<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
--- ---
Commission File No. 814-55
TECHNOLOGY FUNDING VENTURE PARTNERS IV, AN AGGRESSIVE GROWTH FUND, L.P.
- -----------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-3054600
------------------------------ ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 94403
- ------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
(415) 345-2200
--------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
No active market for the units of limited partnership interests
("Units") exists, and therefore the market value of such Units cannot be
determined.
<PAGE>
I. FINANCIAL INFORMATION
Item 1. Financial Statements
BALANCE SHEETS
- --------------
<TABLE>
<CAPTION>
(unaudited)
September 30, December 31,
1997 1996
------------ -----------
<S> <C> <C>
ASSETS
Investments:
Equity investments (cost basis
of $12,708,596 and $18,522,217 for
1997 and 1996, respectively) $18,785,696 35,527,098
Secured notes receivable, net 159,876 29,137
---------- ----------
Total investments 18,945,572 35,556,235
Cash and cash equivalents 5,412,186 1,402,668
Other assets 9,943 66,285
---------- ----------
Total $24,367,701 37,025,188
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 33,657 38,429
Due to related parties 394 90,890
Promissory notes -- 1,363,332
Interest payable -- 28,350
Other liabilities 10,771 21,455
---------- ----------
Total liabilities 44,822 1,542,456
Commitments and contingencies
(Notes 2 and 6)
Partners' capital:
Limited Partners
(Units outstanding of 400,000
for both 1997 and 1996) 17,136,592 17,224,580
Managing General Partners 1,109,187 1,253,271
Net unrealized fair value increase
from cost of equity investments 6,077,100 17,004,881
---------- ----------
Total partners' capital 24,322,879 35,482,732
---------- ----------
Total $24,367,701 37,025,188
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
---------------------- --------------------
1997 1996 1997 1996
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Income:
Secured notes receivable interest $ 2,340 23,192 17,685 72,948
Short-term investment interest 39,439 239 85,348 2,317
--------- --------- ---------- ---------
Total income 41,779 23,431 103,033 75,265
Costs and expenses:
Management fees 64,617 108,576 235,981 317,755
Individual General Partners'
compensation 10,500 12,755 35,401 35,750
Operating expenses 312,249 224,777 848,839 815,648
--------- --------- ---------- ---------
Total costs and expenses 387,366 346,108 1,120,221 1,169,153
--------- --------- ---------- ---------
Net operating loss (345,587) (322,677) (1,017,188) (1,093,888)
Net realized (loss) gain from
sales of equity investments (31,129) 106,286 3,417,413 3,051,222
Net realized gain from venture
capital limited partnership
investments 100,419 -- 514,050 --
Realized losses from
investment write-downs (3,146,346) -- (3,146,346) (1,077,091)
--------- --------- ---------- ---------
Net realized (loss) income (3,422,643) (216,391) (232,071) 880,243
Change in net unrealized
fair value:
Equity investments 1,970,382 (5,940,664) (10,927,781) (3,505,011)
Secured notes receivable -- -- -- --
--------- --------- ---------- ---------
Net loss $(1,452,261) (6,157,055) (11,159,852) (2,624,768)
========= ========= ========== =========
Net realized loss per Unit $ (7) -- -- 2
========= ========= ========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
----------------------------------------
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 96,780 45,860
Interest expense (42,976) (205,800)
Cash paid to vendors (261,346) (135,381)
Cash paid to related parties (954,079) (1,646,837)
--------- ---------
Net cash used by operating activities (1,161,621) (1,942,158)
--------- ---------
Cash flows from investing activities:
Secured notes receivable issued (150,500) (640,000)
Purchase of equity investments (1,619,510) (2,016,217)
Repayments of secured notes receivable 11,678 27,679
Repayments of convertible
notes receivable -- 1,063,950
Proceeds from sales of equity
investments 8,273,094 6,009,665
Distributions from venture capital
limited partnerships 19,709 17,688
--------- ---------
Net cash provided by
investing activities 6,534,471 4,462,765
--------- ---------
Cash flows from financing activities:
Repayments of short-term
borrowings, net (1,363,332) (2,788,414)
--------- ---------
Net cash used by financing
activities (1,363,332) (2,788,414)
