DIXON MILLS ASSOCIATES

                      COMBINED FINANCIAL STATEMENTS FOR THE

                  YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

                        AND INDEPENDENT AUDITORS' REPORT








<PAGE>




                             DIXON MILLS ASSOCIATES

                      Combined Financial Statements for the

                  Years Ended December 31, 2003, 2002 and 2001

                        and Independent Auditors' Report

                                 C O N T E N T S
                                 ---------------

                                                                         Page
                                                                         ----

INDEPENDENT AUDITORS' REPORT                                               1

COMBINED FINANCIAL STATEMENTS:

   Combined balance sheets                                                 2

   Combined statements of operations                                       3

   Combined statements of partners' equity and comprehensive income        4

   Combined statements of cash flows                                       5

   Notes to combined financial statements                                6 - 10





<PAGE>

                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Dixon Venture Corp.
Secaucus, New Jersey

and

Partners
Wilder Richman Historic Properties II, LP
Greenwich, Connecticut

We have  audited  the  accompanying  combined  balance  sheets  of  Dixon  Mills
Associates  as of December  31, 2003 and 2002,  and the  related  statements  of
operations,  partners'  equity and cash flows for the years ended  December  31,
2003, 2002 and 2001. These financial  statements are the  responsibility  of the
Partnerships'  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we 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.   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 financial  position of Dixon Mills Associates as of
December  31,  2003 and 2002,  and the  results  of its  operations,  changes in
partners'  equity and cash flows for the years ended December 31, 2003, 2002 and
2001 in conformity with accounting  principles  generally accepted in the United
States of America.

/s/ Rosenberg, Neuwirth & Kuchner
Certified Public Accountants, P.C.

January 30, 2004
New York, New York


                                       1
<PAGE>

                             DIXON MILLS ASSOCIATES

                             COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                           December 31,
                                                      --------------------------
        ASSETS                                            2003          2002
                                                      -----------   -----------
<S>                                                   <C>           <C>
LAND (Notes 2 and 5)                                  $ 1,150,473   $ 1,150,473

BUILDINGS (net of accumulated depreciation
   of $19,793,840 and $18,240,199 in 2003 and 2002,
    respectively) (Notes 2 and 5)                      35,641,694    36,723,151

CASH AND CASH EQUIVALENTS (Note 2)                      6,788,271     7,176,990

DEFERRED COSTS (Notes 2 and 5)                            787,039       816,739

MORTGAGE ESCROW DEPOSITS (Note 5)                       2,456,607     1,698,200

TENANT SECURITY DEPOSITS                                  711,493       790,510

OTHER ASSETS                                               35,234        16,495
                                                      -----------   -----------

                                                      $47,570,811   $48,372,558
                                                      ===========   ===========

        LIABILITIES AND PARTNERS' EQUITY

LIABILITIES:

   Mortgages payable (Note 5)                         $28,600,000   $28,600,000

   Accounts payable and accrued expenses                  318,182       261,050

   Accrued interest payable (Note 5)                       13,754        13,776

   Tenants' security deposits payable                     711,493       790,510

   Due to general partner and affiliates (Note 4)       1,685,854     1,644,420
                                                      -----------   -----------

                                                       31,329,283    31,309,756

   PARTNER'S EQUITY (Note 3)                           16,241,528    17,062,802
                                                      -----------   -----------

                                                      $47,570,811   $48,372,558
                                                      ===========   ===========
</TABLE>

                   See notes to combined financial statements


                                       2
<PAGE>

                             DIXON MILLS ASSOCIATES

                        COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                          Year ended
                                                          December 31,
                                              ------------------------------------
                                                  2003         2002         2001
                                              ----------   ----------   ----------
<S>                                           <C>          <C>          <C>
Revenues:
   Rent                                       $6,876,152   $7,187,352   $7,423,632
   Interest                                       46,287       52,049       95,850
                                              ----------   ----------   ----------

