SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 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.
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(Exact name of registrant as specified in its charter)
Delaware 13-3423417
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
17 Academy Street, 5th Floor
Newark, New Jersey 07102-2905
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 624-2131
Not applicable
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Former name, former address and former fiscal year, if changed since last report
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
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
Amendment to Form 10-Q
For the quarter ended September 30, 1998
Item 2 of Part I, Management's Discussion and Analysis of Financial Condition
and Results of Operations, on pages 11 to 13 of Form 10-Q of Westford Technology
Ventures, L.P. for the quarterly period ended September 30, 1998, filed with the
Securities and Exchange Commission on November 13, 1998 is amended by adding the
following:
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 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 General Partner will take such issues into
consideration in adjusting the fair value of the Partnership's portfolio
investments.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets as of September 30, 1998 (Unaudited) and December 31, 1997
Schedule of Portfolio Investments as of September 30, 1998 (Unaudited)
Statements of Operations for the Three and Nine Months Ended September 30, 1998
and 1997 (Unaudited)Statements of Cash Flows for the Nine Months Ended
September 30, 1998 and 1997 (Unaudited)Statement of Changes in Partners' Capital
for the Nine Months Ended September 30, 1998 (Unaudited) Notes to Financial
Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
WESTFORD TECHNOLOGY VENTURES, L.P.
BALANCE SHEETS
<TABLE>
September 30,
1998 December 31,
(Unaudited) 1997
ASSETS
Portfolio investments, at fair value (cost $10,460,214 at
<S> <C> <C> <C> <C> <C> <C> <C>
September 30, 1998 and $10,528,421 at December 31, 1997) $ 5,585,285 $ 6,366,864
Cash and cash equivalents 5,240 16,061
Receivable from securities sold (net of unamortized discount of
$40,180 at September 30, 1998 and $66,322 at December 31, 1997) 86,920 122,180
Accrued interest receivable 246,925 150,000
--------------- ----------------
TOTAL ASSETS $ 5,924,370 $ 6,655,105
=============== ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 42,013 $ 44,355
Due to Management Company 187,334 22,134
Due to Independent General Partners 42,054 10,500
--------------- ----------------
Total Liabilities 271,401 76,989
--------------- ----------------
Partners' Capital:
Managing General Partner 585,976 577,197
Individual General Partners 3,499 3,577
Limited Partners (11,217 Units) 9,938,423 10,158,899
Unallocated net unrealized depreciation of investments (4,874,929) (4,161,557)
--------------- ----------------
Total Partners' Capital 5,652,969 6,578,116
--------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 5,924,370 $ 6,655,105
=============== ================
</TABLE>
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
September 30, 1998
<TABLE>
Initial Investment
Company /Position Date Cost Fair Value
EIS International, Inc.(A)
<S> <C> <C> <C> <C> <C> <C>
228,682 shares of Common Stock Mar. 1990 $ 3,096,597 $ 471,657
- -------------------------------------------------------------------------------------------------------------------------------
Inn-Room Systems, Inc. *
1,548,494 shares of Common Stock Oct. 1989 1,320,349 774,247
Demand Promissory Note at prime plus 1% due 12/31/98 102,940 102,940
-------------- -------------
1,423,289 877,187
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Spectrix Corporation*
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
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Thunderbird Technologies, Inc.
788,796 shares of Preferred Stock Oct. 1992 788,796 788,796
- -------------------------------------------------------------------------------------------------------------------------------
TOTALS $ 10,460,214 $ 5,585,285
============== =============
</TABLE>
(A) Public company.
* May be deemed an affiliated person of the Partnership as defined in the
Investment Company Act of 1940.
