<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 September 30, 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. 0-15766
TECHNOLOGY FUNDING SECURED INVESTORS I
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-2944800
------------------------------ ----------------------------------
(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 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
No active market for the 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)
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Investments:
Secured notes receivable, net
(cost basis of $903,135 and
$995,227 in 1995 and 1994,
respectively) $ 593,135 760,227
Equity investments (cost basis
of $273,783 and $3,196,958 in
1995 and 1994, respectively) 287,990 915,383
--------- ---------
Total investments 881,125 1,675,610
Cash and cash equivalents 1,013,976 534,644
Other assets 9,439 59,984
--------- ---------
Total $1,904,540 2,270,238
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 31,378 47,221
Due to related parties 303 1,136
Other liabilities 61,586 60,320
--------- ---------
Total liabilities 93,267 108,677
Commitments and subsequent events
(Notes 1, 2, and 7)
Partners' capital:
Limited Partners
(Units outstanding of 114,995 and
115,501 in 1995 and 1994, 2,321,501 4,866,951
respectively)
General Partners (214,435) (188,815)
Net unrealized fair value (decrease)
increase from cost:
Secured notes receivable (310,000) (235,000)
Equity investments 14,207 (2,281,575)
--------- ---------
Total partners' capital 1,811,273 2,161,561
--------- ---------
Total $1,904,540 2,270,238
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
----------------------------- -------------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Secured notes receivable interest $ 1,430 6,144 72,722 115,522
Short-term investment interest 12,774 7,631 31,327 17,169
Other income -- 574 -- 2,422
------- --------- --------- ---------
Total income 14,204 14,349 104,049 135,113
Costs and expenses:
Management fees 9,383 19,357 31,116 59,961
Operating expenses:
Lending operations and investment
management 19,685 39,857 67,289 165,288
Administrative and investor
services 35,580 47,017 125,675 189,038
Computer services 12,977 19,609 43,236 61,135
Professional fees 12,311 9,002 33,322 29,422
------- --------- --------- ---------
Total operating expenses 80,553 115,485 269,522 444,883
------- --------- --------- ---------
Total costs and expenses 89,936 134,842 300,638 504,844
------- --------- --------- ---------
Net operating loss (75,732) (120,493) (196,589) (369,731)
Net realized gain (loss) from sales
of equity investments 221,102 (3,368) 539,299 355,000
Realized losses from investment
write-downs (5,000) (46,721) (2,963,247) (521,150)
Recoveries from investments previously
written off -- -- 58,575 45,290
------- --------- --------- ---------
Net realized income (loss) 140,370 (170,582) (2,561,962) (490,591)
Change in net unrealized
fair value:
Secured notes receivable 26,000 (107,000) (75,000) 484,000
Equity investments (222,507) (1,267,572) 2,295,782 (1,984,867)
------- --------- --------- ---------
Net loss $ (56,137) (1,545,154) (341,180) (1,991,458)
======= ========= ========= =========
Net realized income (loss) per Unit $ 1 (1) (22) (4)
======= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF PARTNERS' CAPITAL (UNAUDITED)
- -------------------------------------------
<TABLE>
<CAPTION>
Net Unrealized Fair Value
(Decrease) Increase From Cost
-----------------------------
Limited General Equity Secured Notes
Partners Partners Investments Receivable Total
-------- -------- ----------- ---------- -----
<S> <C> <C> <C> <C> <C>
Partners' capital,
December 31, 1994 $ 4,866,951 (188,815) (2,281,575) (235,000) 2,161,561
Repurchase of limited
partnership interests (9,108) -- -- -- (9,108)
Net realized loss (2,536,342) (25,620) -- -- (2,561,962)
Change in net unrealized fair
value:
Equity investments -- -- 2,295,782 -- 2,295,782
Secured notes receivable -- -- -- (75,000) (75,000)
--------- -------- --------- -------- --------
Partners' capital,
September 30, 1995 $ 2,321,501 (214,435) 14,207 (310,000) 1,811,273
========= ======= ========= ======= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
--------------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Interest and other income received $ 118,348 136,573
Cash paid to vendors (61,421) (203,991)
Cash received from affiliated
partnerships 1,300 6,203
Cash paid to related parties (209,018) (403,799)
--------- -------
Net cash used by operating activities (150,791) (465,014)
--------- -------
Cash flows from investing activities:
Secured notes receivable issued (178,500) (222,000)
Repayments of secured notes receivable 202,150 357,171
Proceeds from sales of equity investments 554,330 418,004
Recoveries from investments previously
written off 58,575 45,290
Purchase of equity investments (960) (69,633)