                                               6,922,439    7,239,401    7,519,482
                                              ----------   ----------   ----------
Expenses:

   Administrative (Note 6)                     1,325,315    1,327,299    1,520,163
   Operating                                   2,985,769    2,676,074    2,581,957
   Management fees (Note 4)                      275,046      297,684      280,389
   Interest (Note 5)                             335,062      423,231      782,202
   Depreciation and amortization               1,583,341    1,548,674    1,524,025
                                              ----------   ----------   ----------
                                               6,504,533    6,272,962    6,688,736
                                              ----------   ----------   ----------

NET INCOME                                    $  417,906   $  966,439   $  830,746
                                              ==========   ==========   ==========

Net income allocated to Wilder Richman

Historic Properties II, L.P.                  $  413,727   $  851,780   $  386,617
                                              ==========   ==========   ==========


Net income allocated to Dixon Venture Corp.   $    4,179   $  114,659   $  444,129
                                              ==========   ==========   ==========
</TABLE>

                   See notes to combined financial statements


                                       3
<PAGE>

                             DIXON MILLS ASSOCIATES

        COMBINED STATEMENTS OF PARTNERS' EQUITY AND COMPREHENSIVE INCOME

                  YEARS ENDED DECEMBER 31, 2003, 2002, and 2001

<TABLE>
<CAPTION>
                                                                           Limited        General
                                                           Total           partner        partner
                                                        ------------    ------------    ------------
<S>                                                     <C>             <C>             <C>
Partners' equity, January 1, 2001                       $ 15,265,617    $  1,236,702    $ 14,028,915
                                                        ------------    ------------    ------------
Net income, year ended December 31, 2001                     830,746         386,617         444,129
Unrealized loss on marketable securities                     (32,498)             --         (32,498)
                                                        ------------    ------------    ------------
Comprehensive income, year ended December 31, 2001           798,248         386,617         411,631
                                                        ------------    ------------    ------------
Partners' equity, December 31, 2001                       16,063,865       1,623,319      14,440,546
Reversal of unrealized loss on marketable securities,
   sold in 2002                                               32,498              --          32,498
Net income, year ended December 31, 2002                     966,439         851,780         114,659
                                                        ------------    ------------    ------------
Partners' equity, December 31, 2002                       17,062,802       2,475,099      14,587,703
Net income, year ended December 31, 2003                     417,906         413,727           4,179
Distributions to partner                                  (1,239,180)     (1,239,180)             --
                                                        ------------    ------------    ------------
Partners' equity, December 31, 2003                     $ 16,241,528    $  1,649,646    $ 14,591,882
                                                        ============    ============    ============
</TABLE>

                   See notes to combined financial statements


                                       4
<PAGE>

                             DIXON MILLS ASSOCIATES

                        COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                        Year Ended December 31,
                                                               -----------------------------------------
                                                                   2003           2002           2001
                                                               -----------    -----------    -----------
<S>                                                            <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                  $   417,906    $   966,439    $   830,746
                                                               -----------    -----------    -----------
   Adjustments to reconcile net income to
    net cash provided by operating activities:
      Depreciation and amortization                              1,583,341      1,548,674      1,524,025

   Change in assets:

       Decrease (increase) in mortgage escrow deposits            (356,787)     1,795,727         45,162
      Decrease (increase) in tenant security deposits               79,017         79,706        (18,202)
      Decrease (increase) in other assets                          (18,739)       130,403        (54,526)
   Change in liabilities:
      Increase (decrease) in accounts payable
      and accrued expenses                                          57,132        184,019       (122,904)
      Decrease in accrued interest payable                             (22)        (1,126)       (30,138)
       (Decrease) increase in tenants security deposits            (79,017)       (79,706)        18,202
      Increase in due to General Partner

      and affiliates                                                41,434         74,678         91,570
                                                               -----------    -----------    -----------