--------- ---------
Net increase (decrease) in cash
and cash equivalents 4,009,518 (267,807)
Cash and cash equivalents at
beginning of year 1,402,668 274,980
--------- ---------
Cash and cash equivalents $5,412,186 7,173
at September 30 ========= =========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)(continued)
- -----------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
---------------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Reconciliation of net loss to net
cash used by operating activities:
Net loss $(11,159,852) (2,624,768)
Adjustments to reconcile net loss to
net cash used by operating activities:
Realized losses from investment
write-downs 3,146,346 1,077,091
Net realized gain from sales
of equity investments (3,417,413) (3,051,222)
Net realized gain from venture
capital limited partnership
investments (514,050) --
Change in net unrealized fair value
of equity investments 10,927,781 3,505,011
Changes in:
Accrued interest on secured and
convertible notes receivable (6,253) (29,405)
Due to related parties (90,496) (797,268)
Other changes, net (47,684) (21,597)
--------- ---------
Net cash used by operating activities $ (1,161,621) (1,942,158)
========== =========
Non-cash investing activities:
Reclassification of secured notes to
equity investments (subordinated
notes) $ -- 640,000
========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ----------------------------------------
1. General
-------
In the opinion of the Managing General Partners, the Balance Sheets as
of September 30, 1997, and December 31, 1996, and the related Statements
of Operations for the three and nine months ended September 30, 1997 and
1996, and Statements of Cash Flows for the nine months ended September
30, 1997 and 1996, reflect all adjustments which are necessary for a
fair presentation of the financial position, results of operations and
cash flows for such periods. These statements should be read in
conjunction with the Annual Report on Form 10-K for the year ended
December 31, 1996. The following notes to financial statements for
activity through September 30, 1997, supplement those included in the
Annual Report on Form 10-K. Allocation of income and loss to Limited
and General Partners is based on cumulative income and loss.
Adjustments, if any, are reflected in the current quarter balances.
2. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party costs for the nine months ended
September 30, 1997 and 1996, were as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Management fees $235,981 317,755
Individual General Partners' compensation 35,401 35,750
Reimbursable operating expenses 592,201 496,064
</TABLE>
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Managing General Partners and are adjusted to
actual periodically. There were $21,145 receivable from and $60,463 due
to related parties at September 30, 1997, and December 31, 1996,
respectively, related to such expenses.
Amounts payable for management fees were $21,539 and $30,427 at
September 30, 1997, and December 31, 1996, respectively. Pursuant to
the Partnership Agreement, quarterly management fees are equal to one
quarter of one percent of the fair value of Partnership assets.
3. Equity Investments
------------------
A full listing of the Partnership's equity investments at December 31,
1996, is in the 1996 Annual Report. Activity from January 1 through
September 30, 1997, consisted of:
<TABLE>
<CAPTION>
January 1 through
September 30, 1997
---------------------
Principal
Investment Amount or Cost Fair
Industry/Company Position Date Shares Basis Value
- ---------------- -------- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1997 $18,522,217 35,527,098
---------- ----------
Significant changes:
Communications
- --------------
NetChannel, Inc. Series B
Preferred
shares warrant
at $1.10;
exercised
01/97 10/96 136,363 (1,500) (1,500)
NetChannel, Inc. Series B
Preferred shares 01/97 284,044 68,863 149,999
NetChannel, Inc. Series B
Preferred shares 03/97 340,852 82,636 179,999
NetChannel, Inc. Convertible
note (1) 05/97 $67,671 70,132 70,132
NetChannel, Inc. Series B
Preferred shares 05/97 191,817 84,400 101,296
NetChannel, Inc. Convertible
note (1) 09/97 $112,500 112,908 112,908
UT Starcom, Inc. Common
share
warrant
at $0.6875;
expiring
05/99 05/94 145,456 0 200,730
UT Starcom, Inc. Series A
Preferred shares 03/95 187,500 0 258,750