--------- -------
Net cash provided by investing activities 635,595 528,832
--------- -------
Cash flows from financing activities:
Repurchase of limited partnership interest (5,472) (4,620)
--------- -------
Net cash used by financing activities (5,472) (4,620)
--------- -------
Net increase in cash and cash equivalents 479,332 59,198
Cash and cash equivalents at beginning
of year 534,644 568,130
--------- -------
Cash and cash equivalents at
September 30 $ 1,013,976 627,328
========= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
- -----------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
--------------------------------------
1995 1994
---- ----
<S> <C> <C>
Reconciliation of net loss
to net cash used by
operating activities:
Net loss $ (341,180) (1,991,458)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Net realized gain from
sales of equity investments (539,299) (355,000)
Recoveries from investments
previously written off (58,575) (45,290)
Realized losses from investment
write-downs 2,963,247 521,150
Change in net unrealized fair value:
Secured notes receivable 75,000 (484,000)
Equity investments (2,295,782) 1,984,867
Amortization of discount related
to warrants (3,583) (928)
Changes in:
Other assets 49,245 (107,898)
Other, net 136 13,543
--------- ---------
Net cash used by operating activities $ (150,791) (465,014)
========= =========
Non-cash investing activities:
Conversion of secured notes
receivable to equity investments $ -- 2,082,107
========= =========
</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
September 30, 1995 and December 31, 1994 and the related Statement of
Partners' Capital for the nine months ended September 30, 1995,
Statements of Operations for the three and nine months ended September
30, 1995 and 1994, and Statements of Cash Flows for the nine months
ended September 30, 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 September 30, 1995 supplement those included in the
Annual Report on Form 10-K. Certain 1994 balances have been
reclassified to conform with the 1995 financial statement presentation.
Allocation of income and loss to Limited and General Partners is based
on cumulative income and loss. Adjustments, if any, are reflected in
the current quarter balances.
Withdrawal of Capital
- ---------------------
Each June, beginning June 1987, Limited Partners may tender their Units
for repurchase by the Partnership. The amount available in any year to
repurchase tendered Units is limited to 10% of the aggregate principal
repayments received by the Partnership during the preceding calendar
year on notes to borrowing companies. The price paid for any Units
tendered is subject to the restrictions stated in the Partnership
Agreement. As of September 30, 1995, 304 Units were repurchased for
$5,472 with an accrual of $3,636 for the remaining 202 Units to be
repurchased.
Special Withdrawal Option
- -------------------------
Subsequent to quarter end, the General Partners elected to offer Limited
Partners with an initial investment of $2,000 held in an Individual
Retirement or Keogh Account the option to tender their Units for
repurchase by the Partnership. This election is being made as annual
account maintenance fees may be greater than the current value of the
investment. The price to be paid for the Units tendered under this
offer is subject to the restrictions stated in the Partnership Agreement
and will be determined at a later date. Such withdrawals should be
completed before year end and are not expected to materially affect the
Partnership assets.
2. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party costs for the nine months ended
September 30, 1995 and 1994 were as follows:
<TABLE>
<S> <C> <C>
1995 1994
---- ----
Management fees $ 31,116 59,961
Reimbursable operating expenses 176,643 308,525
</TABLE>
Certain reimbursable expenses have been allocated and accrued based upon
interim estimates prepared by the Managing General Partner, and are
adjusted to actual costs periodically. At September 30, 1995, due from
related parties totaled $123 compared to due to related parties of
$1,136 at December 31, 1994 which related to reimbursable operating
expenses. These amounts were received or paid in the respective
subsequent quarters.
Within the normal course of business, the Partnership participates with
affiliated partnerships in secured notes receivable granted to
nonaffiliated borrowing companies. The Partnership may also
reparticipate such secured notes receivable amongst affiliated
partnerships to meet business needs. At September 30, 1995, due to
affiliated partnerships was $426 (included in "due to related parties"),
compared to due from affiliated partnerships of $1,300 (included in
"other assets") at December 31, 1994. These amounts were paid to or
received from such affiliated partnerships in the following respective
quarters.
