<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 June 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. 814-48
TECHNOLOGY FUNDING PARTNERS III, L.P.
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-3033783
- ------------------------------ ---------------------------------
(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 interest ("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,
1995 1994
-------- -----------
<S> <C> <C>
ASSETS
Equity investments (cost basis
of $19,242,360 and $19,299,469 for
1995 and 1994, respectively) $31,916,700 29,411,649
Cash and cash equivalents 4,984,241 4,049,929
Other assets -- 743,924
---------- ----------
Total $36,900,941 34,205,502
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 17,877 25,839
Due to related parties 37,719 44,572
Distributions payable -- 1,673,084
Deferred income 62,500 93,750
Other liabilities 22,942 19,362
---------- ----------
Total liabilities 141,038 1,856,607
Commitments, contingencies and
subsequent event (Notes 2, 3 and 6)
Partners' capital:
Limited Partners
(Units outstanding of 160,000
in both 1995 and 1994) 24,085,563 22,269,799
General Partners -- (33,084)
Net unrealized fair value increase
from cost of equity investments 12,674,340 10,112,180
---------- ----------
Total partners' capital 36,759,903 32,348,895
---------- ----------
Total $36,900,941 34,205,502
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
------------------------ -------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Notes receivable interest $ 54,617 99,104 57,930 189,612
Short-term investment interest 84,351 1,456 128,171 3,383
Other income 15,625 -- 31,250 --
--------- --------- --------- ---------
Total income 154,593 100,560 217,351 192,995
Costs and expenses:
Management fees 84,464 86,145 169,978 176,164
Individual general partners'
compensation 9,000 13,500 16,500 21,000
Operating expenses:
Administrative and investor services 83,190 141,087 152,133 245,973
Investment operation 52,020 99,494 106,349 206,133
Professional fees 29,271 29,581 41,345 46,496
Computer services 19,140 20,529 38,217 53,173
Interest expense -- 18,151 -- 26,785
--------- --------- --------- ---------
Total operating expenses 183,621 308,842 338,044 578,560
--------- --------- --------- ---------
Total costs and expenses 277,085 408,487 524,522 775,724
--------- --------- --------- ---------
Net operating loss (122,492) (307,927) (307,171) (582,729)
Net realized gain from sales
of equity investments 2,025,442 1,476,903 2,478,529 1,560,340
Realized losses from investment
write-downs (365,092) (149,765) (365,092) (149,765)
Recoveries from investments previously
written off 42,582 55,397 42,582 55,397
--------- --------- --------- ---------
Net realized income 1,580,440 1,074,608 1,848,848 883,243
Change in net unrealized
fair value:
Equity investments 1,546,762 (2,833,859) 2,562,160 (5,522,012)
Secured notes receivable -- 56,000 -- 37,000
--------- --------- --------- ---------
Net income (loss) $3,127,202 (1,703,251) 4,411,008 (4,601,769)
========= ========= ========= =========
Net realized income per Unit $ 10 6 11 5
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 185,492 156,401
Cash paid to vendors (100,291) (171,376)
Cash paid to related parties (431,961) (566,746)
--------- ---------
Net cash used by operating
activities (346,760) (581,721)
--------- ---------
Cash flows from investing activities:
Secured notes receivable issued -- (927,296)
Purchase of equity investments (991,584) (1,156,983)
Repayments of convertible and
secured notes receivable 125,000 544,833
Proceeds from sales of
equity investments 3,819,264 2,781,166
Recoveries of investments
previously written off -- 55,397
Distributions from venture capital
limited partnerships 1,476 83,575
--------- ---------
Net cash provided by
investing activities 2,954,156 1,380,692
--------- ---------
Cash flows from financing activities:
Distributions to Limited and General
Partners (1,673,084) --
Repayment of short-term
borrowings, net -- (125,000)
--------- ---------
Net cash used by financing
activities (1,673,084) (125,000)
--------- ---------
Net increase in cash and
cash equivalents 934,312 673,971
Cash and cash equivalents at beginning
of year 4,049,929 73,890
--------- ---------
Cash and cash equivalents at June 30 $ 4,984,241 747,861
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
- -----------------------------------------------
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
1995 1994
---- ----
<S> <C> <C>
Reconciliation of net income (loss) to net
cash used by operating activities:
Net income (loss) $ 4,411,008 (4,601,769)
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Net realized gain from sales of
equity investments (2,478,529) (1,560,340)
Recoveries from investments previously
written off (42,582) (55,397)
Realized losses from investment
write-downs 365,092 149,765
Change in net unrealized fair value:
Equity investments (2,562,160) 5,522,012
Secured notes receivable -- (37,000)
Other, net -- (4,939)
Changes in:
Due to/from related parties (6,853) 30,530
Other, net (32,736) (24,583)
--------- ---------
Net cash used by operating activities $ (346,760) (581,721)
========= =========
Non-cash investing activities:
Non-cash exercise of warrants $ -- 156,494
========= =========
Common stock recovered from equity
investment previously written off $ 42,582 --
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ----------------------------------------
1. General
-------
In the opinion of the Managing General Partners, the Balance Sheets as
of June 30, 1995 and December 31, 1994 and the related Statements of
Operations for the three and six months ended June 30, 1995 and 1994,
and Statements of Cash Flows for the six months ended June 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
June 30, 1995 supplement those included in the Annual Report on Form 10-
K. 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. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party expenses for the six months
ended June 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Management fees $169,978 176,164
Reimbursable operating expenses 238,630 400,112
Individual general partners'
compensation 16,500 21,000
</TABLE>
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Managing General Partners and are adjusted to
actual costs periodically. There were $9,564 and $15,526 of such
expenses due to related parties at June 30, 1995 and December 31, 1994,
respectively.