VOIS, Inc. Series A 08/96-
Preferred shares 02/97 312,500 62,500 531,250
VOIS, Inc. Series B
Preferred shares 05/97 120,000 300,000 300,000
Wire Networks, Inc. Convertible
Notes (1) 11/96 $101,973 (102,908) (102,908)
Wire Networks, Inc. Series C
Preferred shares 07/97 35,295 107,298 107,298
Computer Systems and Software
- -----------------------------
Multiport, Inc. Series A 05/93-
Preferred shares 08/93 2,440,000 0 92,323
Quintar Series A
Corporation Convertible
Preferred shares 11/89 1,200,000 (1,200,000) (1,800,000)
Quintar Common share
Corporation warrant at
$1.00;
expiring 10/98 10/93 145,000 0 (72,500)
Quintar Series A
Corporation Preferred shares 05/95 384,178 (576,267) (576,267)
Reflection Technology, Series F
Inc. Preferred shares 01/94 28,572 (50,001) (58,573)
Reflection Technology, Common
Inc. shares 05/94 19,567 (22,502) (40,112)
Reflection Technology, Series D
Inc. Preferred shares 11/94 869,565 (1,000,000) (1,782,608)
Reflection Technology, Series G
Inc. Preferred shares 11/94 172,877 (312,500) (377,788)
Reflection Technology, Series D
Inc. Preferred shares 11/94 163,043 (187,498) (334,238)
Reflection Technology, Series J
Inc. Preferred shares 04/96 547,918 (1,123,232) (1,123,232)
Reflection Technology, Common share
Inc. warrant at $.50;
expiring 04/01 04/96 359,750 0 (557,613)
Reflection Technology, Convertible 01/97-
Inc. notes (1) 04/97 $416,708 0 0
Environmental
- -------------
Thermatrix, Inc. Common shares 06/96 1,105,847 0 (6,374,139)
Information Technology
- ----------------------
WorldRes, Inc. Series B
Preferred shares 01/97 66,568 225,000 225,000
Medical/Biotechnology
- ---------------------
Biex, Inc. Series A
Preferred shares 07/93 128,205 0 76,923
Biex, Inc. Series B
Preferred shares 10/94 63,907 0 38,344
Biex, Inc. Series C
Preferred shares various 250,000 0 149,998
Biex, Inc. Series D
Preferred shares 08/96 111,115 0 66,669
Biex, Inc. Series D
Preferred shares 03/97 44,446 66,669 93,337
Biex, Inc. Series E
Preferred shares 08/97 13,333 33,334 27,998
CV Therapeutics, Inc. Common shares 11/96 37,693 0 157,885
Endocardial Solutions Common shares 09/97 5,714 80,710 76,785
Inhale Therapeutic Common
Systems, Inc. shares various 28,952 365,607 755,462
Pharmos Corporation Common shares 04/95 60,331 0 71,431
Physiometrix, Common
Inc. shares 04/96 270,791 0 (441,733)
RedCell, Inc. Series B
Preferred shares 12/94 132,979 0 (125,000)
SyStemix, Inc. Common shares 1991-1992 115,173 (771,504) (1,761,801)
Systemix, Inc. Common shares 06/96 660 (10,352) (10,096)
Systemix, Inc. Common shares 10/96 6,665 (106,779) (101,955)
Pharmaceuticals
- ---------------
Shaman Pharmaceuticals, Common
Inc. shares 01/93 409,167 (751,401) (2,434,544)
Shaman Pharmaceuticals, Common
Inc. shares 02/95 135,000 (1,363,332) (2,027,956)
Venture Capital Limited Partnership Investments
- -----------------------------------------------
Various Limited Partnership
Interests various $2,216,264 55,000 (558,188)
---------- ----------
Total significant changes during the nine
months ended September 30, 1997 (5,864,719)(16,818,234)
Other changes, net 51,098 76,832
---------- ----------
Total equity investments at September 30, 1997 $12,708,596 18,785,696
========== ==========
(1) Convertible notes include accrued interest. The interest rates on convertible notes
issued during 1997 ranged from 8% to 10%.
</TABLE>
Marketable Equity Securities
- ----------------------------
At September 30, 1997, and December 31, 1996, marketable equity
securities had aggregate costs of $2,672,629 and $5,552,176,
respectively, and aggregate market values of $2,795,324 and $11,161,489,
respectively. The net unrealized gains at September 30, 1997, and
December 31, 1996, included gross gains of $745,568 and $6,140,674,
respectively.
Biex, Inc.
- ----------
In March of 1997, the Partnership made an additional investment in the
company by purchasing 44,446 Series D Preferred shares for $66,669.
In August of 1997, the Partnership purchased 13,333 Series E Preferred
shares for $33,334. The pricing of this round, in which third parties
participated, indicated a fair value increase of $372,726 for the
Partnership's existing investment.
Multiport, Inc.
- ---------------
Based upon the fair value of Multiport's underlying net assets September
30, 1997, the Partnership recorded a fair value increase of $92,323 for
its investments.
NetChannel, Inc.