3. Net Realized Income (Loss) Per Unit
-----------------------------------
Net realized income (loss) per Unit is calculated by dividing total net
realized income (loss) allocated to the Limited Partners by the weighted
average number of Limited Partner Units outstanding for the nine months
ended September 30, 1995 and 1994 of 115,445 and 116,008, respectively.
4. Equity Investments
------------------
A complete listing of the Partnership's equity investments at December
31, 1994 are included in the 1994 Annual Report. Activity from January
1 through September 30, 1995 consisted of
<TABLE>
<CAPTION>
January 1 -
September 30, 1995
------------------
Investment Cost Fair
Industry/Company Date Position Basis Value
- ---------------- ---------- -------- ----- -----
<S> <C> <C> <C> <C>
Balance at January 1, 1995 $ 3,196,958 915,383
--------- -------
Significant Changes:
WARRANTS:
Computers and Computer Equipment
- --------------------------------
Censtor Corporation 02/91 78,438 Common
shares at $.29;
exercised 05/95 (15,000) (173,191)
Pinnacle Systems, Inc. 05/90 2,083 Common
shares at $8.00;
exercised 02/95 (2,500) (14,164)
Telecommunications
- ------------------
Integrated Network 06/91 2,941 Common
Corporation shares at $17.00;
expiring 06/96 (5,000) (49,997)
Primary Access 10/90- 21,900 Common
Corporation 04/91 shares at $2.25;
exercised 06/95 (5,500) (5,500)
STOCKS:
Computers and Computer Equipment
- --------------------------------
Censtor Corporation 06/95 21,178 Common
shares 11,179 11,179
Electronic Design Automation
- ----------------------------
IKOS Systems, Inc. 07/90 84,765 Common
shares (23,613) (162,155)
Industrial/Business Automation
- ------------------------------
Cyclean, Inc. 01/95 19,646 Series D
Preferred
shares 54,812 54,812
Cyclean of 03/95 Class A LLC Unit -
Los Angeles, LLC 11% ownership 2,816 2,816
Medical
- -------
Hemocleanse, Inc. 03/95 20,999 Common
shares 19,320 19,320
Resonex Holding 02/94 22,804 Common
Corporation shares (1,682,507) 0
Retail/Consumer Products
- ------------------------
S-Tron 05/93 3,237,000 Series
1 & 2 Preferred
shares (880,740) (191,473)
S-Tron 05/93 Subordinated
note (1) $390,000
principal amount (392,015) (130,316)
Telecommunications
- ------------------
3Com Corporation 06/95 424 Common
shares in
escrow 4,612 19,443
--------- -------
Total significant changes during
the nine months ended September 30, 1995 (2,914,136) (619,226)
Other changes, net (9,039) (8,167)
--------- -------
Total equity investments at September 30, 1995 $ 273,783 287,990
========= =======
(1) Subordinated note includes accrued interest. The interest rate on the subordinated
note was 6%.
</TABLE
Marketable Equity Securities
- ----------------------------
At September 30, 1995 and December 31, 1994, marketable equity
securities had aggregate costs of $4,612 and $26,113, respectively, and
aggregate market values of $19,843 and $176,319, respectively. The
unrealized gains at September 30, 1995 and December 31, 1994 included
gross gains of $15,231 and $150,206, respectively.
Censtor Corporation
- -------------------
In May 1995, the Partnership exercised its warrant without cash and
received 21,178 common shares. The recorded common share cost basis was
$11,179, which is net of a realized loss.
Cyclean, Inc./Cyclean of Los Angeles, LLC
- -----------------------------------------
In January 1995, the Partnership obtained the right to receive 26,195
Series D Preferred shares with a twelve month vesting schedule in
exchange for a one year maturity date extension of secured notes
receivable. At September 30, 1995, 19,646 shares were fully vested with
a recorded cost basis and fair value of $54,812.