Amounts due to related parties for management fees were $28,155 and
$29,046 at June 30, 1995 and December 31, 1994, respectively.
Officers of the Managing General Partners occasionally receive stock
options as compensation for serving on the Boards of Directors of
portfolio companies. At June 30, 1995, the Partnership had an indirect
interest in such non-transferable PolyMedica options at an exercise
price higher than the current market value.
3. 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 through
June 30, 1995 consisted of:
<TABLE>
<CAPTION>
January 1 -
June 30, 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 $19,299,469 29,411,649
---------- ----------
Significant changes:
Communications
- --------------
Coded
Communications Common
Corporation share 04/93 72,727 (123,091) (10,982)
Coded Common
Communications share
Corporation warrant
at $3.16;
expired
04/95 04/93 72,727 (2,000) 0
Computer Systems and Software
- -----------------------------
Geoworks Common 01/92-
shares 06/94 600,110 (458,333) 2,165,348
Electronic Design Automation
- ----------------------------
IKOS Systems, Inc. Common
shares 03/92 8,294 (15,866) (19,026)
Environmental
- -------------
Conversion
Technologies Series A
International, Preferred
Inc. shares 05/95 200,000 500,000 500,000
Industrial/Business Automation
- ------------------------------
Crystallume Common
shares 03/94 348,611 0 (215,991)
Crystallume Series A
Preferred
shares 05/95 50 50,000 50,000
Nanodyne, Inc. Convertible 05/94&
notes 10/94 $87,158 (91,542) (91,542)
Nanodyne, Inc. Series B
Preferred
shares 04/95 42,126 92,150 92,150
Oxford GlycoSystems Common
shares 08/93 266,934 0 (286,416)
Medical/Biotechnology
- ---------------------
Acusphere, Inc. Series B
Preferred
shares 05/95 125,000 200,000 200,000
Biex, Inc. Series C
Preferred
shares 06/95 83,334 83,334 83,334
ICU Medical, Inc. Common 04/92&
shares 05/92 300,000 0 (532,500)
Lifecell Common
Corporation shares 02/92 252,923 0 703,126
Matrix Common
Pharmaceuticals, share
Inc. warrant
at $.23;
exercised
01/95 04/90 1,905 0 (24,422)
Matrix
Pharmaceuticals, Common 01/92 &
Inc. shares 01/95 321,633 438 314,331
Pharmos Common
Corporation shares 04/95 56,776 42,582 143,643
PolyMedica Common
Industries, Inc. shares 03/92 438,365 0 738,645
SyStemix, Inc. Common 08/91 &
shares 01/92 66,986 0 (210,671)
TheraTx, Inc. Common
shares 06/94 70,043 (16,500) (731,817)
UroMed Common
Corporation shares 03/94 59,942 (95,409) (277,232)
Retail/Consumer Products
- ------------------------
YES! Entertainment Series B
Corporation Preferred
shares 01/93 450,000 (300,000) (225,000)
YES! Entertainment Common
Corporation shares 06/95 33,333 99,999 125,999
---------- ----------
Total significant changes during the six months
ended June 30, 1995 (34,238) 2,490,977
Other changes, net (22,871) 14,074
---------- ----------
Total equity investments at June 30, 1995 $19,242,360 31,916,700
========== ==========
</TABLE>
Marketable Equity Securities
- ----------------------------
At June 30, 1995 and December 31, 1994, marketable equity securities had
aggregate costs of $10,859,078 and $9,713,832, respectively, and
aggregate fair values of $22,174,852 and $17,350,086, respectively. The
net unrealized gains at June 30, 1995 and December 31, 1994 included
gross gains of $12,753,027 and $10,000,499, respectively.
