SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the Fiscal Year Ended December 31, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of The Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-16208
WESTFORD TECHNOLOGY VENTURES, L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3423417
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
17 Academy Street, 5th Floor
Newark, New Jersey 07102-2905
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 624-2131
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
- -------------------------------------------------------------------------------
(Title of class)
<PAGE>
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 16, 1999, 11,204 units of limited partnership interest ("Units")
were held by non-affiliates of the registrant. There is no established public
trading market for such Units.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement relating to the 1999 Annual Meeting
of the Limited Partners of the Registrant, to be held on June 28, 1999 (the
"Annual Meeting Proxy Statement") are incorporated herein by reference in Part
III hereof. The Annual Meeting Proxy Statement will be filed with the Commission
not later than 120 days after the close of the fiscal year ended December 31,
1998.
<PAGE>
PART I
Item 1. Business.
Formation
Westford Technology Ventures, L.P. (the "Partnership") is a Delaware limited
partnership formed on September 3, 1987. WTVI Co., L.P., the managing general
partner of the Partnership (the "Managing General Partner"), and four
individuals (the "Individual General Partners") are the general partners of the
Partnership. Hamilton Capital Management Inc. (the "Management Company") is the
general partner of the Managing General Partner and the Partnership's management
company. The Partnership began its principal operations on December 1, 1988.
The Partnership operates as a business development company under the Investment
Company Act of 1940. The Partnership's investment objective is to achieve
long-term capital appreciation by making venture capital investments in new and
developing companies and other special investment situations. The Partnership
considers this activity to constitute the single industry segment of venture
capital investing.
In 1988 and 1989, the Partnership publicly offered, through The Stuart-James
Company, Incorporated (the "Selling Agent"), 35,000 units of limited partnership
interest ("Units") at $1,000 per Unit. The Units were registered under the
Securities Act of 1933 pursuant to a Registration Statement on Form N-2 (File
No. 33-16891) which was declared effective on May 12, 1988. The Partnership held
its initial and final closings on November 25, 1988 and January 31, 1989,
respectively. A total of 11,217 Units were sold to limited partners (the
"Limited Partners"). Gross capital contributions to the Partnership total
$11,333,170, comprised of $11,217,000 from the Limited Partners, $112,170 from
the Managing General Partner and $4,000 from the Individual General Partners.
The Partnership's originally scheduled termination date was December 31, 1998.
In October 1998, the Individual General Partners voted to extend the term of the
Partnership for an additional two-year period. The Partnership is now scheduled
to terminate no later than December 31, 2000. The Individual General Partners
have the right to extend the term of the Partnership for an additional two-year
period if they determine that such extension is in the best interest of the
Partnership.
The Venture Capital Investments
From its inception to December 31, 1998, the Partnership made investments in
eight portfolio companies with an aggregate cost of $11,160,079. The Partnership
has fully invested its original net proceeds and will not make additional
investments in new portfolio companies. However, the Partnership may make
additional follow-on investments in existing portfolio companies, if required.
The venture capital investments made during 1998 and other events affecting the
Partnership's portfolio investments during the year are listed below.
o In May 1998, the Partnership exercised its warrant to purchase 29,015
common shares of EIS International, Inc. for a total cost of $40,815.
Subsequently, the Partnership sold 6,600 common shares of EIS for
$40,832, realizing a loss of $68,190.
o In June 1998, the Partnership exercised its warrant to purchase 68,003
common shares of Inn-Room Systems, Inc. The cost to exercise such
warrant, totaling $680, was paid by reducing the principal balance of the
demand promissory note due from the company, from $103,620 to $102,940.
As of December 31, 1998, the Partnership had active investments in four
portfolio companies with an aggregate cost of $10,460,214 and a fair value of
$5,039,575. As of December 31, 1998, the Partnership had fully or partially
liquidated investments with an aggregate cost of $3,864,669. These liquidated
investments returned $5,590,139, resulting in a cumulative net realized gain of
$1,725,470. Additionally, from its inception to December 31, 1998, the
Partnership had earned $749,747 of interest and dividend income from its
portfolio investments. As a result, from its inception to December 31, 1998, the
Partnership had a cumulative net gain from its venture capital investments of
$2,475,217.
Competition
The Partnership encounters competition from other entities having similar
investment objectives. Primary competition for venture capital investments has
been from venture capital partnerships and corporations, venture capital
affiliates of large industrial and financial companies, small business
investment companies and wealthy individuals. Competition also may develop from
foreign investors and from large industrial and financial companies investing
directly rather than through venture capital affiliates. The Partnership has
been a co-investor with other professional venture capital investors and these
relationships have generally expanded the Partnership's access to investment
opportunities. As discussed above, the Partnership will not make investments in
any new portfolio companies.
Employees
The Partnership has no employees. The Managing General Partner, subject to the
supervision of the Individual General Partners, manages and controls the
Partnership's venture capital investments. The Management Company performs, or
arranges for others to perform, the management and administrative services
necessary for the operation of the Partnership and is responsible for managing
the Partnership's short-term investments.
Item 2. Properties.
The Partnership does not own or lease physical properties.
Item 3. Legal Proceedings.
The Partnership is not a party to any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth quarter
of the calendar year covered by this report.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
There is no established public trading market for the Units and it is not
anticipated that any public market for the Units will develop. Consequently,
Limited Partners cannot easily liquidate their investment. Several independent
broker/dealers provide an informal secondary market for limited partnership
interests. Transfers of Units are subject to certain restrictions pursuant to
the Partnership Agreement and also may be affected by restrictions on resale
imposed by the laws of certain states.
