<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
--- ---
Commission File No. 814-82
TECHNOLOGY FUNDING VENTURE PARTNERS V, AN AGGRESSIVE GROWTH FUND, L.P.
----------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-3094910
- ------------------------------- ----------------------------------
(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,
1995 1994
---------- -----------
<S> <C> <C>
ASSETS
Investments:
Equity investments (cost basis
of $21,123,531 and $16,068,778 at
1995 and 1994, respectively) $25,148,371 18,985,725
Secured notes receivable, net
(cost basis of $1,595,009 and
$1,995,190 at 1995 and 1994,
respectively) 747,009 1,435,190
---------- ----------
Total investments 25,895,380 20,420,915
Cash and cash equivalents 6,986,597 11,371,533
Other assets 17,178 807,401
---------- ----------
Total $32,899,155 32,599,849
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 20,999 29,751
Due to related parties 131,723 55,781
Other liabilities 756 861
---------- ----------
Total liabilities 153,478 86,393
Commitments and contingencies
(Notes 2 and 6)
Partners' capital:
Limited Partners
(Units outstanding of
400,000 in both 1995 and 1994) 29,563,551 30,145,346
Managing General Partners 5,286 11,163
Net unrealized fair value increase
(decrease) from cost:
Equity investments 4,024,840 2,916,947
Secured notes receivable (848,000) (560,000)
---------- ----------
Total partners' capital 32,745,677 32,513,456
---------- ----------
Total $32,899,155 32,599,849
========== ==========
</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,
------------------------ --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income:
Secured notes receivable interest $ 29,733 133,051 85,940 404,594
Short-term investments interest 104,131 160,577 431,559 425,531
------- ------- --------- ---------
Total income 133,864 293,628 517,499 830,125
Costs and expenses:
Management fees 199,060 199,049 597,223 597,153
Individual general partners'
compensation 24,461 7,500 41,310 22,500
Amortization of organizational costs 1,750 1,750 5,250 5,250
Operating expenses:
Investment operations 124,215 92,396 407,167 336,506
Administrative and investor services 85,997 104,820 338,269 364,464
Professional fees 10,792 16,598 67,719 52,900
Computer services 32,952 26,724 89,423 83,684
Expenses absorbed by General Partners (102,578) (37,554) (102,578) (37,554)
------- ------- --------- ---------
Total operating expenses 151,378 202,984 800,000 800,000
------- ------- --------- ---------
Total costs and expenses 376,649 411,283 1,443,783 1,424,903
------- ------- --------- ---------
Net operating loss (242,785) (117,655) (926,284) (594,778)
Realized gains from
sales of equity investments -- -- 935,950 534,370
Realized losses from
investment write-downs -- -- (639,920) (2,500)
Recoveries from investments previously
written off -- -- 42,582 --
------- ------- --------- ---------
Net realized loss (242,785) (117,655) (587,672) (62,908)
Change in net unrealized
fair value:
Equity investments 505,335 480,290 1,107,893 1,386,680
Secured notes receivable (155,000) (100,000) (288,000) (252,000)
------- ------- --------- ---------
Net income $ 107,550 262,635 232,221 1,071,772
======= ======= ========= =========
Net realized loss per Unit $ (1) -- (1) --
======= ======= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
---------------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 537,673 731,347
Cash paid to vendors (199,676) (200,641)
Cash paid to related parties (1,170,534) (1,263,834)
---------- ----------
Net cash used by
operating activities (832,537) (733,128)
---------- ----------
Cash flows from investing activities:
Secured notes receivable issued -- (127,438)
Purchase of equity investments (6,136,472) (5,333,057)
Proceeds from sales of
equity investments 2,022,421 816,323
