SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999.
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-29120
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
New York 13-7110611
- -------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
c/o Raymond S. Troubh
Ten Rockefeller Plaza, Suite 712
New York, New York 10020
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (800) 821-0905
Not applicable
- -------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Beneficial Interest
- -------------------------------------------------------------------------------
(Title of class)
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
(Cover page continues on next page)
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 15, 2000, there were 2,427,281 units of beneficial interest of the
MicroCap Liquidating Trust outstanding.
Documents Incorporated By Reference
None
<PAGE>
PART I
Item 1. Business.
--------
General
The MicroCap Liquidating Trust (the "Trust"), a liquidating trust established
under the laws of the State of New York, is the successor to The MicroCap Fund,
Inc., formerly Commonwealth Associates Growth Fund, Inc. (the "Fund"). The Fund,
which was a Maryland corporation formed on January 26, 1993, was a
non-diversified, closed-end management investment company and operated as a
business development company under the Investment Company Act of 1940. The
Fund's investment objective was to achieve long-term capital appreciation of
assets, rather than current income, by investing in debt and equity securities
of emerging and established companies that management believed offered
significant growth potential.
Pursuant to its Plan of Liquidation, which was approved at a special meeting of
shareholders on July 23, 1996, the Fund transferred all of its remaining assets
and its remaining fixed and contingent liabilities to the Trust, effective as of
the close of business on February 24, 1997, the Fund's termination date.
Also effective as of the close of business on February 24, 1997, the 2,188,085
common shares and 191,357 preferred shares of the Fund, outstanding on such
date, were automatically deemed to represent 2,427,281 units of beneficial
interest in the Trust ("Units"). As a result, on February 24, 1997, each
shareholder of the Fund received one Unit of the Trust for each share of the
Fund's common stock held on such date and 1.25 Units of the Trust for each share
of the Fund's preferred stock held on such date.
The Trust was organized for the sole purpose of liquidating the Fund's assets
and winding up the Fund's affairs. The Trust will terminate upon the final
liquidation of its remaining assets, payment of all liabilities and satisfaction
of all outstanding claims and contingencies.
Cash Distributions
The initial liquidating cash distribution totaling $8,495,486 was paid by the
Fund on August 30, 1996 to shareholders of record on August 15, 1996. Common
shareholders received $3.50 per share and preferred shareholders received $4.375
per share. The amount paid to common shareholders was comprised of $0.274 of
long-term capital gain and $3.226 of return of capital. The amount paid to
preferred shareholders was comprised of $0.343 of long-term capital gain and
$4.032 of return of capital. Since its inception and through January 28, 2000,
the Trust has made four additional interim liquidating distributions. Cumulative
liquidating distributions paid to beneficiaries, including the initial
liquidating distribution paid by the Fund, total $15.5 million, or $6.40 per
Unit, as follows:
<TABLE>
Total Per Unit
Date Distribution Amount
-------------------- --------------- ---------
<S> <C> <C> <C>
August 30,1996 $ 8,495,486 $ 3.50
July 15, 1997 2,427,281 1.00
August 28, 1998 1,820,461 .75
March 31, 1999 1,820,461 .75
January 28, 2000 970,912 .40
--------------- --------
Total $ 15,534,601 $ 6.40
=============== ========
</TABLE>
Portfolio Investments
As of December 31, 1999, the Trust held two portfolio investments with an
aggregate cost of $1,937,500 and a fair value of $484,375. There were no changes
to the Trust's portfolio investment holdings for the year ended December 31,
1999. Subsequent to December 31, 1999, the Trust exercised its warrant to
purchase 475,000 common shares of Unigene Laboratories, Inc. at a cost of
$653,125, or $1.375 per share. As of March 20, 2000, the Trust had sold 340,000
shares of Unigene for net proceeds of $1,357,628. The sale of these shares will
result in a realized gain of $890,128 for the quarter ending March 31, 2000.
Competition
The Trust is operating solely to liquidate its remaining assets and will not
invest in any new portfolio companies, therefore; the Trust is not competing for
new investment opportunities.
Employees
The Trust has no employees. In July 1996, Raymond S. Troubh was appointed
President, Chief Executive Officer, Treasurer, Secretary and Director of the
Fund. All of the Fund's previous officers and all of its employees had resigned
by the end of July 1996. Mr. Troubh held these offices through the Fund's date
of termination and became the sole independent liquidating trustee of the Trust,
with primary responsibility for the liquidation of its remaining assets.
Item 2. Properties.
----------
None
Item 3. Legal Proceedings.
-----------------
On April 19, 1996, the Fund filed a complaint against Commonwealth Associates, a
registered broker-dealer and the underwriter of the Fund's initial public
offering, Michael S. Falk, the chief executive officer of Commonwealth
Associates, a minority shareholder and former director of the Fund, and Stephen
J. Warner, a former executive officer of Commonwealth Associates and the former
president of the Fund. The civil action, which was filed in federal court in the
Southern District of New York, alleged fraud, breach of fiduciary duties and
violations of the Investment Company Act of 1940. On December 24, 1996, the Fund
and the defendants agreed to a settlement of the complaint, whereby Commonwealth
Associates agreed to make settlement payments to the Fund or the Trust totaling
$1,150,000. In connection therewith, $500,000 was received in December 1996 and
an additional $650,000 was received in installments during 1997. Interest of
$20,415 was also paid to the Trust with the final installment payment in
December 1997. Additionally, as part of the settlement, the Fund and the
defendants agreed to pursue claims against former counsel to the Fund. The Trust
was entitled to receive 50% of any recovery from such claims after reimbursement
to Commonwealth Associates of all costs and expenses associated with pursuing
the claims. See note 6 of Notes to the Financial Statements for additional
information.
Regency Holdings (Cayman) Inc. ("Holdings") and Regency Maritime Corp.
