<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 ended April 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-28405
MEVC DRAPER FISHER JURVETSON FUND I, INC.
(Exact name of the registrant as specified in its charter)
DELAWARE 94-3346760
(State or other jurisdiction of (I.R.S. Employer
incorpration or organization) Identification No.)
991 Folsom Street, Suite 301 San
Francisco, California 94107-1020
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: (415) 977-6150
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Common Stock New York Stock Exchange
------------------- ---------------------------------
Securities registered pursuant to Section 12(g) of the Act: None
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 [ ]
As of June 09, 2000 there were 16,500,000 shares of Registrant's common stock,
$.01 par value, outstanding. The net asset value of a share at April 30, 2000
was $18.95.
<PAGE>
meVC Draper Fisher Jurvetson Fund I, Inc.
(A Delaware Corporation)
Index
Part I. Financial Information Page
Item 1. Financial Statements
Balance Sheet
- April 30, 2000........................................ 01
Statement of Operations
- March 31, 2000 to April 30, 2000...................... 02
Statement of Cash Flows
- March 31, 2000 to April 30, 2000...................... 03
Statement of Shareholders' Equity
- March 31, 2000 to April 30, 2000...................... 04
Selected Per Share Data and Ratios
- March 31, 2000 to April 30, 2000...................... 05
Schedule of Investments
- April 30, 2000........................................ 06
Notes to Financial Statements............................. 08
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 12
Item 3. Quantitative and Qualitative Disclosure about Market Risk.. 14
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K........................... 15
SIGNATURE................................................................... 16
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEVC DRAPER FISHER JURVETSON FUND I, INC.
BALANCE SHEET
APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Cash and cash equivalents (Note 2)............................. $ 270,894,670
Investments, at fair value
(cost $42,301,937), (Note 2)............................. 42,297,453
Interest receivable............................................ 87,451
---------------
TOTAL ASSETS................................................... 313,279,574
===============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Management fee payable (Notes 3, 6)............................ $ 660,932
SHAREHOLDERS' EQUITY:
Common Stock, $0.01 par value; 150,000,000 shares
authorized and 16,500,000 outstanding
at April 30, 2000..................................... 165,000
Additional paid in capital................................. 311,485,000
Retained earnings.......................................... 968,642
---------------
TOTAL SHAREHOLDERS' EQUITY..................................... 312,618,642
---------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..................... $ 313,279,574
===============
NET ASSET VALUE PER SHARE...................................... $ 18.95
===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
MEVC DRAPER FISHER JURVETSON FUND I, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 31, 2000* TO APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Interest income..........................................$ 1,634,058
---------------
OPERATING EXPENSES:
Management fees (Notes 3, 6)............................. 660,932
---------------
NET INVESTMENT INCOME............................................. 973,126
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENT TRANSACTIONS:
Net unrealized depreciation on
investment transactions.................................. (4,484)
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..............$ 968,642
===============
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE....$ 0.06
===============
DIVIDENDS DECLARED PER SHARE......................................$ 0.00
===============
</TABLE>
* Commencement of operations.
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
MEVC DRAPER FISHER JURVETSON FUND I, INC.
STATEMENT OF CASH FLOWS
FOR THE PERIOD MARCH 31, 2000* TO APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..........$ 968,642
Adjustments to reconcile net cash provided by operations:
Change in unrealized depreciation........................ 4,484
Changes in assets and liabilities:
Management fee payable.............................. 660,932
Interest receivable................................. (87,451)
-----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES................ 1,546,607
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities....................... (42,301,937)
Purchases of short-term investments...................... (1,053,327,836)
Sales/Maturities of short-term investments............... 1,053,327,836
-----------------
NET CASH USED FOR INVESTING ACTIVITIES................... (42,301,937)
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Gross proceeds from initial public offering.............. 330,000,000
Sales load............................................... (16,500,000)
Advisory fee, Prudential Securities Incorporated......... (1,500,000)
Deferred offering costs.................................. (350,000)
Redemption of seed money................................. (5,000)
-----------------
NET CASH USED FOR FINANCING ACTIVITIES................... 311,645,000
-----------------
NET CHANGE IN CASH AND CASH EQUIVALENTS FOR THE PERIOD............ 270,889,670
-----------------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.................... 5,000
-----------------
CASH AND CASH EQUIVALENTS, END OF THE PERIOD......................$ 270,894,670
==================
</TABLE>
* Commencement of operations.
