<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 1999
/ / 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 814-00141
Venture Lending & Leasing II, Inc.
----------------------------------
(Exact Name of Registrant as specified in its charter)
Maryland 77-0456589
---------------- ---------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
or organization) Identification No.)
2010 North First Street, Suite 310, San Jose, CA 95131
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(408) 436-8577
------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant has (i) filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (ii) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding as of April 30, 1999
- ----------------------------------- --------------------------------
Common Stock, $.001 par value 44,000
Page 1 of 13; Exhibit Index appears on Page 13
<PAGE>
VENTURE LENDING & LEASING II, INC.
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Financial Position 3
March 31, 1999 (Unaudited) and June 30, 1998
Statements of Operations (Unaudited) 4
Three months ended March 31, 1999 and March 31, 1998 and the nine
months ended March 31, 1999 and the period from September 15,
1997(commencement of operations) to March 31, 1998
Statements of Changes in Shareholders' Equity (Unaudited) 5
For the period from September 15, 1997(commencement of operations) to
June 30, 1998 and the nine months ended March 31, 1999
Statements of Cash Flows (Unaudited) 6
Nine months ended March 31, 1999 and the period from September 15,
1997 (commencement of operations) to March 31, 1998
Notes to Financial Statements 7 - 10
Item 2. Management's Discussion and Analysis of Financial 11 - 12
Condition and Results of Operations
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits 13
SIGNATURES 13
</TABLE>
2
<PAGE>
VENTURE LENDING & LEASING II, INC.
STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
- ----------------------------------------------------------------------------------
March 31, 1999 June 30, 1998
- ----------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Loans and leases, at estimated fair value,
which equals cost $ 68,831,574 $ 22,768,445
Investments in warrants, at estimated fair value
(cost of $1,440,550 and $487,850) 3,076,922 487,850
Investments in stocks, at estimated fair value
(cost of $0 and $328,655) - 972,347
Cash and cash equivalents 6,568,434 7,091,890
Other assets 435,437 283,192
-------------- --------------
Total assets 78,912,367 31,603,724
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Bank loans 31,708,210 9,008,210
Management fees payable 687,500 687,500
Accounts payable and other accrued liabilities 845,534 393,052
-------------- --------------
Total liabilities 33,241,244 10,088,762
Shareholders' equity:
Common stock, $.001 par value:
Authorized - 2,000 shares
Issued and outstanding - 44,000 shares 44 22
Capital in excess of par value 43,999,956 21,999,978
Distributions (2,046,990) -
Accumulated earnings (deficit) 3,718,113 (485,038)
-------------- --------------
Total shareholders' equity 45,671,123 21,514,962
Total liabilities and shareholders' equity $ 78,912,367 $ 31,603,724
- ----------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
VENTURE LENDING & LEASING II, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
For the Three For the Three For the Nine For the period from
Months Ended Months Ended Months Ended September 15, 1997*
March 31, 1999 March 31, 1998 March 31, 1999 to March 31, 1998
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest on loans and leases $ 2,113,040 $ 255,774 $ 4,535,844 $ 286,160
Interest on short-term investments 137,339 38,704 318,530 151,997
----------- ----------- ------------ -------------
Total investment income 2,250,379 294,478 4,854,374 438,157
----------- ----------- ------------ -------------
EXPENSES
Management fees 687,500 687,500 2,062,500 1,495,548
Interest expense 466,922 39,412 974,268 39,412
Bank loan facility fee 32,405 - 112,018 -
Other operation expenses 73,874 86,215 157,605 147,246
----------- ----------- ------------ -------------
Total expenses 1,206,701 813,127 3,306,391 1,682,206
----------- ----------- ------------ -------------
Net investment income (loss) 989,678 (518,649) 1,547,983 (1,244,049)
----------- ----------- ------------ -------------
Net change in unrealized gain from
investment transactions 1,636,372 60,418 992,680 60,418
----------- ----------- ------------ -------------
Net realized gain from investment
transactions - - 1,662,488 -
----------- ----------- ------------ -------------
Net Income (loss) $ 2,626,050 $ (458,231) $ 4,203,151 $ 1,183,631
----------- ----------- ------------ -------------
Net Income (loss) per share $ 67.14 $ (41.66) $ 137.58 $ (122.24)
----------- ----------- ------------ -------------
Weighted average shares outstanding 39,111.11 11,000.00 30,551.09 9,682.83
----------- ----------- ------------ -------------
</TABLE>
*commencement of operations
The accompanying notes are an integral part of these statements.
