<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
--- ---
Commission File No. 814-124
TECHNOLOGY FUNDING VENTURE CAPITAL FUND VI, LLC.
------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-3266666
- ------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 94403
- --------------------------------------- --------
(Address of principal executive offices) (Zip Code)
(650) 345-2200
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
No active market for the shares of the limited liability company exists,
and therefore the market value of such shares cannot be determined.
<PAGE>
I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
(unaudited)
March 31, December 31,
2000 1999
----------- -----------
<S> <C> <C>
ASSETS
Equity investments (cost basis of
$277,977 and $247,977 for 2000 and
1999, respectively) $330,197 315,186
Cash and cash equivalents 40,972 10,829
Restricted cash 35,100 23,500
Subscription receivable 2,500 --
------- -------
Total assets $408,769 349,515
======= =======
LIABILITIES AND MEMBERS' EQUITY
Accounts payable and accrued
expenses $ 37,748 26,734
Due to related parties 778,497 644,455
------- -------
Total liabilities 816,245 671,189
Commitments, contingencies and
subsequent events (Notes 5, 6, 8 and 9)
Members' equity
Investors (Shares outstanding of
5,057 and 4,456 in 2000 and
1999, respectively) 104,844 128,999
Investment Managers (3,543) (2,747)
Deferred distribution costs (508,777) (447,926)
------- -------
Total members' equity (407,476) (321,674)
------- -------
Total liabilities and
members' equity $408,769 349,515
======= =======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
- ------------------------------------
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
--------------------------
2000 1999
------ ------
<S> <C> <C>
Income:
Interest income $ -- 917
------ -------
Total income -- 917
Costs and expenses:
Management fees 4,932 232
Independent Directors' compensation 7,616 16,003
Operating expenses:
Investment operations 3,409 10,151
Administrative and investor services 33,593 21,710
Professional fees 14,258 14,157
Computer services 6,309 3,630
------ -------
Total operating expenses 57,569 49,648
------ -------
Total expenses 70,117 65,883
------ -------
Net realized loss (70,117) (64,966)
Change in net unrealized fair value of
equity investments (14,989) --
------ -------
Net loss before cumulative effect of
change in accounting principle (85,106) (64,966)
Cumulative effect of change in
accounting principle (Note 2) -- (40,000)
------ -------
Net loss $(85,106) (104,966)
====== =======
Net loss per Share before cumulative
effect of change in accounting principle $ (17.60) (17.08)
Cumulative effect of change in
accounting principle (Note 2) -- (10.52)
------ -------
Net loss per Share $ (17.60) (27.60)
====== =======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
STATEMENTS OF MEMBERS' EQUITY (unaudited)
- -----------------------------------------
<TABLE>
<CAPTION>
For the three months ended March 31, 2000
Deferred
Investment Distribution
Investors Managers Costs Total
--------- ---------- ------------ -----
<S> <C> <C> <C> <C>
Members' equity, December 31, 1999 $128,999 (2,747) (447,926) (321,674)
Sales of Fund shares 60,100 -- -- 60,100
Investment Managers'
capital contributions -- 55 -- 55
Deferred distribution costs -- -- (60,851) (60,851)
Net loss (84,255) (851) -- (85,106)
------- ----- ------- -------
Members' equity, March 31, 2000 $104,844 (3,543) (508,777) (407,476)
======= ===== ======= =======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- ------------------------------------
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
-------------------------
2000 1999
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Interest received $ -- 917
Cash paid to vendors (14,354) (32,397)
Cash advances received from related
parties 12,493 17,469
------ -------
Net cash used by operating activities (1,861) (14,011)
------ -------
Cash flows from investing activities:
Purchase of equity investments (30,000) (127,497)
------ -------
Net cash used by investing activities (30,000) (127,497)
------ -------
Cash flows from financings:
Proceeds from sale of investor shares 60,100 11,600
Increase in subscription receivable (2,500) --
Investment Managers' capital contributions 55 12
Payments for distribution costs (751) (80)
Payments (to) from restricted cash (11,600) 12,500
Proceeds from Investment Manager for
investment purchases 16,700 --
------ -------
Net cash provided by financing activities 62,004 24,032
------ -------
Net increase (decrease) in cash and
cash equivalents 30,143 (117,476)
Cash and cash equivalents at beginning