The approximate number of holders of Units as of March 16, 1999 is 1,792. The
Managing General Partner and the four Individual General Partners of the
Partnership also hold interests in the Partnership. Information contained in
Item 12 of this report "Security Ownership of Certain Beneficial Owners and
Management" is incorporated herein by reference.
The Partnership did not make any cash distributions to its Partners during the
three year period ended December 31, 1998 and has not made any cash
distributions to Partners since the inception of the Partnership.
Item 6. Selected Financial Data.
($ In Thousands, Except For Per Unit Information)
<TABLE>
Years Ended December 31,
1998 1997 1996 1995 1994
--------- --------- --------- -------- ----------
<S> <C> <C> <C> <C> <C>
Total assets $ 5,397 $ 6,655 $ 9,077 $ 10,817 $ 8,471
Net assets 5,054 6,578 9,013 10,775 8,432
Cost of portfolio investments purchased 41 600 1,033 336 1,464
Cumulative cost of portfolio investments 11,160 11,119 10,519 9,487 9,151
Net unrealized (depreciation) appreciation
of portfolio investments (5,421) (4,162) (1,980) 2,448 (227)
Net investment loss (197) (222) (257) (318) (295)
Net realized (loss) gain from portfolio
investments (68) (32) 2,923 (14) (384)
Change in unrealized depreciation or
appreciation of investments (1,259) (2,181) (4,428) 2,674 180
(Decrease) increase in net assets
resulting from operations (1,524) (2,435) (1,762) 2,343 (500)
PER UNIT OF LIMITED PARTNERSHIP INTEREST
Net asset value, including net unrealized
appreciation or depreciation of investments $ 446 $ 580 $ 790 $ 920 $ 744
Net investment loss (20) (22) (24) (28) (26)
Net realized (loss) gain from portfolio
investments (5) (2) 219 (1) (34)
Change in unrealized depreciation or
appreciation of investments (109) (186) (325) 205 16
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
As of December 31, 1998, the Partnership had $7,998 in an interest-bearing cash
account. Interest earned on such cash balances and other short-term investments
for the years ended December 31, 1998, 1997 and 1996 was $415, $11,692 and
$56,377, respectively. Interest earned from cash balances and short-term
investments in future periods is subject to fluctuations in short-term interest
rates and changes in cash balances and amounts available for investment in
short-term securities.
The Partnership has fully invested the net proceeds received from the offering
of Units and will not make additional investments in new portfolio companies.
However, the Partnership may make additional follow-on investments in existing
portfolio companies, if required. As discussed below, during 1998, the
Partnership completed a follow-on investment totaling $40,815 in EIS
International, Inc.
As of December 31, 1998, the Partnership's current liabilities exceeded its cash
balance by approximately $335,000. Current liabilities as of December 31, 1998
include $251,300 due to the Management Company. Funds needed to cover such
current liabilities, future follow-on investments, if any, and operating
expenses are expected to be obtained primarily from proceeds from the sale of
the Partnership's remaining portfolio investments. As a result of the current
cash shortage, payments to the Managing General Partner and Independent General
Partners have been temporarily suspended.
The Partnership's originally scheduled termination date was December 31, 1998.
In October 1998, the Individual General Partners voted to extend the term of the
Partnership for an additional two-year period. The Partnership is now scheduled
to terminate no later than December 31, 2000. The Individual General Partners
have the right to extend the term of the Partnership for an additional two-year
period if they determine that such extension is in the best interest of the
Partnership.
Results of Operations
For the years ended December 31, 1998 and 1997, the Partnership had a net
realized loss from operations of $264,993 and $254,578, respectively. For the
year ended December 31, 1996, the Partnership had a net realized gain from
operations of $2,666,326. Net realized gain or loss from operations is comprised
of (i) net realized gain or loss from portfolio investments and (ii) net
investment income or loss (interest and dividend income less operating
expenses).
Realized Gains and Losses from Portfolio Investments - For the year ended
December 31, 1998, the Partnership had a net realized loss from its portfolio
investments of $68,190 resulting from the sale of 6,600 common shares of EIS
International, Inc. in June 1998.
Such shares were sold for $40,832 compared to a cost of $109,022.
For the year ended December 31, 1997, the Partnership had a net realized loss
from its portfolio investments of $31,655, relating to the final escrow payment
received, during 1997, in connection with the 1996 merger of EIS International,
Inc. with Cybernetics Systems, Inc. In June 1997, the Partnership received
16,682 common shares of EIS, representing 100% of the shares previously held in
escrow. However, in connection with a settlement agreement among EIS and the
former Cybernetics shareholders, the Partnership received $1,320, representing
only a portion of the $32,985 cash balance previously held in escrow, resulting
in the $31,655 realized loss for 1997.
For the year ended December 31, 1996, the Partnership had a net realized gain
from its portfolio investments of $2,923,123. In May 1996, the Partnership sold
its remaining 21,673 shares of Cincinnati Bell Inc. common stock in the public
market for $1,082,314, realizing a gain of $657,115. In March 1996, EIS
International, Inc., a public company, completed its merger with Cybernetics
Systems International, Inc. In connection with the merger, the Partnership
exchanged its Cybernetics holdings for $460,245 in cash, 206,267 shares of
restricted EIS common stock and warrants to purchase 29,015 shares of EIS common
stock at $1.41 per share. Of the total merger consideration, $32,985 of cash and
16,682 shares of EIS common stock were placed in escrow, the release of which
was contingent upon certain events. Claims set forth by EIS International
subsequent to the merger were resolved through arbitration, resulting in a loss
to the Partnership in 1997, as discussed above. The Partnership recognized a
$2,272,883 realized gain in 1996 in connection with the merger. Also during
1996, the Partnership had a realized loss of $6,875 resulting from the
expiration, in April 1996, of the Partnership's option to purchase 5,000 shares
of common stock of Spectix Corporation.