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
--------------- ---------------- --------------- --------------
INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C> <C> <C>
Interest from short-term investments $ 59 $ 904 $ 345 $ 11,364
Interest and other income from portfolio
investments 42,814 38,549 123,108 97,148
--------------- ---------------- --------------- --------------
Totals 42,873 39,453 123,453 108,512
--------------- ---------------- --------------- --------------
Expenses:
Management fee 55,468 55,896 166,832 167,688
Professional fees 15,759 15,738 47,678 58,108
Mailing and printing 4,654 2,103 14,235 8,795
Independent General Partners' fees 10,500 10,500 31,500 31,500
Custodial fees 1,500 1,525 4,725 4,700
Other expenses 899 1,270 2,068 4,289
--------------- ---------------- --------------- --------------
Totals 88,780 87,032 267,038 275,080
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NET INVESTMENT LOSS (45,907) (47,579) (143,585) (166,568)
Net realized loss from portfolio investments - - (68,190) (31,665)
--------------- ---------------- --------------- --------------
NET REALIZED LOSS FROM OPERATIONS (45,907) (47,579) (211,775) (198,233)
Change in unrealized depreciation of investments (757,509) (1,816,658) (713,372) (1,593,196)
--------------- ---------------- --------------- --------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (803,416) $ (1,864,237) $ (925,147) $ (1,791,429)
=============== ================ =============== ==============
</TABLE>
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30,
<TABLE>
1998 1997
-------------- -------------
CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C>
Net investment loss $ (143,585) $ (166,568)
Adjustments to reconcile net investment loss to cash used for operating
activities:
Increase in accrued interest receivable (101,423) (84,625)
Increase (decrease) in payables 194,412 (15,463)
------------- -------------
Cash used for operating activities (50,596) (266,656)
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CASH FLOWS PROVIDED FROM (USED FOR) INVESTING
ACTIVITIES
Cost of portfolio investments purchased (40,815) (600,000)
Proceeds from the sale of portfolio investments 80,590 30,135
------------- -------------
Cash provided from (used for) investing activities 39,775 (569,865)
------------- -------------
Decrease in cash and cash equivalents (10,821) (836,521)
Cash and cash equivalents at beginning of period 16,061 900,186
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,240 $ 63,665
============= =============
Supplemental disclosure of non-cash investing and
financing activities:
Acquisition of 68,003 common shares of Inn-Room
Systems, Inc. - through reduction of notes $ 680 $ -
</TABLE>
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited)
For the Nine Months Ended September 30, 1998
<TABLE>
Unallocated
Managing Individual Net Unrealized
General General Limited Depreciation of
Partner Partners Partners Investments Total
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 577,197 $ 3,577 $ 10,158,899 $ (4,161,557) $ 6,578,116
Net investment loss 22,957 (59) (166,483) - (143,585)
Net realized loss from portfolio
investments (14,178) (19) (53,993) - (68,190)
Change in unrealized
depreciation of investments - - - (713,372) (713,372)
------------ -------- --------------- --------------- ---------------
Balance at end of period $ 585,976 $ 3,499 $ 9,938,423(A) $ (4,874,929) $ 5,652,969
============ ======== =============== ============== ===============
(A) The net asset value per $1,000 unit of limited partnership interest,
including an assumed allocation of net unrealized depreciation of
investments, is $499.
</TABLE>
See notes to financial statements.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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.
WESTFORD TECHNOLOGY VENTURES, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited) - continued
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.
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 $4.9
million at September 30, 1998, which was recorded for financial statement
purposes, has not been recognized for tax purposes. Additionally, from inception
to September 30, 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.
<PAGE>
WESTFORD TECHNOLOGY VENTURES, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited) - continued
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.
6. Classification of Portfolio Investments
As of September 30, 1998, the Partnership's investments were categorized as
follows:
<TABLE>
Percentage of
Type of Investments Cost Fair Value Net Assets*
- ------------------- --------------- --------------- -----------
<S> <C> <C> <C>
Preferred Stock $ 4,300,147 $ 1,902,254 33.65%
Common Stock 4,559,627 2,082,591 36.84%
Debt Securities 1,600,440 1,600,440 28.31%
---------------- -------------- ------
Total $ 10,460,214 $ 5,585,285 98.80%
================ ============== ======
Country/Geographic Region
Midwestern U.S. $ 6,574,821 $ 4,324,832 76.50%
Eastern U.S. 3,885,393 1,260,453 22.30%
---------------- -------------- ------
Total $ 10,460,214 $ 5,585,285 98.80%
================ ============== ======
Industry
Wireless Communications $ 5,151,532 $ 3,447,645 60.99%
Computer Software 3,096,597 471,657 8.34%
Vending Equipment 1,423,289 877,187 15.52%
Semiconductors 788,796 788,796 13.95%
---------------- -------------- -------
Total $ 10,460,214 $ 5,585,285 98.80%
================ ============== ======
</TABLE>
* Fair value as a percentage of net assets.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
As of September 30, 1998, the Partnership held $5,240 in an interest-bearing
cash account. The Partnership earned $59 and $345 of interest from such cash
account for the three and nine months ended September 30, 1998, respectively.
The Partnership had no short-term investments as of September 30, 1998. Interest
earned from short-term investments and idle cash balances in future periods is
subject to fluctuations in short-term interest rates and changes in amounts
available for investment in such securities.
The Partnership has fully invested its original net proceeds of $10.5 million
and will not make investments in any new portfolio companies. However, the
Partnership may make additional follow-on investments in existing portfolio
companies when required. The Partnership made no follow-on investments during
the three months ended September 30, 1998.
As of September 30, 1998, the Partnership's current liabilities exceeded its
cash balance by approximately $265,000. Funds needed to cover such current
liabilities, future follow-on investments, if any, and operating expenses are
expected to be obtained from existing cash reserves, interest and other income
from portfolio investments and proceeds from the sale of 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 three and nine months ended September 30, 1998, the Partnership had a
net realized loss from operations of $45,907 and $211,775, respectively. For the
three and nine months ended September 30, 1997, the Partnership had a net
realized loss from operations of $47,579 and $198,233, respectively. Net
realized gain or loss from operations is comprised of 1) net realized gain or
loss from portfolio investments and 2) net investment income or loss (investment
income less operating expenses).