4
<PAGE>
VENTURE LENDING & LEASING II, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE *PERIOD ENDED JUNE 30, 1998 AND
THE NINE MONTHS ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
COMMON STOCK CAPITAL IN
---------------- EXCESS OF ACCUMULATED
SHARES AMOUNT PAR VALUE DISTRIBUTIONS EARNINGS TOTAL
(DEFICIT)
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 15, 1997 50 $ - $ 50,000 $ - $ - $ 50,000
Sales of common stock 21,950 22 21,949,978 - - 21,950,000
Net Loss - - - - (485,038) (485,038)
-------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1998 22,000 22 21,999,978 - (485,038) 21,514,962
Sales of common stock 22,000 22 21,999,978 - - 22,000,000
Distribution - - - (2,046,990) - (2,046,990)
Net Income - - - - 4,203,151 4,203,151
-------------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1999 44,000 $ 44 $43,999,956 $ (2,046,990) $ 3,718,113 $ 45,671,123
-------------------------------------------------------------------------------------------
</TABLE>
*From commencement of operations
The accompanying notes are an integral part of these statements
5
<PAGE>
VENTURE LENDING & LEASING II, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------- -------------------
For the Nine *For the Period
Months Ended Ended
March 31, 1999 March 31, 1998
- -------------------------------------------------------------------------------------- -------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4,203,151 $ (1,183,631)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Amortization of deferred assets 91,698 21,632
Unrealized gain from investment transactions (992,680) (60,418)
Gain on sale of securities (1,662,489) -
Increase in other assets (182,232) (59,377)
Increase in accounts payable and other accrued liabilities 390,771 730,458
----------------- -------------------
Net cash provided by (used in) operating activities $ 1,848,219 $ (551,336)
----------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of loans and leases (56,156,823) (16,420,254)
Principal payments on loans and leases 10,093,694 1,574,237
Proceeds from sale of securities 1,991,144 -
Acquisition of warrants and stock (952,700) (394,350)
----------------- -------------------
Net cash used in investing activities (45,024,685) (15,240,367)
----------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sales of common stock, net 22,000,000 11,000,000
Distributions to shareholders (2,046,990) -
Loans from bank 22,700,000 9,008,210
----------------- -------------------
Net cash provided by financing activities 42,653,010 20,008,210
----------------- -------------------
Net increase (decrease) in cash and cash equivalents (523,456) 4,216,507
CASH AND CASH EQUIVALENTS:
Beginning of period 7,091,890 -
----------------- -------------------
End of period $ 6,568,434 $ 4,216,507
----------------- -------------------
CASH PAID DURING THE PERIOD FOR:
Interest $ 974,268 $ -
Taxes $ 1,600 $ -
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*From commencement of operations, September 15, 1997
The accompanying notes are an integral part of these statements
6
<PAGE>
VENTURE LENDING & LEASING II, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
1. BASIS OF PRESENTATION
The accompanying condensed financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission (SEC) and in
Management's opinion, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of results for such
interim periods. Certain information and note disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to SEC rules or regulations;
however, the Fund believes that the disclosures made are adequate to make the
information presented not misleading. The interim results for the nine months
ended March 31, 1999 and the period ending March 31, 1998, are not necessarily
indicative of results for the full year. It is suggested that these financial
statements be read in conjunction with the financial Statements and the notes
included in the Fund's Annual Report for the period ended June 30, 1998.