("Maritime") (collectively "Regency") along with other related entities are
debtors in a bankruptcy case pending in the United States Bankruptcy Court for
the Southern District of New York, 95 B 45197 (TLB). In that bankruptcy case,
Regency initiated an adversary proceeding against the Fund and certain other
persons and entities to recover monies that it paid them on the ground that such
payments constituted voidable preferences or fraudulent conveyances under the
Bankruptcy Code. Holdings maintained that a payment made to the Fund between 90
days and one year prior to the filing of Regency's bankruptcy petition in the
amount of $1,940,000 to satisfy a bridge loan the Fund made to Regency, was a
voidable preference because Kamal Mustafa, the former president of the Fund, was
a director of Regency (and therefore an insider) for a portion of the time that
such amounts were due and owing. Holdings also maintained that such relationship
had an impact on the decision to pay these amounts. Additionally, Holdings
maintained that a payment of $145,728 made to the Fund to redeem certain
warrants issued with respect to the loan transaction was made within 90 days of
the filing of the bankruptcy petition and was therefore a voidable preference
without regard to whether Mustafa was an insider. Alternatively, Maritime
asserted that the foregoing payments were made from its funds, without
reasonably equivalent consideration, and were therefore avoidable as fraudulent
conveyances. The Fund served an answer denying the allegations of the amended
complaint and contested Regency's claims. Pursuant to an order filed with the
Bankruptcy Court, the Trust had set aside approximately $2.4 million in an
interest-bearing cash account pending resolution by the Bankruptcy Court of the
adversary proceeding. A limited trial based upon written submissions to address
the validity of Regency's preference claims was held in December 1997 and
resulted in a judgment in favor of the Trust, dismissing the preference claims
with prejudice. A mediator was appointed to attempt to facilitate a mutually
beneficial settlement of the remaining fraudulent conveyance claims, and a
mediation session occurred on October 5, 1998. During that session, the parties
reached a tentative consensual resolution of the fraudulent conveyance claim.
The settlement was finalized in March 1999 and the defendants agreed to pay a
total of $535,000, of which the Trust's share was $281,425, exclusive of legal
and other fees and expenses. As a result of the settlement, the $2.4 million
previously set aside became available to the Trust.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
No matter was submitted to a vote of Unit holders during the last quarter of the
period covered by this report.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
---------------------------------------------------------------------
There were 2,427,281 units of beneficial interest of the MicroCap Liquidating
Trust (the "Units") outstanding as of March 15, 2000. Units of the Trust (CUSIP#
59501M) (symbol MCAPS) became listed securities on the OTC Bulletin Board for
over-the counter securities as of April 30, 1997.
The following table sets forth, for each of the periods indicated, the high and
low closing bid prices for the Units as reported by NASDAQ since April 30, 1997.
These per Unit quotations represent inter-dealer prices on the over-the-counter
market, do not include retail markups, markdowns, or commissions and may not
represent actual transactions.
<TABLE>
Price Per Unit
High Low
Period from April 30, 1997 to December 31, 1997:
<S> <C> <C> <C> <C> <C> <C>
April 30, 1997 to June 30, 1997 $ 2.25 $ 0.38
Third quarter 2.13 0.69
Fourth quarter 1.19 0.75
Year ended December 31, 1998:
First quarter 1.00 0.53
Second quarter 1.63 0.63
Third quarter 1.63 0.50
Fourth quarter 1.31 0.52
Year ended December 31, 1999:
First quarter 1.25 0.88
Second quarter .50 .41
Third quarter .50 .41
Fourth quarter .50 .25
Period from January 1, 2000 to March 15, 2000 .56 .13
</TABLE>
As of March 15, 2000, there were approximately 14 Unit holders of record of the
Trust. Certain holders of record held Units for approximately 250 beneficial
owners.
<PAGE>
Item 6. Selected Financial Data.
-----------------------
<TABLE>
Period From Fiscal
Mar. 1, 1996 to Year
Feb. 24, 1997 Ended
Period From (Date of Feb. 29,
Year Ended Year Ended Feb. 25, 1997 Termination) 1996
Dec. 31, 1999 Dec. 31, 1998 to Dec. 31, 1997 (Predecessor) (Predecessor)
------------- ------------- ---------------- ------------- ------------
Operating Data:
Net investment loss (interest and
<S> <C> <C> <C> <C> <C>
dividend income less operating expenses) $ (43,402) $ (179,246) $ (173,067) $ (1,243,927) $ (313,174)
Net realized (loss) gain from portfolio investments - (240,000) 775,250 3,972,372 (1,061,009)
Change in net unrealized appreciation or
depreciation of investments - (898,125) (1,026,843) (1,684,806) 2,121,261
Net realized and unrealized (loss) gain from
portfolio investments - (1,138,125) (251,593) 2,287,566 1,060,252
Net (decrease) increase in net assets from
operations (43,402) (1,317,371) (424,660) 1,043,639 747,078
Cash distributions paid or accrued 2,791,373 1,820,461 2,427,281 8,495,486 -
Per Unit or Common Equivalent Share*:
Net investment loss $ (.02) $ (.07) $ (.07) $ (.51) $ (.13)
Net realized and unrealized (loss) gain from
portfolio investments - (.47) (.10) .94 .44
Net (decrease) increase in net assets resulting
from operations (.02) (.54) (.17) .43 .31
Cash distributions paid and accrued 1.15 .75 1.00 3.50 -
</TABLE>
<TABLE>
Feb. 24, 1997
(Date of
Termination) Feb. 29, 1996
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997
------------- ------------- -------------
(Predecessor) (Predecessor)
- ------------ -------------
Balance Sheet Data:
<S> <C> <C> <C> <C> <C>
Total assets $ 1,958,793 $ 4,153,251 $ 7,084,047 $ 10,968,644 $ 17,568,711
Net assets 958,763 3,793,538 6,931,370 9,783,311 17,235,158
Cash and cash equivalents 1,468,193 3,604,050 5,442,020 7,571,246 9,878,280
Portfolio investments at fair value 484,375 484,375 1,622,500 2,696,593 6,939,805
Per Unit or Common Equivalent Share**:
Net assets $ 0.39 $ 1.56 $ 2.86 $ 4.03 $ 7.25
</TABLE>
* Based on weighted average number of Units or common equivalent shares
outstanding for each respective period. ** Based on number of Units or common
equivalent shares outstanding as of the period end date.