Acusphere, Inc.
- ---------------
In May 1995, the Partnership invested in Acusphere, Inc. by purchasing
125,000 Series B Preferred shares at a total cost of $200,000.
Biex, Inc.
- ----------
In June 1995, the Partnership made an additional investment in Biex,
Inc. by purchasing 83,334 Series C Preferred shares at a total cost of
$83,334.
Coded Communications
- --------------------
During the second quarter of 1995, the Managing General Partners
determined that there has been a decline in value of the Partnership's
investment. As a result, the Partnership realized a loss of $125,091.
The Partnership also recorded a decrease in fair value of $10,982 to
reflect the publicly-traded market value at June 30, 1995.
Conversion Technologies International, Inc.
- -------------------------------------------
In May 1995, the Partnership invested in Conversion Technologies
International, Inc. by purchasing 200,000 Series A Preferred shares at a
total cost of $500,000.
Crystallume
- -----------
In May 1995, the Partnership made an additional investment in
Crystallume by purchasing 50 Series A Preferred shares and received a
warrant to purchase 5,000 common shares at a total cost of $50,000. The
Partnership also recorded a decrease in fair value of $215,991 to
reflect the publicly-traded market price of its common stock investment
at June 30, 1995; a portion of the investment fair value was adjusted to
reflect a 25% discount for restricted securities.
GeoWorks
- --------
In April 1995, the Partnership sold 275,000 common shares of GeoWorks
for total proceeds of $2,483,918 and a realized gain of $2,025,585. The
partnership recorded an increase in fair value of $2,165,348 at June 30,
1995 primarily due to an increase in market value of the remaining
unrestricted shares at June 30, 1995, partially offset by a reduction
due to the sale.
Subsequent to June 30, 1995, the Partnership sold 150,000 common shares
of Geoworks for total proceeds of $2,255,000 and a realized gain of
$1,934,600.
IKOS Systems Inc.
- -----------------
During the first quarter of 1995, the Partnership sold all of its
holdings in the company for total proceeds of $24,882 and a realized
gain of $9,016.
Matrix Pharmaceuticals, Inc.
- ----------------------------
In January 1995, the Partnership cash exercised its warrant to purchase
1,905 common shares, resulting in a recorded cost basis of $438. The
Partnership also recorded a total increase in fair value of $289,909 to
reflect the unrestricted market value at June 30, 1995.
Nanodyne, Inc.
- --------------
In April 1995, the Partnership converted $87,158 in notes issued in 1994
and $4,992 in accrued interest into 42,126 Series B Preferred shares.
Oxford GlycoSystems
- -------------------
In March 1995, the company had a new round of equity financing in which
the Partnership did not participate. The pricing of this round
indicated a decrease in the change in fair value of $286,416 for the
Partnership's existing investments.
Pharmos Corporation/Oculon Corporation
- --------------------------------------
In March 1995, Oculon Corporation ("Oculon") was acquired by Pharmos
Corporation ("Pharmos"). The Partnership's Series II Senior Preferred
shares were canceled while the Series III Senior Preferred shares were
exchanged for 56,776 shares of marketable, unrestricted Pharmos common
stock. The Partnership recorded the $42,582 cost basis of the Pharmos
stock as a recovery from Oculon investments previously written off. An
increase in fair value of $143,643 reflected the market value of the
Pharmos stock at June 30, 1995.
TheraTx, Inc.
- -------------
In January 1995, the Partnership sold 11,000 common shares of TheraTx,
Inc. for total proceeds of $214,665 and realized a gain of $198,165.
The Partnership also received proceeds of $127,750 from sales prior to
December 31, 1994, which have been settled. The Partnership recorded a
decrease in unrealized fair value of $731,817 at June 30, 1995, a
portion was realized related to the sale mentioned above, with the
remainder due to a decrease in the market value of the remaining
unrestricted shares at June 30, 1995.
UroMed Corporation
- ------------------
In January 1995, the Partnership sold its remaining holdings in the
company for total proceeds of $341,314 and realized a gain of $245,905.
The Partnership also received proceeds of $218,660 from sales prior to
December 31, 1994, which have been settled.
YES! Entertainment Corporation
- ------------------------------
In June 1995, the company completed its initial public offering ("IPO").
Prior to the IPO, the company effected a 1-for-15 reverse stock split.
