring  losses and an
ongoing  need for capital  infusion to meet normal  financial  obligations  that
raise  substantial  doubt  about its  ability to  continue  as a going  concern.
Management's  plans in regard to these matters are also described in Note 2. The
accompanying  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.




                                           /s/ Jack Gilk
January 14, 2003                             33-0724657




               See the accompanying notes to financial statements.

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<TABLE>
<CAPTION>

                             REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)
------------------------------------------------------------------------------------------------------------
                   BALANCE SHEETS, DECEMBER 31, 2001 AND 2002
------------------------------------------------------------------------------------------------------------



                                   A S S E T S



                                                                           2002                    2001
                                                                       -------------           -------------
<S>                                                                    <C>                     <C>
Current Assets:
     Operating cash and equivalents                                    $      27,629           $       4,235
     Tenant security deposit cash                                             24,703                  25,643
     Tenant accounts receivable                                                   70                     111
     Prepaid expenses                                                         14,211                  10,415
     Tax impound funds                                                        56,381                  72,381
     Hazard insurance impound funds                                           15,438                   9,768
     Earthquake insurance impound funds                                       15,646                   9,308
                                                                       -------------           -------------
              Total current assets                                           154,078                 131,861
                                                                       -------------           -------------

Property, Building and Equipment, At Cost:
     Building and improvements                                             7,703,983               7,703,983
     Equipment                                                                 3,572                   3,572
                                                                       -------------           -------------
                                                                           7,707,555               7,707,555
     Accumulated depreciation                                             (1,396,376)             (1,200,085)
                                                                         -----------           -------------
              Property, building, and equipment - net                      6,311,179               6,507,470
                                                                       -------------           -------------

Other Assets:
     Replacement reserve                                                     112,546                 105,628
     Rent up reserve                                                          52,471                  51,191
     Unamortized deferred costs                                               19,811                  26,415
                                                                       -------------           -------------
              Total other assets                                             184,828                 183,234
                                                                       -------------           -------------

                                                                          $6,650,085              $6,822,565
                                                                          ==========              ==========

               See the accompanying notes to financial statements.
------------------------------------------------------------------------------------------------------------
</TABLE>

                                       3
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Regency Court Partners
CHFA Project No. 92-002-S
Balance Sheets, December 31, 2001 and 2002
Page 2
<TABLE>
<CAPTION>

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                        LIABILITIES AND PARTNERS' EQUITY


                                                                           2002                    2001
                                                                       -------------           -------------
<S>                                                                    <C>                     <C>
Current Liabilities:
     Current portion of mortgage payable                               $      77,002           $      71,918
     Accounts payable                                                          5,745                   7,712
     Tenant security trust liability                                          24,457                  24,237
     Accrued interest                                                         23,531                  23,941
     Accrued property tax                                                     48,447                       -
     Accrued other                                                                 -                   2,525
     Unearned rental income                                                       81                     242
                                                                       -------------           -------------
              Total current liabilities                                      179,263                 130,575
                                                                       -------------           -------------

Long-term Debt:
     Accrued property tax                                                    227,748                 346,612
     Accrued interest                                                        219,828                 192,828
     Accrued expenses                                                        189,370                 167,000
     Mortgage payable, less current portion                                4,045,177               4,122,179
     Other note payable                                                      894,900                 894,900
                                                                       -------------           -------------
              Total long-term debt                                         5,577,023               5,723,519
                                                                       -------------           -------------

Partners' equity                                                             893,799                 968,471
                                                                       -------------           -------------

                                                                          $6,650,085              $6,822,565
                                                                       =============           =============


               See the accompanying notes to financial statements.
------------------------------------------------------------------------------------------------------------
</TABLE>

                                        4

<PAGE>

<TABLE>
<CAPTION>


                             REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)
------------------------------------------------------------------------------------------------------------
                      STATEMENTS OF OPERATIONS AND CHANGES
       IN PARTNERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2002
------------------------------------------------------------------------------------------------------------




                                                                           2002                    2001
                                                                       -------------           -------------
<S>                                                                     <C>                    <C>
Revenue:
     Tenant rents                                                       $    578,821           $     568,837
     Rental assistance                                                       117,227                  92,711
                                                                        ------------           -------------
     Gross potential rents                                                   696,048                 661,548
     Excess rents                                                              2,273                   5,026
     Less vacancies                                                          (12,422)                 (9,388)
                                                                        ------------           -------------
     Net rental income                                                       685,899                 657,186
     Laundry and vending income                                                7,500                   7,000
     Tenant charges income                                                       580                     270
     Interest income                                                           5,241                  11,847
                                                                        ------------           -------------
              Total revenues                                                 699,220                 676,303
                                                                        ------------           -------------