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
----------------------------------------------------------------------
Liquidity and Capital Resources
As of December 31, 1999, the MicroCap Liquidating Trust (the "Trust") had cash
and cash equivalents totaling $1,468,193, of which $120,000 was restricted due
to certain contingencies, as discussed below. The Trust's cash balances are
invested in U.S. Treasury Bills or overnight repurchase agreements
collateralized by securities issued by the U.S. Government or its agencies.
Interest earned from such investments totaled $94,091, $240,737 and $270,147 for
the years ended December 31, 1999 and 1998 and for the period from February 25,
1997 to December 31, 1997 (the "1997 Period"), respectively. Interest earned
from such cash equivalent balances in future periods is subject to fluctuations
in short-term interest rates and changes in cash equivalent balances held by the
Trust.
As of December 31, 1999, the Trust had a restricted cash balance of $120,000,
relating to a potential reimbursement of expenses of a shareholder group that
had solicited proxies in opposition to the Plan of Liquidation.
The Trust paid an interim liquidating distribution to beneficiaries on March 31,
1999 totaling $1,820,461, or $0.75 per Unit. In December 1999, the Trust
announced that an additional liquidating distribution would be paid to unit
holders of record on January 14, 2000. This distribution, totaling $970,912 or
$.40 per Unit, was paid on January 28, 2000.
Results of Operations
The Trust is pursuing the orderly liquidation of its assets and subsequent
distribution to unit holders of the proceeds from such liquidation, including
the Trust's remaining cash balances after payment of, or provision for, all
current, future and contingent liabilities. Prior to the creation of the Trust,
the Fund had begun to pursue this objective with the approval of its Plan of
Liquidation in July 1996.
Realized and Unrealized Gains and Losses from Portfolio Investments - The Trust
had no realized or unrealized gains or losses from portfolio investments for the
year ended December 31, 1999. For the year ended December 31, 1998 and for the
1997 Period, the Trust had a net realized and unrealized loss from its portfolio
investments of $1,138,125 and $251,593, respectively.
1998:
The $1,138,125 net realized and unrealized loss for 1998 was comprised of a
$240,000 realized loss and an $898,125 unfavorable change to net unrealized
depreciation of portfolio investments. The $240,000 realized loss resulted from
the September 1998 write-off of the remaining cost of the Trust's investment in
Oh-La-La! Inc. The unfavorable change in net unrealized depreciation for the
year ended December 31, 1998 was comprised of a net downward revaluation of
$593,750, relating to the Trust's investment in Unigene Laboratories, Inc., and
a downward revaluation of $484,375, relating to the Trust's investment in First
Colony Acquistion Corp. These downward revaluations were partially offset by the
transfer of $180,000 from unrealized loss to realized loss resulting from the
write-off of the remaining cost of Oh-La-La!, as discussed above. See the
caption heading "Summary of Portfolio Transactions and Change in Net Assets
during 1998" presented below for additional information.
1997 Period:
The $251,593 net realized and unrealized loss for the 1997 Period was comprised
of a $775,250 net realized gain from the sale of certain portfolio investments
during the 1997 Period, as discussed below. These realized gains were more than
offset by a $1,026,843 decrease to net unrealized appreciation of portfolio
investments during the 1997 Period, as discussed below.
In June 1997, the Trust sold a covered call option for $37,500, allowing for the
purchase of up to 307,500 common stock warrants of Unigene Laboratories, Inc. at
a purchase price of $2.875 per warrant. In July 1997, a portion of the option
was exercised for 140,000 warrants at $2.875 per warrant, or $402,500. The
remaining portion of the option expired on July 30, 1997. The Trust realized a
net gain of $440,000 as a result of these transactions. In November 1997, the
Trust sold its remaining 112,500 common shares of Bennett Environmental, Inc.
for $382,500, or $3.40 per share, resulting in a realized gain of $335,250.
During the 1997 Period, the Trust had a $1,026,843 net decrease in the net
unrealized appreciation of its remaining portfolio investments. Such decrease
included a $623,438 net downward revaluation of the Trust's holdings of Unigene
Laboratories, Inc., and a net transfer of $403,405 from unrealized gain to
realized gain relating to the portfolio investments sold during the 1997 Period,
as discussed above.
Investment Income and Expenses
For the years ended December 31, 1999 and 1998 and for the 1997 Period, the
Trust had a net investment loss (interest and other income less operating
expenses) of $43,402, $179,246 and $173,067, respectively.
The favorable change in net investment loss of $135,844 for 1999 compared to
1998, was comprised of a $370,790 decrease in operating expenses offset by a
$234,946 decrease in investment and other income for 1999 compared to 1998. The
reduced income primarily resulted from a $146,646 decrease in interest income
from short-term investments due to a decrease in cash equivalent balances during
1999 compared to 1998. Other income also declined $74,475 for 1999 compared to
1998. During 1999, the Trust received $123,638 in settlement of an insurance
claim to cover certain legal fees incurred by the Trust and certain officers and
directors in prior years. Other income earned in 1998 includes a one-time
litigation settlement payment totaling $186,298 as discussed below. The reduced
expenses primarily resulted from a one-time litigation settlement expense
totaling $281,425 relating to the Regency Holdings (Cayman) Inc. settlement, of
which $278,200 was expensed in 1998. Other operating expenses declined a total
of $95,815 in 1999 compared to 1998 primarily resulting from significantly
reduced legal fees, which declined from $101,663 in 1998 to $7,739 in 1999. This
reduction reflects the reduced legal work required as the Trust continues to
settle litigation and other contingencies.