          Total adjustments                                      1,306,359      3,732,375      1,453,189
                                                               -----------    -----------    -----------
          Net cash provided by operating activities              1,724,265      4,698,814      2,283,935
                                                               -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of fixed assets                                       (472,184)      (554,676)      (507,809)
   Proceeds (purchase) of investments                                   --      1,381,315     (1,381,315)
                                                               -----------    -----------    -----------

         Net cash provided by (used in) investing activities      (472,184)       826,639     (1,889,124)
                                                               -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments to principal reserve fund                             (401,620)      (367,277)      (335,903)
   Distributions                                                (1,239,180)            --             --
                                                               -----------    -----------    -----------
   Net cash used in financing activities                        (1,640,800)      (367,277)      (335,903)
                                                               -----------    -----------    -----------

(DECREASE) INCREASE IN CASH                                       (388,719)     5,158,176         58,908

CASH AND CASH EQUIVALENTS, beginning of year                     7,176,990      2,018,814      1,959,906
                                                               -----------    -----------    -----------
CASH AND CASH EQUIVALENTS, end of year                         $ 6,788,271    $ 7,176,990    $ 2,018,814
                                                               ===========    ===========    ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during year for interest                             $   292,178    $   380,198    $   753,773
                                                               ===========    ===========    ===========
</TABLE>


                   See notes to combined financial statements


                                       5
<PAGE>

                             DIXON MILLS ASSOCIATES

                     NOTES TO COMBINED FINANCIAL STATEMENTS

                  YEARS ENDED DECEMBER 31, 2003, 2002, and 2001

1.    COMBINATION AND ORGANIZATION

      The  combined  financial  statements  include  the  accounts of Dixon Mill
      Associates  I (Phase  One),  Limited  Partnership  ("DM  I"),  Dixon  Mill
      Associates II, (Phase Two),  Limited  Partnership ("DM II") and Dixon Mill
      Associates  III,  (Phase  Three),  Limited  Partnership  ("DM III")  after
      elimination of all significant intercompany balances and transactions.

      Description of the business

      The partnerships are collectively known as "Dixon Mills Associates" or the
      "Operating Partnerships", each of which owns one phase of an aggregate 433
      units of residential  apartments located in Jersey City, New Jersey,  that
      consist  of  buildings   that  are   designated  as  "certified   historic
      structures"  by  the  U.S.  Department  of  the  Interior.  The  Operating
      Partnerships  have  constructed,  rehabilitated,  and own and  operate the
      complex.  In accordance with the tax exempt financing of the complex,  the
      Operating  Partnerships  are required to rent 15% to 20% of the  apartment
      units to individuals of low or moderate income.

      On July 15, 1988, the Operating Partnerships transferred their 99% limited
      partnership  interests to Wilder Richman Historic Properties II, L.P. (the
      "Limited  Partner") in connection with that limited  partnership's  public
      offering.  The remaining 1% interest  remained with the Operating  General
      Partner, Dixon Venture Corp. ("DVC").

2.    SIGNIFICANT ACCOUNTING POLICIES

      Financial statements

      The financial statements of the Operating Partnerships are prepared on the
      accrual basis of accounting and include only those assets, liabilities and
      results  of   operations   related  to  the  business  of  the   Operating
      Partnerships.

      Combined financial statements are presented as the Operating  Partnerships
      are under common control, ownership, and management.

      Land and buildings

      Land and  buildings are stated at lower of cost or net  realizable  value,
      ("NRV").  NRV is the net cash flow necessary to recover costs exclusive of
      debt service.  Depreciation on buildings is computed on the  straight-line
      method. The depreciable lives assigned is 40 years for the real property.

      Income taxes

      No provisions have been made for federal, state and local income taxes, as
      they are the responsibility of the partners.

      The partners of the Operating Partnerships were entitled to a 25% historic
      rehabilitation  tax credit on eligible  costs as a reduction  of their tax
      liabilities.  In addition,  the tax basis of the property has been reduced
      by  one-half  of the  historic  rehabilitation  tax  credit for income tax
      purposes only.