- ----------------
In January of 1997, the Partnership cash exercised its Series B
Preferred share warrant for $149,999 and received 136,363 Series B
Preferred shares. In March of 1997, the Partnership issued a $150,000
convertible note receivable to the company. The Partnership also
received an additional 163,635 Series B Preferred shares as a result of
an adjustment to the warrant exercise price.
In May of 1997, the company effected a 1-to-2.083 stock split. As a
result, the Partnership received an additional 472,579 Series B
Preferred shares. The Partnership also purchased 191,817 Series B
Preferred shares by converting $82,329 of the notes receivable discussed
above including accrued interest of $2,071 for a total cost of $84,400.
The remaining note principal of $67,671 was reissued as a new note. In
September of 1997 the Partnership funded bridge notes amounting to
$112,908 which includes $408 of accrued interest. In addition, the
Partnership is entitled to receive warrants to purchase 25% of the
number of shares issued upon conversion at an exercise price equal to
the conversion price. At September 30, 1997, the Partnership recorded
an increase in the change in fair value of $196,895 for the above
transactions.
Quintar Corporation
- -------------------
In May of 1997, Splash Technology Holding Inc., acquired Quintar
Corporation. The Partnership received total proceeds of $2,147,372 for
its Preferred share and warrant investments and realized a gain of
$371,105.
RedCell, Inc.
- -------------
During the second quarter of 1997, the company had a new round of
financing in which the Partnership did not participate. The pricing of
this round indicated a decrease in fair value of $125,000 for the
Partnership's existing investment.
Reflection Technology, Inc.
- ---------------------------
During the first half of 1997, the Partnership issued $416,708 in
convertible notes receivable to the company. In addition, based on the
opinion of the Managing General Partners, the Partnership recorded
decreases in fair value of $4,274,164 and cost basis of $2,695,733 for
its existing investments.
Shaman Pharmaceuticals, Inc.
- ----------------------------
During the first half of 1997, the Partnership sold its entire
investment in the company for total proceeds of $3,702,853 and realized
a gain of $1,588,120.
SyStemix Inc.
- -------------
In January of 1997, the Partnership sold its entire investment in the
company for total proceeds of $2,356,657 and realized a gain of
$1,468,022.
UT Starcom, Inc.
- ----------------
During the first quarter of 1997, the company closed a Series C
Preferred share round of financing in which the Partnership did not
participate. The pricing of this round indicated a fair value increase
of $459,480 for the Partnership's existing investment.
In October 1997, the Partnership exercised its common shares warrant for
$100,000 and received 145,456 common shares. The Partnership then sold
its entire investment in the company for total proceeds of $3,625,891
and realized a gain of $3,150,891.
VOIS, Inc.
- ----------
In February of 1997, the Partnership made an additional investment in
the company by purchasing 62,500 Series A Preferred shares for $62,500.
Then in May of 1997, the Partnership purchased 120,000 Series B
Preferred shares for $300,000. The pricing of this round, in which
third parties participated, indicated a fair value increase of $468,750
for the Partnership's existing investment.
Wire Networks, Inc.
- -------------------
In July of 1997, the Partnership converted its $101,973 note receivable,
including accrued interest of $5,324, into 35,295 Series C Preferred
shares, at a total cost of $107,298.
WorldRes, Inc.
- --------------
In January of 1997, the Partnership invested in the company by
purchasing 66,568 Series B Preferred shares for $225,000.
Venture Capital Limited Partnership Investments
- -----------------------------------------------
The Partnership made an additional investment of $55,000 in venture
capital limited partnerships during the nine months ended September 30,
1997. The Partnership recorded a fair value decrease of $558,188 as a
result of stock distributions from a venture capital limited partnership
investment and a net decrease in fair value of the underlying
investments.
During the first three quarters of 1997, the Partnership received common
stock distributions of Inhale Therapeutics Systems, Inc., Penederm, Inc.,
and Endocardial Solutions with fair values of $365,607, $48,024 and
$80,710 respectively. The Partnership also received cash distributions
from El Dorado Ventures III totaling $19,709 during the third quarter of
1997. These distributions were recorded as realized gains from venture
capital limited partnership investments.
Other Equity Investments
- ------------------------
Other significant changes reflected above relate to market value
fluctuations or the elimination of a discount relating to selling
restrictions for publicly-traded portfolio companies. Portions of the
Partnership's Physiometrix, Inc., and Thermatrix, Inc., shares are
restricted.