The $6,179 unfavorable change in net investment loss for 1998 as compared to the
1997 Period, resulted from a $154,427 increase in operating expenses partially
offset by a $148,248 increase in investment income. The increase in operating
expenses for 1998 compared to the 1997 Period primarily was due to the $278,200
litigation settlement reserve, relating to the Regency Holdings litigation as
discussed above. This settlement expense was partially offset by a $123,773
decrease in other operating expenses. The decrease in other expenses primarily
was the result of a $98,575 decrease in legal and accounting fees, and a $27,830
decrease in trustee fees. The decrease in legal and accounting fees reflects the
declining legal work relating to activities of the Trust during 1998 as compared
to the 1997 Period and the reduction of certain expenses that had been accrued
for in prior periods. Total investment income for 1998 was $452,804 as compared
to $304,556 for the 1997 Period. The increase in investment income primarily was
due to $186,298 of other income recorded during 1998 relating to litigation
settlements as discussed in Note 6 of Notes to Financial Statements. The
increase in other income was partially offset by a $29,410 decrease in interest
income from short-term investments, due to a decrease in funds available for
investment in such securities during 1998 as compared to the 1997 Period.
Interest income is expected to continue to decline as the Trust continues with
the liquidation of its remaining assets and completes subsequent distributions
of such proceeds to Unit holders.
Net Assets in Liquidation
For the year ended December 31, 1999, the Trust's net assets decreased
$2,834,775, comprised of the $2,791,373 of cash distributions paid and accrued
during 1999 and the $43,402 net investment loss for the year ended December 31,
1999. For the year ended December 31, 1998, the Trust had a $1,317,371 decrease
in net assets resulting from operations, comprised of the $1,138,125 net
realized and unrealized loss from portfolio investments and the $179,246 net
investment loss. The Trust's net assets also were reduced by the $1,820,461 cash
distribution paid to unit holders on August 28, 1998. As a result, the Trust's
net assets declined by $3,187,382, from $6,931,370 as of December 31, 1997 to
$3,793,538 as of December 31, 1998.
On a per Unit basis, the results of operations for the year ended December 31,
1999 reduced the Trust's net assets by $.018 per Unit and the cash distributions
paid and accrued to Unit holders during 1999 reduced the Trust's net assets by
$1.15 per Unit. As a result, the Trust's net asset value declined $1.168 per
Unit from $1.563 as of December 31, 1998, to $0.395 per Unit as of December 31,
1999.
For the 1997 Period, the Trust had a $424,660 decrease in net assets resulting
from operations, comprised of the $251,593 net realized and unrealized loss from
portfolio investments and the $173,067 net investment loss. The Trust's net
assets also were reduced by the $2,427,281 cash distribution made to unit
holders on July 15, 1997. As a result, the Trust's net assets were $6,931,370,
or $2.86 per Unit, as of December 31, 1997, representing a decrease of
$2,851,941, or $1.17 per Unit, from net assets of $9,783,311 as of February 24,
1997, the Fund's termination date.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Trust is subject to market risk arising from changes in the value of its
portfolio investments, investments in U.S. Treasury Bills and interest-bearing
cash equivalents, which may result from fluctuations in interest rates and
equity prices. The Trust has calculated its market risk related to its holdings
of these investments based on changes in interest rates and equity prices
utilizing a sensitivity analysis. The sensitivity analysis estimates the
hypothetical change in fair values, cash flows and earnings based on an assumed
10% change (increase or decrease) in interest rates and equity prices. To
perform the sensitivity analysis, the assumed 10% change is applied to market
rates and prices on investments held by the Trust at the end of the accounting
period.
The Trust's portfolio investments had an aggregate fair value of $484,375 as of
December 31, 1999. An assumed 10% decline from this December 31, 1999 fair
value, would result in a reduction to the fair value of such investments and an
unrealized loss of $48,438.
Market risk relating to the Trust's interest-bearing cash equivalents,
investments in U.S. Treasury Bills and overnight repurchase agreements
collateralized by securities issued by the U.S. Government or its agencies held
as of December 31, 1999 are considered to be immaterial.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
INDEX
Independent Auditors' Report
Statements of Assets and Liabilities as of December 31, 1999 and 1998
Schedules of Portfolio Investments as of December 31, 1999 and 1998
Statements of Operations for the years ended December 31, 1999 and 1998, and for
the period from February 25, 1997 to December 31, 1997
Statements of Changes in Net Assets for the years ended December 31, 1999 and
1998, and for the period from February 25, 1997 to December 31, 1997
Statements of Cash Flows for the years ended December 31, 1999 and 1998, and for
the period from February 25, 1997 to December 31, 1997
Notes to Financial Statements
Note - All schedules are omitted because of the absence of conditions under
which they are required or because the required information is included
in the financial statements or notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
MicroCap Liquidating Trust
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of the MicroCap Liquidating Trust (the
"Trust") as of December 31, 1999 and 1998, and the related statements of
operations, changes in net assets and cash flows of the Trust for the years
ended December 31, 1999 and 1998, and for the period from February 25, 1997 to
December 31, 1997. These financial statements are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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. Our procedures included
confirmation of securities owned as of December 31, 1999 and 1998 by
correspondence with the custodian. 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, such financial statements present fairly, in all material
respects, the financial position of the Trust as of December 31, 1999 and 1998
and the results of the Trust's operations, changes in net assets and cash flows
for the years ended December 31, 1999 and 1998, and for the period from February
25, 1997 to December 31, 1997 in conformity with generally accepted accounting
principles.
As explained in Note 2, the financial statements include securities valued at
$484,375 as of December 31, 1999 and 1998, representing 51% and 13% of net
assets, respectively, whose values have been estimated by the Trustee of the
Trust in the absence of readily ascertainable market values. We have reviewed
the procedures used by the Trustee in arriving at the estimated value of such
securities and have inspected underlying documentation, and, in the
circumstances, we believe the procedures are reasonable and the documentation
appropriate. However, because of the inherent uncertainty of valuation, those
estimated values may differ significantly from the values that would have been
used had a ready market for the securities existed, and the differences could be
material.