Expenses:
     Payroll and related costs                                                89,113                  83,566
     Administrative                                                           82,529                  70,223
     Utilities                                                                61,682                  65,938
     Operating and maintenance                                                63,256                  74,435
     Insurance and taxes                                                      48,366                  24,765
     Interest                                                                311,656                 316,430
     Depreciation and amortization                                           202,895                 202,895
                                                                       -------------           -------------
              Total expenses                                                 859,497                 838,252
                                                                       -------------           -------------

Net loss before extraordinary item                                          (160,277)               (161,949)

Extraordinary item - reduction of
     prior years property tax accrual                                         85,605                       -
                                                                       -------------           -------------

Net Loss                                                                     (74,672)               (161,949)

Partners' equity - beginning                                                 968,471               1,130,420
                                                                       -------------           -------------

Partners' equity - ending                                              $     893,799           $     968,471
                                                                       =============           =============

               See the accompanying notes to financial statements.
------------------------------------------------------------------------------------------------------------
</TABLE>

                                       5

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<TABLE>
<CAPTION>

                             REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)
------------------------------------------------------------------------------------------------------------
                    STATEMENTS OF CHANGES IN PARTNERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2002
------------------------------------------------------------------------------------------------------------



                                           Old                New
                                         General            General            Limited
                                         Partner            Partner            Partner             Total
                                      -------------     --------------     -------------      --------------

<S>                                   <C>               <C>               <C>                 <C>
Balance - December 31, 2000           $     729,544     $       (6,439)   $      407,315      $     1,130,420

Net Loss - 2001                                   -             (1,619)         (160,330)            (161,949)
                                      -------------     --------------    --------------      ---------------

Balance - December 31, 2001                 729,544             (8,058)          246,985              968,471

Net Loss - 2002                                   -               (747)          (73,925)             (74,672)
                                      -------------     --------------    --------------      ---------------

Balance - December 31, 2002           $     729,544     $       (8,805)   $      173,060      $       893,799
                                      =============     ==============    ==============      ===============

Profit and loss percentage
       at December 31, 2002                 0%                 1%                99%               100%
                                      =============     ===============   ==============      ===============
               See the accompanying notes to financial statements.
-------------------------------------------------------------------------------------------------------------
</TABLE>
                                      6


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<TABLE>
<CAPTION>

                             REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)
-------------------------------------------------------------------------------------------------------------
                            STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2002
-------------------------------------------------------------------------------------------------------------




                                                                            2002                    2001
                                                                        ------------             -----------
<S>                                                                   <C>                       <C>
Cash flows from operating activities:
     Tenant rental receipts                                           $     553,048             $   547,471
     Rental assistance                                                      117,227                  92,711
     Interest receipts                                                          343                     684
     Other receipts                                                           8,080                   7,270
     Payments to suppliers and employees:
         Administrative expenses                                            (30,030)                (21,772)
         Management fees                                                    (33,586)                (52,185)
         Utilities                                                          (61,682)                (65,938)
         Salaries and wages                                                 (53,809)                (53,344)
         Operating and maintenance                                          (71,149)                (68,068)
         Payroll taxes                                                       (5,633)                 (5,304)
         Property insurance                                                 (29,838)                (21,425)
         Miscellaneous taxes and insurance                                  (14,445)                (14,212)
         Interest on mortgage                                              (285,066)               (289,814)
         Tenant security deposits                                             1,160                    (771)
                                                                       -------------             -----------
     Net cash provided by operating activities                               94,620                  55,303
                                                                       -------------             -----------

Cash flows from investing activities:
     Deposits to reserve, including interest                                (34,885)                (37,612)
     Withdrawals from reserve                                                27,967                  28,436
     Reserve interest                                                         4,898                  11,163
     Funding of tax and insurance impound - net                               2,712                   1,005
                                                                       ------------              -----------
         Net cash used in investing activities                                  692                   2,992
                                                                       -------------             -----------

Cash flow used in financing activities -
     Mortgage principal payments                                            (71,918)                (67,171)
                                                                       -------------             -----------

Net increase (decrease) in cash                                              23,394                  (8,876)
Cash at beginning of year                                                     4,235                  13,111
                                                                       -------------             -----------

Cash at end of year                                                   $      27,629             $     4,235
                                                                       =============             ===========

               See the accompanying notes to financial statements.
------------------------------------------------------------------------------------------------------------
</TABLE>

                                       7
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<TABLE>
<CAPTION>

Regency Court Partners
CHFA Project No. 92-002-S
Statements of Cash Flows, December 31, 2001 and 2002
Page 2
------------------------------------------------------------------------------------------------------------



                           Reconciliation of Net Loss
                  to Net Cash Provided by Operating Activities



                                                                            2002                   2001
                                                                       -------------           -------------