of year 10,829 153,692
------ -------
Cash and cash equivalents at March 31 $ 40,972 36,216
====== =======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)(continued)
- -----------------------------------------------
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
-------------------------
2000 1999
--------- ---------
<S> <C> <C>
Reconciliation of net loss to net
cash used by operating activities:
Net loss $(85,106) (104,966)
Adjustments to reconcile net loss to net
cash used by operating activities:
Cumulative effect of change in
accounting principle -- 40,000
Change in net unrealized fair value of
equity investments 14,989 --
Changes in assets and liabilities net of
effects from noncash financing activities:
Due to related parties 57,242 59,607
Accounts payable and accrued expenses 11,014 (8,652)
------ -------
Net cash used by operating activities $ (1,861) (14,011)
====== =======
Non-cash financing activities:
Organizational and deferred distribution
costs due to Investment Managers $ 60,100 11,600
====== =======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ----------------------------------------
1. General
-------
In the opinion of the Investment Managers, the Balance Sheets as of March
31, 2000 and December 31, 1999 and the related Statements of Operations,
Statements of Member's Equity, and Statements of Cash Flows for the three
months ended March 31, 2000 and 1999, reflect all adjustments which are
necessary for a fair presentation of the financial position, results of
operations, and cash flows for such periods. These statements should be
read in conjunction with the Annual Report on Form 10-K for the year
ended December 31, 1999. The following notes to financial statements for
activity through March 31, 2000, supplement those included in the Annual
Report on Form 10-K. Allocation of income and loss to Investors is based
on cumulative income and loss. Adjustments, if any, are reflected in the
current quarter balances.
2. Change in Accounting Principle for Organizational Costs
-------------------------------------------------------
Effective January 1, 1999, the Fund adopted the provisions of the
American Institute of Certified Public Accountants' Statement of Position
98-5, "Reporting on the Costs of Start-up Activities" ("SOP 98-5.") SOP
98-5 specifies that organizational costs should be expensed as incurred
rather than capitalized and subsequently amortized.
The effect of adopting SOP 98-5 on net loss before the cumulative effect
of the change in accounting principle for the three months ended March
31, 1999 was to reduce the loss by $2,500, or $.66 per share. The effect
on net loss (including a non-cash charge of $40,000, or $10.52 per share,
for the cumulative effect as of January 1, 1999) was $37,500, or $9.86
per share. The cumulative effect of this change on the Fund's balance
sheet as of January 1, 1999 was to reduce organizational costs by
$40,000.
The pro forma effect of retroactive application of this accounting
principle would have resulted in net realized loss for the three months
ended March 31, 1999 of $64,966, and net realized loss per Share of
$17.08.
3. Financing of Fund Operations
----------------------------
The Investment Managers expect cash received from future investor share
sales, liquidation of fund investments, and investment income to provide
the necessary liquidity for Fund operations. The Fund may be dependent
upon the financial support of the Investment Managers to fund operations
if future proceeds are not received timely. The Investment Managers have
committed to support the Fund's working capital requirements through
short-term advances as necessary.
4. Net Loss Per Investor Share
---------------------------
Net loss per Investor Share is calculated by dividing total net loss
allocated to the Investors by the weighted average number of Shares
outstanding for the three months ended March 31, 2000 and 1999 of 4,788
and 3,766, respectively.
5. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statement of Operations. Related party costs for the three months ended
March 31, 2000 and 1999, were as follows:
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Management fees $ 4,932 232
Independent Directors' compensation 7,616 16,003
Reimbursable operating expenses 32,201 25,903
</TABLE>
At March 31, 2000 and December 31, 1999 management fees payable totaled
$22,756 and $17,824, respectively.
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Investment Managers and are adjusted to actual
costs periodically. At March 31, 2000 and December 31, 1999, due to
related parties for such expenses was $370,041 and $301,031,
respectively.