Deloitte & Touche LLP
New York, New York
February 25, 2000
(March 20, 2000 as to Note 8)
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
As of December 31, 1999 and 1998
1999 1998
--------------- ----------
Assets
<S> <C>
Portfolio investments at fair value (cost $1,937,500 as of
December 31,1999 and December 31, 1998) $ 484,375 $ 484,375
Cash and cash equivalents - unrestricted 1,348,193 813,832
Cash and cash equivalents - restricted 120,000 2,790,218
Accrued interest receivable 6,225 14,826
Other receivables - 50,000
--------------- ----------------
Total assets 1,958,793 4,153,251
--------------- ----------------
Liabilities
Accrued distribution payable 970,912 -
Accounts payable and accrued expenses 29,118 81,513
Litigation settlement reserve - 278,200
--------------- ----------------
Total liabilities 1,000,030 359,713
--------------- ----------------
Net Assets in Liquidation $ 958,763 $ 3,793,538
=============== ================
Net assets in liquidation per Unit of beneficial interest $0.39 $ 1.56
===== ======
Number of Units of beneficial interest outstanding 2,427,281 2,427,281
========= =========
</TABLE>
See notes to financial statements.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
SCHEDULE OF PORTFOLIO INVESTMENTS
<TABLE>
As of December 31, 1999
Fair Value
as a % of
<S> <C>
Issuer / Position Cost Fair Value Net Assets(1)
Publicly-Held Securities:
Unigene Laboratories, Inc.
Warrant to purchase 475,000 shares of Common Stock
at $1.375, expiring 7/7/00 $ 0 $ 0 0.00%
------------- -------------- -------
Privately-Held Securities:
First Colony Acquisition Corp.
106,562 shares of Series A1 Preferred Stock 594,174 148,544
240,179 shares of Series B1 Preferred Stock 1,343,326 335,831
Warrant to purchase 7,560 shares of Common Stock
at $5.00, expiring 1/24/00 0 0
------------- --------------
1,937,500 484,375 50.52%
------------- -------------- --------
Total Portfolio Investments (A) $ 1,937,500 $ 484,375 50.52%
============= ============== ========
</TABLE>
(1) Represents fair value as a percentage of the Trust's total net assets.
(A) All portfolio securities held as of December 31, 1999 are non-income
producing. As of December 31, 1999, all of the Trust's portfolio companies
were located in the eastern United States. The investments, using fair
value as a percentage of net assets, represented consumer products, 50.52%,
biotechnology, 0%, preferred stock, 50.52%, and common stock, 0%.
See notes to financial statements.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
SCHEDULE OF PORTFOLIO INVESTMENTS
<TABLE>
As of December 31, 1998
Fair Value
as a % of
<S> <C>
Issuer / Position Cost Fair Value Net Assets(1)
Publicly-Held Securities:
Unigene Laboratories, Inc.
Warrant to purchase 475,000 shares of Common Stock
at $1.375, expiring 7/7/00 $ 0 $ 0 0.00%
------------- -------------- -------
Privately-Held Securities:
First Colony Acquisition Corp.
106,562 shares of Series A1 Preferred Stock 594,174 148,544
240,179 shares of Series B1 Preferred Stock 1,343,326 335,831
Warrant to purchase 7,560 shares of Common Stock
at $5.00, expiring 1/24/00 0 0
------------- --------------
1,937,500 484,375 12.77%
------------- -------------- --------
Total Portfolio Investments(A) $ 1,937,500 $ 484,375 12.77%
============= ============== ========
</TABLE>
(1) Represents fair value as a percentage of net assets.
(A) All portfolio securities held as of December 31, 1998, are non-income
producing. As of December 31, 1998, all of the Trust's portfolio companies
were located in the eastern United States. The investments, using fair
value as a percentage of net assets, represented biotechnology, 12.77%,
consumer products, 0%, preferred stock, 12.77%, and common stock, 0%.
See notes to financial statements.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF OPERATIONS
For the Years ended December 31, 1999 and 1998, and for the Period from February
25, 1997 to December 31, 1997
<TABLE>
February 25,
1997 to
December 31,
1999 1998 1997
--------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Investment Income and Expenses
Income:
Interest from U.S. Treasury Bills and
repurchase agreements $ 94,091 $ 240,737 $ 270,147
Other interest income 129 13,954 15,467
Other income 123,638 198,113 18,942
--------------- --------------- -------------
Total income 217,858 452,804 304,556
--------------- --------------- -------------
Expenses:
Litigation settlement 3,225 278,200 -
Administrative expenses 78,459 76,573 73,498
Legal fees 7,739 101,663 167,602
Accounting fees 27,750 31,189 63,825
Trustee fees 120,205 120,205 148,035
Transfer agent and custody fees 20,218 20,867 17,461
Mailing and printing 2,899 2,502 4,677
Other operating expenses 765 851 2,525
--------------- --------------- -------------
Total expenses 261,260 632,050 477,623
--------------- --------------- -------------
Net Investment Loss (43,402) (179,246) (173,067)
--------------- --------------- -------------
Net Realized and Unrealized Gain (Loss) From
Portfolio Investments
Net realized (loss) gain from portfolio investments - (240,000) 775,250
Change in net unrealized appreciation or
depreciation of investments - (898,125) (1,026,843)
--------------- --------------- -------------
Net realized and unrealized loss
from portfolio investments - (1,138,125) (251,593)
--------------- --------------- -------------
Net Decrease in Net Assets From Operations $ (43,402) $ (1,317,371) $ (424,660)
=============== =============== ==========
</TABLE>
See notes to financial statements.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
For the Years ended December 31, 1999 and 1998, and for the Period from February
25, 1997 to December 31, 1997
February 25,
1997 to
December 31,
1999 1998 1997
---------------- ---------------- -------------
Change in net assets resulting from operations:
<S> <C> <C> <C>
Net investment loss $ (43,402) $ (179,246) $ (173,067)
Net realized gain from portfolio investments - 240,000 775,250
Change in net unrealized appreciation or depreciation
of portfolio investments - (898,125) (1,026,843)
---------------- ---------------- ---------------
Net decrease in net assets resulting from operations (43,402) (1,317,371) (424,660)
---------------- ---------------- ---------------
Change in net assets from distributions:
Cash distributions paid and accrued (2,791,373) (1,820,461) (2,427,281)
---------------- ---------------- ---------------
Net decrease in net assets for the period (2,834,775) (3,137,832) (2,851,941)
Net assets in liquidation at beginning of period 3,793,538 6,931,370 9,783,311
---------------- ---------------- ---------------
Net Assets in Liquidation at End of Period $ 958,763 $ 3,793,538 $ 6,931,370
================ ================ ===============
Net assets per Unit of beneficial interest or