<S>                                                                     <C>                      <C>
Net Loss                                                                $    (74,672)            $  (161,949)
Adjustments to reconcile net loss to net cash
     Provided by operating activities:
     Depreciation and amortization                                           202,895                 202,894
     Decrease (increase) in:
         Security deposit cash                                                   940                  (1,411)
         Receivables                                                              41                   1,251
         Prepaids                                                             (3,796)                 (1,227)
     Increase (decrease) in:
         Payables                                                             (7,892)                  1,004
         Security deposit liability                                              220                     640
         Accrued interest                                                     26,590                  26,616
         Other accruals                                                       40,958                   2,525
         Unearned income                                                        (161)                 (3,877)
     Reserve and impound interest earned                                      (4,898)                (11,163)
     Extraordinary items                                                     (85,605)                      -
                                                                        ------------             -----------

Net cash provided by operating activities                               $     94,620             $    55,303
                                                                        ============             ===========
               See the accompanying notes to financial statements.
------------------------------------------------------------------------------------------------------------
</TABLE>

                                      8
<PAGE>




--------------------------------------------------------------------------------

                             REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)
--------------------------------------------------------------------------------
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2002
--------------------------------------------------------------------------------



     1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Organization:  Regency Court Partners is a California  limited  partnership
     formed in 1992 to acquire an interest in real property located in Monrovia,
     California and to construct and operate thereon an apartment complex of 115
     units for low-income  senior citizens.  Mortgage  financing was provided by
     the California  Housing Finance Agency (CHFA).  Such projects are regulated
     under  the  terms of a  Regulatory  Agreement  with  CHFA,  including  rent
     charges, operating methods and other matters.

     Capitalization   and   Depreciation:   Assets  are  recorded  at  cost  and
     depreciated  for  financial  accounting  purposes  using the  straight-line
     method over their estimated  useful lives.  The principal  estimated useful
     lives  used in  computing  the  depreciation  provisions  are 40 years  for
     building and 10 years for  equipment The policy of the project is to charge
     amounts  expended  for  maintenance,  repairs,  and minor  replacements  to
     expense,  and  to  capitalize   expenditures  for  major  replacements  and
     betterments.

     Deferred Costs: Deferred costs, comprised substantially of tax credit fees,
     are amortized over their estimated useful life of ten years.

     Cash and Cash  Equivalents:  For  purposes of  reporting  cash flows,  cash
     includes unrestricted cash in bank, cash on hand, savings accounts, and all
     certificates of deposit with original maturities of three months or less.

     The Partnership maintains its cash in bank deposit accounts, which at times
     may exceed  federally  insured limits.  The Partnership has not experienced
     any losses in such accounts.  The Partnership believes it is not exposed to
     any significant credit risk on cash and cash equivalents.

     Estimates:  The  preparation  of financial  statements in  conformity  with
     generally  accepted  accounting  principles  requires  management  to  make
     estimates and assumptions  that affect:  (1) the reported amounts of assets
     and  liabilities  and  disclosure  of  contingencies  at  the  date  of the
     financial statements, and (2) the reported amounts of revenues and expenses
     during  the  reporting  period.  Actual  results  could  differ  from those
     estimates.

--------------------------------------------------------------------------------
                                       9

<PAGE>


Regency Court Partners
CHFA Project No. 92-002-S
Notes to Financial Statements, December 31, 2002
Page 2

--------------------------------------------------------------------------------


     Rental Income and Unearned Rents: The Partnership  rents apartment units on
     a month to  month  basis  and  recognizes  revenues  when  earned.  Advance
     receipts of rents are classified as liabilities until earned.

     Income  Taxes:  No provision is made for income taxes since such taxes,  if
     any, are the liability of the individual partners.

2.   GOING CONCERN AND PROPERTY TAX LIABILITY

     The  accompanying  financial  statements  have been  prepared  assuming the
     Partnership  will  continue  as a  going  concern  which  contemplates  the
     realization  of assets and the  satisfaction  of  liabilities in the normal
     course of business.  A number of factors  including  recurring losses and a
     working capital  deficiency raise substantial doubt about the Partnership's
     ability to continue as a going concern.

     The  Partnership  has  applied  for  property  tax  exemption,   under  the
     California welfare organization exemption,  for 1999 and 1998 property tax.
     The  Partnership  has also  requested  that  property  taxes from June 1995
     through  December 1997, be abated.  The  Partnership  believes that it will
     receive the abatement for 1999, 1998 and future taxes due to the non-profit
     status of its general partner.  In addition,  the Partnership is optimistic
     about  receiving  an abatement  for the property  taxes for the period June
     1995 through  December 1997, as it had a non-profit  general partner during
     that time period.  Communications  with governmental  authorities  indicate
     application processing is three to five years behind. However,  authorities
     state that tax exemption will likely be granted.

     These financial  statements reflect a long-term liability of $227,748 as of
     December 31, 2002 for unpaid property  taxes.  The liability is expected to
     be reduced when future tax exemptions are received. However, cash generated
     from the  Partnership's  operations has not been  sufficient  enough to pay
     such tax liability.