Repayments of convertible and
secured notes receivable 561,652 1,023,746
Distributions from venture capital
limited partnerships -- 5,941
---------- ----------
Net cash used by investing activities (3,552,399) (3,614,485)
---------- ----------
Net decrease in cash and
cash equivalents (4,384,936) (4,347,613)
Cash and cash equivalents at
beginning of year 11,371,533 16,187,289
---------- ----------
Cash and cash equivalents at September 30 $ 6,986,597 11,839,676
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
- -----------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
---------------------------------------
1995 1994
---- ----
<S> <C> <C>
Reconciliation of net income to net
cash used by operating activities:
Net income $ 232,221 1,071,772
Adjustments to reconcile net income to
net cash used by operating activities:
Realized gains from sales of
equity investments (935,950) (534,370)
Realized losses from investment
write-downs 639,920 2,500
Recoveries from investments previously
written off (42,582) --
Change in net unrealized fair value:
Equity investments (1,107,893) (1,386,680)
Secured notes receivable 288,000 252,000
Other changes, net (742) (5,111)
Changes in:
Due to related parties 75,942 (29,188)
Accrued interest on secured and
convertible notes 26,166 (88,417)
Other, net (7,619) (15,634)
---------- ---------
Net cash used by operating activities $ (832,537) (733,128)
========== =========
Non-cash investing activities:
Common stock recovered from equity
investments previously written off $ 42,582 --
========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ----------------------------------------
1. General
-------
In the opinion of the Managing General Partners, the Balance Sheets as
of September 30, 1995 and December 31, 1994, and the related Statements
of Operations for the three and nine months ended September 30, 1995 and
1994 and Statements of Cash Flows for the nine months ended September
30, 1995 and 1994, reflect all adjustments which are necessary for a
fair presentation of the financial position, results of operations and
cash flows for such periods. These statements should be read in
conjunction with the Annual Report on Form 10-K for the year ended
December 31, 1994. The following notes to financial statements for
activity through September 30, 1995 supplement those included in the
Annual Report on Form 10-K. Allocation of income and loss to Limited
and General Partners is based on cumulative income and loss.
Adjustments, if any, are reflected in the current quarter balances.
2. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations. Related party costs for the nine months ended
September 30, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Management fees $ 597,223 597,153
Amortization of organizational cost 5,250 5,250
Reimbursable operating expenses 710,521 652,547
Individual general partners' compensation 41,310 22,500
Expenses absorbed by General Partners (102,578) (37,554)
</TABLE>
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Managing General Partners and are adjusted to
actual costs periodically. Due to related parties was $65,369 at
September 30, 1995 compared to due from related parties of $10,568 at
December 31, 1994 for reimbursable operating expenses.
Amounts payable for management fees were $66,354 and $66,349 at
September 30, 1995 and December 31, 1994, respectively.
As set forth in the Partnership Agreement, the Partnership may not pay
or reimburse the Managing General Partners for operational costs that
aggregate more than 2% of total Limited Partner capital contributions.
As of September 30, 1995 and 1994, this limitation was in effect and
expenses absorbed by the General Partners totaled $102,578 and $37,554
for the nine months ended September 30, 1995 and 1994, respectively.