In March 1995, Cyclean, Inc. ("Cyclean") formed Cyclean of Los Angeles,
LLC ("Cyclean LLC") and contributed certain assets and contracts to the
new entity. Cyclean LLC is completing a new round of financing through
the offering of Class A LLC Units. As a result of the transaction, one
of the Partnership's secured notes receivable was transferred from
Cyclean to Cyclean LLC with modified terms; Cyclean has guaranteed note
repayments. The Partnership received a participated percentage of one
Class A LLC Unit in exchange for certain interest payments and late
charges totaling $2,816. The Partnership is also entitled to royalty
payments and additional Series D Preferred shares based on the total
proceeds raised from the Cyclean LLC offering, which is expected to be
completed by late 1995.
Hemocleanse, Inc.
- -----------------
In March 1995, the Partnership exercised its warrant without cash and
received 20,999 common shares, resulting in a cost basis and realized
gain of $19,320.
IKOS Systems, Inc.
- ------------------
In January 1995, the Partnership sold all of its holdings in the company
for total proceeds of $254,295 and a realized gain of $230,682.
Integrated Network Corporation
- ------------------------------
During June 1995, the Partnership exercised its option to sell half of
its warrant holdings to the company for $50,000 and realized warrant
income of $45,000, which was included in "secured note receivable
interest income" on the Statements of Operations. The Partnership does
not have this option for its remaining warrant.
Pinnacle Systems, Inc.
- ----------------------
In February 1995, the Partnership exercised its warrant without cash and
received 1,970 common shares. The recorded cost basis of $13,244
included a realized gain of $10,744 and a warrant cost basis of $2,500.
In May 1995, the Partnership sold the common shares for total proceeds
of $37,429 and realized a gain of $24,185.
Primary Access Corporation/3Com Corporation
- -------------------------------------------
In June 1995, Primary Access Corporation ("Primary Access") was acquired
by 3Com Corporation ("3Com"), a public company. Immediately prior to
the acquisition, the Partnership exercised its Primary Access common
warrant holdings without cash and received 12,686 shares of Primary
Access common stock with a cost basis of $46,116, which reflects a
realized gain of $40,616 and a warrant cost basis of $5,500. Upon the
acquisition, these shares were then exchanged for 4,236 3Com common
shares, of which 3,812 shares were sold for total proceeds of $262,606
and a realized gain of $221,102 in July 1995. The remaining 424 shares
are held in an escrow account until March 21, 1996 to indemnify 3Com for
any loss it may incur as a result of any contractual breach of the
merger agreement by Primary Access. The Partnership recorded an
increase in the change in fair value of $14,831 to reflect the above
transactions and the market value at September 30, 1995.
Resonex Holding Corporation
- ----------------------------
Resonex Holding Corporation has licensed certain technologies and is
currently obtaining additional bids from other potential licensees. The
company will wind down its operations by year end. Based on the opinion
of the Managing General Partner, there has been a decline in
Partnership's investment value and accordingly, the common stock cost
basis of $1,682,507 was written off.
S-Tron
- ------
The company was unsuccessful in its recent efforts to obtain a major
government contract; as a result, operations will likely cease by year
end. Based on the Managing General Partner's opinion, the fair value of
the Partnership's investment has declined. Accordingly, the Partnership
has written off the cost basis of its Preferred stock investment of
$880,740 and recorded a write-down of $392,015 on its subordinated note
investment.
5. Secured Notes Receivable, Net
-----------------------------
Activity from January 1, 1995 through September 30, 1995 consisted of:
</TABLE>
<TABLE>
<S> <C>
Balance at January 1, 1995 $ 760,227
1995 activity:
Secured notes receivable issued 178,500
Repayment of secured notes receivable (202,150)
Change in interest receivable (13,727)
Increase in allowance for loan losses (75,000)
Increase in unamortized
discount related to warrants (54,715)
-------
Total secured notes receivable, net,
at September 30, 1995 $ 593,135
=======
</TABLE>
The Partnership had accrued interest of $362 and $14,089 at September
30, 1995 and December 31, 1994, respectively.
Changes in the allowance for loan losses were as follows:
<TABLE>
<S> <C>
Balance at January 1, 1995 $235,000
-------
Provision for loan losses 16,425
Recoveries of previous write-offs:
Computers and computer equipment 58,575
-------
Total recoveries 58,575
-------
Change in net unrealized fair value
of secured notes receivable 75,000
-------
Balance at September 30, 1995 $310,000
=======
</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.