Investment Income and Expenses - Net investment loss for the years ended
December 31, 1998, 1997 and 1996 was $196,803, $221,913 and $256,797,
respectively. The $25,110 favorable change in net investment loss for 1998
compared to 1997 resulted from an $18,520 increase in investment income and a
$6,590 decrease in operating expenses. The increase in investment income for
1998 is comprised of a $29,797 increase in income from portfolio investments
partially offset by an $11,277 decrease in interest from short-term investments.
The increase in income from portfolio investments primarily resulted from the
additional promissory notes of Spectrix Corporation held by the Partnership
during 1998 as compared to 1997. The decrease in interest from short-term
investments during 1998 as compared to 1997 primarily is due to a reduction of
funds available for investment in such securities during 1998. The decrease in
operating expenses for 1998 as compared 1997 primarily resulted from a decline
in professional fees of $9,006, primarily attributable to an unfavorable accrual
adjustment made during the first quarter of 1997. This decrease was partially
offset by a $5,939 increase in mailing and printing expenses primarily due to
additional charges related to the proxy tabulation for the Partnership's 1998
Annual Meeting of Limited Partners.
The $34,884 decrease in net investment loss for 1997 compared to 1996 resulted
from a $37,736 increase in investment income offset by a slight increase of
$2,852 in operating expenses. The increase in investment income primarily
resulted from an $82,421 increase in interest income from portfolio investments
partially offset by a $44,685 decrease in interest from short-term investments.
The increase in income from portfolio investments primarily resulted from the
additional promissory notes of Spectrix Corporation held by the Partnership
during 1997 compared to 1996. The decrease in interest from short-term
investments for 1997 compared to 1996 primarily is due to a reduction of funds
available for investment in such securities during 1997.
The Management Company is responsible for the management and administrative
services necessary for the operation of the Partnership. The Management Company
receives a management fee at an annual rate of 2.5% of the gross capital
contributions to the Partnership (net of selling commissions and organizational
expenses paid by the Partnership), reduced by capital distributed and realized
losses, with a minimum annual fee of $200,000. The management fee for the years
ended December 31, 1998, 1997 and 1996 was $222,302, $223,586 and $223,784,
respectively. The Management Company agreed to reduce the management fee payable
by the Partnership to the minimum annual fee of $200,000 effective January 1,
1999. To the extent possible, the management fee and other expenses incurred by
the Partnership are paid with funds provided from operations. Funds provided
from operations primarily are obtained from interest received from short-term
investments, income earned from portfolio investments and proceeds received from
the sale of portfolio investments.
Unrealized Gains and Losses and Changes in Unrealized Depreciation or
Appreciation of Portfolio Investments - For the year ended December 31, 1998,
the Partnership had a $1,259,082 unfavorable net change in unrealized
depreciation of investments, primarily resulting from a $1,312,829 net downward
revaluation of the Partnership's investment in EIS International, Inc. and
Inn-Room Systems, Inc. during 1998. Partially offsetting this unfavorable change
was a $53,747 transfer from unrealized loss to realized loss resulting from the
sale of 6,600 common shares of EIS, as discussed above.
For the year ended December 31, 1997, the Partnership had a $2,181,401
unfavorable net change in unrealized depreciation of investments from the net
downward revaluation of its investments in EIS International, Inc. and Spectrix
Corporation during 1997.
For the year ended December 31, 1996, the Partnership had a $4,428,010
unfavorable net change in unrealized depreciation of investments, primarily
resulting from the net downward revaluation of the Partnership's investment in
EIS International, Inc. during 1996. Additionally during 1996, $2,805,258 was
transferred from unrealized gain to realized gain relating to investments sold
during 1996, as discussed above.
Net Assets - Changes in net assets resulting from operations are comprised of
(1) net realized gain or loss from operations and (2) changes in net unrealized
appreciation or depreciation of portfolio investments. As of December 31, 1998,
the Partnership's net assets were $5,054,041, reflecting a decrease of
$1,524,075 from net assets of $6,578,116 as of December 31, 1997. This decline
reflects the decrease in net assets resulting from operations, comprised of the
$1,259,082 unfavorable change in net unrealized depreciation and the $264,993
net realized loss from operations for 1998.
As of December 31, 1997, the Partnership's net assets were $6,578,116,
reflecting a decrease of $2,434,979 from net assets of $9,013,095 as of December
31, 1996. This decline reflects the decrease in net assets resulting from
operations, comprised of the $2,181,401 unfavorable change in net unrealized
depreciation and the $253,578 net realized loss from operations for 1997.
As of December 31, 1996, the Partnership's net assets were $9,013,095,
reflecting a decrease of $1,761,684 from net assets of $10,774,779 as of
December 31, 1995. This decline reflects the decrease in net assets resulting
from operations, comprised of the $4,428,010 unfavorable change in net
unrealized depreciation partially offset by the $2,666,326 net realized gain
from operations for 1996.
Gains and losses from investments are allocated to the Partners' capital
accounts when realized in accordance with the Partnership Agreement (see Note 3
of Notes to Financial Statements). However, for purposes of calculating the net
asset value per unit of limited partnership interest ("Unit"), net unrealized
appreciation or depreciation of investments has been included as if it had been
realized and allocated to the Limited Partners in accordance with the
Partnership Agreement. Pursuant to such calculation, the net asset value per
$1,000 Unit as of December 31, 1998, 1997 and 1996 was $446, $580, and $790,
respectively.
Year 2000 Issue - The Year 2000 ("Y2K") concern arose because many existing
computer programs use only the last two digits to refer to a year. Therefore,
these computer programs do not properly recognize a year that begins with "20"
instead of "19". If not corrected, many computer applications could fail or
create erroneous results. The impact of the Y2K concern on the Partnership's
operations is currently being assessed.