4. Secured Notes Receivable, Net
-----------------------------
Activity from January 1, 1997, through September 30, 1997, consisted of:
<TABLE>
<S> <C>
Balance at January 1, 1997 $ 29,137
1997 activity:
Secured notes receivable issued 150,500
Repayments of secured notes receivable (11,678)
Decrease in accrued interest (8,083)
-------
Total secured notes receivable, net,
at September 30, 1997 $159,876
=======
</TABLE>
The Partnership had accrued interest of $7,091 and $15,174 at September
30, 1997, and December 31, 1996, respectively.
5. Promissory Notes
----------------
At December 31, 1996, a promissory note totaling $1,363,332 was payable
to an unaffiliated third party. The note was fully repaid in February,
1997. Interest expense on this note was $14,626 for the nine months
ended September 30, 1997.
6. Commitments and Contingencies
-----------------------------
On October 27, 1997, the Managing General Partner declared a
distribution totaling $4,000,000 to partners of record as of September
30, 1997. The distribution will be paid in the fourth quarter of 1997.
The Partnership is a party to financial instruments with off-balance-
sheet risk in the normal course of its business. Generally, these
instruments are commitments for future equity fundings, venture capital
limited partnership investments, equipment financing commitments, or
accounts receivable lines of credit that are outstanding but not
currently fully utilized. As they do not represent current outstanding
balances, these unfunded commitments are properly not recognized in the
financial statements. At September 30, 1997, the Partnership had
unfunded commitments as follows:
<TABLE>
<S> <C>
Type
- ----
Equity investments $ 84,376
Venture capital limited partnership investments 101,150
-------
Total $185,526
=======
</TABLE>
In 1996, the Partnership jointly guaranteed with two affiliated
partnerships a $1,000,000 line of credit between a financial institution
and a portfolio company in the computer systems and software industry.
If the affiliated partnerships are unable to finance their portion of
the guarantee, the Partnership may be liable up to $1,000,000.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
During the nine months ended September 30, 1997, net cash used by
operating activities totaled $1,161,621. The Partnership paid
management fees of $244,869 to the Managing General Partners and
reimbursed related parties for operating expenses of $709,210. In
addition, $35,401 was paid to the Individual General Partners as
compensation for their services. Other operating expenses of $261,346
were paid and interest income of $96,780 was received. The Partnership
also paid interest of $42,976 on borrowings and in February 1997, repaid
its promissory note of $1,363,332.
During the nine months ended September 30, 1997, the Partnership issued
$150,500 in secured notes receivable to a portfolio company in the
computer systems and software industry and funded equity investments of
$1,619,510 mainly to portfolio companies in the communications and
computer systems and software industries. Repayments of secured notes
receivable provided cash of $11,678. Proceeds from the sales of equity
investments were $8,273,094. At September 30, 1997, the Partnership was
committed to fund $185,526 in additional investments, and has
outstanding guarantees up to $1,000,000 as disclosed in Note 6 to the
financial statements. In October 1997, the Managing General Partner
declared a distribution of $4,000,000 to partners payable in the fourth
quarter of 1997.
Cash and cash equivalents at September 30, 1997, were $5,412,186.
Future interest income earned on notes receivable and proceeds from
investment sales are expected to be adequate to fund Partnership
operations through the next twelve months.
Results of Operations
- ---------------------
Current quarter compared to corresponding quarter in the preceding year
- -----------------------------------------------------------------------
Net loss was $1,452,261 for the quarter ended September 30, 1997,
compared to a net loss of $6,157,055 during the same period in 1996.
The change was primarily due to an increase of $7,911,046 in the change
in net unrealized fair values of equity investments. This change was
partially offset by a $3,146,346 decrease in realized losses from
investment write-downs.
During the quarter ended September 30, 1997, the increase in equity
investment fair value of $1,970,382 was primarily attributable to
increases in portfolio companies in the computer systems and software,
and medical and biotechnology industries, partially offset by decreases
in the environmental industry. During the same period in 1996, the
decrease of $5,940,664 was primarily attributable to market price
declines in two portfolio companies in the environmental and
pharmaceuticals industries.
The Partnership recorded $3,146,346 in realized losses from investment
write-downs for the quarter ended September 30, 1997, related to a
portfolio company in the computer systems and software industry. No
such loss was recorded for the same period in 1996.