common equivalent share $ 0.39 $ 1.56 $ 2.86
====== ====== ======
Number of Units of beneficial interest or
common equivalent shares 2,427,281 2,427,281 2,427,281
========= ========= =========
</TABLE>
See notes to financial statements.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
STATEMENTS OF CASH FLOWS
For the Years ended December 31, 1999 and 1998, and for the Period from February
25, 1997 to December 31, 1997
<TABLE>
February 25,
1997 to
December 31,
1999 1998 1997
--------------- --------------- -----------
Cash Flows Used For Operating Activities
<S> <C> <C> <C>
Net investment loss $ (43,402) $ (179,246) $ (173,067)
Adjustments to reconcile net investment loss
to cash used for operating activities:
(Decrease) increase in payables and other liabilities (330,595) 207,036 (1,032,656)
Decrease (increase) in receivables and other assets 58,601 (45,299) 668,557
Depreciation expense - - 12,721
--------------- -------------- --------------
Cash flows used for operating activities (315,396) (17,509) (524,445)
--------------- -------------- --------------
Cash Flows Provided From Investing Activities
Net proceeds from the sale of portfolio investments - - 822,500
--------------- -------------- --------------
Cash flows provided from investing activities - - 822,500
--------------- -------------- --------------
Cash Flows Used For Financing Activities
Cash distributions paid (1,820,461) (1,820,461) (2,427,281)
--------------- -------------- --------------
Decrease in cash and cash equivalents (2,135,857) (1,837,970) (2,129,226)
Cash and cash equivalents at beginning of period 3,604,050 5,442,020 7,571,246
--------------- -------------- --------------
Cash and Cash Equivalents at End of Period $ 1,468,193 $ 3,604,050 $ 5,442,020
=============== ============== ==============
Supplemental disclosure of non-cash financing activities:
Accrued cash distribution $ 970,912 $ - $ -
</TABLE>
See notes to financial statements.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
NOTES TO FINANCIAL STATEMENTS
1. Organization and Purpose
The MicroCap Liquidating Trust (the "Trust"), a liquidating trust established
under the laws of the State of New York, is the successor entity to The MicroCap
Fund, Inc., formerly Commonwealth Associates Growth Fund, Inc. (the "Fund"). The
Fund, which was a Maryland corporation formed on January 26, 1993, was a
non-diversified, closed-end management investment company and operated as a
business development company under the Investment Company Act of 1940. The
Fund's investment objective was to achieve long-term capital appreciation of
assets, rather than current income, by investing in debt and equity securities
of emerging and established companies that management believed offered
significant growth potential.
Pursuant to its Plan of Liquidation, which was approved at a special meeting of
shareholders on July 23, 1996, the Fund transferred all of its remaining assets
and its remaining fixed and contingent liabilities to the Trust, effective as of
the close of business on February 24, 1997, the Fund's termination date.
Also effective as of the close of business on February 24, 1997, the 2,188,085
common shares and 191,357 preferred shares of the Fund, outstanding on such
date, were automatically deemed to represent 2,427,281 units of beneficial
interest in the Trust ("Units"). As a result, on February 24, 1997, each
shareholder of the Fund received one Unit of the Trust for each share of the
Fund's common stock held on such date and 1.25 Units of the Trust for each share
of the Fund's preferred stock held on such date.
2. Significant Accounting Policies
Valuation of Investments - Portfolio investments are carried at fair value as
determined quarterly by the Trustee. The fair value of each publicly-held
portfolio security is adjusted to the closing public market price on the last
day of the calendar quarter discounted by a factor of 0% to 20% for sales
restrictions, if any. Factors considered in the determination of an appropriate
discount include: underwriter lock-up, affiliate status by owning greater than
10% of the outstanding shares of a portfolio security, and other liquidity
factors such as the size of the Trust's position in a given portfolio company
compared to the trading history of the public security. Privately-held portfolio
securities are carried at cost until significant developments affecting the
portfolio company provide a basis for change in valuation, including adjustments
to reflect meaningful third-party transactions in the private market.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles 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.
Investment Transactions - Realized gains and losses on investments sold are
computed on a specific identification basis. The Trust records its transactions
on the accrual method.
Income Taxes - The Trust is a complete pass-through entity for federal income
tax purposes and, accordingly, is not subject to income tax. Instead, each
beneficiary of the Trust is required to take into account, in accordance with
such beneficiary's method of accounting, such beneficiary's pro rata share of
the Trust's income, gain, loss, deduction or expense, regardless of the amount
or timing of distributions to beneficiaries.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
NOTES TO FINANCIAL STATEMENTS - continued
Cash and Cash Equivalents - The Trust invests its available cash in U.S.
Treasury Bills and overnight repurchase agreements collateralized by securities
issued by the U.S. Government or its agencies. Such investments are considered
to be cash equivalents for the statement of cash flows. The cash and cash
equivalents of the Trust include restricted cash of $120,000 relating to the
potential reimbursement of out-of-pocket expenses of a shareholder group that
had solicited proxies in opposition to the Fund's Plan of Liquidation. See Note
5 below.
3. Related Party Transactions
In July 1996, the Fund entered into an agreement with Raymond S. Troubh, whereby
Mr. Troubh provided management services to the Fund in connection with its Plan
of Liquidation and has continued to provide such services to the Trust during
its liquidation. For services rendered under the agreement, Mr. Troubh receives
$8,500 per month, plus 1% of the amount of each distribution (other than the
initial distribution paid by the Fund on August 30, 1996), plus a percentage of
any proceeds of sale or other revenues received by the Fund or the Trust in
excess of the investment in the particular asset. Mr. Troubh was paid 5% of such
excess for amounts received in 1996 and 1997, 4% in 1998, 2% in 1999 and 0%
thereafter.
Commencing January 1, 2000, Mr. Troubh voluntarily reduced his compensation for
management services by 50% to $4,250 per month.