The Company paid no interest or federal income tax during the period.
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
MEVC DRAPER FISHER JURVETSON FUND I, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE PERIOD MARCH 31, 2000* TO APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID IN RETAINED SHAREHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
BALANCE AT MARCH 31, 2000 $ 3 $ 4,997 $ -- $ 5,000
Issuance of 16,500,000 shares through
Initial public offering 165,000 311,485,000 -- 311,650,000
Redemption of seed shares (3) (4,997) -- (5,000)
Net increase in net assets from operations -- -- 968,642 968,642
---------------- ---------------- --------------- ---------------
BALANCE AT APRIL 30, 2000 $ 165,000 $ 311,485,000 $ 968,642 $ 312,618,642
---------------- ---------------- --------------- ---------------
</TABLE>
* Commencement of operations.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
MEVC DRAPER FISHER JURVETSON FUND I, INC.
SELECTED PER SHARE DATA AND RATIOS
FOR THE PERIOD MARCH 31, 2000* TO APRIL 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
Net proceeds from initial public offering (a)........................... 18.89
Income (loss) from investment operations:
Net investment income................................................ 0.06
Less distributions from and in excess of:
Net investment income................................................ 0.00
Net realized and unrealized gain..................................... 0.00
------------
Total distributions.................................................. 0.00
------------
Net asset value, end of period ......................................... $ 18.95
============
TOTAL RETURN - AT NAV (b)................................................ 0.32%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)................................. 312,618
Ratios to average net assets:
Expenses (c) (Note 3)................................................... 2.50%
Net investment income (d)............................................... 0.31%
</TABLE>
NOTES TO SUPPLEMENTAL INFORMATION:
* Commencement of operations.
(a) Net of initial sales load, underwriting and offering costs of $1.11
per share.
(b) Total return is historical and assumes changes in unit price,
reinvestment of all dividends and distributions, and no sales charge.
Periods of less than one year are not annualized.
(c) Annualized for periods of less than one year.
(d) For the period March 31, 2000 to April 30, 2000.
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
MEVC DRAPER FISHER JURVETSON FUND I, INC.
SCHEDULE OF INVESTMENTS
APRIL 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Date of
Principal Initial Principal
Name / Face Rate / Maturity ($000) Investment Amount Value
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER
ABB Treasury Centre (USA) Inc.
6.020%, 05/04/2000 ................... 15,000 April 2000 14,992,475 14,992,475
American Express Credit Corp.
6.000%, 05/17/2000 ................... 14,000 April 2000 13,962,667 13,962,667
Bell South Telecommunications
6.010%, 05/22/2000 ................... 10,500 April 2000 10,463,189 10,463,189
Caterpillar Financial Services
6.020%, 05/22/2000 ................... 11,100 April 2000 11,061,020 11,061,020
Coca Cola Company
6.030%, 05/23/2000 ................... 15,000 April 2000 14,944,725 14,944,725
DaimlerChrysler
6.020%, 05/09/2000 ................... 15,000 April 2000 14,979,933 14,979,933
DuPont E.I. de Nemours & Company
6.030%, 05/04/2000 ................... 13,240 April 2000 13,233,347 13,233,347
Ford Motor Credit Company
6.030%, 05/18/2000 ................... 15,000 April 2000 14,957,288 14,957,288
General Electric Capital Corp.
6.300%, 05/15/2000 ................... 15,000 April 2000 14,964,825 14,964,825
Gillette Company
6.010%, 05/09/2000 ................... 10,000 April 2000 9,986,644 9,986,644
International Lease Finance Corp.
6.010%, 05/04/2000 ................... 15,000 April 2000 14,992,488 14,992,488
Kimberly Clark Corp.
6.000%, 05/17/2000 ................... 15,000 April 2000 14,960,000 14,960,000
Lucent Technology Inc.
5.990%, 05/08/2000 ................... 15,000 April 2000 14,982,529 14,982,529
Morgan (J.P.) & Company, Inc.