2. SUMMARY OF INVESTMENTS:
Loans and leases generally are made to borrowers pursuant to commitments
whereby the Fund commits to finance assets up to a specified amount for the
term of the commitments, upon the terms and subject to the conditions
specified by such commitment. The Fund's investments in loans and leases are
entirely within the United States and are diversified among the following
industries. The percentage of shareholders' equity (net assets) that each
industry group represents is shown with the industry totals:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Industry Outstanding
- --------------------------------------------------------------------------------------------------------
<S> <C>
Biotech:
Cellgate $ 1,044,862
Ceres 2,674,291
Genteric 200,609
Metamorphix 457,800
Therics 852,001
-------------------
Total biotech (11.45%) $ 5,229,563
-------------------
Communications:
Aunet, Inc. $ 600,516
Cerent Corporation 1,917,134
Cosine Communications, Inc. 3,086,724
Cyras Systems, Inc. 1,523,828
Digital Generation Systems, Inc. 4,169,921
Exodus Communications, Inc. 2,885,605
Juniper Networks, Inc. 2,131,797
Magellan Network Systems, Inc. 650,912
Ramp Networks, Inc. 3,828,983
-------------------
Total communications (45.53%) $ 20,795,420
-------------------
7
<PAGE>
Computers and peripherals:
Applied Magnetics Corporation $ 3,104,477
New Focus, Inc. 717,391
Quantum3D, Inc. 197,549
Svision 1,053,333
-------------------
Total computers and peripherals (11.11%) $ 5,072,750
-------------------
Internet:
Adforce $ 250,829
Keynote Systems Incorporated 274,811
Netratings 288,844
-------------------
Total internet (1.78%) $ 814,484
-------------------
Medical device:
Aerogen, Inc. $ 350,382
Heaertstent Corporation 293,112
Intratherapeutics, Inc. 3,263,571
Myelotec, Inc. 336,403
Protein Delivery, Inc. 305,466
Spinal Concepts, Inc. 321,199
Survivalink Corporation 1,111,023
Volumetrics Medical Imaging, Inc. 613,101
-------------------
Total medical devices (14.44%) $ 6,594,257
-------------------
Semiconductors and equipment:
Abpac, Inc. $ 1,993,950
Abrizio 926,159
Chameleon Systems, Inc. 869,397
Dynachip Corporation 357,661
Icompression, Inc. 819,953
Lightwave Microsystems Corporation 364,722
NuCore Technology, Inc. 463,940
Obsidian, Inc. 4,918,752
Poseidon Technology, Inc. 1,175,679
Quantum Effect Design, Inc. 1,884,645
Smart Machines, Inc. 1,382,819
Telecruz Technology, Inc. 1,078,081
Transmeta Corporation 1,733,940
0-in Design Automation 264,897
ZSP Corporation 291,466
-------------------
Total semiconductors and equipment (40.56%) $ 18,526,061
-------------------
8
<PAGE>
Software:
Acme Software, Inc. $ 171,401
Mineshare, Inc. 473,653
Personics Software, Inc. 838,098
Plenan Systems, Inc. 296,519
Sycon Design, Inc. 291,013
USInternetworking, Inc. 8,597,252
-------------------
Total software (23.36%) $ 10,667,936
-------------------
Other:
Intelligent Systems For Retail $ 1,114,268
-------------------
Total other (2.44%) $ 1,114,268
-------------------
Total $ 68,831,574
-------------------
</TABLE>
The Fund provides asset-based financing primarily to start-up and emerging
growth venture-capital-backed companies. As a result, the Fund is subject to
general credit risk associated with such companies. At March 31, 1999, the Fund
has unfunded commitments to borrowers of $86,129,129
At March 31, 1999, the Fund held warrants to purchase 5,039,079 shares of common
and preferred stock in 56 companies, of which three companies are publicly
traded. Warrants issued by private companies do not have a readily ascertainable
market value and are assigned a minimal value at the time of acquisition. These
warrants had a value of $3,076,922 at March 31, 1999.