4. Litigation
On April 19, 1996, the Fund filed a complaint against Commonwealth Associates, a
registered broker-dealer and the underwriter of the Fund's initial public
offering, Michael S. Falk, the chief executive officer of Commonwealth
Associates, a minority shareholder and former director of the Fund, and Stephen
J. Warner, a former executive officer of Commonwealth Associates and the former
president of the Fund. The civil action, which was filed in federal court in the
Southern District of New York, alleged fraud, breach of fiduciary duties and
violations of the Investment Company Act of 1940. On December 24, 1996, the Fund
and the defendants agreed to a settlement of the complaint, whereby Commonwealth
Associates agreed to make settlement payments to the Fund or the Trust totaling
$1,150,000. In connection therewith, $500,000 was received in December 1996 and
an additional $650,000 was received in installments during 1997. Interest of
$20,415 was also paid to the Trust with the final installment payment in
December 1997. Additionally, as part of the settlement, the Fund and the
defendants agreed to pursue claims against former counsel to the Fund. The Trust
was entitled to receive 50% of any recovery from such claims after reimbursement
to Commonwealth Associates of all costs and expenses associated with pursuing
the claims. See note 6 below for additional information.
Regency Holdings (Cayman) Inc. ("Holdings") and Regency Maritime Corp.
("Maritime") (collectively "Regency") along with other related entities are
debtors in a bankruptcy case pending in the United States Bankruptcy Court for
the Southern District of New York, 95 B 45197 (TLB). In that bankruptcy case,
Regency initiated an adversary proceeding against the Fund and certain other
persons and entities to recover monies that it paid them on the ground that such
payments constituted voidable preferences or fraudulent conveyances under the
Bankruptcy Code. Holdings maintained that a payment made to the Fund between 90
days and one year prior to the filing of Regency's bankruptcy petition in the
amount of $1,940,000 to satisfy a bridge loan the Fund made to Regency, was a
voidable preference because Kamal Mustafa, the former president of the Fund, was
a director of Regency (and therefore an insider) for a portion of the time that
such amounts were due and owing. Holdings also maintained that such relationship
had an impact on the decision to pay these amounts. Additionally, Holdings
maintained that a payment of $145,728 made to the Fund to redeem certain
warrants issued with respect to the loan transaction was made within 90 days of
the filing of the bankruptcy petition and was therefore a voidable preference
without regard to whether Mustafa was an insider. Alternatively, Maritime
asserted that the foregoing payments were made from its funds, without
reasonably equivalent consideration, and were therefore avoidable as fraudulent
conveyances. The Fund served an answer denying the allegations of the amended
complaint and contested Regency's claims. Pursuant to an order filed with the
Bankruptcy Court, the Trust had set aside approximately $2.4 million in an
interest-bearing cash account pending resolution by the Bankruptcy Court of the
adversary proceeding. Substantial discovery had been undertaken. A limited trial
based upon written submissions to address the validity of Regency's preference
claims was held in December 1997 and resulted in a judgment in favor of the
Trust, dismissing the preference claims with prejudice. A mediator was appointed
to attempt to facilitate a mutually beneficial settlement of the remaining
fraudulent conveyance claims, and a mediation session occurred on October 5,
1998. During that session, the parties reached a tentative consensual resolution
of the fraudulent conveyance claim. The proposed settlement was finalized in
March 1999 and the defendants agreed to pay a total of $535,000, of which the
Trust's share was $281,425, exclusive of legal and other fees and expenses. As a
result of the settlement, the $2.4 million previously set aside became available
to the Trust.
5. Other Information
On July 15, 1996, the Fund entered into a settlement agreement with a group of
shareholders of the Fund's common stock that had solicited proxies in opposition
to the Fund's Plan of Liquidation (the "13D Group"). Under the settlement
agreement, the Fund and the 13D Group agreed that, (i) certain members of the
13D Group and affiliated persons would cease to have business dealings with or
receive compensation from the Fund, (ii) a 13D Group member would have the right
to receive notice of and attend all meetings of the Board of Directors and any
committee meeting thereof, and (iii) subject to the approval of the Securities
and Exchange Commission (the "SEC"), the Trust would reimburse the 13D Group for
its reasonable out of pocket expenses up to $120,000 in connection with the 13D
Group's efforts. An application relating to such reimbursement by the Trust to
the 13D Group was filed with the SEC on September 27, 1996.
The Trust is a creditor of PSSS, Inc., formerly known as Oh-La-La! Inc.
("PSSS"). PSSS confirmed its reorganization plan on May 15, 1998. Pursuant to
the confirmed plan, the Trust may receive a payment on account of its claim
against PSSS if funds become available for distribution. Currently, it is
uncertain whether there will ever be any funds to distribute, or the timing of
any distribution if funds ever become available. As a result, the Trust
wrote-off the remaining $240,000 of cost of its investment in Oh-La-La during
the quarter ended September 30, 1998.
6. Other Income
Other income for the year ended December 31, 1998 includes income received as a
result of the settlement of certain claims against former counsel by the Fund,
Commonwealth Associates, Falk and Warner. Pursuant to the terms of this
settlement agreement, a final payment of $50,000 was received by the Trust on
February 1, 1999.
During the year ended December 31, 1999, the Trust received a settlement payment
of $123,638 in connection with an insurance claim to cover certain legal fees
incurred by the Trust and certain officers and directors in prior years.
<PAGE>
MICROCAP LIQUIDATING TRUST
(Successor to The MicroCap Fund, Inc.)