The Partnership's Series B Preferred shares were converted into 33,333
common shares. The Managing General Partners determined that there has
been a decline in value of the Partnership's investment; as a result, a
realized loss of $200,001 was recorded. The loss reflects the fact that
the stock will be restricted for two years.
Other Equity Investments
- ------------------------
Other significant changes during the six months ended June 30, 1995
reflected above relate to market value fluctuations and the elimination
of a discount relating to selling restrictions for publicly-traded
portfolio companies.
The Partnership also received proceeds of $394,009 in January 1995 from
sales of Powersoft Corporation prior to December 31, 1994, which have
been settled.
4. Notes Receivable Interest Income
--------------------------------
Included in the three months ended June 30, 1995 notes receivable
interest income balance of $54,617 was approximately $50,000 in interest
income recovered from a portfolio company in the medical/biotechnology
industry which had been previously written off.
5. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents at June 30, 1995 and December 31, 1994
consisted of:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Demand accounts $ 8,454 3,059
Money-market accounts 4,975,787 4,046,870
--------- ---------
Total $4,984,241 4,049,929
========= =========
</TABLE>
6. Commitments and Contingencies
-----------------------------
The Partnership is a party to financial instruments with off-balance-
sheet risk in the normal course of its business. Generally, these
instruments are commitments for future equity investment fundings,
venture capital limited partnership investments, 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 June 30, 1995,
the Partnership had unfunded commitments of $166,666 and $46,870 for
equity and venture capital limited partnership investments,
respectively.
In July 1994, the Partnership agreed to guarantee for a two-year period
a $2 million loan between a financial institution and a portfolio
company in the medical/biotechnology industry. The Partnership has
received a guarantee fee of $125,000, which is recorded as deferred
income and is being amortized as other income over the two-year period.
During the six months ended June 30, 1995, $31,250 was recorded as other
income. In June 1995, the Partnership also agreed to guarantee a
$375,000 line of credit between a financial institution and a portfolio
company in the computer systems and software industry. While the
Partnership expects the portfolio companies to repay the loan or line of
credit, if the portfolio companies fail to do so, the Partnership may be
liable up to the guarantee amounts.
<PAGE>
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, 1995, net cash used by operations
totaled $346,760. The Partnership paid management fees of $170,869 to
the Managing General Partners and reimbursed related parties for
operating expenses of $244,592. In addition, $16,500 was paid to the
individual general partners as compensation for their services. Other
operating expenses of $100,291 were paid and $185,492 in interest income
was received. Distributions totaling $1,673,084 were paid to Limited
and General Partners.
During the six months ended June 30, 1995, the Partnership funded equity
investments of $991,584 primarily to portfolio companies in the
environmental and medical/biotechnology industries. Repayments of
convertible and secured notes receivable provided cash of $125,000.
Proceeds from the sales of equity investments were $3,819,264 of which
$740,419 related to sales prior to December 31, 1994, which have been
settled. As of June 30, 1995, the Partnership was committed to fund
$166,666 and $46,870 in equity and venture capital limited partnership
investments, respectively.
The Partnership maintains a margin account with a brokerage firm. At
June 30, 1995, the maximum borrowing capacity, which fluctuates based on
collateral value, was approximately $2,118,750. The Partnership's ICU
Medical, Inc. shares are pledged as collateral. The Partnership did not
draw on this account during the six months ended June 30, 1995.
During the first half of 1995, YES! Entertainment Corporation completed
its initial public offering ("IPO"). Although the Partnership's
holdings in YES! Entertainment Corporation are subject to selling
restrictions, the IPO indicates potential future liquidity for this
investment.
Cash and cash equivalents at June 30, 1995 were $4,984,241. Cash
reserves, interest income on short-term investments, future proceeds
from sales of equity investments and borrowing capacity from the margin
account are expected to be adequate to fund Partnership operations and
future investments through the next twelve months.
Results of Operations
- ---------------------
Current quarter compared to corresponding quarter in the preceding year
- -----------------------------------------------------------------------
Net income was $3,127,202 for the three months ended June 30, 1995
compared to a net loss of $1,703,251 during the same period in 1994.
The change was primarily due to a $4,380,621 increase in the change in
net unrealized fair value of equity investments, a $548,539 increase in
net realized gain from sales of equity investments and a $125,221
decrease in operating expenses. These changes were partially offset by
a $215,327 increase in realized losses from investment write-downs.
During the quarter ended June 30, 1995, the increase in fair value of
equity investments of $1,546,762 was mostly attributable to increases
in portfolio companies in the computer systems and software industry.