The Management Company is responsible to provide or arrange for the provision of
administrative services necessary to support the Partnership's operations. The
Management Company has arranged for Palmeri Fund Administrators, Inc. (the
"Administrator") to provide the administrative and accounting services for the
Partnership, including maintenance of the books and records of the Partnership,
maintenance of the Limited Partner database, issuance of financial reports and
tax information to Limited Partners and processing distribution payments to
Limited Partners. Fees charged by the Administrator are paid directly by the
Management Company.
The Administrator is currently assessing its computer hardware and software
systems, specifically as they relate to the operations of the Partnership. As
part of its investigation of potential Y2K problems, the Administrator has
contracted with an outside computer service provider to examine all of the
Administrator's computer hardware and software applications, to identify any Y2K
concerns. This review and evaluation is in process and is expected to be
completed by May 1999. If Y2K problems are identified, the Administrator will
purchase, install and test the necessary software patches and new computer
hardware to ensure that all of its computer systems are Y2K compliant. This
correction phase, if required, is expected to be completed by September 1999.
Additionally, the Administrator has contacted the outside service providers used
to assist the Administrator or the Management Company with the administration of
the Partnership's operations to ascertain whether these entities are addressing
the Y2K issue within their own operation. There can be no guarantee that the
Administrator's systems or that systems of other companies providing services to
the Partnership will be corrected in a timely manner. The estimated costs to the
Partnership, relating to the investigation or correction of Y2K problems
affecting the Partnership's operations, are expected to be nominal.
Finally, the Y2K issue is a global concern that may affect all business
entities, including the Partnership's portfolio companies. The Managing General
Partner is continuing to assess the impact of Y2K concerns on its portfolio
companies. However, the extent to which any potential Y2K problems could affect
the valuations of these companies is unknown. At the time that specific Y2K
problems are identified, if any, the Managing General Partner will take such
issues into consideration in adjusting the fair value of the Partnership's
portfolio investments.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
The Partnership is subject to market risk arising from changes in the value of
its portfolio investments, short-term investments and interest-bearing cash
equivalents, which may result from fluctuations in interest rates and equity
prices. The Partnership has calculated its market risk related to its holdings
of these investments based on changes in interest rates and equity prices
utilizing a sensitivity analysis. The sensitivity analysis estimates the
hypothetical change in fair values, cash flows and earnings based on an assumed
10% change (increase or decrease) in interest rates and equity prices. To
perform the sensitivity analysis, the assumed 10% change is applied to market
rates and prices on investments held by the Partnership at the end of the
accounting period.
The Partnership's portfolio investments had an aggregate fair value of
$5,039,575 as of December 31, 1998. An assumed 10% decline from this December
31, 1998 fair value, including an assumed 10% decline of the per share market
prices of the Partnership's publicly-traded securities, would result in a
reduction to the fair value of such investments and an unrealized loss of
$503,958.
The Partnership had no short-term investments as of December 31, 1998. Market
risk relating to the Partnership's interest-bearing cash equivalents held as of
December 31, 1998 is considered to be immaterial.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
WESTFORD TECHNOLOGY VENTURES, L.P.
INDEX
Report of Independent Certified Public Accountants - BDO Seidman, LLP
Balance Sheets as of December 31, 1998 and 1997
Schedule of Portfolio Investments as of December 31, 1998
Schedule of Portfolio Investments as of December 31, 1997
Statements of Operations for the years ended December 31, 1998, 1997 and 1996
Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996
Statements of Changes in Partners' Capital for the years ended December 31,
1996, 1997 and 1998
Notes to Financial Statements
NOTE - All schedules are omitted because of the absence of conditions under
which they are required or because the required information is included in the
financial statements or the notes thereto.
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Partners
Westford Technology Ventures, L.P.
Newark, New Jersey
We have audited the accompanying balance sheets of Westford Technology Ventures,
L.P. (the "Partnership"), including the schedule of portfolio investments, as of
December 31, 1998 and 1997, and the related statements of operations, changes in
partners' capital, and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Westford Technology Ventures,
L.P. at December 31, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1998 in
conformity with generally accepted accounting principles.
As explained in Note 2, the financial statements include investments valued at
$4,639,381 and $6,366,864, at December 31, 1998 and 1997, respectively,
representing 92% and 97% of partners' capital, respectively, whose values have
been estimated by the managing general partner in the absence of readily
ascertainable market values. We have reviewed the procedures used by the
managing general partner in arriving at its estimates or value of such
investments and have inspected underlying documentation and, in the
circumstances, we believe the procedures are reasonable and the documentation
appropriate. However, those estimated values may differ significantly from the
values that would have been used had a ready market for the investments existed,
and the differences could be material.