     If an abatement  for prior years' taxes is not  obtained,  the  Partnership
     will seek to  negotiate a 5 year  payment  plan  during  which to pay those
     taxes. If the Partnership is unsuccessful,  it may request additional funds
     from the limited partner to satisfy this obligation.  However,  the limited
     partner is under no obligation to contribute  any additional  amounts.  The
     Partnership  believes the abatement of property  taxes,  if obtained,  will
     enable the Partnership to fund its on-going operations.

                                       10
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<PAGE>


Regency Court Partners
CHFA Project No. 92-002-S
Notes to Financial Statements, December 31, 2002
Page 3

--------------------------------------------------------------------------------


     The  Partnership's  continued  existence is  dependent  upon its ability to
     resolve its liquidity  problems,  principally  by obtaining an abatement of
     real property  taxes and/or  obtaining  additional  equity  capital.  While
     pursuing  the  tax  abatement  and/or   additional   equity  funding,   the
     Partnership  must  continue  to  operate  on  limited  cash flow  generated
     internally.

     The  financial  statements do not include any  adjustments  relating to the
     recoverability  and  classification  of liabilities that might be necessary
     should  the  Partnership  be unable to  continue  as a going  concern.  The
     Partnership's continuation as a going concern is dependent upon its ability
     to general  sufficient cash flow to meet its obligations on a timely basis,
     to comply with the terms of its financing  agreement,  to obtain additional
     financing or  refinancing  as may be  required,  and  ultimately  to attain
     profitability.

3.   EXTRAORDINARY ITEMS

     During 2002, the partnership  received  adjusted property tax bills for the
     periods  1998-1999  through  2001-2002.  The  portion of the tax bill which
     relates  to voted  indebtedness  and  which  will not be  abated is due and
     payable,  and  accordingly  has been set up as a  current  liability.  That
     portion  related to the  general  tax levy on  property  is  expected to be
     exempted under the California welfare organization exemption,  and has been
     classified as a long-term  debt until receipt of the  exemption.  The books
     have been adjusted $85,605 to reflect the new tax bills.  This reduction to
     the accrued tax liability has been treated as an extraordinary item.

4.   RESTRICTED FUNDS

     As required by the  Regulatory  Agreement  with CHFA,  the  Partnership  is
     required to make  monthly  impound  deposits to cover  insurance  premiums,
     property  taxes and to  maintain  an  operating  reserve  and a reserve for
     replacements.  These  restricted  funds are held by, and  expenditures  are
     subject to,  supervision  and approval by CHFA.  The  operating  reserve is
     funded by a letter of credit.

                                       11
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<PAGE>

<TABLE>
<CAPTION>

Regency Court Partners
CHFA Project No. 92-002-S
Notes to Financial Statements, December 31, 2002
Page 4
------------------------------------------------------------------------------------------------------------


5.   MORTGAGE PAYABLE
<S>                                                                                             <C>
     California  Housing  Finance Agency 6.85% real estate  mortgage  payable in
     monthly installments of $29,749,  including interest.  Final payment is due
     in the year 2025. The mortgage may not be paid in advance without  approval
     of CHFA,  nor may the  building be sold,  demolished  or  alterations  made
     without CHFA's prior approval.                                                             $4,122,179

     Less current portion                                                                          (77,002)
                                                                                                -----------

                                                                                                $4,045,177
                                                                                                ===========
     Principal amounts maturing for the next five years are:

         2003                   $77,002
         2004                    82,446
         2005                    88,274
         2006                    94,514
         2007                   101,196

6.   OTHER NOTE PAYABLE

     Community   Development   Commission,   County  of  Los  Angeles  (CDC)  3%
     construction   loan  secured  by  second   trust  deed  on  buildings   and
     improvements.  Payments made to the extent there are residual receipts.  In
     the event that  residual  rental  receipts are  available in any year,  70%
     thereof  shall  be paid to the  holder  of the  construction  loan  and the
     remaining  30% balance will be paid to the CDC as rent on the ground lease.
     Upon payment of $750,000 of the outstanding  balance,  3.4% of the residual
     rental  receipts  shall be paid to the CDC as repayment  of  principal  and
     interest.  All  unpaid  amounts  will be due and  payable in the year 2025.
     Accrued interest is $219,828 at December 31, 2002.                                         $ 894,900
</TABLE>

                                       12
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<PAGE>


Regency Court Partners
CHFA Project No. 92-002-S
Notes to Financial Statements, December 31, 2002
Page 5
--------------------------------------------------------------------------------


7.   RELATED PARTY TRANSACTIONS

     The Regulatory  Agreement with CHFA limits the maximum annual distributions
     to  partners.  Such  distributions  are payable  only from surplus cash (as
     defined),  but accumulate and may be distributed to the extent surplus cash
     is  generated  from future  operations.  No surplus  cash was  available at
     December 31, 2002 and 2001.