The Fund reimburses the Investment Managers and Distributors for
distribution costs. Distribution costs charged to the Fund by related
parties were $60,100 and $11,600 in the three months ended March 31, 2000
and 1999, respectively. As discussed in Note 8, additional distribution
costs have been, and will be, incurred by the Distributors, and will be
payable by the Fund as additional investor capital is raised.
Distribution costs payable were $385,700 and $325,600 at March 31, 2000
and December 31, 1999, respectively.
6. Equity Investments
------------------
<TABLE>
Activity from January 1 through March 31, 2000, consisted of:
<CAPTION>
January 1 through March 31, 2000
Principal --------------------------------
Amount or
Investment Shares as of Cost Fair
Industry/Company Position Date March 31, 2000 Basis Value
- ---------------- -------- ---------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 2000 $247,977 315,186
Significant changes:
Communications
- -------------
Women.com Networks, Common
Inc. (a) shares 1999 6,048 0 (14,989)
Medical/Biotechnology
- ---------------------
Resolution Sciences Preferred
Corporation (a) shares 2000 15,000 30,000 30,000
------- -------
Total equity investments at March 31, 2000 $277,977 330,197
======= =======
Legend and footnotes:
(a) Equity securities acquired in a private placement transaction;
resale may be subject to certain selling restrictions.
</TABLE>
Resolution Sciences Corporation
- -------------------------------
In February 2000, the Fund purchased 15,000 Series C Preferred shares for
$30,000. This purchase was funded, in part, by cash advances from the
Investment Managers.
Other Equity Investments
- ------------------------
Other significant changes reflected above relate to market value
fluctuations or the elimination of a discount relating to selling
restrictions for publicly traded portfolio companies.
Subsequent to March 31, 2000, the fair value of the Partnership's
investment in Women.com Networks, Inc. decreased by $22,660 as a result of
a decrease in the publicly traded market price on May 8, 2000.
7. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents at March 31, 2000 and December 31, 1999,
consisted of:
<TABLE>
<CAPTION>
2000 1999
------ ------
<S> <C> <C>
Demand accounts $40,214 9,966
Money-market accounts 758 863
------ -------
Total $40,972 10,829
====== =======
</TABLE>
As of March 31, 2000, the Fund's monies were on deposit at a single
financial institution.
Under terms of an agreement with the Fund's bank, the use of the funds
arising from sales of shares via automatic clearing house (ACH) wire
transfers and credit card transactions are restricted for a maximum period
of 90 days. At March 31, 2000, such restricted funds totaled $35,100.
8. Commitments and Contingencies
-----------------------------
The Fund reimburses the Distributors for distribution costs incurred in
connection with the offering of its shares. The Distributors expect the
Fund to reimburse these costs to the extent capital has been raised. At
March 31, 2000, the Distributors had incurred distribution costs totaling
$3,121,684, of which $120,000 has been paid and $385,700 has been recorded
as a liability of the Fund, with the remaining portion of $2,615,984
payable to the Distributors as additional capital is raised. Additional
distribution costs are expected to be incurred throughout the offering
period and will be payable by the Fund as additional capital is raised.
The Fund's distribution costs, however, are limited to 10.5% of the total
proceeds raised in this offering. Any distribution costs paid to the
Distributors in excess of this limitation will be reimbursed to the Fund
prior to the end of the offering period. If the Fund had not sold any
additional shares subsequent to March 31, 2000, distribution costs would
have been limited to $53,098. Distribution costs charged to the Fund
through March 31, 2000 in excess of the limitation would have totaled
$455,679 and would have been borne by the Distributors. Cash payments made
by the Fund through March 31, 2000 for such excess costs totaled $73,212
and would have been reimbursable to the Fund by the Distributors. The Fund
reports these deferred distribution costs, to the extent that investor
capital has been raised, as a liability and as a deduction from Members'
equity.
9. Subsequent Event--Suspension of Offering
----------------------------------------
Technology Funding Securities Corporation, at the request of the Directors
of the Fund, suspended the offering of the Fund's shares pending the filing
of a Post-Effective Amendment to the Fund's Registration Statement with the
Securities and Exchange Commission. No shares in the Fund can be offered
until the Post-Effective Amendment has been declared effective.