      Cash and cash equivalents

      For purposes of the statements of cash flows,  the Operating  Partnerships
      consider all highly liquid debt  instruments  purchased with a maturity of
      three months or less to be cash equivalents. Cash and cash equivalents are
      recorded at cost, which approximates fair value.


                                       6
<PAGE>

                             DIXON MILLS ASSOCIATES

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2003, 2002, and 2001

2.    SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

      Concentration of credit risk

      Financial instruments which potentially subject the Operating Partnerships
      to  concentrations  of credit risk consist  principally  of temporary cash
      investments in high credit quality financial institutions.

      Deferred costs

      Deferred costs  represent  costs incurred in connection with the mortgages
      (Note 5) and are being  amortized over the term of the mortgages using the
      straight line method.

      Use of Estimates

      The  preparation  of financial  statements in conformity  with  accounting
      principles  generally  accepted in the United  States of America  requires
      management  to make  estimates  and  assumptions  that affect the reported
      amounts of assets and liabilities and disclosure of contingent  assets and
      liabilities  at the  date of the  financial  statements  and the  reported
      amounts of revenues  and  expenses  during the  reporting  period.  Actual
      results could differ from those estimates.

      Recently issued accounting standards

      During 2003 the financial  accounting  standards board ("FASB") issued the
      following statements:

         FASB  Statement  No.  149  Amendment  of  Statement  133 on  Derivative
            Instruments and Hedging Activities.

         FASB Statement No. 150 Accounting for Certain Financial Instrument with
            Characteristics of both Liabilities and Equity.

         FASB Statement  No. 132 (revised  2003)  Employers'  Disclosures  about
            Pensions  and Other  Postretirement  Benefits - an amendment of FASB
            Statement No. 87, 88, and 106.

      These   statements  do  not  have  a  material  effect  on  the  Operating
      Partnerships' financial position or results of operations.

3.    PARTNERS' EQUITY

      In accordance with the Partnership agreement,  income and losses are to be
      allocated  1% and 99% to the  Operating  General  Partner  and the Limited
      Partner, respectively.  Losses are not allocable to the Limited Partner if
      the losses  reduce its equity  basis below  zero.  Losses in excess of the
      Limited  Partner's  investment  are  allocated  to the  Operating  General
      Partner.

      Accordingly, the Operating Partnerships did not allocate 99% of the income
      reported in 2002 and 2001 to the Limited Partner due to the non-allocation
      of previous years' losses in excess of the Limited Partner's investment.

      Distributions

      The partnership agreements of the Operating Partnerships provide that cash
      flow from operations will be distributed 99% to the Limited Partner and 1%
      to the Operating  General Partner until the Limited Partner has received a
      7% preferred  return (the  "Preference  Amount") on their initial  capital
      contributions.  The  balance,  if any,  would  be  distributed  75% to the
      Limited Partner and 25% to the Operating  General Partner.  Any cumulative
      shortfall not recovered out of subsequent cash flow  distributions will be
      payable from sale or refinancing  proceeds,  to the extent available.  The
      cumulative  preferred  amount due to the Limited  Partner at December  31,
      2003 is  $16,558,745.  There is no assurance that all or a portion of such
      amount will be paid, and no amount has been accrued.


                                       7
<PAGE>

                             DIXON MILLS ASSOCIATES

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2003, 2002, and 2001

3.    PARTNERS' EQUITY (CONTINUED)

      Net cash  proceeds  resulting  from a sale or  refinancing,  to the extent
      available   (after  the  discharge  of  debts  and   obligations   of  the
      Partnership,  including  outstanding  loans from partners or  affiliates),
      will be distributed generally as follows:

      -     99% to the Limited Partner and 1% to the Operating  General Partner,
            until the  Limited  Partner  has  received  an  amount  equal to its
            adjusted contributions.