Total operating expenses were $312,249 and $224,777 for the quarters
ended September 30, 1997 and 1996, respectively. The increase is
primarily due to a higher level of activity required for portfolio
management in 1997. Additionally, in the third quarter of 1997, the
Partnership's administrative and investor service operations were
relocated to Santa Fe, New Mexico. This relocation is expected to lower
the future operational costs of the Partnership sufficient to recoup the
initial relocation expenses incurred, and provide a meaningful reduction
in ongoing operational costs.
Given the inherent risk associated with the business of the Partnership,
the future performance of the portfolio company investments may
significantly impact future operations.
Current nine months compared to corresponding nine months in the
- -----------------------------------------------------------------
preceding year
- --------------
Net loss was $11,159,852 for the nine months ended September 30, 1997,
compared to a net loss of $2,624,768 during the same period in 1996.
The change was primarily due to a $7,422,770 decrease in the change in
net unrealized fair value of equity investments and a $2,069,255
increase in realized losses from investment write-downs. These changes
were partially offset by a $366,191 increase in net realized gain from
sales of equity investments, and a $514,050 increase in net realized
gain from venture capital limited partnership investments.
During the nine months ended September 30, 1997, the decrease in equity
investment fair value of $10,927,781 was mainly attributable to
portfolio companies in the environmental, computer systems and software,
and pharmaceuticals industries, partially offset by increases in
portfolio companies in the communications industries. During the same
period in 1996, the decrease of $3,505,011 was primarily attributable to
the sale of Shaman Pharmaceuticals, Inc., common stock as the gain was
realized.
The Partnership recorded $3,146,346 and $1,077,091 in realized losses
from investment write-downs for the nine months ended September 30, 1997
and 1996,respectively, related to portfolio companies in the computer
systems and software industry.
During the nine months ended September 30, 1997, net realized gain from
sales of equity investments of $3,417,413 was mostly due to the common
stock sales of SyStemix, Inc., and Shaman Pharmaceuticals, Inc. A
$3,051,222 net realized gain recorded for the same period in 1996 was
mostly due to the common stock sale of Shaman Pharmaceuticals, Inc.
Net realized gain from venture capital limited partnership investments
was $514,050 for the nine months ended September 30, 1997. The gain
represented distributions from profits of a venture capital limited
partnership. There was no such gain realized during the same period in
1996.
Total operating expenses were $848,839 and $815,648 for the nine months
ended September 30, 1997 and 1996, respectively.
II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) No reports on Form 8-K were filed by the Partnership during the
quarter ended September 30, 1997.
(b) Financial Data Schedule for the nine months ended and as of
September 30,
1997 (Exhibit 27).
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TECHNOLOGY FUNDING VENTURE PARTNERS IV,
AN AGGRESSIVE GROWTH FUND, L.P.
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: November 14, 1997 By: /s/Michael R. Brenner
-------------------------------------------
Michael R. Brenner
Controller
<TABLE> <S> <C>
<ARTICLE>6
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORM 10-Q AS OF September 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<PERIOD-TYPE> 9-MOS
<INVESTMENTS-AT-COST> 12,868,472
<INVESTMENTS-AT-VALUE> 18,945,572
<RECEIVABLES> 0
<ASSETS-OTHER> 9,943
<OTHER-ITEMS-ASSETS> 5,412,186
<TOTAL-ASSETS> 24,367,701
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44,822
<TOTAL-LIABILITIES> 44,822
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,245,779
<SHARES-COMMON-STOCK> 400,000
<SHARES-COMMON-PRIOR> 400,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,077,100
<NET-ASSETS> 24,322,879
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 103,033
<OTHER-INCOME> 0
<EXPENSES-NET> (1,120,221)
<NET-INVESTMENT-INCOME> (1,017,188)
<REALIZED-GAINS-CURRENT> 3,931,463
<APPREC-INCREASE-CURRENT> (10,927,781)
<NET-CHANGE-FROM-OPS> (11,159,852)
<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> (11,159,852)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 235,981
<INTEREST-EXPENSE> (14,626)
<GROSS-EXPENSE> (1,123,231)
<AVERAGE-NET-ASSETS> 29,902,805
<PER-SHARE-NAV-BEGIN> 43
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 43
<EXPENSE-RATIO> 3.7
<AVG-DEBT-OUTSTANDING> 681,666
<AVG-DEBT-PER-SHARE> 1.7
<FN>
<F1>
A zero value is used since the change in net unrealized fair value is
not allocated to General Partners and Limited Partners as it is not
taxable. Only taxable gains or losses are allocated in accordance with
the Partnership Agreement.
</FN>
</TABLE>