The Fund's investments in warrants are entirely within the United States and are
diversified among the following industries. The percentage of net assets that
each industry group represents is shown with the industry totals:
<TABLE>
<CAPTION>
PERCENTAGE OF
SHAREHOLDERS' EQUITY
INDUSTRY WARRANT VALUE (NET ASSETS)
- --------------------------------------------------------------------------------
<S> <C> <C>
Biotechnology $ 108,000 0.23%
Communications 2,095,581 4.58%
Computer and peripherals 136,791 0.30%
Internet 17,250 0.04%
Medical devices 103,100 0.23%
Other 35,000 0.08%
Semiconductor 400,400 0.88%
Software 180,800 0.40%
------------------------------------
Total warrants $3,076,922 6.74%
------------------------------------
</TABLE>
3. EARNINGS PER SHARE:
The Fund adopted Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share," effective December 31, 1997. SFAS No. 128 replaces primary
and fully diluted earnings per share with basic and diluted earnings per share
calculations. Basic earnings per share are computed by dividing net income, less
dividends on preferred stock, by the weighted average common shares outstanding.
Diluted earnings per share are computed by dividing net income, less dividends
on preferred stock, by the weighted average common shares outstanding, including
the dilutive effects of potential common shares (e.g., stock options). The Fund
has no preferred stock or instruments that would be potential common shares;
thus, reported basic and diluted earnings are the same.
9
<PAGE>
4. FUTURE FINANCIAL ACCOUNTING STANDARDS:
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement and requires that a company formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999, and
the Fund plans to adopt its provisions effective July 1, 1999. From time to
time, the Fund enters into interest rate swaps to hedge its interest rate.
Additionally, certain of its investments and long-term borrowings may have
embedded options due to call or put features that would be required to be
accounted for differently under SFAS No. 133 as compared to current accounting
principles. The Fund has not yet quantified the impact of adopting SFAS No. 133
on its financial statements; however, SFAS No. 133 could increase the volatility
of future earning
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Venture Lending & Leasing II, Inc. ("Fund") is a closed-end,
non-diversified management investment company electing status as a business
development company under the Investment Company Act of 1940 ("1940 Act"). The
Fund's investment objective is to achieve a high total return. The Fund will
provide asset-based financing to carefully selected venture capital-backed
companies, in the form of secured loans, installment sales contracts or
equipment leases. The Fund generally will receive warrants to acquire equity
securities in connection with its portfolio investments.
The Fund's shares of Common Stock, $.001 par value ("Shares") are sold
to subscribers pursuant to one or more capital calls to be made from time to
time until September 15, 2001. The Fund will seek to require payment by
investors pursuant to each capital call of only that portion of the total dollar
amount subscribed for that the Fund expects will be needed to fund commitments
entered into within a reasonable time after such capital call. The Fund has made
four capital calls since inception for a total of 40% of committed capital.
Total committed capital as of March 31, 1999 was $110 million; a total of
$44.0 million has been called.
In addition to the historical information contained herein, this
Quarterly Report contains certain forward-looking statements. The reader of this
Quarterly Report should understand that all such forward-looking statements are
subject to various uncertainties and risks that could affect their outcome. The
Fund's actual results could differ materially from those suggested by such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, variances in the actual versus
projected growth in assets, return on assets, loan losses, expenses, rates
charged on loans and earned on securities investments and competition effects as
well as other factors. This entire Quarterly Report should be read to put such
forward-looking statements in context and to gain a more complete understanding
of the uncertainties and risks involved in the Fund's business.