     Capital Contributions: The limited partner, WNC Housing Tax Credit Fund IV,
     L.P.  Series  I, a 99%  limited  partner,  is  required  to make a  capital
     contribution  of  $1,691,585,  in  amounts  and at times as  stated  in the
     Limited Partnership Agreement. The limited partner's cash contributions may
     be reduced to account for reduced tax benefits,  if any. As of December 31,
     2002, the limited partner has contributed $1,641,782.

     Profit or Loss Allocations: All items included in the calculation of income
     or loss not arising from a sale or refinancing,  and all tax credits, shall
     be allocated 99% to the limited partner and 1% to the general partner.

     Cash  Distributions:   Residual  rental  receipts,  as  defined,  shall  be
     distributed as follows:

     (i) 70% to the CDC until $750,000 of the construction loan has been repaid;
         3.4% thereafter;

     (ii) 30% to the CDC as payment under the ground lease;

     (iii) The remaining  residual  rental  receipts shall be distributed to the
           Partners in proportion to their partnership interests.

     Distribution of sale or refinancing proceeds, as defined,  shall be made in
     accordance with the Limited Partnership Agreement.

     A monthly asset management fee is payable to the general  partner.  Fees of
     $22,370 and $22,383 were incurred for the years 2002 and 2001 respectively.

     An affiliate  of the former  general  partner  provided  previous  property
     management  services  to the  Partnership.  Included in  long-term  accrued
     expenses  at  December  31,  2002  and  December  31,  2001 is  $88,000  of
     management fees payable to such entity.

                                       13
--------------------------------------------------------------------------------
<PAGE>

Regency Court Partners
CHFA Project No. 92-002-S
Notes to Financial Statements, December 31, 2002
Page 6
--------------------------------------------------------------------------------


     An affiliate of the limited partner provides property  management  services
     to the Partnership.  Property  management fees were $33,926 and $32,657 for
     the years 2002 and 2001, respectively.

8.   COMMITMENTS AND CONTINGENCIES

     Purchase Option: On January 4, 1994, the Partnership executed a Disposition
     and  Development  Agreement with the CDC. The  Disposition  and Development
     Agreement grants the Partnership the option to purchase the Rental Property
     under  construction  commencing  on the  first  day of the 15th year of the
     ground  lease and  ending  on the last day of the 20th  year of the  ground
     lease.  The purchase  price will be the future value of the CDC's  original
     interest in the Rental Property under  construction based on an 8% annually
     compounded  return,  less any payments made by the  Partnership  related to
     interest.

     Ground Lease: On January 4, 1994, the  Partnership  executed a Ground Lease
     Agreement with the CDC.  Future minimum rental payments on the ground lease
     are based on 30% of residual rental receipts,  as defined, and will be paid
     annually  through  2049.  No  payments  were made  during  the years  ended
     December 31, 2002 and 2001.

9.   CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

     The  Partnership's  sole  asset  is  a  115-unit  apartment  complex.   The
     Partnership's  operations are  concentrated in the multifamily  real estate
     market  In  addition,  the  Partnership  operates  in a  heavily  regulated
     environment.   The   operations   of  the   project   are  subject  to  the
     administrative  directives,  rules and  regulations  of federal,  state and
     local  regulatory  agencies,  including,  but not  limited  to  CHFA.  Such
     administrative  directives,  rules and regulations are subject to change by
     an act of congress,  the State of  California or an  administrative  change
     mandated by CHFA.  Such changes may occur with little  notice or inadequate
     funding to pay for related costs,  including the additional  administrative
     burden, to comply with a change.

--------------------------------------------------------------------------------
                                       14
<PAGE>
















                            SUPPLEMENTARY INFORMATION







<PAGE>
<TABLE>
<CAPTION>


                             REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)
------------------------------------------------------------------------------------------------------------
                        SUPPLEMENTAL SCHEDULE OF EXPENSES
                  FOR THE YEAR ENDED DECEMBER 31, 2001 and 2002
------------------------------------------------------------------------------------------------------------

                                                                         2002                      2001
                                                                     -------------             -------------
<S>                                                                   <C>                      <C>
On-site manager salary                                                $     23,646             $      22,100
Office salaries                                                             10,238                    10,081
Maintenance salaries                                                        22,986                    21,163
Payroll taxes and workers' compensation                                     11,779                    11,810
Employee benefits                                                            4,960                     4,364
Employee rent-free apartment                                                15,504                    14,048
                                                                     -------------             -------------
       Subtotal payroll and related expenses                                89,113                    83,566
                                                                     -------------             -------------