6.040%, 05/03/2000 ................... 15,000 April 2000 14,994,967 14,994,967
National Rural Utilities Corp.
6.000%, 05/02/2000 ................... 5,350 April 2000 5,349,108 5,349,108
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
MEVC DRAPER FISHER JURVETSON FUND I, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
APRIL 30, 2000
(UNAUDITED)
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Date of
Principal Initial Principal
Name / Face Rate / Maturity ($000) Investment Amount Value
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER (CONT.)
Paccar Financial Corp.
6.000%, 05/05/2000 ................... 15,000 April 2000 14,990,000 14,990,000
UBS Finance Delaware Inc.
6.040%, 05/01/2000 ................... 15,000 April 2000 15,000,000 15,000,000
USAA Capital Corp.
6.000%, 05/23/2000 ................... 12,000 April 2000 11,956,000 11,956,000
Warner Lambert Company
6.000%, 05/30/2000 ................... 15,000 April 2000 14,927,500 14,927,500
Wells Fargo and Company
6.040%, 05/15/2000 ................... 15,000 April 2000 14,964,767 14,964,767
-------------- --------------
TOTAL COMMERCIAL PAPER 270,663,472 270,663,472
-------------- --------------
MONEY MARKET FUNDS
SSgA Money Market Fund
5.766% ............................... 231 April 2000 231,198 231,198
-------------- --------------
TOTAL COMMERCIAL PAPER AND MONEY MARKET FUNDS 270,894,670 270,894,670
=============== ===============
CERTIFICATE OF DEPOSIT
Bank Nova Scotia
6.695%, 02/12/2001 ................... 3,000 April 2000 2,999,063 2,999,063
-------------- --------------
U.S. GOVERNMENT & AGENCY SECURITIES
Federal Farm Credit Banks
5.125%, 04/02/2001 ................... 10,000 April 2000 9,868,774 9,864,290
Federal Home Loan Mortgage Disc. Note
6.020%, 07/06/2000 ................... 15,000 April 2000 14,834,450 14,834,450
Federal National Mortgage Assoc. Disc. Note
6.120%, 10/05/2000 ................... 15,000 April 2000 14,599,650 14,599,650
-------------- --------------
TOTAL U.S. GOVERNMENT & AGENCY 39,302,874 39,298,390
-------------- --------------
TOTAL CERTIFICATE OF DEPOSIT AND U.S. GOVERNMENT & AGENCY SECURITIES 42,301,937 42,297,453
=============== ===============
TOTAL .................................................................... $ 313,196,607 $ 313,192,123
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
meVC Draper Fisher Jurvetson Fund I, Inc.
Notes to Financial Statements
April 30, 2000
(Unaudited)
1. ORGANIZATION AND BUSINESS PURPOSE
meVC Draper Fisher Jurvetson Fund I, Inc. (the "Fund"), a closed-end
investment company sponsored by meVC.com, Inc. ("meVC.com"), was organized as a
Delaware corporation on December 2, 1999. The Fund seeks to achieve long-term
capital appreciation from equity and equity-oriented securities issued by
privately owned companies in transactions negotiated directly with such
companies ("Portfolio Companies"). The Fund seeks to make venture capital
investments in information technology companies, primarily in the Internet,
e-commerce, telecommunications, networking, software and information services
industries. The Fund's investments in portfolio companies will consist
principally of equity securities such as common and preferred stock, but may
also include other equity-oriented securities such as debt convertible into
common or preferred stock or debt combined with warrants, options or other
rights to acquire common or preferred stock. Current income is not a significant
factor in the selection of portfolio company investments. The Fund has elected
to be treated as a business development company under the Investment Company Act
of 1940, as amended ("the Act"). The shares of the Fund are authorized to list
on the New York Stock Exchange under the symbol MVC but trading will commence no
later than June 26, 2000. The Fund has entered into an advisory agreement with
meVC Advisers, Inc. ("meVC Advisers"), a wholly-owned subsidiary of meVC.com.
meVC Advisers has entered into a sub-advisory agreement with Draper Fisher
Jurvetson MeVC Management Co., LLC (the "Sub-Adviser").