BDO Seidman, LLP
New York, New York
March 15, 1999
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
BALANCE SHEETS
December 31,
<TABLE>
1998 1997
--------------- -----------------
ASSETS
Portfolio investments, at fair value (cost $10,460,214 as of
<S> <C> <C> <C> <C> <C> <C> <C>
December 31, 1998 and $10,528,421 as of December 31, 1997) $ 5,039,575 $ 6,366,864
Cash and cash equivalents 7,998 16,061
Receivable from securities sold (net of unamortized discount of
$30,493 as of December 31, 1998 and $66,322 as of December 31, 1997) 70,275 122,180
Accrued interest receivable 279,498 150,000
--------------- ----------------
TOTAL ASSETS $ 5,397,346 $ 6,655,105
=============== ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 39,501 $ 44,355
Due to Management Company 251,304 22,134
Due to Independent General Partners 52,500 10,500
--------------- ----------------
Total liabilities 343,305 76,989
--------------- ----------------
Partners' Capital:
Managing General Partner 593,816 577,197
Individual General Partners 3,477 3,577
Limited Partners (11,217 Units) 9,877,387 10,158,899
Unallocated net unrealized depreciation of investments (5,420,639) (4,161,557)
--------------- ----------------
Total Partners' Capital 5,054,041 6,578,116
--------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 5,397,346 $ 6,655,105
=============== ================
</TABLE>
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1998
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Initial Investment
Company /Position Date Cost Fair Value
EIS International, Inc.(A) (B)
Systems for call center telephone operators
<C> <C> <C> <C>
228,682 shares of Common Stock Mar. 1990 $ 3,096,597 $ 400,194
- --------------------------------------------------------------------------------------------------------------------------------
Inn-Room Systems, Inc.* (C)
Automated, in-room vending units for the lodging industry
1,548,494 shares of Common Stock Oct. 1989 1,320,349 300,000
Demand Promissory Note at prime plus 1% due 12/31/99 102,940 102,940
---------------- ---------------
1,423,289 402,940
- --------------------------------------------------------------------------------------------------------------------------------
Spectrix Corporation*
Infrared data transfer technology for networks
742,304 shares of Preferred Stock June 1989 3,511,351 1,113,458
274,862 shares of Common Stock 142,681 412,293
Demand Promissory Notes at 8% 1,497,500 1,497,500
Warrants to purchase 424,394 shares of Common Stock
at $.50 per share, expiring between 12/31/99 and 4/30/03 0 424,394
Warrants to purchase 50,000 shares of Common Stock at
$4.00 per share, expiring 04/30/03 0 0
---------------- ---------------
5,151,532 3,447,645
- --------------------------------------------------------------------------------------------------------------------------------
Thunderbird Technologies, Inc.
Designer of high performance, low power integrated
circuit products
788,796 shares of Preferred Stock Oct. 1992 788,796 788,796
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO INVESTMENTS $ 10,460,214 $ 5,039,575
================ ===============
</TABLE>
(A) Public company
(B) In May 1998, the Partnership exercised its warrant to purchase 29,015 common
shares of EIS International, Inc. for a total cost of $40,815. Subsequently,
the Partnership sold 6,600 common shares of EIS for $40,832, realizing a
loss of $68,190.
(C) In June 1998, the Partnership exercised its warrant to purchase 68,003
common shares of Inn-Room Systems, Inc. The cost to exercise such warrants,
totaling $680, was paid by reducing the principal balance of the demand
promissory note due from the company, from $103,620 to $102,940.
* May be deemed an affiliated person of the Partnership as defined by the
Investment Company Act of 1940.
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1997
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Initial Investment
Company / Position Date Cost Fair Value
EIS International, Inc.(A)
Systems for call center telephone operators
<C> <C> <C> <C>
206,267 shares of Common Stock Mar. 1990 $ 2,726,335 $ 1,134,469
Warrants to purchase 29,015 shares of Common Stock
at $1.41 per share, expiring between 12/31/98 and 3/23/00 438,469 118,767
--------------- --------------
3,164,804 1,253,236
- --------------------------------------------------------------------------------------------------------------------------------
Inn-Room Systems, Inc.*
Automated, in-room vending units for the lodging industry
1,480,491 shares of Common Stock Oct. 1989 1,285,894 740,246
Demand Promissory Note at 1% plus prime due 12/31/98 103,620 103,620
Warrants to purchase 68,003 shares of Common Stock at
$0.01 per share, expiring 6/30/98 33,775 33,321
--------------- --------------
1,423,289 877,187
- --------------------------------------------------------------------------------------------------------------------------------
Spectrix Corporation*
Infrared data transfer technology for networks
742,304 shares of Preferred Stock June 1989 3,511,351 1,113,458
274,862 shares of Common Stock 142,681 412,293
Demand Promissory Notes at 8% 1,497,500 1,497,500
Warrants to purchase 424,394 shares of Common Stock
at $.50 per share, expiring between 12/31/99 and 4/30/03 0 424,394
Warrants to purchase 50,000 shares of Common Stock at
$4.00 per share, expiring 04/30/03 0 0
--------------- --------------
5,151,532 3,447,645
- --------------------------------------------------------------------------------------------------------------------------------
Thunderbird Technologies, Inc.
Designer of high performance, low power integrated
circuit products
788,796 shares of Preferred Stock Oct. 1992 788,796 788,796
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO INVESTMENTS $ 10,528,421 $ 6,366,864
=============== ==============
</TABLE>
(A) Public company
* May be deemed an affiliated person of the Partnership as defined by the
Investment Company Act of 1940.