3. Equity Investments
------------------
A full listing of the Partnership's equity investments at December 31,
1994 is in the 1994 Annual Report. Activity from January 1 through
September 30, 1995 consisted of:
<TABLE>
<CAPTION>
January 1 -
September 30, 1995
Principal ------------------
Investment Amount or Cost Fair
Industry/Company Position Date Shares Basis Value
- ---------------- -------- ---------- --------- ----- -----
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995 $16,068,778 18,985,725
---------- ----------
Significant changes:
Biotechnology
- -------------
CV Therapeutics, Inc. Series E
Preferred
shares 09/95 64,000 126,720 126,720
CV Therapeutics, Inc. Series E
Preferred share
warrant at $2.00;
expiring 09/00 09/95 32,000 1,280 1,280
Prolinx, Inc. Series A
Preferred
shares 05/95 328,929 328,929 328,929
Communications
- --------------
Coded Communications Common
Corporation shares 04/93 145,454 (246,182) (21,963)
Coded Communications Common
Corporation share
warrant
at $3.16;
expired 04/95 04/93 145,454 (4,000) 0
Positive Series E
Communications, Inc. Preferred
shares 09/94 285,714 0 214,285
Positive Series G
Communications, Inc. Preferred
shares 08/95 17,885 76,011 76,011
Unitech Telecom, Inc. Convertible
note (1) 05/94 $100,000 (106,039) (106,039)
Unitech Telecom, Inc. Series A Preferred
shares 03/95 46,875 375,000 375,000
Computer Systems and Software
- -----------------------------
Pilot Network Series D Preferred
Services, Inc. shares 03/95 371,557 650,225 650,225
Velocity Convertible 08/95 &
Incorporated notes (1) 09/95 $225,000 228,060 228,060
Environmental
- -------------
Conversion Series A
Technologies Preferred
International, Inc. shares 05/95 600,000 1,500,000 1,500,000
Conversion Convertible
Technologies note (1)
International, Inc. 09/95 $37,500 37,600 37,600
SRG Holdings, Inc. Subordinated
note (1) 04/95 $56,880 59,387 59,387
SRG Holdings, Inc. Subordinated
note (1) 06/95 $122,547 130,227 130,227
Industrial/Business Automation
- ------------------------------
Bolder Technologies Series C Preferred
Corporation shares 09/94 250,000 0 500,000
Bolder Technologies Series B Preferred
Corporation shares 10/94 50,001 0 100,002
Bolder Technologies Common share
Corporation warrant at $0.50;
expiring 03/00 03/95 8,694 87 30,429
Bolder Technologies Series C Preferred
Corporation shares 05/95 810 1,622 3,240
Bolder Technologies Series D Preferred
Corporation shares 05/95 17,366 69,467 69,464
Oxford GlycoSystems Common
Group PLC shares 08/93 533,867 0 (572,833)
Portable Energy Series A
Products, Inc. Preferred shares 06/95 1,100,000 1,100,000 1,100,000
Medical
- -------
Acusphere, Inc. Series B Preferred
shares 05/95 250,000 400,000 400,000
Adesso Specialty Series A
Services Organization, Preferred
Inc. shares 07/95 400,000 400,000 400,000
Biex, Inc. Series C Preferred
shares 06/95 83,334 83,334 83,334
Circadian, Inc. Convertible note (1) 09/95 $70,990 71,227 71,227
Everest & Jennings, Common shares
International, Ltd. 01/94 592,717 0 238,272
Megabios Corp. Series C
Preferred shares 07/95 150,637 195,000 195,000
Pharmos Corporation Common shares 04/95 56,776 42,582 147,618
TheraTx, Incorporated Common shares 06/94 70,042 (16,500) (695,387)
UroMed Corporation Common shares 03/94 179,828 (286,236) (831,705)
Microelectronics
- ----------------
Tessera, Inc. Common share
warrant
at $0.73;
expiring 04/97 04/92 72,754 0 128,775
Tessera, Inc. Series B
Preferred shares 05/92 666,666 0 1,166,665
Retail/Consumer Products
- ------------------------
Yes! Entertainment Series B Preferred
Corporation shares 01/93 750,000 (500,000) (375,000)
Yes! Entertainment
Corporation Common shares 06/95 55,555 166,665 235,414
Venture Capital Limited Partnership Investments
- -----------------------------------------------
Various Ltd. Partnership
interest various $812,403 162,401 168,008
---------- ----------
Total significant changes during the nine
months ended September 30, 1995 5,046,867 6,162,245
Other changes, net 7,886 401
---------- ----------
Total equity investments at September 30, 1995 $21,123,531 25,148,371
========== ==========
(1) Convertible and subordinated notes include accrued interest. Interest rates on
such notes issued in 1995 ranged from 6% to 24%.
</TABLE>
Marketable Equity Securities
- ----------------------------
At September 30, 1995 and December 31, 1994, marketable equity
securities had aggregate costs of $934,979 and $1,445,315, respectively,
and aggregate market values of $1,747,626 and $2,910,791, respectively.