2. SIGNIFICANT ACCOUNTING POLICIES
INTERIM FINANCIAL STATEMENTS - The interim financial statements have been
prepared by meVC Draper Fisher Jurvetson Fund I, Inc. pursuant to the rules and
regulations of the Securities and Exchange Commission applicable to quarterly
reports on Form 10-Q. The unaudited financial statements reflect, in the opinion
of management, all adjustments, all of which are of a normal recurring nature,
necessary to present fairly the financial position of the Fund as of April 30,
2000, the results of its operations for the fiscal quarter ended April 30, 2000,
the statement of shareholders' equity as of April 30, 2000, its cash flows for
the fiscal quarter ended April 30, 2000, its per share data and ratios as of
April 30, 2000, and its schedule of investments as of fiscal quarter end April
30, 2000. Interim results are not necessarily indicative of results to be
expected for a full fiscal year.
VALUATION OF INVESTMENTS - Portfolio investments are carried at fair value
with the net change in unrealized appreciation or depreciation included in the
determination of net assets. Cost is used to approximate fair value of these
investments until significant developments affecting an investment provide a
basis for valuing such investment at a number other than cost. Thereafter,
portfolio investments are carried at appraised values as determined quarterly,
and at such other times as deemed appropriate under the circumstances, by the
Adviser, subject to approval by the Board of Directors.
The fair value of investments for which no market exists and for which our
Board of Directors has determined that the original cost of the investment is no
longer an appropriate valuation will be determined on the basis of procedures
established in good faith by our Board of Directors. Valuations will be based
upon such factors as earnings and net worth, the market price of similar
securities of comparable companies and an assessment of future financial
prospects. In the case of unsuccessful operations, the valuation may be based
upon anticipated liquidation proceeds.
Because of the inherent uncertainty of the valuation of portfolio
securities which do not have readily ascertainable market values, the Fund's
estimate of fair value may significantly differ from the fair market value that
would have been used had a ready market existed for the securities. Appraised
values do not reflect
8
<PAGE>
meVC Draper Fisher Jurvetson Fund I, Inc.
Notes to Financial Statements (continued)
April 30, 2000
(Unaudited)
brokers' fees or other normal selling costs which might become payable on
disposition of such investments.
Investments in companies whose securities are publicly traded are valued
at their quoted market price, less a discount to reflect the estimated effects
of restrictions on the sale of such securities ("Valuation Discount"), if
applicable. Securities traded on a securities exchange will be valued at the
closing price on the day the securities are being valued, minus any applicable
valuation discount. Securities traded on the over-the-counter market will be
valued at the last sale price for the trading day the securities are being
valued, minus any applicable valuation discount.
Short-term investments having maturities of 60 days or less are stated at
amortized cost, which approximates fair value. Other fixed income securities are
stated at fair value. Fair value of these securities is determined at the most
recent bid or yield equivalent from dealers that make markets in such
securities.
On a daily basis the Fund adjusts its net asset value for the changes in
the value of its publicly held securities and material changes in the value of
its private securities and reports those amounts to Lipper Analytical Services,
Inc.
REPURCHASE AGREEMENTS - With respect to repurchase agreements entered into
by the Fund, it is the Fund's policy to always receive, as collateral, United
States Government securities or other high quality debt securities of which the
value, including accrued interest, is at least equal to the amount to be repaid
to the Fund under each agreement at its maturity. To the extent that any
repurchase transaction exceeds one business day, the value of the collateral is
marked-to-market on a daily basis to ensure the adequacy of the collateral. In
the event of default of the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. Under certain circumstances, in the event of default or bankruptcy
by the other party to the agreement, realization and/or retention of the
collateral or proceeds may be subject to delay due to legal proceedings and the
Fund may suffer a loss.
INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME - Investment
transactions are accounted for on the trade date (the date the order to buy or
sell is executed). The cost of securities sold is determined on a first-in,
first-out basis, unless otherwise specified. Dividend income on investment
securities is recorded on the ex-dividend date. Interest income, which includes
accretion of discount and amortization of premium, if applicable, is recorded on
an accrual basis.
CASH FLOWS - For the purpose of the Statement of Cash Flows, the Fund
considers all money market and all highly liquid temporary cash investments
purchased with an original maturity of three months or less to be cash
equivalents.