RESULTS OF OPERATIONS -- FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1999 AND
1998
Total investment income for the three months ending March 31, 1999 and
1998 was $2.3 million and $294 thousand, respectively, of which $2.1 million and
$256 thousand, consisted of interest on venture loans outstanding during the
period. The remaining income consisted of interest on the temporary investment
of cash, pending investment in venture loans and leases or application to the
Fund's expenses.
Total investment income for the fiscal year to date periods ending
March 31, 1999 and 1998 was $4.9 million and $438 thousand, respectively, of
which $4.5 million and $286 thousand, consisted of interest on venture loans
outstanding during the period. As the Fund commenced operations on September
15, 1997, the period ended March 31, 1998 reflects only a nominal amount of
income. Investment income should increase in future periods as the Fund's
balance of loans outstanding continues to grow.
Expenses for the quarters ending March 31, 1999 and 1998 were $1.3
million and $813 thousand, respectively. The Fund posted an unrealized gain on
investments of $1.6 million during the period ending March 31, 1999 resulting in
net income of $2.6 million for the three month period. There was a $60 thousand
unrealized investment gain during the period ended March 31, 1998 leaving the
Fund with a net loss of $458 thousand during the period. On a per share basis,
the three months ending March 31, 1999 and 1998 resulted in net income of $67.14
and a net loss $41.66, respectively.
The primary expense of the Fund for the three months ended March 31,
1999 and 1998 was the
11
<PAGE>
management fee of $688 thousand incurred during each of the periods, which is
imposed at an annual rate of 2.5% of committed capital. Because the
management fee is imposed on committed capital for the first two years of the
Fund's life, it may represent more than 2.5% of invested assets (and reduce
net income correspondingly).
Interest expense for the three months ended March 31, 1999 was $467
thousand as the Fund increased its borrowings against its line of credit. There
was $39 thousand in interest expense in the corresponding period of the prior
year as the Fund had no borrowings during most of the quarter. Interest expense
is expected to become a significant portion of the Fund's operating expense as
the Fund begins to use borrowed money in addition to its equity capital to fund
loans. Expenses, other than the management fee and interest expense, are
relatively fixed and should decrease as a percentage of investment income as the
Fund's assets increase.
Expenses for the fiscal year to date periods ending March 31, 1999 and
1998 were $3.3 million and $1.7 million, respectively. The Fund posted an
unrealized gain on investments of $993 thousand and a realized gain of $1.7
million during the period ending March 31, 1999 resulting in net income of $4.2
million for the period. There was a $60 thousand unrealized investment gain
during the period ended March 31, 1998 leaving the Fund with a net loss of $1.2
million during the period. On a per share basis, the periods ending March 31,
1999 and 1998 resulted in net income of $137.58 and a net loss $122.24,
respectively.
LIQUIDITY AND CAPITAL RESOURCES -- MARCH 31, 1999
Total capital committed to the purchase of shares pursuant to
subscription agreements stood at $110 million at December 31, 1997 when the Fund
stopped accepting new subscriptions. As of March 31, 1999, $44 million
representing 40% of this committed capital, was called to fund investments in
venture loans and leases and to meet the Fund's expenses. Additional capital may
be drawn from subscribers upon 15 days' notice.
The Fund increased its credit facility with a syndicate of major banks
to finance the acquisition of asset-based loans and leases to $42 million. As of
March 31, 1999 there was $31.7 million outstanding under this facility.
Outstanding balances bear interest at either the financial institution's prime
rate or 1.25 percent above LIBOR at the Fund's option.
As of March 31, 1999, 8% of the Fund's assets consisted of cash and
cash equivalents. The Fund invested $56.2 million in venture loans and leases
during this fiscal year, and net loan amounts outstanding after amortization
stand at approximately $68.8 million. Amounts committed but undrawn increased to
approximately $86.1 million. Because venture loans and leases are privately
negotiated transactions, investments in these assets are relatively illiquid.
