<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 quarterly period ended June 30, 2000
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
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Commission File No. 0-15766
TECHNOLOGY FUNDING SECURED INVESTORS I
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(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-2944800
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(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
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(Address of principal executive offices) (Zip Code)
(650) 345-2200
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(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
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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)
June 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
ASSETS
Investments:
Secured notes receivable, net (cost
basis of $360,839 in both
2000 and 1999) $1,448,839 1,448,839
Equity investments (cost basis
of $166,729 in both 2000 and 1999) 0 0
--------- ---------
Total investments 1,448,839 1,448,839
Cash and cash equivalents 8,240 7,861
Other assets 1,856 --
--------- ---------
Total assets $1,458,935 1,456,700
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 11,540 26,096
Due to related parties 524,158 380,396
Other liabilities 647 647
--------- ---------
Total liabilities 536,345 407,139
Commitments and contingencies
(Notes 2, 3 and 4)
Partners' capital:
Limited Partners
(106,990 Units outstanding) 59,199 184,901
General Partners (57,880) (56,611)
Net unrealized fair value increase
(decrease) from cost:
Secured notes receivable 1,088,000 1,088,000
Equity investments (166,729) (166,729)
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Total partners' capital 922,590 1,049,561
--------- ---------
Total liabilities and partners' capital $1,458,935 1,456,700
========= =========
</TABLE>
See accompanying notes to unaudited financial statements
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
-----------------------------------
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
----------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Short-term investment interest $ 8 6 15 674
------ ------- ------- -------
Total income 8 6 15 674
Costs and expenses:
Management fees 4,923 8,223 10,170 17,028
Operating expenses:
Administrative and investor services 39,808 99,770 78,066 170,391
Investment operations (2,711) 9,420 3,525 19,327
Professional fees 7,311 7,599 5,995 19,652
Computer services 12,952 16,447 29,230 31,871
------- ------- ------- -------
Total operating expenses 57,360 133,236 116,816 241,241
------ ------- ------- -------
Total costs and expenses 62,283 141,459 126,986 258,269
------ ------- ------- -------
Net realized loss (62,275) (141,453) (126,971) (257,595)
------ ------- ------- -------
Net loss $(62,275) (141,453) (126,971) (257,595)
====== ======= ======= =======
Net realized loss per Unit $ (.57) (1.31) (1.17) (2.38)
====== ======= ======= =======
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
-----------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 15 674
Cash paid to vendors (56,821) (106,187)
Cash advanced by (paid to) related
parties 57,185 (257,829)
------ -------
Net cash provided (used) by operating
activities 379 (363,342)
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Cash flows from investing activities:
Repayments of secured notes receivable -- 364,385
------ -------
Net cash provided by investing
activities -- 364,385
------ -------
Net increase in cash
and cash equivalents 379 1,043
Cash and cash equivalents at beginning
of year 7,861 7,020
------ -------
Cash and cash equivalents
at June 30 $ 8,240 8,063
====== =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
-----------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
------------------------------------
2000 1999
-------- --------
<S> <C> <C>
Reconciliation of net loss
to net cash provided (used) by
operating activities:
Net loss $(126,971) (257,595)
Changes in:
Accounts payable and accrued
expenses (14,556) (15,988)
Due to related parties 143,762 (89,089)
Other (1,856) (670)
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Net cash provided (used) by
operating activities $ 379 (363,342)
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</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
----------------------------------------
1. General
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In the opinion of the Managing General Partner, the accompanying interim
financial statements reflect all adjustments necessary for a fair
presentation of the financial position, results of operations, and cash
flows for the interim periods presented. These statements should be read
in conjunction with the Annual Report on Form 10-K for the year ended
December 31, 1999. 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.
2. Financing of Partnership Operations
-----------------------------------
The General Partners have made loans to the Partnership to finance its
recurring losses from on-going operations. The Partnership has very
limited cash resources and primarily illiquid assets. The General Partners
are under no obligation to continue the financing of the Partnership's
daily operations and may elect to discontinue such support at any time
during the remaining life of the Partnership.
3. Fair Value of Investments
-------------------------
The Partnership's investments are valued at fair value as determined in
good faith by the Managing General Partner in the absence of readily
available market quotations. At this stage of the Partnership's life, the
holdings in the Partnership's portfolio are limited to troubled companies
for which any estimate of fair value is highly subjective. The estimates
made by the Managing General Partner give consideration to each company's
current operating activities, underlying financial condition, prospects for
liquidation events, and other factors. The estimated fair value of
$1,448,839 at June 30, 2000 may differ significantly from a value that
would have been used had the ultimate realization of the investments been
known.