RESTRICTED SECURITIES - The Fund will invest in privately placed restricted
securities. These securities may be resold in transactions exempt from
registration or to the public if the securities are registered. Disposal of
these securities may involve time-consuming negotiations and expense, and a
prompt sale at an acceptable price may be difficult.
INCOME TAXES - It is the policy of the Fund to meet the requirements for
qualification as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended. The Fund is not subject to income or
excise taxes to the extent that it distributes all of its investment company
taxable income and net realized gains for its fiscal year.
9
<PAGE>
meVC Draper Fisher Jurvetson Fund I, Inc.
Notes to Financial Statements (continued)
April 30, 2000
(Unaudited)
ACCOUNTING ESTIMATES - The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statement. Actual results could differ
from those estimates.
3. MANAGEMENT
The Fund has entered into a management agreement with meVC Advisers, Inc.,
a Delaware corporation (the "Adviser"). Pursuant to such agreement, the Adviser
performs certain services including certain management and administrative
services necessary for the operation of the Fund. The Adviser receives a
management fee equal to 2.5% of the average weekly net assets of the Fund, paid
monthly in arrears. A portion of this fee is also used to pay the Fund's
Sub-Adviser. The Adviser also receives annual compensation equal to 20.0% of the
Fund's annual realized capital gains net of realized and unrealized capital
losses ("Carried Interest"). The Adviser is a wholly owned subsidiary of a
privately owned corporation.
The Adviser has entered into a sub-advisory agreement with Draper Fisher
Jurvetson MeVC Management Co., LLC (the "Sub-Adviser"). The Sub-Adviser provides
all investment opportunities for approval by the Fund's Board of Directors. For
the Sub-Adviser's services, the Adviser pays the Sub-Adviser an annual
investment sub-advisory fee equal to 1.0% of the Fund's average weekly net
assets, paid monthly in arrears. The Adviser shall also pay the Sub-Adviser an
amount equal to 90.0% of the annual carried interest paid by the Fund to the
Adviser. The sub-advisory fees are not an additional expense to the Fund.
The Adviser has entered into a sub-advisory agreement with Fleet Investment
Advisors, Inc. (the "Investment Manager"). The Investment Manager provides all
short-term management of the Fund's uninvested cash. The sub-advisory fees are
not an additional expense to the Fund.
meVC Advisers has agreed to pay compensation to the directors and officers
for any and all services rendered to the Fund. As compensation for such
services, each director who is not an officer of the Fund receives an annual fee
of $4,800 paid monthly in arrears, a fee of $10,000 for each meeting of the
Board of Directors, or a committee of the Board of Directors, in which each such
independent director participates, whether attended in person or by telephone,
and reimbursement of all out-of-pocket expenses relating to attendance at such
meetings.
meVC Advisers has agreed to pay all Fund expenses above and beyond the 2.5%
Management Fee paid to meVC Advisers by the Fund.
4. DISTRIBUTIONS
The Fund declared no dividends during the period ended April 30, 2000. The
Fund has adopted a policy to make dividend distributions, at least annually, of
at least 90.0% of the net investment income received from interest and dividends
plus net short-term capital gains. If the market value of a share of our common
stock on the record date for such dividend or distribution equals or exceeds the
net asset value per share on that date, we will issue new shares at the net
asset value. If the net asset value exceeds the market price, the Dividend
Disbursing Agent will purchase in the open market such number of shares as is
necessary to complete the distribution. Distributions can be made payable by the
Fund either in the form of a cash distribution or a stock dividend. The Fund has
not adopted any set policy concerning whether dividends will be paid only in
cash, or in stock or cash by specific election.
10
<PAGE>
meVC Draper Fisher Jurvetson Fund I, Inc.
Notes to Financial Statements (continued)
April 30, 2000
(Unaudited)
5. PORTFOLIO SECURITIES
During the fiscal quarter ended April 30, 2000, the Fund invested in no
portfolio companies and made no follow-on investments in any portfolio
companies. The Fund realized no net capital gains during the fiscal quarter
ended April 30, 2000.