      -     99% to the Limited Partner and 1% to the Operating  General Partner,
            until the Limited Partner has received an amount equal to the unpaid
            cumulative Preference Amount.

      -     The  balance  of  adjusted  capital  contributions  of  the  General
            Partner.

      -     The  balance,  if any,  75% to the  Limited  Partner  and 25% to the
            Operating General Partner.

4.    RELATED PARTY TRANSACTIONS

      DVC has  complete  authority,  management  and  control  of the  Operating
      Partnerships.   The  Operating  Partnerships,  in  the  normal  course  of
      business, have transactions with related parties.  Included in the balance
      sheet are the following items:

                                                 December 31,
                                          --------------------------
                                             2003           2002
                                          -----------    -----------
      Due to (from):
         Morris Realty                    $    (5,259)   $    (5,259)
         DVC                                1,438,523      1,418,816
         Richman Asset Management, Inc.       252,590        230,863
                                          -----------    -----------
                                          $ 1,685,854    $ 1,644,420
                                          ===========    ===========

      The Operating  Partnerships  incurred annual  property  management fees to
      Wilder  Richman  Management  Corp.  ("WRMC"),  an affiliate of the Limited
      Partner,  in the amount of $110,018 in 2003, $119,074 in 2002 and $118,488
      in 2001. WRMC received payments of $115,542 and $119,074 in 2003 and 2002,
      respectively.  In addition, property management fees of $165,028, $178,610
      and $161,901 were incurred in 2003, 2002 and 2001,  respectively to Morris
      Property Management, an affiliate of the Operating General Partner. Morris
      Property Management received payments of $188,228 and $178,610 in 2003 and
      2002, respectively.

      Pursuant to the terms of Limited  Partnership  Agreements,  the  Operating
      Partnerships  have engaged an affiliate of the Limited  Partner to provide
      investor services at a fee which is based upon a base amount of $45,000 in
      1992 and is subject to adjustment  annually thereafter based on changes in
      the Operating  Partnerships'  rental revenue.  The Operating  Partnerships
      incurred investor services fees of $72,251, $75,520 and $78,003 to Richman
      Asset Management,  Inc., an affiliate of the Limited Partner in 2003, 2002
      and 2001, respectively, and paid Richman Asset Management, Inc. $45,000 in
      2003 and 2002.

      Pursuant to the terms of the Limited Partnership Agreements, the Operating
      General  Partner is entitled to interest on  Operating  Deficit  Loans and
      voluntary  loans  made  subsequent  to  the  issuance  of the  Fannie  Mae
      pass-through  certificates (which occurred in February 1991) (see Note 5).
      Interest on such  advances  accrues at 1% above the JP Morgan  Chase prime
      rate. The Operating Partnerships incurred interest of $42,907, $44,158 and
      $58,567  for 2003,  2002 and 2001,  respectively.  Amounts  payable to the
      Operating  General Partner were $1,438,523  (inclusive of accrued interest
      of $524,893) and $1,418,816 (inclusive of accrued interest of $481,986) as
      of December 31 2003 and 2002, respectively.


                                       8
<PAGE>

                             DIXON MILLS ASSOCIATES

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2003, 2002 and 2001

5.    MORTGAGES PAYABLE

      On June 11, 1992, the Jersey City  Redevelopment  Agency (Agency) provided
      mortgage financing for the Operating  Partnerships through the issuance of
      tax-exempt  Bonds (the  "Bonds")  guaranteed  and  secured by the  Federal
      National Mortgage Association ("FNMA") mortgage  pass-through  certificate
      ("FNMA  Certificate").  The  FNMA  Certificate  in  turn  was  secured  by
      mortgages   given  by  the  Operating   Partnerships   in  the  amount  of
      $27,545,000.