The net unrealized gains at September 30, 1995 and December 31, 1994
included gross gains of $893,009 and $2,012,329, respectively.
Acusphere, Inc.
- ---------------
In May 1995, the Partnership invested in Acusphere, Inc. by purchasing
250,000 Series B Preferred shares at a total cost of $400,000.
Adesso Specialty Services Organization, Inc.
- --------------------------------------------
In July 1995, the Partnership invested in Adesso Specialty Services
Organization, Inc. by purchasing 400,000 Series A Preferred shares at a
total cost of $400,000.
Biex, Inc.
- ----------
In June 1995, the Partnership made an additional investment in Biex,
Inc. by purchasing 83,334 Series C Preferred shares at a total cost of
$83,334.
Bolder Technologies Corporation
- -------------------------------
In March 1995, the Partnership issued an unsecured convertible note for
$69,467 and purchased a warrant for 8,694 common shares with an exercise
price of $0.50 per share for $87.
Then in May 1995, the Partnership converted the unsecured note mentioned
above into 17,366 Series D Preferred shares and the accrued interest of
$1,622 into 810 Series C preferred shares. This round of equity
conversion in which other investors participated indicated an increase
in the change in fair value of $631,959 for the Partnership's
investments.
Circadian, Inc.
- ---------------
In September 1995, the Partnership issued a $70,990 convertible note to
the company.
Coded Communications Corporation
- --------------------------------
During the second quarter of 1995, the Managing General Partners
determined that there has been a decline in value of the Partnership's
investments. As a result, the Partnership realized a loss of $250,182.
The Partnership also recorded a decrease in fair value of $21,963 to
reflect the publicly-traded market value at September 30, 1995.
Conversion Technologies International, Inc.
- -------------------------------------------
In May 1995, the Partnership invested in Conversion Technologies
International, Inc. by purchasing 600,000 Series A Preferred shares at a
total cost of $1,500,000. Then in September 1995, the Partnership
issued a $37,500 convertible note to the company.
CV Therapeutics, Inc.
- ---------------------
In September 1995, the Partnership made an additional investment in CV
Therapeutics, Inc. by purchasing 64,000 Series E Preferred shares and
receiving a warrant to purchase 32,000 Series E Preferred shares for a
total cost of $128,000.
Megabios Corp.
- --------------
In July 1995, the Partnership made an additional investment in Megabios
Corp. by purchasing 150,637 Series C Preferred shares at a total cost of
$195,000.
Oxford GlycoSystems Group PLC
- -----------------------------
In March 1995, the company had a new round of equity financing in which
the Partnership did not participate. The pricing of this round
indicated a decrease in the change in fair value of $572,833 for the
Partnership's existing investments.
Pharmos Corporation/Oculon Corporation
- --------------------------------------
In March 1995, Oculon Corporation ("Oculon") was acquired by Pharmos
Corporation ("Pharmos"). The Partnership's Series II Senior Preferred
shares were canceled while the Series III Senior Preferred shares were
exchanged for 56,776 shares of marketable, unrestricted Pharmos common
stock. The Partnership recorded the $42,582 cost basis of the Pharmos
stock as a recovery from Oculon investments previously written off. An
increase in fair value of $147,618 reflected the market value of the
Pharmos stock at September 30, 1995.
Pilot Network Services, Inc.
- ----------------------------
In March 1995, the Partnership purchased 371,557 Series D Preferred
shares from the company at a total cost of $650,225.
Portable Energy Products, Inc.
- ------------------------------
In June 1995, the Partnership purchased 1,100,000 Series A Preferred
shares from the company at a total cost of $1,100,000.
Positive Communications, Inc.
- -----------------------------
In August 1995, the Partnership made an additional investment in
Positive Communications, Inc. by purchasing 17,885 Series G Preferred
shares at a total cost of $76,011. The pricing of this financing in
which other investors participated indicated an increase in the change
in fair value of $214,285 in the Partnership's existing investment.
Prolinx, Inc.