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
<TABLE>
1998 1997 1996
--------------- -------------- -------------
INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C> <C>
Interest from short-term investments $ 415 $ 11,692 $ 56,377
Interest and other income from portfolio investments 165,359 135,562 53,141
--------------- --------------- ---------------
Total investment income 165,774 147,254 109,518
--------------- --------------- ---------------
Expenses:
Management fee 222,302 223,586 223,784
Professional fees 65,024 74,030 54,546
Independent General Partners' fees 42,000 42,000 42,000
Mailing and printing 24,901 18,962 30,250
Custody fees 6,225 6,300 7,200
Other expenses 2,125 4,289 8,535
--------------- --------------- ---------------
Total expenses 362,577 369,167 366,315
--------------- --------------- ---------------
NET INVESTMENT LOSS (196,803) (221,913) (256,797)
Net realized (loss) gain from portfolio investments (68,190) (31,665) 2,923,123
--------------- --------------- ---------------
NET REALIZED (LOSS) GAIN FROM OPERATIONS (264,993) (253,578) 2,666,326
Change in unrealized depreciation of investments (1,259,082) (2,181,401) (4,428,010)
--------------- --------------- ---------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (1,524,075) $ (2,434,979) $ (1,761,684)
=============== =============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
<TABLE>
1998 1997 1996
------------- -------------- ---------------
CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C> <C>
Net investment loss $ (196,803) $ (221,913) $ (256,797)
Adjustments to reconcile net investment loss to cash used for operating
activities:
Decrease in accrued interest on short-term investments - - 1,395
Decrease (increase) in accrued interest and other receivables 32 1,709 (765)
Increase in accrued interest receivable from portfolio investments (133,542) (119,080) (34,715)
Increase in payables 266,316 13,152 22,078
------------- -------------- ---------------
Cash used for operating activities (63,997) (326,132) (268,804)
------------- -------------- ---------------
CASH PROVIDED FROM (USED FOR) INVESTING
ACTIVITIES
Net proceeds from sale or maturity of short-term investments - - 348,158
Cost of portfolio investments purchased (40,815) (600,000) (1,032,500)
Proceeds from the sale of portfolio investments 96,749 42,007 1,646,828
------------- -------------- ---------------
Cash provided from (used for) investing activities 55,934 (557,993) 962,486
------------- -------------- ---------------
(Decrease) increase in cash and cash equivalents (8,063) (884,125) 693,682
Cash and cash equivalents at beginning of period 16,061 900,186 206,504
------------- -------------- ---------------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 7,998 $ 16,061 $ 900,186
============= ============== ===============
Supplemental disclosure of non-cash investing and
financing activities:
Proceeds from sale of Cybernetics - EIS stock $ - $ - $ 3,164,804
Proceeds from sale of Cybernetics - cash held in escrow - - 32,985
Conversion of accrued interest into cost of portfolio
investment 680 1,380 -
</TABLE>
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Years Ended December 31, 1996, 1997 and 1998
<TABLE>
Unallocated
Net Unrealized
Managing Individual Appreciation
General General Limited (Depreciation)
Partner Partners Partners of Investments Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance as of December 31, 1995 $ 82,416 $ 2,893 $ 8,241,616 $ 2,447,854 $ 10,774,779
Net investment loss 7,981 (94) (264,684) - (256,797)
Net realized gain from
portfolio investments 468,737 875 2,453,511 - 2,923,123
Change in unrealized
depreciation of investments - - - (4,428,010) (4,428,010)
------------ ---------- --------------- --------------- ---------------
Balance as of December 31, 1996 559,134 3,674 10,430,443(A) (1,980,156) 9,013,095
Net investment loss 24,647 (88) (246,472) - (221,913)
Net realized loss from
portfolio investments (6,584) (9) (25,072) - (31,665)
Change in unrealized
depreciation of investments - - - (2,181,401) (2,181,401)
------------ ---------- --------------- --------------- ---------------
Balance as of December 31, 1997 577,197 3,577 10,158,899(A) (4,161,557) 6,578,116
Net investment loss 30,797 (81) (227,519) - (196,803)
Net realized loss from
portfolio investments (14,178) (19) (53,993) - (68,190)
Change in unrealized
depreciation of investments - - - (1,259,082) (784,835)
------------ ---------- --------------- --------------- ---------------
Balance as of December 31, 1998 $ 593,816 $ 3,477 $ 9,877,387(A) $ (5,420,639) $ 5,054,041
============ ========== =============== =============== ===============
</TABLE>
(A) The net asset value per unit of limited partnership interest, including an
assumed allocation of net unrealized depreciation of investments, was $44
nnn6, $580 and $790 as of December 31, 1998, 1997 and 1996, respectively.
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
NOTES TO FINANCIAL STATEMENTS
1. Organization and Purpose
Westford Technology Ventures, L.P. (the "Partnership") is a Delaware limited
partnership formed on September 3, 1987. WTVI Co., L.P., the managing general
partner of the Partnership (the "Managing General Partner") and four individuals
(the "Individual General Partners") are the general partners of the Partnership.
Hamilton Capital Management Inc. (the "Management Company") is the general
partner of the Managing General Partner and the management company of the
Partnership. The Partnership began its principal operations on December 1, 1988.
The Partnership's objective is to achieve long-term capital appreciation by
making venture capital investments in new and developing companies and other
special investment situations. The Partnership will not engage in any other
business or activity. The Partnership's originally scheduled termination date
was December 31, 1998. In October 1998, the Individual General Partners voted to
extend the term of the Partnership for an additional two-year period. The
Partnership is now scheduled to terminate no later than December 31, 2000. The
Individual General Partners have the right to extend the term of the Partnership
for an additional two-year period if they determine that such extension is in
the best interest of the Partnership.
2. Significant Accounting Policies
Valuation of Investments - Short-term investments are carried at amortized cost
which approximates market. Portfolio investments are carried at fair value as
determined quarterly by the Managing General Partner under the supervision of
the Individual General Partners. The fair value of publicly-held portfolio
securities is adjusted to the closing public market price for the last trading
day of each quarter discounted by a factor of 0% to 50% for sales restrictions.
Factors considered in the determination of an appropriate discount include,
underwriter lock-up or Rule 144 trading restrictions, insider status where the
Partnership either has a representative serving on the Board of Directors or is
greater than a 10% shareholder, and other liquidity factors such as the size of
the Partnership's position in a given company compared to the trading history of
the public security. Privately-held portfolio securities are carried at cost
until significant developments affecting the portfolio company provide a basis
for change in valuation. The fair value of private securities is adjusted 1) to
reflect meaningful third-party transactions in the private market or 2) to
reflect significant progress or slippage in the development of the company's
business such that cost is no longer reflective of fair value. As a venture
capital investment fund, the Partnership's portfolio investments involve a high
degree of business and financial risk that can result in substantial losses. The
Managing General Partner considers such risks in determining the fair value of
the Partnership's portfolio investments.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Transactions - Investment transactions are recorded on the
accrual method. Portfolio investments are recorded on the trade date, the date
the Partnership obtains an enforceable right to demand the securities or payment
therefor. Realized gains and losses on investments sold are computed on a
specific identification basis.