Item 2. Management's Discussion and Analysis of Financial
Condition
Liquidity and Capital Resources
- -------------------------------
During the three months ended March 31, 2000, net cash used by operating
activities totaled $1,861. The Fund received advances from the Investment
Managers for operating expenses totaling $20,109 and paid $7,616 in
compensation to Independent Directors. Other operating expenses of $14,354
were paid.
During the three months ended March 31, 2000, the Fund purchased equity
investments of $30,000 in a company in the medical industry. The Fund
received proceeds of $60,100 from sales of Investor shares and $55 from
Investment Managers' capital contributions and paid $751 in distribution
costs. Net funds deposited to restricted cash totaled $11,600. The Fund
received cash advances of $16,700 from the Investment Managers for
investment purchases.
Cash and cash equivalents at March 31, 2000, were $40,972. Future proceeds
from the sale of Fund shares, sales of equity investments, interest income
earned on short-term investments and operating cash reserves along with
Investment Managers' support are expected to be adequate to fund
Partnership operations through the next twelve months.
Technology Funding Securities Corporation, at the request of the Directors
of the Fund, suspended the offering of the Fund's shares pending the filing
of a Post-Effective Amendment to the Fund's Registration Statement with the
Securities and Exchange Commission. No shares in the Fund can be offered
until the Post-Effective Amendment has been declared effective.
Results of Operations
- ---------------------
Current quarter compared to corresponding quarter in the preceding year
- -----------------------------------------------------------------------
Net losses for the three months ended March 31, 2000 and March 31, 1999
were $85,106 and $104,966, respectively.
As explained in Note 2 to the financial statements, the Fund adopted SOP
98-5 as of January 1, 1999. This adoption resulted in a $40,000 charge in
the first quarter of 1999 to write off previously capitalized
organizational costs in accordance with SOP 98-5.
Operating expenses totaled $57,569 and $49,648 for the quarters ended March
31, 2000 and 1999,respectively. The increase is due to increased
investment activity.
The $14,989 decrease in net unrealized fair value of equity investments in
the quarter ended March 31, 2000 is due to a decrease in the publicly
traded market price of Women.com Networks, Inc.
Given the inherent risk associated with the business of the Fund, the sale
of additional investor shares and future performance of the portfolio
company investments may significantly impact future operations.
II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) No reports on Form 8-K were filed by the Fund during the quarter
ended March 31, 2000.
(b) Financial Data Schedule for the period ended and as of March 31,
2000 (Exhibit 27).
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TECHNOLOGY FUNDING VENTURE CAPITAL FUND VI,LLC
By: TECHNOLOGY FUNDING INC.
Investment Manager
Date: May 15, 2000 By: /s/Michael R. Brenner
-----------------------------------
Michael R. Brenner
Vice President
<TABLE> <S> <C>
<ARTICLE>6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORM 10-Q AS OF MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<PERIOD-TYPE> 3-MOS
<INVESTMENTS-AT-COST> 277,977
<INVESTMENTS-AT-VALUE> 330,197
<RECEIVABLES> 0
<ASSETS-OTHER> 2,500
<OTHER-ITEMS-ASSETS> 76,072
<TOTAL-ASSETS> 408,769
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 816,245
<TOTAL-LIABILITIES> 816,245
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 49,081
<SHARES-COMMON-STOCK> 5,057
<SHARES-COMMON-PRIOR> 4,456
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (456,557)
<NET-ASSETS> (407,476)
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (70,117)
<NET-INVESTMENT-INCOME> (70,117)
<REALIZED-GAINS-CURRENT> (14,989)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (85,106)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 601
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (85,802)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,932
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (70,117)
<AVERAGE-NET-ASSETS> (364,575)
<PER-SHARE-NAV-BEGIN> 28.95
<PER-SHARE-NII> (17.60)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.73
<EXPENSE-RATIO> 19.23
</TABLE>