- -------------
In May 1995, the Partnership invested in Prolinx, Inc. by purchasing
328,929 Series A Preferred shares at a total cost of $328,929.
SRG Holdings, Inc.
- ------------------
During the first quarter of 1995, the Partnership issued convertible
notes totaling $78,124 to SRG Holdings, Inc. Then, during the second
quarter, the Partnership issued an additional $179,427 in subordinated
notes to the company, which consisted of $100,693 in cash and the
transfer of $78,734 in principal and interest from the $78,124
convertible notes mentioned above.
Tessera, Inc.
- -------------
In February 1995, the company had a Series C round of equity financing
in which the Partnership did not participate. The pricing of this
financing indicated an increase in the change in fair value of
$1,295,440 for the Partnership's existing investments.
TheraTx, Inc.
- -------------
In January 1995, the Partnership sold 11,000 common shares of TheraTx,
Inc. for proceeds of $214,719 and realized a gain of $198,219. The
Partnership also received proceeds of $127,750 from sales prior to
December 31, 1994, which have been settled. The Partnership recorded a
decrease in unrealized fair value of $695,387 at September 30, 1995; a
portion was realized related to the sale mentioned above, with the
remainder due to a decrease in the market value of the remaining
unrestricted shares at September 30, 1995.
Unitech Telecom, Inc.
- ---------------------
In March 1995, the Partnership purchased 46,875 Series A Preferred
shares from the company at a total cost of $375,000. The purchase price
consisted of $275,000 in cash and the conversion of a $100,000 note
issued in May 1994. Interest on the note was paid in cash.
UroMed Corporation
- ------------------
In January 1995, the Partnership sold its remaining holdings in the
company for total proceeds of $1,023,967 and realized a gain of
$737,731. The Partnership also received proceeds of $655,985 from sales
prior to December 31, 1994, which have been settled.
Velocity Incorporated
- ---------------------
During the third quarter of 1995, the Partnership issued convertible
notes totaling $225,000 to the company.
YES! Entertainment Corporation
- ------------------------------
In June 1995, the company completed its initial public offering ("IPO").
Prior to the IPO, the company effected a 1-for-15 reverse stock split.
The Partnership's Series B Preferred shares were converted into 55,555
common shares. The Managing General Partners determined that there has
been a decline in value of the Partnership's investment; as a result, a
realized loss of $333,335 was recorded. The loss reflects the fact that
the stock will be restricted for two years.
Venture Capital Limited Partnership Investments
- -----------------------------------------------
The Partnership recorded a cost basis increase of $162,401 during the
first nine months of 1995 from additional contributions to certain
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.
4. Secured Notes Receivable, Net
-----------------------------
Activity from January 1, 1995 through September 30, 1995 consisted of:
<TABLE>
<S> <C>
Balance at January 1, 1995 $1,435,190
1995 activity:
Repayments of secured notes receivable (311,652)
Increase in allowance for loan losses (288,000)
Write-off of interest receivable (48,403)
Change in interest receivable (46,118)
Other activity, net 5,992
---------
Total secured notes receivable, net, at September 30, 1995 $ 747,009
=========
</TABLE>
The Partnership had accrued interest of $25,120 and $119,641 at
September 30, 1995 and December 31, 1994, respectively.
During the second quarter of 1995, the Partnership wrote off $48,403 in
interest receivable from a portfolio company in the biomedical industry
as collection was considered unlikely.
Activity in the allowance for loan losses was as follows:
<TABLE>
<S> <C>
Balance at January 1, 1995 $560,000
Change in net unrealized fair value of
secured notes receivable 288,000
-------
Balance at September 30, 1995 $848,000
=======
</TABLE>
The allowance for loan losses is adjusted quarterly based upon changes
to the portfolio size and risk profile. Although the allowance is
established by evaluating individual debtor repayment ability, the
allowance represents the Managing General Partners' assessment of the
portfolio as a whole.