Notes aggregating $991,450 and $782,274 were on nonaccrual status due to
uncertainties in the financial condition of borrowing companies at
September 30, 1995 and December 31, 1994, respectively. The Managing
General Partner continues to monitor the progress of companies with
nonaccrual notes. The fair value at September 30, 1995 reflected the
Managing General Partner's estimate of collectibility of these notes.
All notes are secured by specific assets of the borrowing company. The
interest rates on notes issued during the nine months ended September
30, 1995 ranged from 10% to 14%.
6. Cash and Cash Equivalents
-------------------------
At September 30, 1995 and December 31, 1994, cash and cash equivalents
consisted of:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Demand and brokerage accounts $ -- 1,994
Money market accounts 1,013,976 532,650
--------- -------
Total $1,013,976 534,644
========= =======
</TABLE>
7. Commitments
-----------
The Partnership is a party to financial instruments with off-balance-
sheet risk in the normal course of its business. Generally, these
instruments are equipment financing commitments or accounts receivable
lines of credit that are outstanding but not currently fully utilized by
a borrowing company. As they do not represent current outstanding
balances, these unfunded commitments are properly not recognized in the
financial statements. At September 30, 1995, the Partnership had
unfunded commitments of $50,500 related to bridge and term note
financings.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
Liquidity and Capital Resources
- -------------------------------
During the nine months ended September 30, 1995, net cash used by
operating activities totaled $150,791. The Partnership paid management
fees of $31,116 to the Managing General Partner, reimbursed related
parties for operating expenses of $177,902, and received $1,300 from
affiliated partnerships for net loan participations. In addition, other
operating expenses of $61,421 were paid. Interest received from secured
notes receivable and short-term investments totaled $118,348.
During the nine months ended September 30, 1995, the Partnership issued
$178,500 in secured notes receivable to portfolio companies in the
computers and computer equipment, and retail/consumer products
industries. Repayments of notes receivable provided cash of $202,150
and proceeds from investment sales totaled $554,330. The Partnership
also received $58,575 from investment recoveries. As of September 30,
1995, the Partnership was committed to fund $50,500 related to bridge
and term note financings to existing borrowing companies.
All management fees which are due have been paid through September 30,
1995. Management fees are paid to the extent that the aggregate amount
of all proceeds (including those from warrants exercised without cash)
received by the Partnership from the sale or other disposition of
borrowing company equities, plus the aggregate fair market value of any
equity securities distributed to the partners, exceeded the total
management fee paid.
Each June, Limited Partners may tender their Units for repurchase by the
Partnership. The price paid for any Units tendered is subject to the
restrictions stated in the Partnership Agreement. As of September 30,
1995, $5,472 was paid for 304 Units repurchased by the Partnership, with
an accrual of $3,636 for an additional 202 Units to be repurchased.
Also, as disclosed in Note 1, a special withdrawal option was extended
to Limited Partners which should not materially affect Partnership
assets.
Cash and cash equivalents at September 30, 1995 were $1,013,976.
Distributions will fluctuate in the future based upon loan payoffs
received and expected cash needed by the Partnership. Operating cash
reserves combined with interest income received on short-term
investments, proceeds from investment sales, and repayments of secured
notes receivable are expected to be sufficient to fund Partnership
operations through the next twelve months.
Results of Operations
- ---------------------
Current quarter compared to corresponding quarter in the preceding year
- -----------------------------------------------------------------------
Net losses were $56,137 and $1,545,154 for the three months ended
September 30, 1995 and 1994, respectively. The change was primarily due
to a $1,045,065 increase in the change in net unrealized fair value of
equity investments, a $224,470 increase in net realized gain from sales
of equity investments, and a $133,000 increase in the change in net
unrealized fair value of secured notes receivable.
During the quarter ended September 30, 1995, the $222,507 decrease in
the fair value of equity investments was primarily due to sales of 3Com
Corporation as gains were realized. In 1994, the decrease of $1,267,572
was primarily due to a portfolio company in the medical industry.
During the three months ended September 30, 1995, the Partnership
recorded a net realized gain of $221,102 related to the sale of 3Com
Corporation. In 1994, a net realized loss of $3,368 was recorded.
