<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
--- ---
Commission File No. 0-13554
TECHNOLOGY FUNDING PARTNERS I
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 77-0020778
----------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 94403
- --------------------------------------- --------
(Address of principal executive offices) (Zip Code)
(415) 345-2200
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
No active market for the units of limited partnership interests
("Units") exists, and therefore the market value of such Units cannot be
determined.
<PAGE>
I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
(unaudited)
March 31, December 31,
1995 1994
---------- -------------
<S> <C> <C>
ASSETS
Investments:
Equity investments (cost basis
of $2,768,651 at both
1995 and 1994) $7,840,052 12,622,577
Secured notes receivable, net
(cost basis of $606,364 and
$592,026 at 1995 and 1994, 501,364 483,026
respectively) --------- ----------
Total investments 8,341,416 13,105,603
Cash and cash equivalents 794 421
Prepaid management fees 83,190 83,190
Due from related parties -- 3,051
--------- ----------
Total $8,425,400 13,192,265
========= ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 23,650 27,194
Due to related parties 27,083 --
Short-term borrowings 3,045,620 2,889,002
--------- ----------
Total liabilities 3,096,353 2,916,196
Commitments and subsequent events
(Notes 2 and 4)
Partners' capital:
Limited Partners
(Units outstanding of
16,643 for both 1995 and 1994) 275,358 442,170
General Partners 87,288 88,973
Net unrealized fair value increase
(decrease) from cost:
Equity investments 5,071,401 9,853,926
Secured notes receivable (105,000) (109,000)
--------- ----------
Total partners' capital 5,329,047 10,276,069
--------- ----------
Total $8,425,400 13,192,265
========= ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
- ------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
-----------------------------------
1995 1994
---- ----
<S> <C> <C>
Interest income $ 14,456 13,067
Costs and expenses:
Management fees 83,190 83,190
Operating expenses:
Administrative and investor
services 19,776 37,519
Investment operations 1,568 8,007
Professional fees 5,538 6,970
Computer services 5,764 9,794
Interest expense 67,117 33,527
--------- ---------
Total operating expenses 99,763 95,817
--------- ---------
Total costs and expenses 182,953 179,007
--------- ---------
Net realized loss (168,497) (165,940)
Change in net unrealized fair value:
Equity investments (4,782,525) 1,762,890
Secured notes receivable 4,000 (35,000)
--------- ---------
Net (loss) income $(4,947,022) 1,561,950
========= =========
Net realized loss per Unit $ (10) (10)
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- ------------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
--------------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Cash paid to related parties $ (73,781) (120,418)
Cash paid to vendors (15,465) (23,580)
Interest received 118 474
Interest paid on short-term borrowings (67,117) (33,527)
--------- ---------
Net cash used by operating
activities (156,245) (177,051)
--------- ---------
Cash flows from financing activities:
Proceeds from short-term borrowings,
net 156,618 118,001
--------- ---------
Net cash provided by financing
activities 156,618 118,001
--------- ---------
Net increase (decrease) in cash and
cash equivalents 373 (59,050)
Cash and cash equivalents at beginning
of year 421 68,512
--------- ---------
Cash and cash equivalents at March 31 $ 794 9,462
========= =========
Reconciliation of net (loss) income to
net cash used by operating activities:
Net (loss) income $(4,947,022) 1,561,950
Adjustments to reconcile net (loss) income
to net cash used by operating activities:
Change in net unrealized fair value:
Equity investments 4,782,525 (1,762,890)
Secured notes receivable (4,000) 35,000
Changes in:
Accrued interest on subordinated and
secured notes receivable (14,250) (12,443)
Due to/from related parties 30,134 7,419
Other, net (3,632) (6,087)
--------- ---------
Net cash used by operating activities $ (156,245) (177,051)
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- -----------------------------------------
1. General
-------
In the opinion of the Managing General Partner, the Balance Sheets as of
March 31, 1995 and December 31, 1994 and the related Statements of
Operations and Statements of Cash Flows for the three months ended March
31, 1995 and 1994, reflect all adjustments which are necessary for a
fair presentation of the financial position, results of operations and
cash flows for such periods. These statements should be read in
conjunction with the Annual Report on Form 10-K for the year ended
December 31, 1994. The following notes to financial statements for
activity through March 31, 1995 supplement those included in the Annual
Report on Form 10-K.
2. Financing of Partnership Operations
-----------------------------------
The Managing General Partner expects cash received from the liquidation
of Partnership investments and the collection of notes receivable will
provide the necessary liquidity to service Partnership debt and fund
Partnership operations. Until such future proceeds are received, the
Partnership may be dependent upon the financial support of the Managing
General Partner to fund operations. The Managing General Partner has
committed to support the Partnership's working capital requirements
through advances as necessary.
3. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party expenses for the three months
ended March 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Management fees $83,190 83,190
Reimbursable operating expenses 20,725 44,647
</TABLE>
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Managing General Partner and are adjusted to
actual costs periodically. At March 31, 1995 due to related parties for
such costs was $27,083 compared to due from related parties of $3,051 at
December 31, 1994.
Officers of the General Partners occasionally receive stock options as
compensation for serving on the Boards of Directors of portfolio
companies. At March 31, 1995, the Partnership had an indirect interest
in such options, worth approximately $4,644, in non-transferable
Viewlogic Systems, Inc. and Cytocare, Inc. options.
4. Equity Investments
------------------
A complete listing of the Partnership's equity investments at December
31, 1994 is in the 1994 Annual Report. Activity from January 1, 1995
through March 31, 1995 consisted of
<TABLE>
<CAPTION>
January 1 -
March 31, 1995
Principal ---------------
Investment Amount or Cost Fair
Industry/Company Position Date Shares Basis Value
- ---------------- -------- ---------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $2,768,651 12,622,577
--------- ----------
Significant changes:
Electronic Design Automation
- ----------------------------
Viewlogic Systems,
Inc. Common shares 12/91 555,460 0 (4,815,915)
Industrial/Business Automation
- ------------------------------
Acuity Imaging,
Inc. Common shares 03/88 24,916 0 77,863
Medical
- -------
Cytocare, Inc. Common shares 06/88 211,351 0 (44,882)
--------- ----------
Total significant changes during
the three months ended March 31, 1995 0 (4,782,934)
Other changes, net 0 409
--------- ----------
Total equity investments at March 31, 1995 $2,768,651 7,840,052
========= ==========
</TABLE>
Marketable Equity Securities
- ----------------------------
At March 31, 1995 and December 31, 1994, marketable equity securities
had aggregate costs of $657,201 and $656,330, respectively, and
aggregate fair values of $5,008,968 and $9,204,804, respectively. The
net unrealized gains at March 31, 1995 and December 31, 1994 included
gross gains of $4,351,767 and $8,548,474, respectively.
Acuity Imaging, Inc.
- --------------------
The increase in fair value in the above table of $77,863 reflected the
publicly-traded unrestricted market value of $252,900 at March 31, 1995.
In April 1995, the company announced a definitive agreement to become a
subsidiary of Robotic Vision Systems Inc. ("RVSI"), a public company. A
targeted date for the completion of the merger has not been announced as
the merger is still subject to various conditions customary for
transactions of this nature and stockholder approval. Upon consummation
of the merger, the Partnership will exchange its common share holdings
in Acuity for approximately 27,000 RVSI common shares; at May 5, 1995,
these shares had an approximate market value of $227,000.
Cytocare, Inc.
- --------------
The Partnership recorded a decrease in fair value of $44,882 to reflect
the publicly-traded market price at March 31, 1995; a portion of the
investment fair value was adjusted to reflect a 25% discount for
restricted securities.
Viewlogic Systems, Inc.
- -----------------------
The Partnership recorded a decrease in fair value of $4,815,915 to
reflect the publicly-traded market price at March 31, 1995; a portion of
the investment fair value was adjusted to reflect a 25% discount for
restricted securities.
As of May 5, 1995, the fair value increased to $5,617,839 compared to
$4,756,437 at March 31, 1995. This change reflects changes in common
stock prices which fluctuate daily on stock exchanges. The Managing
General Partner continues to believe that its investment is capable of a
higher future value.
5. Secured Notes Receivable, Net
-----------------------------
Activity from January 1, 1995 through March 31, 1995 consisted of:
<TABLE>
<S> <C>
Balance at January 1, 1995 $483,026
1995 Activity:
Accrued interest 14,250
Decrease in allowance for loan losses 4,000
Other, net 88
-------
Total secured notes receivable, net
at March 31, 1995 $501,364
=======
</TABLE>
The Partnership had accrued interest of $132,064 and $117,814 at March
31, 1995 and December 31, 1994, respectively.
<TABLE>
<CAPTION>
Activity in the allowance for loan losses was as follows:
<S> <C>
Balance at January 1, 1995 $109,000
Change in net unrealized fair value
of secured notes receivable (4,000)
-------
Balance at March 31, 1995 $105,000
=======
</TABLE>
The allowance for loan losses is adjusted quarterly based upon changes
to the portfolio size and risk profile. Although the allowance is
established by evaluating individual debtor repayment ability, the
allowance represents the Managing General Partner's assessment of the
portfolio as a whole.