Advertising                                                                    302                       192
Renting expenses                                                               229                     1,005
Office expenses                                                              2,931                     2,372
Management fee                                                              56,295                    55,040
Legal                                                                            -                       100
Audit fee                                                                    5,300                     5,500
Telephone                                                                    3,753                     3,994
Educational and social programs                                             11,520                         -
Miscellaneous administrative                                                 2,199                     2,020
                                                                     -------------             -------------
       Subtotal administrative expenses                                     82,529                    70,223
                                                                     -------------             -------------

Electricity                                                                 19,723                    17,799
Water and Sewer                                                             25,565                    25,379
Gas utilities                                                               16,394                    22,760
                                                                     -------------             -------------
       Subtotal utilities expenses                                          61,682                    65,938
                                                                     -------------             -------------

Maintenance supplies                                                        32,380                    34,170
Grounds supplies                                                                62                       129
Contract maintenance and repairs                                             4,458                     6,008
Grounds contract                                                             9,751                    10,856
Exterminating                                                                1,540                     1,880
Trash removal                                                                5,158                     6,670
Heating repair                                                               1,789                     3,254
Decorating and painting                                                      4,570                     6,942
Miscellaneous operating and maintenance                                      3,548                     4,526
                                                                     -------------             -------------
       Subtotal operating and maintenance expenses                          63,256                    74,435
                                                                     -------------             -------------

Property and comprehensive insurance                                        19,734                    15,321
Earthquake insurance                                                        10,105                     6,104
Property taxes                                                              15,187                         -
Miscellaneous taxes and licenses                                             3,340                     3,340
                                                                     -------------             -------------
       Subtotal insurance and taxes                                         48,366                    24,765
                                                                     -------------             -------------

Interest                                                                   311,656                   316,430
                                                                     -------------             -------------

Depreciation and amortization                                              202,895                   202,895
                                                                     -------------             -------------

    Total operating and maintenance expenses                         $     859,497             $     838,252
                                                                     =============             =============


------------------------------------------------------------------------------------------------------------
</TABLE>

                                      15

<PAGE>
<TABLE>
<CAPTION>
                             REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)
------------------------------------------------------------------------------------------------------------
                       SUPPLEMENTAL DATA REQUIRED BY CHFA
                      FOR THE YEAR ENDED DECEMBER 31, 2002
------------------------------------------------------------------------------------------------------------

CASH ON HAND AND IN BANKS

<S>                                                                    <C>
     Unrestricted accounts:
         Cash on hand                                                  $     300
         Checking account                                                  6,139
         Operating deposit                                                 1,385
         Operating savings                                                19,805
                                                                       ---------
     Balance, December 31, 2002                                        $  27,629
                                                                       =========
     Restricted accounts:
         Tenant security deposits - checking                           $   3,027
         Tenant security deposits - savings                               21,676
                                                                       ---------
       Balance, December 31, 2002                                      $  24,703
                                                                       =========
</TABLE>

     Tenant security deposits are held in a separate  federally insured interest
     bearing bank account in the name of Regency Court Partners. Interest earned
     is retained for project  operations.  The balance of the  Security  Deposit
     account is more than the liability for security deposits.

ACCOUNTS RECEIVABLE

     Accounts  receivable at December 31, 2002 consists of $70 due from tenants,
     none of which is past due.

MORTGAGE IMPOUND ACCOUNTS
<TABLE>
<CAPTION>
                                                                               Property       Earthquake
                                                               Taxes           Insurance       Insurance

<S>                                                         <C>              <C>              <C>
     Balance, December 2001                                 $   72,381       $    9,768       $    9,308

     Transfer to insurance                                     (16,000)          11,800            4,200

     Insurance deposits (10 x 1,385)                                 -           13,850                -
     Insurance deposits (2 x 2,160)                                  -            4,320                -

     Insurance deposits (7 x 560)                                    -                -            3,920
     Insurance deposits (5 x 980)                                    -                -            4,900

     Transfer to earthquake insurance                                -           (3,500)           3,500
     Premium payment                                                 -          (22,534)         (10,182)

     Interest earned                                                 -            1,734                -
                                                            -----------      -----------      -----------
     Balance, December 31, 2002                             $   56,381       $   15,438       $   15,646
                                                            ===========      ===========      ===========
---------------------------------------------------------------------------------------------------------
</TABLE>

                                       16
<PAGE>

<TABLE>
<CAPTION>

Regency Court Partners
CHFA Project No. 92-002-S
Supplemental Data Required by CHFA, December 31, 2002
Page 2
----------------------------------------------------------------------------------------------------------


RESERVE FOR REPLACEMENTS

In   accordance with the provisions of the Regulatory Agreement, restricted cash
     and  investments  are held by the California  Housing  Finance Agency to be
     used for replacements of property with the approval of CHFA as follows:

<S>                                                                         <C>
     Balance December 31, 2001                                              $   105,628
         Monthly deposits                                                        33,000
         Interest earned to December 31, 2002                                     1,886
         Withdrawals                                                            (27,968)
                                                                            -----------
     Balance confirmed by mortgagee - December 31, 2002                     $   112,546
                                                                            ===========
</TABLE>

BUILDINGS AND IMPROVEMENTS
<TABLE>
<CAPTION>
                                                        Buildings and
                                                        Improvements         Equipment           Total

<S>                                                    <C>                 <C>              <C>
     Balance, January 1                                $     7,703,983     $      3,572     $    7,707,555

     Additions                                                       -                -                  -
                                                       ---------------     ------------     --------------

     Balance, December 31                                    7,703,983            3,572          7,707,555

     Less accumulated depreciation                          (1,392,804)          (3,572)        (1,396,376)
                                                       ---------------     ------------     --------------

     Net                                               $     6,311,179     $          -     $    6,311,179
                                                       ===============     ============     ==============

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts  payable are payable to suppliers  and are being paid on a current
     basis.  Non-current accrued expenses at December 31, 2002 and 2001 includes
     amounts payable to Alken  Management  Company ($88,000 for prior management
     services)  and the Los  Angeles  County  Sanitation  ($79,000  for  initial
     hook-up  fees).  As of December  31, 2002 there has been no  resolution  to
     these accrued expenses.

GROSS POTENTIAL RENTS

     Gross potential rent includes:
         Tenant rental payments                                             $   553,168
         Housing assistance payments                                            117,227
         Manager's rent-free apartment                                           15,504
         Vacancy loss                                                            12,422
         Excess assistance payments                                             ( 2,273)
                                                                            -----------
              Total gross potential rent                                    $   696,048
                                                                            ===========
--------------------------------------------------------------------------------------------------
</TABLE>
                                       17
<PAGE>

<TABLE>
<CAPTION>

Regency Court Partners
CHFA Project No. 92-002-S
Supplemental Data Required by CHFA, December 31, 2002
Page 3
--------------------------------------------------------------------------------------------------


MANAGEMENT FEE

    The management fee has been calculated at 5% of collected rental income. In
    addition is a general partner asset management fee of $22,370.

SURPLUS CASH COMPUTATION

<S>                                                                        <C>
     Add:
         Cash on hand and in banks                                         $     27,629
         Other receivables                                                           70
         Tenant security deposits                                                24,703
                                                                           ------------
              Total                                                              52,402
                                                                           ------------

     Less current obligations:
         Accounts payable and accrued expenses
              (due within 30 days)                                               29,968
         Tenant security deposits                                                24,457
         Accrued interest                                                        23,531
         Prepaid revenue                                                             81
                                                                           ------------
              Total                                                              78,037
                                                                           ------------

     Surplus cash (deficiency), end of year                                $   ( 25,635)
                                                                           ============

     Current year owner distribution allowed under
         the Regulatory Agreement with CHFA                                $          -
                                                                           ============

     Property taxes, not a part of the general tax levy which were due December
     10, 2002, are included in accounts payable and accrued expenses.

ACCUMULATED LIMITED DISTRIBUTIONS

     There are no allowable accumulated distributions at December 31, 2002.






--------------------------------------------------------------------------------------------------
</TABLE>

                                       18

<PAGE>






Partners
Regency Court Partners
Costa Mesa, California


             INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROLS OVER
        FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS
         PERFOMRED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


     I have  audited the  financial  statements  of Regency  Court  Partners,  a
California  Limited  Partnership  (CHFA Project No.  92-002-S) as of and for the
year ended  December 31, 2002,  and have issued my report  thereon dated January
14, 2003, which contains an explanatory  paragraph  regarding the  Partnership's
ability to continue as a going concern.  I conducted my audit in accordance with
auditing  standards  generally  accepted  in the United  States  and  Government
Auditing  Standards,  issued by the  Comptroller  General of the United  States.
Those standards  require that I plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.

     The  management  of  the  Project  is  responsible  for   establishing  and
maintaining an internal control  structure.  In fulfilling this  responsibility,
estimates  and  judgments  by  management  are  required to assess the  expected
benefits  and  related  costs  of  internal  control   structure   policies  and
procedures.  The  objectives  of an internal  control  structure  are to provide
management  with  reasonable,  but  not  absolute,  assurance  that  assets  are
safeguarded against loss from unauthorized use or disposition, that transactions
are executed in accordance with management  authorization  and recorded properly
to permit the preparation of financial  statements in accordance with accounting
principles  generally accepted in the United States, and that the state-assisted
program is managed in compliance with applicable laws and  regulations.  Because
of  inherent   limitations   in  any   internal   control   structure,   errors,
irregularities,  or instances of noncompliance may nevertheless occur and not be
detected.  Also, projection of any evaluation of the structure to future periods
is subject to the risk that procedures may become inadequate  because of changes
in conditions or that the  effectiveness of the design and operation of policies
and procedures may deteriorate.