The Partnership recorded an increase in the fair value of secured notes
receivable of $26,000 for the quarter ended September 30, 1995, compared
to a decrease of $107,000 for the same period in 1994, based upon the
level of loan loss reserves deemed adequate by the Managing General
Partner at the respective quarter ends.
A realized loss from investment write-downs of $5,000 was recorded
during the third quarter of 1995. The loss of $46,271 recorded in the
same period in 1994 mostly related a portfolio company in the
industrial/business automation industry.
Total operating expenses were $80,553 and $115,485 for the three months
ended September 30, 1995 and 1994, respectively. The decrease was
primarily attributable to lower lending operations and investment
management, and administrative and investor services expenses from lower
overall portfolio activity.
Given the inherent risk associated with the business of the Partnership,
the future performance of the borrowing companies may significantly
impact the Partnership's future operations.
Current nine months compared to corresponding nine months in the
- ----------------------------------------------------------------
preceding year
- --------------
Net losses for the nine months ended September 30, 1995 and 1994 were
$341,180 and $1,991,458, respectively. The decrease in net loss was
primarily attributable to a $4,280,649 increase in the change in net
unrealized fair value of equity investments, partially offset by a
$2,442,097 increase in the realized losses from investment write-downs
and a $559,000 decrease in the change in the net unrealized fair value
of secured notes receivable.
During the nine months ended September 30, 1995, the increase in net
unrealized fair value of equity investments of $2,295,782 was due to the
write-down of portfolio companies in the medical and retail/consumer
product industries as these investments had been reflected with a fair
value less than cost. During the same period in 1994, the decrease of
$1,984,867 was primarily due to the conversion of notes receivable to
equity investments at fair values lower than cost for a portfolio
company in the medical industry.
Realized losses from investment write-downs were $2,963,247 and $521,150
for the nine months ended September 30, 1995 and 1994, respectively.
Realized losses in 1995 primarily related to equity investments in
portfolio companies in the medical and retail/consumer industries.
Realized losses in 1994 primarily related to an equity investment in a
portfolio company in the medical industry.
The Partnership recorded a decrease in the fair value of secured notes
receivable of $75,000 in 1995, compared to an increase of $484,000 in
1994, based upon the levels of loan loss reserves deemed adequate by the
Managing General Partner at the respective quarter ends. The 1994
increase primarily related to the conversion of notes receivable to
equity investments as discussed above.
During the nine months ended September 30, 1995, the Partnership
recorded a net realized gain of $539,299 mainly from the sale of equity
investments in IKOS Systems, Inc. and 3Com Corporation. The $355,000
net realized gain recorded in 1994 was mainly from the sale of equity
investments in Micro Decisionware, Inc.
Total operating expenses were $269,522 and $444,883 for the nine months
ended September 30, 1995 and 1994, respectively. The decrease was
primarily due to lower lending operations and investment management
expenses, and administrative and investor services expenses from reduced
overall portfolio activities.
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 September 30, 1995.
(b) Financial Data Schedule for the nine months ended and as of
September 30, 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 SECURED INVESTORS I
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: November 10, 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 SEPTEMBER 30, 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> SEP-30-1995
<PERIOD-TYPE> 9-MOS
<INVESTMENTS-AT-COST> 1,176,918
<INVESTMENTS-AT-VALUE> 881,125
<RECEIVABLES> 0
<ASSETS-OTHER> 9,439
<OTHER-ITEMS-ASSETS> 1,013,976
<TOTAL-ASSETS> 1,904,540
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 93,267
<TOTAL-LIABILITIES> 93,267
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,107,066
<SHARES-COMMON-STOCK> 114,995
<SHARES-COMMON-PRIOR> 115,501
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (295,793)
<NET-ASSETS> 1,811,273
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 104,049
<OTHER-INCOME> 0
<EXPENSES-NET> 300,638
<NET-INVESTMENT-INCOME> (196,589)
<REALIZED-GAINS-CURRENT> (2,365,373)
<APPREC-INCREASE-CURRENT> 2,220,782
<NET-CHANGE-FROM-OPS> (341,180)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 506
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (350,288)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 31,116
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 336,338
<AVERAGE-NET-ASSETS> 1,986,417
<PER-SHARE-NAV-BEGIN> 42
<PER-SHARE-NII> (22)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20
<EXPENSE-RATIO> 15.13
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<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>