6. Short-term Borrowings
---------------------
The Partnership maintains a line of credit with a financial institution,
which has been renewed with a maturity date of April 5, 1996. The
actual borrowing capacity at March 31, 1995 was $3,300,000. The
outstanding balance at March 31, 1995 was $3,045,620. The maximum and
weighted average amounts outstanding during the quarter ended March 31,
1995 were $3,045,620 and $3,011,900, respectively. The quarter-end and
weighted average interest rate during the three months ended March 31,
1995 were 9.0% and 8.82%, respectively. Interest expense of $67,117 was
recorded for the first quarter of 1995. The Partnership's shares in
Viewlogic Systems, Inc. and Cytocare, Inc. were pledged as collateral.
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
During the three months ended March 31, 1995, net cash used by
operations totaled $156,245. The Partnership paid management fees of
$73,781 to the Managing General Partner; the remaining fee and related
party operating expenses were accrued. Other operating expenses of
$15,465 were paid and interest income of $118 was received. The
Partnership also paid $67,117 of interest on short-term borrowings. Net
proceeds from short-term borrowings totaled $156,618.
The Partnership has a line of credit account with a financial
institution. This line of credit has been renewed with a maturity date
of April 5, 1996. The actual borrowing capacity at March 31, 1995 was
$3,300,000. The outstanding balance at March 31, 1995 was $3,045,620.
The maximum and weighted average amounts outstanding during the three
months ended March 31, 1995 were $3,045,620 and $3,011,900,
respectively. The Partnership's investments in Viewlogic Systems, Inc.
and Cytocare, Inc. were pledged as collateral.
Cash and cash equivalents at March 31, 1995 were nominal, but future
proceeds from the sale of investments and General Partner support are
expected to be adequate to fund Partnership operations through the next
twelve months.
Results of Operations
- ---------------------
Current quarter compared to corresponding quarter in the preceding year
- -----------------------------------------------------------------------
Net loss was $4,947,022 for the three months ended March 31, 1995
compared to a net income of $1,561,950 during the same period in 1994.
The change was primarily due to a $6,545,415 decrease in the change in
net unrealized fair value of equity investments.
During the quarter ended March 31, 1995, the decrease in fair value of
equity investments of $4,782,525 was primarily due to a portfolio
company in the electronic design automation industry. During the same
quarter in 1993, the increase in fair value of $1,762,890 was primarily
due to portfolio companies in the electronic design automation and
industrial/business automation industries, partially offset by portfolio
companies in the medical industry.
Total operating expenses were $99,763 and $95,517 for the quarters ended
March 31, 1995 and 1994, respectively. The slight increase was
primarily due to higher short-term borrowings interest expense, mostly
offset by lower administrative and investor services, and investment
operations expenses as a result of lower overall portfolio activities.
Given the inherent risk associated with the business of the Partnership,
the future performance of the portfolio company investments may
significantly impact future operations.
II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) No reports on Form 8-K were filed by the Partnership during the
quarter ended March 31, 1995.
(b) Financial Data Schedule for the quarter ended and as of March 31,
1995 (Exhibit 27).
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TECHNOLOGY FUNDING PARTNERS I
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: May 12, 1995 By: /s/Frank R. Pope
-----------------------------------
Frank R. Pope
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE>6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORM 10-Q AS OF MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<PERIOD-TYPE> 3-MOS
<INVESTMENTS-AT-COST> 3,375,015
<INVESTMENTS-AT-VALUE> 8,341,416
<RECEIVABLES> 0
<ASSETS-OTHER> 83,190
<OTHER-ITEMS-ASSETS> 794
<TOTAL-ASSETS> 8,425,400
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,096,353
<TOTAL-LIABILITIES> 3,096,353
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 362,646
<SHARES-COMMON-STOCK> 16,643
<SHARES-COMMON-PRIOR> 16,643
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,966,401
<NET-ASSETS> 5,329,047
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 14,456
<OTHER-INCOME> 0
<EXPENSES-NET> 182,953
<NET-INVESTMENT-INCOME> (168,497)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (4,778,525)
<NET-CHANGE-FROM-OPS> (4,947,022)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,947,022)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 83,190
<INTEREST-EXPENSE> 67,117
<GROSS-EXPENSE> 183,053
<AVERAGE-NET-ASSETS> 7,802,558
<PER-SHARE-NAV-BEGIN> 27
<PER-SHARE-NII> (10)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17
<EXPENSE-RATIO> .02
<AVG-DEBT-OUTSTANDING> 3,011,900
<AVG-DEBT-PER-SHARE> 181
<FN>
<F1>
A zero value is used since the change in net unrealized fair value is
not allocated to General Partners and Limited Partners as it is not
taxable. Only taxable gains or losses are allocated in accordance with
the Partnership Agreement.
</FN>
</TABLE>