Notes with a total cost basis of $1,463,577 were on nonaccrual status
due to uncertainties related to borrowers' financial condition at
September 30, 1995. The Managing General Partners continue to monitor
the progress of these companies. The fair value at September 30, 1995
is based on the Managing General Partners' estimate of collectibility of
these notes.
5. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents at September 30, 1995 and December 31, 1994
consisted of:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Demand accounts $ 36,991 2,241
Money-market accounts 6,949,606 11,369,292
--------- ----------
Total $6,986,597 11,371,533
========= ==========
</TABLE>
6. Commitments and contingencies
-----------------------------
The Partnership is a party to financial instruments with off-balance-
sheet risk in the normal course of its business. Generally, these
instruments are commitments for future equity 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, 1995, the Partnership had
unfunded commitments as follows:
<TABLE>
<S> <C>
Type
- ----
Equity investments $1,187,737
Venture capital limited partnership investments 542,597
Bridge notes and A/R Line 331,510
---------
Total $2,061,844
=========
</TABLE>
In September 1995, the Partnership agreed to guarantee a $1,000,000 line
of credit between a financial institution and a portfolio company in the
computer systems and software industry. While the Partnership expects
the portfolio company to repay the line of credit, if the portfolio
company fails to do so, the Partnership may be liable up to the
guarantee amount.
<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, 1995, net cash used by
operating activities totaled $832,537. The Partnership paid management
fees of $597,218 to the Managing General Partners and reimbursed related
parties for operating expenses of $532,006. In addition, $41,310 was
paid to the individual general partners as compensation for their
services. Other operating expenses of $199,676 were paid and $537,673
in interest income was received.
During the nine months ended September 30, 1995, the Partnership funded
equity investments of $6,136,472 primarily to portfolio companies in the
environmental, industrial/business automation, medical, and computer
systems and software industries. Proceeds from sales of equity
investments were $2,022,421 of which $783,735 related to sales prior to
December 31, 1994, which have been settled. Repayments of convertible
and secured notes receivable provided cash of $561,652. As of September
30, 1995, the Partnership was committed to fund additional investments
totaling $2,061,844 and has an outstanding guarantee of $1,000,000 as
discussed in Note 6 to the financial statements.
During the first nine months of 1995, YES! Entertainment Corporation
completed its initial public offering ("IPO"). Although the
Partnership's holdings in YES! Entertainment Corporation are subject to
selling restrictions, the IPO indicates potential future liquidity for
this investment.
Cash and cash equivalents at September 30, 1995 were $6,986,597. Future
interest income on short-term investments and notes receivable, and
operating cash reserves 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 income was $107,550 and $262,635 for the three months ended
September 30, 1995 and 1994, respectively. The decrease in net income
was primarily due to a $159,764 decrease in total income and a $55,000
decrease in the change in net unrealized fair value of secured notes
receivable.
Total income was $133,864 and $293,628 during the quarters ended
September 30, 1995 and 1994, respectively. The decrease was due to
lower secured notes receivable interest income resulting from notes
placed on nonaccrual status and lower short-term investment income from
lower outstanding cash and cash equivalents balances as more equity
investments were made.
The Partnership recorded decreases in the fair value of secured notes
receivable of $155,000 and $100,000 for the quarters ended September 30,
1995 and 1994, respectively, based upon the level of loan loss reserves
deemed adequate by the Managing General Partners at the respective
quarter ends. The decrease was primarily due to notes receivable being
placed on nonaccrual status.
Total operating expenses were $151,378 and $202,984 for the three months
ended September 30, 1995 and 1994, respectively. Pursuant to the
Partnership Agreement, the Partnership may not pay or reimburse the
General Partners for expenses that aggregate more than 2% of total
Limited Partner contributions. As a result, operating expenses of
$102,578 and $37,554 were absorbed by the General Partners during the
quarters ended September 30, 1995 and 1994, respectively. Had the
limitation not been in effect, total operating expenses for 1995 and
1994 would have been $253,956 and $240,538, respectively. The increase
was primarily due to higher investment operations and administrative and
investor services expenses resulting from higher overall portfolio
activities.