As long as the Fund qualifies as a RIC, it will not pay any federal or
state corporate income tax on income that is distributed to shareholders
(pass-through status). Should the Fund lose its qualification as a RIC, it could
be taxed as an ordinary corporation on its taxable income for that year (even if
that income is distributed to its shareholders), and all distributions out of
its earnings and profits will be taxable to shareholders as ordinary income.
12
<PAGE>
YEAR 2000 ISSUE
The Fund utilizes software and related information technologies that
will be affected by the date change in the year 2000. The year 2000 issue exists
because many computer systems and applications currently use two-digit date
fields to designate a year. When the century date change occurs, certain
date-sensitive systems may recognize the year 2000 as 1900, or not at all. This
inability to recognize or properly treat the year 2000 may result in a systems
failure or cause systems to process critical financial and operational
information incorrectly. Additionally, many of the Fund's customers and service
providers use software and information technology that could also be affected by
the date change.
Based on ongoing assessments and testing, the Fund believes that there
is no material risk of business interruption as a result of computer errors or
inefficiencies. Consequently, the Fund does not anticipate that the remediation
costs associated with the year 2000 issue will be material. The Fund is also
working with its vendors and customers to obtain reasonable assurances that they
are taking comparable steps with respect to their year 2000 exposures. However,
in the event that significant vendors or customers do not adequately address the
year 2000 issue, it could have a material adverse effect on the Fund's
operations and financial position. The Fund's contingency plan includes
switching to vendors that are year 2000 compliant and utilizing backup systems
that do not rely on computers. The steps the Fund is taking and intends to take
do not guarantee complete success or eliminate the possibility that the Fund
will not be adversely affected by the matters related to the year 2000.
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6. EXHIBITS
27. Financial Data Schedule
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 duly authorized.
VENTURE LENDING & LEASING II, INC.
(Registrant)
By: /S/ Ronald W. Swenson By: /S/ Salvador O. Gutierrez
--------------------------------- ---------------------------------
Ronald W. Swenson Salvador O. Gutierrez
Chairman and Chief Executive Officer President, Chief Financial Officer
and Chief Accounting Officer
Date: May 14, 1999 Date: May 14, 1999
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-01-1999
<INVESTMENTS-AT-COST> 70,272
<INVESTMENTS-AT-VALUE> 71,908
<RECEIVABLES> 0
<ASSETS-OTHER> 435
<OTHER-ITEMS-ASSETS> 6,568
<TOTAL-ASSETS> 78,912
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 31,708
<OTHER-ITEMS-LIABILITIES> 1,533
<TOTAL-LIABILITIES> 33,241
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44,000
<SHARES-COMMON-STOCK> 44
<SHARES-COMMON-PRIOR> 22
<ACCUMULATED-NII-CURRENT> 35
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,636
<NET-ASSETS> 45,671
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4,854
<OTHER-INCOME> 0
<EXPENSES-NET> 3,306
<NET-INVESTMENT-INCOME> 1,548
<REALIZED-GAINS-CURRENT> 1,662
<APPREC-INCREASE-CURRENT> 993
<NET-CHANGE-FROM-OPS> 4,203
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 385
<DISTRIBUTIONS-OF-GAINS> 1,662
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 22
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 47,308
<ACCUMULATED-NII-PRIOR> (1,129)
<ACCUMULATED-GAINS-PRIOR> 279
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,063
<INTEREST-EXPENSE> 974
<GROSS-EXPENSE> 3,306
<AVERAGE-NET-ASSETS> 33,593
<PER-SHARE-NAV-BEGIN> 977.95
<PER-SHARE-NII> 50.67
<PER-SHARE-GAIN-APPREC> 86.91
<PER-SHARE-DIVIDEND> 12.60
<PER-SHARE-DISTRIBUTIONS> 54.4
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1,037.98
<EXPENSE-RATIO> .098
<AVG-DEBT-OUTSTANDING> 20,358
<AVG-DEBT-PER-SHARE> 462.68
</TABLE>