Realized Gains and Losses from Portfolio Investments - For the three and nine
months ended September 30, 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.stock in June 1998. Such shares were sold for
$40,832 compared to a cost basis of $109,022.
For the three and nine months ended September 30, 1997, the Partnership had a
net realized loss from its portfolio investments of $31,665 relating to the
final escrow payment received 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. As a result, the Partnership realized a loss of $31,665 for the quarter
ended June 30, 1997.
Investment Income and Expenses - Net investment loss for the three months ended
September 30, 1998 and 1997 was $45,907 and $47,579, respectively. The decrease
in net investment loss for the three months ended September 30, 1998 compared to
the same period in 1997, is comprised of a $3,420 increase in investment income
partially offset by a $1,748 increase in operating expenses. The increase in
investment income for the 1998 period primarily was due to a $4,265 increase in
income from portfolio investments resulting from the additional promissory notes
of Spectrix Corporation held by the Partnership during the 1998 period compared
to the same period in 1997. The increase in operating expenses primarily was due
to a $2,551 increase in mailing and printing expenses during 1998 primarily due
to additional charges related to the 1998 proxy tabulation.
Net investment loss for the nine months ended September 30, 1998 and 1997 was
$143,585 and $166,568, respectively. The decrease in net investment loss for the
1998 period as compared to the same period in 1997, is comprised of a $14,941
increase in investment income and an $8,042 decrease in operating expenses. The
increase in investment income for the 1998 period is comprised of a $25,960
increase in income from portfolio investments partially offset by an $11,019
decrease in interest from short-term investments. The increase in income from
portfolio investments relates to the additional promissory notes of Spectrix
Corporation held by the Partnership during the 1998 period as discussed above.
The decrease in interest from short-term investments for the 1998 period
compared to the same period in 1997 primarily is due to a reduction of funds
available for investment in such securities during the 1998 period.
The decrease in operating expenses for the 1998 period as compared to the same
period in 1997 primarily resulted from a decline in professional fees of
$10,430, primarily attributable to an unfavorable accrual adjustment in the
first quarter of 1997. This decrease was partially offset by a $5,440 increase
in mailing and printing expenses primarily due to additional charges related to
the 1998 proxy tabulation.
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 the 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 three
months ended September 30, 1998 and 1997 was $55,468 and $55,896 respectively.
The management fee for the nine months ended September 30, 1998 and 1997 was
$166,832 and $167,688 respectively. To the extent possible, the management fee
and other expenses incurred directly 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 of Portfolio
Investments - For the nine months ended September 30, 1998, the Partnership
recorded additional unrealized depreciation of $767,119 resulting from the net
downward revaluation of its investment in EIS International, Inc., due to a
decrease in the public market price of the company's common stock at the end of
the period. Additionally during the nine month period, $53,747 was transferred
from unrealized loss to realized loss due to the sale of 6,600 common shares of
EIS, as discussed above. As a result, the Partnership had an unfavorable change
to its unrealized depreciation of investments of $713,372 for the nine months
ended September 30, 1998.
For the nine months ended September 30, 1997, the Partnership recorded
additional unrealized depreciation of $1,593,196 resulting from a $1,801,956 net
downward revaluation of its privately held investments in Spectrix Corporation
and Inn-Room Systems, Inc., partially offset by a $208,760 net upward
revaluation of its investment in EIS International, Inc., due to an increase in
the public market price of the company's common stock at the end of the period.
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 investments.
As of September 30, 1998, the Partnership's net assets were $5,652,969, down
$925,147 from $6,578,116 as of December 31, 1997. The $925,147 decrease was
comprised of the $713,372 unfavorable change to net unrealized depreciation of
investments and the $211,775 net realized loss from operations for the nine
month period.
As of September 30, 1997, the Partnership's net assets were $7,221,666, down
$1,791,429 from $9,013,095 as of December 31, 1996. The $1,791,429 decrease was
comprised of the $1,593,196 unfavorable change to net unrealized depreciation of
investments and the $198,233 net realized loss from operations for the nine
month period.
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 September 30, 1998 and December 31, 1997 was $499 and $580,
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 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 General Partner will take such issues into
consideration in adjusting the fair value of the Partnership's portfolio
investments.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Partnership is not a party to any material pending legal proceedings.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the period
covered by this report.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter
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, and on the dates indicated.
WESTFORD TECHNOLOGY VENTURES, L.P.
<TABLE>
By: WTVI Co., L.P.
its managing general partner
By: Hamilton Capital Management Inc.
its general partner
<S> <C> <C> <C> <C> <C> <C>
By: s/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/s Susan J. Trammell Treasurer and Director (Principal Financial
Susan J. Trammell and Accounting Officer) of Hamilton Capital
Management Inc.
</TABLE>
Date: January 26, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESTFORD
TECHNOLOGY VENTURES, L.P.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 10,460,214
<INVESTMENTS-AT-VALUE> 5,585,285
<RECEIVABLES> 333,845
<ASSETS-OTHER> 0
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 11,217
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</TABLE>