WESTFORD TECHNOLOGY VENTURES, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
Income Taxes - No provision for income taxes has been made since all income and
losses are allocable to the Partners for inclusion in their respective income
tax returns. The Partnership's net assets for financial reporting purposes
differ from its net assets for tax purposes. Net unrealized depreciation of $5.4
million at December 31, 1998, which was recorded for financial statement
purposes, has not been recognized for tax purposes. Additionally, from inception
to December 31, 1998, other timing differences relating to net realized gains
totaling $1.0 million have been recorded on the Partnership's financial
statements but have not yet been recorded on the Partnership's tax return and
syndication costs relating to the selling of Units totaling $1.2 million were
charged to partners' capital on the financial statements but have not been
deducted or charged against partners' capital for tax purposes.
Cash Equivalents - The Partnership considers all highly liquid debt instruments
(primarily money market funds) to be cash equivalents.
Reclassifications - Certain reclassifications have been made to the prior year's
financial statements to conform with the current year's presentation.
3. Allocation of Partnership Profits and Losses
The Partnership Agreement provides that the Managing General Partner will be
allocated, on a cumulative basis over the life of the Partnership, 20% of the
Partnership's aggregate investment income and net realized gains from venture
capital investments, provided that such amount is positive. All other gains and
losses of the Partnership are allocated among all the Partners, including the
Managing General Partner, in proportion to their respective capital
contributions to the Partnership.
4. Related Party Transactions
The Management Company is responsible for the management and administrative
services necessary for the operation of the Partnership. For these services, the
Management Company receives a management fee at an annual rate of 2.5% of the
gross capital contributions to the Partnership (net of selling commissions and
organizational expenses paid by the Partnership), reduced by capital distributed
and realized losses, with a minimum fee of $200,000 per annum. Such fee is
determined quarterly and paid monthly. The Management Company agreed to reduce
the management fee payable by the Partnership to the minimum annual fee of
$200,000 effective January 1, 1999.
The Management Company also directly provides certain shareholder services and
database management support for the Limited Partners of the Partnership. For
such services, the Management Company charges the Partnership $8,500 per
quarter. This amount is paid to the Management Company in addition to the
regular management fee discussed above.
5. Independent General Partners' Fees
As compensation for services rendered to the Partnership, each of the three
Independent General Partners receives $10,000 annually in quarterly installments
and $1,000 for each meeting of the Independent General Partners attended, plus
out-of-pocket expenses. Beginning in January 1999, the annual fee of $10,000
will be reduced to $5,000 for each Independent General Partner.
WESTFORD TECHNOLOGY VENTURES, L.P.
NOTES TO FINANCIAL STATEMENTS, continued
6. Classification of Portfolio Investments
As of December 31, 1998 and 1997, the Partnership's investments were categorized
as follows:
<TABLE>
As of December 31, 1998: Percentage of
- ------------------------
Type of Investments Cost Fair Value Net Assets*
- ------------------- --------------- --------------- -----------
<S> <C> <C> <C>
Preferred Stock $ 4,300,147 $ 1,902,254 37.63%
Common Stock 4,559,627 1,536,881 30.41%
Debt Securities 1,600,440 1,600,440 31.67%
---------------- -------------- ------
Total $ 10,460,214 $ 5,039,575 99.71%
================ ============== ======
Country/Geographic Region
Midwestern U.S. $ 6,574,821 $ 3,850,585 76.18%
Eastern U.S. 3,885,393 1,188,990 23.53%
---------------- -------------- ------
Total $ 10,460,214 $ 5,039,575 99.71%
================ ============== ======
Industry
Wireless Communications $ 5,151,532 $ 3,447,645 68.21%
Computer Software 3,096,597 400,194 7.92%
Vending Equipment 1,423,289 402,940 7.97%
Semiconductors 788,796 788,796 15.61%
---------------- -------------- ------
Total $ 10,460,214 $ 5,039,575 99.71%
================ ============== ======
As of December 31, 1997: Percentage of
- ------------------------
Type of Investments Cost Fair Value Net Assets*
- ------------------- --------------- --------------- -----------
Preferred Stock $ 4,300,147 $ 1,902,254 28.92%
Common Stock 4,154,910 2,287,008 34.77%
Common Stock Warrants 472,244 576,482 8.76%
Debt Securities 1,601,120 1,601,120 24.34%
---------------- -------------- ------
Total $ 10,528,421 $ 6,366,864 96.79%
================ ============== ======
Country/Geographic Region
Midwestern U.S. $ 6,574,821 $ 4,324,832 65.75%
Eastern U.S. 3,953,600 2,042,032 31.04%
---------------- -------------- ------
Total $ 10,528,421 $ 6,366,864 96.79%
================ ============== ======
Industry
Wireless Communications $ 5,151,532 $ 3,447,645 52.41%
Computer Software 3,164,804 1,253,236 19.06%
Vending Equipment 1,423,289 877,187 13.33%
Semiconductors 788,796 788,796 11.99%
---------------- -------------- ------
Total $ 10,528,421 $ 6,366,864 96.79%
================ ============== ======
</TABLE>
* Fair value as a percentage of net assets.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership
The information set forth under the caption "Election of General Partners" in
the Annual Meeting Proxy Statement is incorporated herein by reference.