During the same period in 1994, the decrease of $2,833,859 was primarily
due to decreases in portfolio companies in the medical/biotechnology
industry.
Net realized gains from sales of equity investments were $2,025,442 and
$1,476,903 for the three months ended June 30, 1995 and 1994,
respectively. The 1995 gain mostly related to sales of GeoWorks. The
net gain in 1994 mostly related to sales of Telios Pharmaceuticals, Inc.
and TheraTx, Inc. investments.
Operating expenses were $183,621 for the three months ended June 30,
1995 compared to $308,842 for the same period in 1994. The decrease was
primarily due to lower administrative and investor services expenses
from decreased portfolio activities.
During the quarter ended June 30, 1995, the Partnership recorded
realized losses from investment write-downs of $365,092 related
primarily to equity investments for portfolio companies in the
retail/consumer products and communications industries. During the same
period in 1994, such losses totaled $149,765 related to equity
investments in Angenics, Inc.
Total income was $154,593 and $100,560 during the quarters ended June
30, 1995 and 1994, respectively. The increase of $82,895 in short-term
investment interest was mainly from investment sale proceeds. This
increase was partially offset by a $44,487 decrease in notes receivable
interest. Included in the 1995 balance of $54,617 was approximately
$50,000 in interest income related to a secured note receivable
previously written off from a portfolio company in the
medical/biotechnology industry. The overall decrease was due to lower
outstanding convertible and secured notes receivable balances.
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
- ----
Net income was $4,411,008 for the six months ended June 30, 1995
compared to a net loss of $4,601,769 for the same period in 1994. The
change was primarily due to a $8,084,172 increase in the change in net
unrealized fair value of equity investments, a $918,189 increase in net
realized gain from sales of equity investments, and a $240,516 decrease
in operating expenses. These changes were partially offset by a
$215,327 increase in realized losses from investment write-downs as
discussed in the above section.
During the six months ended June 30, 1995, the increase in fair value of
equity investments of $2,562,160 was primarily attributable to increases
in portfolio companies in the computer systems and software and
medical/biotechnology industries, partially offset by decreases in
portfolio companies in the industrial/business automation industry.
During the same period ended June 30, 1994, the decrease of $5,522,012
was primarily due to decreases in portfolio companies in the
medical/biotechnology and industrial/business automation industries.
Net realized gain from sales of equity investments was $2,478,529 for
the six months ended June 30, 1995 compared to $1,560,340 for the same
period in 1994. The net gain in 1995 mostly related to sales of
GeoWorks and UroMed Corporation investments. The net gain in 1994
mostly related to investment sales of Telios Pharmaceuticals, Inc. and
TheraTx, Inc.
Operating expenses were $338,044 for the six months ended June 30, 1995
compared to $578,560 for the same period in 1994. The decrease was
primarily due to lower administrative and investor services expenses
from lower overall portfolio activities.
Total income was $217,351 and $192,995 during the six months ended June
30, 1995 and 1994, respectively. The increase of $124,788 in short-term
investment interest was mainly from investment sale proceeds. This
increase was more than offset by a $131,682 decrease in notes receivable
interest. Included in the 1995 balance of $57,930 was approximately
$50,000 in interest income related to a secured note receivable
previously written off from a portfolio company in the
medical/biotechnology industry. The overall decrease was due to lower
outstanding convertible and secured notes receivable balances.
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, 1995.
(b) Financial Data Schedule for the six months ended and as of June 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 PARTNERS III, L.P.
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: August 11, 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 JUNE 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> JUN-30-1995
<PERIOD-TYPE> 6-MOS
<INVESTMENTS-AT-COST> 19,242,360
<INVESTMENTS-AT-VALUE> 31,916,700
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 4,984,241
<TOTAL-ASSETS> 36,900,941
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 141,038
<TOTAL-LIABILITIES> 141,038
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24,085,563
<SHARES-COMMON-STOCK> 160,000
<SHARES-COMMON-PRIOR> 160,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,674,340
<NET-ASSETS> 36,759,903
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 186,101
<OTHER-INCOME> 31,250
<EXPENSES-NET> 524,522
<NET-INVESTMENT-INCOME> (307,171)
<REALIZED-GAINS-CURRENT> 2,156,019
<APPREC-INCREASE-CURRENT> 2,562,160
<NET-CHANGE-FROM-OPS> 4,411,008
<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> 4,411,008
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 169,978
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 527,322
<AVERAGE-NET-ASSETS> 34,554,399
<PER-SHARE-NAV-BEGIN> 139
<PER-SHARE-NII> 11
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 151
<EXPENSE-RATIO> .02
<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>