      The  Operating   Partnerships   refinanced  their  respective  outstanding
      mortgage  liabilities under the $27,545,000  Agency,  Multifamily  Housing
      Revenue   Bonds,   Series  1992  (Fannie  Mae   pass-through   Certificate
      Program/Dixon Mill Apartments Project as of April 28, 2000). The total new
      mortgage  indebtedness  in the amount of  $28,600,000  is for a term of 30
      years and was provided by (a) variable-rate tax-exempt bonds in the amount
      of  $26,435,000  maturing  on May 15, 2030 and (b)  variable-rate  taxable
      bonds in the amount of $2,165,000  maturing on November 15, 2005 which are
      secured by the property.  The  Operating  Partnerships  have  purchased an
      interest  rate cap which would limit the interest  rates to 6.97% for five
      years on the tax-exempt portion,  and 9.15% for five and one-half years on
      the taxable portion.

      The Operating  Partnerships  are required to fund an escrow (in the amount
      of $3,470 per month) (the  Pledged Cap  Account)  in  connection  with the
      purchase of another Cap in 2006.  The  mortgage  proceeds  retired the old
      mortgage of $26,154,723,  funded reserves for capital  improvements in the
      amount of  $1,173,000,  and paid for the cost of the  transaction,  in the
      amount  of  $890,989,  which  is  reflected  as  deferred  costs,  net  of
      accumulated amortization,  in the accompanying balance sheets. The capital
      improvements  escrow was  established  from the mortgage  proceeds and the
      replacement reserve in the combined amount of approximately  $2,076,000 to
      pay for significant  planned  improvements (roof  replacement,  smoke/fire
      alarm  systems,  elevator  repairs  and other  repairs  and other  repairs
      throughout the complex).

      The Operating  Partnerships make monthly payments into a principal reserve
      fund or the purpose of providing  funds for retirement of the bonds issued
      by the Agency. The bonds will be retired from funds in the reserve fund at
      which time the mortgage balance will be reduced  accordingly.  At December
      31, 2003 the scheduled principal reserve fund payments are as follows:

                   2004                      $      439,174
                   2005                             473,018
                   2006                             429,334
                   2007                             460,016
                   2008                             492,890
                   Thereafter                    25,018,269
                                              -------------
                                              $  27,312,701

      The new mortgage terms require monthly payments of $6,326 to a replacement
      reserve.


                                       9
<PAGE>

                             DIXON MILLS ASSOCIATES

               NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)

                  YEARS ENDED DECEMBER 31, 2003, 2002 and 2001

5.    MORTGAGES PAYABLE (CONTINUED)

      Restricted funds held in deposit are as follows:

<TABLE>
<CAPTION>
                                                                December 31,
                                                           -----------------------
       Mortgage Escrows:                                      2003          2002
                                                           ----------   ----------
<S>                                                        <C>          <C>
       Principal reserve fund                              $1,287,299   $  885,679
       Capital improvements escrow                                 --      223,345

       Replacement reserve                                    314,039       84,300
       Tax and insurance escrow                               285,892      330,712
       Pledge Cap Account                                     114,992       77,542
                                                           ----------   ----------

             Subtotal                                       2,002,222    1,601,578

       Additional replacement reserve not held by lender      454,385       96,622
                                                           ----------   ----------

                                                           $2,456,607   $1,698,200
                                                           ==========   ==========
</TABLE>

6.    LITIGATION

      Three  complaints  had been filed in a prior year  against  the  Operating
      Partnerships and others,  by a former employee,  a former part-time rental
      agent, and a security person employed by a private non-affiliated security
      company which provided service to the properties,  alleging discrimination
      in  connection  with  advancement,   hiring  and  termination.  All  three
      complaints  were  settled in 2001 for a total for  $150,000.  Total  legal
      expense incurred by the Operating  Partnerships in 2001 was  approximately
      $412,000  which  includes  the  $150,000  settlement  and is  included  in
      administrative expenses in the combined statements of operations.


                                       10