     In planning and performing my audit for the year ended December 31, 2002, I
obtained an understanding of the design of relevant  internal control  structure
policies  and  procedures  and  determined  whether  they  had  been  placed  in
operation,  and I  assessed  control  risk in order  to  determine  my  auditing
procedures  for the purpose of  expressing  my opinions on the  Project's  basic
financial statements and on its compliance with specific requirements applicable
to its major state-assisted program and not to provide assurance on the internal
control structure.
--------------------------------------------------------------------------------
                                       19
<PAGE>



Regency Court Partners
CHFA Project No. 92-002-S
Independent Auditor's Report on Internal Controls, December 31, 2002
Page 2
--------------------------------------------------------------------------------


     I performed tests of controls to evaluate the  effectiveness  of the design
and  operation of internal  control  structure  policies and  procedures  that I
considered  relevant to  preventing  or detecting  material  noncompliance  with
specific  requirements  applicable to the Project's  state-assisted  program. My
procedures  were less in scope than would be  necessary  to render an opinion on
internal control structure policy and procedures.  Accordingly, I do not express
such an opinion.

     My consideration  of the internal  control  structure would not necessarily
disclose all matters in the internal  control  structure  that might be material
weaknesses  under standards  established by the American  Institute of Certified
Public Accountants.  A material weakness is a reportable  condition in which the
design or operation of one or more of the internal  control  structure  elements
does not reduce to a relatively low level the risk that errors or irregularities
in amounts that would be material in relation to the financial  statements being
audited or that  noncompliance  with laws and regulations that would be material
to a state-assisted program may occur and not be detected within a timely period
by employees in the normal  course of performing  their  assigned  functions.  I
noted no matters  involving the internal  control  structure and its  operations
that I consider to be material weaknesses as defined above.

     This  report  is  intended  solely  for the  information  of the  partners,
management and their staff, and the California Housing Finance Agency and is not
intended  to be and  should not be used by anyone  other  than  these  specified
parties.






                                              /s/ Jack Gilk
January 14, 2003                              33-0724657

--------------------------------------------------------------------------------
                                       20
<PAGE>









Partners
Regency Court Partners
Costa Mesa, California


              INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH LAWS
            AND REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS
           PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

     I have  audited the  financial  statements  of Regency  Court  Partners,  a
California  Limited  Partnership  (CHFA Project No.  92-002-S) as of and for the
year ended  December 31, 2002,  and have issued my report  thereon dated January
14, 2003 which contains an  explanatory  paragraph  regarding the  Partnership's
ability to continue as a going concern.  I conducted my audit in accordance with
auditing  standards  generally  accepted  in the United  States  and  Government
Auditing  Standards,  issued by the  Comptroller  General of the United  States.
Those standards  require that I plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.

     Compliance with laws,  regulations and contracts  applicable to the project
is  the  responsibility  of the  project's  management.  As  part  of  obtaining
reasonable assurance about whether the financial statements are free of material
misstatement,  I  performed  tests  of the  project's  compliance  with  certain
provisions of laws, regulations and contracts.  However, my objective was not to
provide an opinion on overall compliance with such provisions. Accordingly, I do
not express such an opinion.

     I also considered those compliance  matters  comprehended in the California
Housing  Finance  Agency  "Audited  Financial  Statements   Handbook."  (Revised
December 1991)

     The results of my tests of compliance  indicate  that,  with respect to the
items  tested,  the  project  complied,  in  all  material  respects,  with  the
provisions  referred to in the second and third paragraphs of this report.  With
respect to items not  tested,  nothing  came to my  attention  that caused me to
believe that the project had not complied, in all material respects,  with those
provisions.

     This  report  is  intended  solely  for the  information  of the  partners,
management and their staff, and the California Housing Finance Agency and is not
intended  to be and  should not be used by anyone  other  than  these  specified
parties.





                                                   /s/ Jack Gilk
January 14, 2003                                   33-0724657

--------------------------------------------------------------------------------
                                       21
<PAGE>


                             REGENCY COURT PARTNERS
                            CHFA Project No. 92-002-S
                       (A California Limited Partnership)
--------------------------------------------------------------------------------
               CERTIFICATION OF GENERAL PARTNER, DECEMBER 31, 2002
--------------------------------------------------------------------------------


     We  hereby  certify  that  we  have  examined  the  accompanying  financial
statements and  supplemental  data of Regency Court  Partners,  CHFA Project No.
92-002-S and, to the best of our knowledge and belief,  the same is complete and
accurate.



                                          Officers:

                                          -----------                ------
                                          (signature)                (date)


                                          -----------                ------
                                          (signature)                (date)


                                          TIN: 95-4409236










--------------------------------------------------------------------------------
                                       22