6. TRANSACTIONS WITH RELATED PARTIES
The Fund is seeking exemptive relief from certain provisions of the
Investment Company Act of 1940, as amended, to permit the Fund to invest in an
offering in which affiliates of the Adviser have invested or intend to invest
in. Assuming the receipt of a favorable exemptive order from the SEC, the Fund
anticipates that it may, subject to certain terms and conditions, frequently
invest in the same portfolio companies as current and future affiliates of the
Adviser. There can be no assurances that the Fund's application for exemptive
relief will be granted.
The Fund has accrued $660,932 payable to the Adviser. For the fiscal
quarter ended April 30, 2000, the Adviser has paid Draper Fisher Jurvetson
MeVC Management Co., LLC (the "Sub-Adviser") sub-advisory fees amounting to
$264,368, its portion of the 2.5% management fee.
7. SUBSEQUENT EVENTS
On May 12, 2000 the Fund entered into an investment of $10,000,000 of
Series G preferred stock of Personic Software, Inc. The Fund also received
1,000,000 warrants to purchase additional shares of Series G preferred stock.
On May 25, 2000 the Fund entered into an investment of $5,999,999.72 of
Series B preferred stock of ShopEaze.com, Inc.
On May 26, 2000 the Fund entered into an investment of $9,999,998.40 of
Series C preferred stock of eOnline, Inc. The Fund also received 136,054
warrants to purchase additional shares of Series C preferred stock.
On June 2, 2000 the Fund entered into an investment of $9,999,996.52 of
Series B preferred stock of INFOUSA.com, Inc.
On June 2, 2000 the Fund entered into an investment of $7,000,000.00 of
Series A preferred stock of Endymion Systems, Inc.
On June 6, 2000 the Fund entered into an investment of $10,000,001.44 of
Series C preferred stock of EXP.com, Inc.
On June 7, 2000 the Fund entered into an investment of $2,004,480.00 of
Series C preferred stock of InfoImage, Inc. The Fund also received 259,200
warrants to purchase additional shares of Series C preferred stock.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL INVESTMENT CLIMATE Despite the recent volatility in technology
stocks, Fund Management feels that all of the long-term trends that drove
investor interest in the information technology sector are still present, and
that they will continue to be here for years to come. We feel that the focus
industries of the Fund--the Internet, telecommunications, e-commerce,
software and information services--will continue to be the most rapidly
growing sectors of the U.S. economy. We continue to see opportunities in the
Internet infrastructure and business-to-business e-commerce areas. The market
for these technologies and services continues to expand as an ever-increasing
proportion of business trade goes through e-marketplaces. Currently, the
sectors we like the most are business-to-business product and service
companies. Our favorite area is telephone-to-Internet infrastructure. We feel
that there is a tremendous market for companies that are developing
voice-over IP technologies as well as other telephony applications. The IP
address is a viable alternative to routing traditional telephone traffic. The
IP backbone is relatively inexpensive compared with its traditional
counterpart, allowing this technology to compete strongly with the
traditional telephone. We are also looking at select business-to-consumer
companies. Although this sector has recently been hurt in the public markets,
we feel that the recent declines in the public markets will create
opportunities for the Fund. Many companies are postponing their initial
public offerings due to these unfavorable market conditions and are now
seeking private financing to maintain their operations while they wait out
the volatility.
RESULTS OF OPERATIONS
The Fund began operations upon the completion of an initial public offering
on March 31, 2000. Its principal investment objective is the realization of
long-term capital appreciation from investing primarily in equity and
equity-linked debt securities of private companies. Due to the Company's limited
operating history, the Company's financial performance at April 30, 2000 is
primarily composed of interest on temporary investments, net of the management
fee accrual. Weekly and daily net asset values appear in various publications,
including the WALL STREET JOURNAL and BARRONS and on the Fund's website at
http://www.mevc.com/FundI/fundfacts.asp
LIQUIDITY AND CAPITAL RESOURCES
At April 30, 2000, the Fund had no investments in portfolio securities of
any companies. Current balance sheet resources are believed to be sufficient to
finance any future commitments.
Net cash provided by operating activities was $1,546,607 for the fiscal
quarter ended April 30, 2000.
At April 30, 2000, the Fund had $313,192,123 of its total assets of
$313,279,574 invested in temporary cash investments consisting of Certificates
of Deposit, Commercial Paper, Money Market Funds, and US Government and Agency
Securities.