NOTES TO FINANCIAL STATEMENTS - continued
7. Cash Distributions
The initial liquidating cash distribution totaling $8,495,486 was paid by the
Fund on August 30, 1996 to shareholders of record on August 15, 1996. Common
shareholders received $3.50 per share and preferred shareholders received $4.375
per share. The amount paid to common shareholders was comprised of $0.274 of
long-term capital gain and $3.226 of return of capital. The amount paid to
preferred shareholders was comprised of $0.343 of long-term capital gain and
$4.032 of return of capital. Since its inception and through January 28, 2000,
the Trust has made four additional interim liquidating distributions. Cumulative
liquidating distributions paid to beneficiaries, including the initial
liquidating distribution paid by the Fund, total $15.5 million, or $6.40 per
Unit, as follows:
<TABLE>
Total Per Unit
Date Distribution Amount
-------------------- --------------- ---------
<S> <C> <C> <C>
August 30,1996 $ 8,495,486 $ 3.50
July 15, 1997 2,427,281 1.00
August 28, 1998 1,820,461 .75
March 31, 1999 1,820,461 .75
January 28, 2000 970,912 .40
--------------- --------
Total $ 15,534,601 $ 6.40
=============== ========
</TABLE>
8. Subsequent Event
Subsequent to December 31, 1999, the Trust exercised its warrant to purchase
475,000 common shares of Unigene Laboratories, Inc. at a cost of $653,125, or
$1.375 per share. As of March 20, 2000, the Trust had sold 340,000 shares of
Unigene for net proceeds of $1,357,628. The sale of these shares will result in
a realized gain of $890,128 for the quarter ending March 31, 2000.
<PAGE>
Item 9. Disagreements on Accounting and Financial Disclosure.
----------------------------------------------------
None.
PART III
Item 10. Directors and Executive Officers.
--------------------------------
The following table sets forth certain information with respect to the Trustee
of the Trust.
<TABLE>
Year First
Elected a
Director Position with
Name Age or Officer the Trust
- ---- --- ---------- ------------
<S> <C> <C>
Raymond S. Troubh 73 1996 Trustee
</TABLE>
Raymond S. Troubh served as President, Chief Executive Officer, Treasurer,
Secretary and Director of the Fund since July 1996, and has been the independent
Trustee of the Trust since its formation on February 25, 1997. Mr. Troubh is a
financial consultant in New York City and a former governor of the American
Stock Exchange. He is a graduate of Bowdoin College and Yale Law School and was
a general partner of Lazard Freres & Co., an investment banking firm. Mr. Troubh
is a director of ARIAD Pharmaceuticals, Inc., a pharmaceutical company; Diamond
Offshore Drilling, Inc., an offshore drilling company; Foundation Health
Systems, Inc., a healthcare company; General American Investors Company, an
investment advisory company; Olsten Corporation, a temporary personnel and
healthcare services company; Starwood Hotels & Resorts, a hotel company; WHX
Corporation, a holding company; and Triarc Companies, Inc., a diversified
holding company. He is also a Trustee of Petrie Stores Liquidating Trust, a
liquidating trust holding the assets of a former women's apparel retailer.
Item 11. Executive Compensation.
----------------------
On July 24, 1996, following approval by the Board of Directors of the Fund, Mr.
Troubh entered into a consulting agreement with the Fund and by extension, the
Trust, pursuant to which he was compensated for his management services to the
Trust in the amount of $8,500 per month, plus 1% of the amount of each
distribution (other than the initial distribution paid on August 30, 1996),
plus, a percentage of any proceeds of sale or other revenues received by the
Trust in excess of the Trust's investment in a particular asset. Mr. Troubh was
paid 5% of such excess for amounts received in 1996 and 1997, 4% in 1998, 2% in
1999, and 0% thereafter. For the year ended December 31, 1999, the Trust paid
fees to Mr. Troubh totaling $120,205.
Commencing January 1, 2000, Mr. Troubh voluntarily reduced his compensation for
management services by 50% to $4,250 per month.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
Security Ownership
As of March 15, 2000, Mr. Troubh, the sole Trustee of the Trust, held no units
of beneficial interest in the Trust.
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
Not applicable.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
-----------------------------------------------------------------
(a) 1. Financial Statements
Independent Auditors' Report
Statements of Assets and Liabilities as of December 31, 1999 and 1998
Schedules of Portfolio Investments as of December 31, 1999 and 1998
Statements of Operations for the years ended December 31, 1999 and
1998, and for the period from February 25, 1997 to December 31, 1997
Statements of Changes in Net Assets for the years ended December 31,
1999 and 1998, and for the period from February 25, 1997 to December
31, 1997
Statements of Cash Flows for the years ended December 31, 1999 and
1998, and for the period from February 25, 1997 to December 31, 1997
Notes to Financial Statements
2. Exhibits.
(2) Agreement and Declaration of Trust, dated as of January 28,
1997, between the Fund and Raymond S. Troubh as Trustee (1)
(3) (i) Certificate of Incorporation of the Fund (2)
(ii) (a) Bylaws of the Fund (2)
(b) Amendments to Bylaws of the Fund (3)
(27) Financial Data Schedule
(b) No reports on Form 8-K have been filed during the last quarter of the
period for which this report is filed.
- -----------------------
(1) Incorporated by reference to the Fund's Form 10-K for the period
from March 1, 1996 to February 24, 1997, filed on May 15, 1997.
(2) Incorporated by reference to the Fund's Form N-2, as amended, filed on
January 29, 1993.
(3) Incorporated by reference to the Fund's Form 10-K for the fiscal year
ended February 29, 1996, filed on June 13, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
MICROCAP LIQUIDATING TRUST
/s/ Raymond S. Troubh
Raymond S. Troubh
Trustee
Date: March 29, 2000
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MICROCAP
LIQUIDATING TRUST'S ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED DECEMBER 31,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> DEC-31-1999
<INVESTMENTS-AT-COST> 1,937,500
<INVESTMENTS-AT-VALUE> 484,375
<RECEIVABLES> 6,225
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,468,193
<TOTAL-ASSETS> 1,958,793
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,000,030
<TOTAL-LIABILITIES> 1,000,030
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2,427,281
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (1,453,125)
<NET-ASSETS> 958,763
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 94,220
<OTHER-INCOME> 123,638
<EXPENSES-NET> 261,260
<NET-INVESTMENT-INCOME> (43,402)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> (43,402)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 2,791,373
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (2,834,775)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 2,376,151
<PER-SHARE-NAV-BEGIN> 1.563
<PER-SHARE-NII> (0.018)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.15)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0.395
<EXPENSE-RATIO> 0
</TABLE>