In August 2000, the General Partners engaged an independent third party to
appraise the Partnership's three remaining portfolio companies. It is
possible that the resulting appraised values will differ significantly from
the investment fair values reported in these financial statements. Any
adjustments based on the independent third party appraisal will be recorded
in the period the appraisal is received.
4. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party costs for the six months ended
June 30, 2000 and 1999, were as follows:
<TABLE>
2000 1999
------ ------
<S> <C> <C>
Management fees $ 10,170 17,028
Reimbursable operating expenses 76,407 151,712
</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 June 30, 2000 and December 31, 1999, due
to related parties for such expenses were $476,686 and $343,094,
respectively.
At June 30, 2000 and December 31, 1999, management fees payable were
$41,503 and $31,333, respectively, and due to affiliated partnerships for
reparticipated secured notes receivable were $5,969.
5. Secured Notes Receivable, Net
-----------------------------
A complete listing of the Partnership's secured notes receivable at
December 31, 1999, is included in the 1999 Annual Report on Form 10-K.
There was no investment activity from January 1 through June 30, 2000.
6. Equity Investments
------------------
A complete listing of the Partnership's equity investments at December 31,
1999, is included in the 1999 Annual Report on Form 10-K. There was no
investment activity from January 1 through June 30, 2000.
7. Cash and Cash Equivalents
-------------------------
At June 30, 2000, and December 31, 1999, cash and cash equivalents
consisted of:
<TABLE>
<CAPTION>
2000 1999
-------- --------
<S> <C> <C>
Demand and brokerage accounts $7,710 7,078
Money market accounts 530 783
----- -----
Total $8,240 7,861
===== =====
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
-------------------------------
During the six months ended June 30, 2000, net cash provided by operating
activities totaled $379. The Partnership received advances from the
Managing General Partners totaling $57,185 to fund its operations. Other
operating expenses of $56,821 were paid and interest income of $15 was
received.
Cash and cash equivalents at June 30, 2000, were $8,240. The General
Partners have made loans to the Partnership to finance its recurring losses
from on-going operations. The Partnership has very limited cash resources
and primarily illiquid assets. The General Partners are under no
obligation to continue financing the Partnership's daily operations and may
elect to discontinue such support at any time during the remaining life of
the Partnership.
The Partnership's investments are valued at fair value as determined in
good faith by the Managing General Partner in the absence of readily
available market quotations. At this stage of the Partnership's life, the
holdings in the Partnership's portfolio are limited to troubled companies
for which any estimate of fair value is highly subjective. The estimates
made by the Managing General Partner give consideration to each company's
current operating activities, underlying financial condition, prospects for
liquidation events, and other factors. The estimated fair value of
$1,448,839 at June 30, 2000 may differ significantly from a value that
would have been used had the ultimate realization of the investments been
known.
In August 2000, the General Partners engaged an independent third party to
appraise the Partnership's three remaining portfolio companies. It is
possible that the resulting appraised values will differ significantly from
the investment fair values reported in these financial statements. Any
adjustments based on the independent third party appraisal will be recorded
in the period the appraisal is received.
Results of Operations
---------------------
Current quarter compared to corresponding quarter in the preceding year
-----------------------------------------------------------------------
Net losses were $62,275 and $141,453 for the quarters ended June 30, 2000
and 1999, respectively. The decrease in net loss in the current period was
primarily due to a $75,876 decrease in total operating expenses.
Total operating expenses were $57,360 and $133,236 for the quarters ended
June 30, 2000 and 1999, respectively. The decrease is primarily
attributable to decreased investment monitoring activity and related
administrative costs.
Given the inherent risk associated with the business of the Partnership,
the future performance of the portfolio company investments may
significantly impact future operations.
Current six months compared to corresponding six months in the
---------------------------------------------------------------
preceding year
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Net losses for the six months ended June 30, 2000 and 1999, were $126,971
and $257,595, respectively. The decrease in net loss was primarily
attributable to a $124,425 decrease in operating expenses.
Total operating expenses were $116,816 and $241,241 for the six months
ended June 30, 2000 and 1999, respectively. The decrease is primarily
attributable to decreased investment monitoring activity and related
administrative and professional costs.
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 June 30, 2000.
(b) Financial Data Schedule for the six months ended and as of June 30,
2000 (Exhibit 27).
<PAGE>
SIGNATURES
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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: August 14, 2000 By: /s/Charles R. Kokesh
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Charles R. Kokesh
President, Chief Executive
Officer, Chief Financial
Officer and Chairman of
Technology Funding Inc. and
Managing General Partner of
Technology Funding Limited