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 income was $232,221 for the nine months ended September 30, 1995
compared to $1,071,772 during the same period in 1994. The decrease in
income was primarily due to a $637,420 increase in realized losses from
investment write-downs, a $312,626 decrease in total income, and a
$278,787 decrease in the change in net unrealized fair value of equity
investments. These changes were partially offset by a $401,580
increase in realized gains from sales of equity investments.
Realized losses from investment write-downs of $639,920 during the nine
months ended September 30, 1995 primarily related to portfolio companies
in the retail/consumer products and communications industries. In 1994,
$2,500 of such losses were realized.
Total income was $517,499 and $830,125 during the nine months ended
September 30, 1995 and 1994, respectively. The decrease was primarily
due to lower secured notes receivable interest income resulting from
notes placed on nonaccrual status.
During the nine months ended September 30, 1995, the increase in fair
value of equity investments of $1,107,893 was primarily due to portfolio
companies in the microelectronics, communications, and retail/consumer
products industries, partially offset by decreases in the
medical industry. During the same period in 1994, the increase in fair
value of equity investments of $1,386,680 was primarily due to portfolio
companies in the medical industry, partially offset by decreases in the
communications, retail/consumer products, and computer systems and
software industries.
Realized gains from sales of equity investments of $935,950 for the nine
months ended September 30, 1995 related to the partial sales of UroMed
Corporation and TheraTx, Incorporated. During the same period in 1994,
realized gains of $534,370 related to the sales of TheraTx,
Incorporated, EROX Corporation and OrthoLogic Corporation.
Total operating expenses were $800,000 for both the nine months ended
September 30, 1995 and 1994. Pursuant to the Partnership Agreement, the
Partnership may not pay or reimburse the General Partners for expenses
that aggregate more than 2% of total Limited Partner contributions. As
a result, operating expenses of $102,578 and $37,554 were absorbed by
the General Partners in 1995 and 1994, respectively. Had the limitation
not been in effect, total operating expenses would have been $902,578
and $837,554 for 1995 and 1994, respectively. The increase was
primarily due to higher investment operations expenses and professional
fees resulting from higher overall portfolio activities, partially
offset by lower administrative and investor services expenses.
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, 1995.
(b) Financial Data Schedule for the nine months ended and as of
September 30, 1995 (Exhibit 27).
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TECHNOLOGY FUNDING VENTURE PARTNERS V,
AN AGGRESSIVE GROWTH FUND, L.P.
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: November 10, 1995 By: /s/Frank R. Pope
------------------------------------
Frank R. Pope
Executive Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE>6
<LEGEND>THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FORM 10-Q AS OF SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<PERIOD-TYPE> 9-MOS
<INVESTMENTS-AT-COST> 22,718,540
<INVESTMENTS-AT-VALUE> 25,895,380
<RECEIVABLES> 0
<ASSETS-OTHER> 17,178
<OTHER-ITEMS-ASSETS> 6,986,597
<TOTAL-ASSETS> 32,899,155
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 153,478
<TOTAL-LIABILITIES> 153,478
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,568,837
<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> 3,176,840
<NET-ASSETS> 32,745,677
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 517,499
<OTHER-INCOME> 0
<EXPENSES-NET> (1,443,783)
<NET-INVESTMENT-INCOME> (926,284)
<REALIZED-GAINS-CURRENT> 338,612
<APPREC-INCREASE-CURRENT> 819,893
<NET-CHANGE-FROM-OPS> 232,221
<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> 232,221
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 597,223
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,548,111
<AVERAGE-NET-ASSETS> 32,629,567
<PER-SHARE-NAV-BEGIN> 75
<PER-SHARE-NII> (1)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 74
<EXPENSE-RATIO> 4.42
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>
A zero value is used since the change in net unrealized fair value is
not allocated to General Partners and Limited Partners as it is not
taxable. Only taxable gains or losses are allocated in accordance with
the Partnership Agreement.
</FN>
</TABLE>