Net investment income and net realized gains from the sales of portfolio
investments are intended to be distributed at least annually. Management
believes that its cash reserves and the ability to sell its investments in
publicly traded securities are adequate to provide payment for any expenses and
contingencies of the Fund.
The Fund reserves the right to retain net long-term capital gains in excess
of net short-term capital losses for reinvestment or to pay contingencies and
expenses. Such retained amounts, if any, will be taxable to the Fund as
long-term capital gains and shareholders will be able to claim their
proportionate share of the federal income taxes paid by the Fund on such gains
as a credit against their own federal income tax liabilities. Shareholders
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will also be entitled to increase the adjusted tax basis of their Fund shares by
the difference between their undistributed capital gains and their tax credit.
INVESTMENT INCOME AND EXPENSES
Net investment income after all expenses amounted to $973,126 for the
fiscal quarter ended April 30, 2000.
The Adviser receives management fee compensation at an annual rate of 2.5%
of the average weekly net assets of the Fund, paid monthly in arrears. Such fees
amounted to $660,932 during the fiscal quarter ended April 30, 2000.
REALIZED GAINS AND LOSSES ON SALES OF PORTFOLIO SECURITIES
During the fiscal quarter ended April 30, 2000, the Fund realized no net
capital gains or losses from the sale of securities.
UNREALIZED APPRECIATION AND DEPRECIATION OF PORTFOLIO SECURITIES
At the fiscal quarter ended April 30, 2000, the Fund had unrealized
depreciation of $4,484 due to its investment in the Federal Farm Credit Bank
Bond, 5.125%, due April 2, 2001.
DIVIDENDS
No dividends were declared for the fiscal quarter ended April 30, 2000.
SUBSEQUENT EVENTS
On May 12, 2000 the Fund entered into an investment of $10,000,000 of
Series G preferred stock of Personic Software, Inc. The Fund also received
1,000,000 warrants to purchase additional shares of Series G preferred stock.
On May 25, 2000 the Fund entered into an investment of $5,999,999.72 of
Series B preferred stock of ShopEaze.com, Inc.
On May 26, 2000 the Fund entered into an investment of $9,999,998.40 of
Series C preferred stock of eOnline, Inc. The Fund also received 136,054
warrants to purchase additional shares of Series C preferred stock.
On June 2, 2000 the Fund entered into an investment of $9,999,996.52 of
Series B preferred stock of INFOUSA.com, Inc.
On June 2, 2000 the Fund entered into an investment of $7,000,000.00 of
Series A preferred stock of Endymion Systems, Inc.
On June 6, 2000 the Fund entered into an investment of $10,000,001.44 of
Series C preferred stock of EXP.com, Inc.
On June 7, 2000 the Fund entered into an investment of $2,004,480.00 of
Series C preferred stock of InfoImage, Inc. The Fund also received 259,200
warrants to purchase additional shares of Series C preferred stock.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Fund is subject to financial market risks, including changes in
interest rates with respect to its investments in debt securities as well as
changes in marketable equity security prices. The Fund does not use derivative
financial instruments to mitigate any of these risks. The return on the Fund's
investments is generally not affected by foreign currency fluctuations.
The Fund's investment in portfolio securities consists of some fixed rate
debt securities. Since the debt securities are generally priced at a fixed rate,
changes in interest rates do not directly impact interest income. The Fund's
debt securities are generally held to maturity and their fair values are
determined on the basis of the terms of the debt security and the financial
condition of the issuer.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The required Exhibits are included in this Form 10-Q or have been
previously filed in the Company's Registration Statement on Form
N-2 (Reg. No. 333-92287):
EXHIBIT INDEX
Exhibit 27 Financial Data Schedule
Only submitted to SEC in electronic format
(b) No reports on Form 8-K were filed by the Fund during the period
for which this report is filed.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed by the
undersigned, thereunto duly authorized.
MEVC DRAPER FISHER JURVETSON FUND I, INC.
Date: June 09, 2000 /s/ JOHN M GRILLOS
----------------------------------------------------
John M. Grillos
Chairman, Chief Executive Officer, Director
Date: June 09, 2000 /s/ PAUL WOZNIAK
----------------------------------------------------
Paul Wozniak
Vice President, Treasurer, Chief Financial Officer
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