The Management Company
The Management Company performs, or arranges for others to perform, the
management and administrative services necessary for the operation of the
Partnership pursuant to the Management Agreement between the Partnership and the
Management Company. As of March 16, 1999, the directors and executive officers
of the Management Company are:
Name and Age Position Held Director Since
Jeffrey T. Hamilton (61)President, Secretary and September 3, 1987
Chairman of the Board of Directors
Louise M. Hamilton (58) Director August 23, 1991
Susan J. Trammell (44) Treasurer and Director February 27, 1991
The directors of the Management Company will serve as directors until the next
annual meeting of stockholders and until their successors are elected and
qualified. The officers of the Management Company will hold office until the
next annual meeting of the Board of Directors of the Management Company and
until their successors are elected and qualified.
The information with respect to Mr. Hamilton, the sole shareholder of the
Management Company, set forth under the subcaption "Election of Individual
General Partners" in the Annual Meeting Proxy Statement is incorporated herein
by reference.
There are no family relationships among any of the Individual General Partners
of the Partnership. Jeffrey T. Hamilton and Louise M. Hamilton, President,
Secretary and Chairman of the Board of Directors and Director of the Management
Company, respectively, are husband and wife.
Item 11. Executive Compensation.
The information with respect to the compensation of the Individual General
Partners set forth under the subcaption "Election of Individual General
Partners" in the Annual Meeting Proxy Statement is incorporated herein by
reference.
The information with respect to the allocation and distribution of the
Partnership's profits and losses to the Managing General Partner set forth under
the subcaption "Election of Managing General Partner" in the Annual Meeting
Proxy Statement is incorporated herein by reference.
The information with respect to the management fee payable to the Management
Company set forth under the caption "The Terms of the Current Management
Agreement and the Proposed Management Agreement" in the Annual Meeting Proxy
Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information concerning the security ownership of the Individual General
Partners set forth under the subcaption "Election of Individual General
Partners" in the Annual Meeting Proxy Statement is incorporated herein by
reference.
As of March 16, 1999, no person or group is known by the Partnership to be the
beneficial owner of more than 5 percent of the Units. Mr. Ames, an Individual
General Partner of the Partnership, owns 10 Units and Ms. Trammell, the
Treasurer and Director of the Management Company, owns 3 Units. The Individual
General Partners and the directors and officers of the Management Company as a
group own 13 Units or less than one percent of the total Units outstanding.
The Partnership is not aware of any arrangement which may, at a subsequent date,
result in a change of control of the Partnership.
Item 13. Certain Relationships and Related Transactions.
Not applicable.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
(a) 1. Financial Statements
Report of Independent Certified Public Accountants - BDO
Seidman, LLP
Balance Sheets as of December 31, 1998 and 1997
Schedule of Portfolio Investments as of December 31, 1998
Schedule of Portfolio Investments as of December 31, 1997
Statements of Operations for the years ended December 31,
1998, 1997 and 1996
Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996
Statements of Changes in Partners' Capital for the years
ended December 31, 1996, 1997 and 1998
Notes to Financial Statements
2. Exhibits
3.1 Amended and Restated Certificate of Limited Partnership
of the Registrant (filed as Exhibit 3.1 to the
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1991 and incorporated herein by
reference).
3.2 Amended and Restated Agreement of Limited Partnership
of the Registrant (filed as Exhibit 1(c) to the
Registrant's Registration Statement on Form N-2 (No.
33-16891) and incorporated herein by reference).
10 Management Agreement dated as of February 28, 1991
between the Registrant and the Management Company
(filed as Exhibit A to the Registrant's definitive
proxy statement in connection with the 1991 Annual
Meeting of Limited Partners and incorporated herein by
reference).
27 Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the fourth
quarter of the fiscal year covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the Registrant, in the capacities indicated on the 15th day of April
1999.
WESTFORD TECHNOLOGY VENTURES, L.P.
By: WTVI Co., L.P.
its managing general partner
By: Hamilton Capital Management Inc.
its general partner
By: /s/ Jeffrey T. Hamilton President, Secretary and Director (Principal
Jeffrey T. Hamilton Executive Officer) of Hamilton Capital
Management Inc. and Individual General
Partner of Westford Technology Ventures, L.P.
By: /s/ Susan J. Trammell Treasurer and Director (Principal Financial
Susan J. Trammell and Accounting Officer) of Hamilton Capital
Management Inc.
By: /s/ Robert S. Ames Individual General Partner of
Robert S. Ames Westford Technology Ventures, L.P.
By: /s/ Alfred M. Bertocchi Individual General Partner of
Alfred M. Bertocchi Westford Technology Ventures, L.P.
By: /s/ George M. Weimer Individual General Partner of
George M. Weimer Westford Technology Ventures, L.P.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
WESTFORD TECHNOLOGY VENTURES, L.P.'S ANNUAL REPORT ON FORM 10-K FOR THE PERIOD
ENDED DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 10,460,214
<INVESTMENTS-AT-VALUE> 5,039,575
<RECEIVABLES> 349,773
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 7,998
<TOTAL-ASSETS> 5,397,346
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 343,305
<TOTAL-LIABILITIES> 343,305
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 11,217
<SHARES-COMMON-PRIOR> 11,217
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5,420,639)
<NET-ASSETS> 5,054,041
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 165,774
<OTHER-INCOME> 0
<EXPENSES-NET> 362,577
<NET-INVESTMENT-INCOME> (196,803)
<REALIZED-GAINS-CURRENT> (68,190)
<APPREC-INCREASE-CURRENT> (1,259,082)
<NET-CHANGE-FROM-OPS> (1,524,075)
<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> (1,524,075)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 5,816,079
<PER-SHARE-NAV-BEGIN> 580
<PER-SHARE-NII> (20)
<PER-SHARE-GAIN-APPREC> (114)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 446
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
