<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, 1998
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)
(650) 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,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
Investments:
Equity investments (cost basis
of $23,978,288 and $22,803,180 at
1998 and 1997, respectively) $34,881,128 37,077,544
Notes receivable -- 4,479
Other investments (cost basis of
$664,299 in 1997) -- 398,579
---------- ----------
Total investments 34,881,128 37,480,602
Cash and cash equivalents 472,917 1,839,535
Due from related parties -- 86,078
Other assets 9,643 9,655
---------- ----------
Total assets $35,363,688 39,415,870
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 36,365 45,893
Due to related parties 32,643 --
Short-term borrowings 407,805 --
---------- ----------
Total liabilities 476,813 45,893
Commitments and contingencies
(Notes 3, 7 and 8)
Partners' capital:
Limited Partners
(Units outstanding of
400,000 in both 1998 and 1997) 23,995,517 25,359,042
General Partners (11,482) 2,291
Net unrealized fair value increase
from cost of:
Equity investments 10,902,840 14,274,364
Other investments -- (265,720)
---------- ----------
Total partners' capital 34,886,875 39,369,977
---------- ----------
Total liabilities and
partners' capital $35,363,688 39,415,870
========== ==========
</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,
------------------------ ----------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Income:
Secured notes receivable interest $ 1,048 14,814 1,048 40,541
Short-term investment interest 1,046 5,080 14,478 23,996
Dividend income -- -- -- 280,010
--------- --------- --------- ---------
Total income 2,094 19,894 15,526 344,547
Costs and expenses:
Management fees 97,499 97,498 292,496 292,496
Individual General Partners'
compensation 13,023 8,206 31,420 26,800
Operating expenses:
Investment operations 118,160 90,870 349,730 209,621
Administrative and investor services 294,529 157,062 613,977 390,342
Professional fees 22,390 8,685 50,314 60,394
Computer services 57,434 43,777 170,807 96,295
Interest expense 7,805 -- 7,805 --
Expenses absorbed by General
Partners (421,041) (103,318) (545,365) (103,318)
--------- --------- --------- ---------
Total operating expenses 79,277 197,076 647,268 653,334
--------- --------- --------- ---------
Total costs and expenses 189,799 302,780 971,184 972,630
--------- --------- --------- ---------
Net operating loss (187,705) (282,886) (955,658) (628,083)
Net realized gain from
sales of equity investments -- 204,104 5,305 630,159
Realized losses from investment
write-downs -- -- (664,299) --
Net realized gain from venture capital
limited partnership investments 520 66,432 237,354 85,480
--------- --------- --------- ---------
Net realized (loss) income (187,185) (12,350) (1,377,298) 87,556
Change in net unrealized
fair value:
Equity investments (1,227,706) 4,234,640 (3,371,524) 8,539,401
Other investments -- (265,720) 265,720 (265,720)
--------- --------- --------- ---------
Net (loss) income $(1,414,891) 3,956,570 (4,483,102) 8,361,237
========= ========= ========= =========
Net realized loss per Unit $ -- -- (3) --
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
---------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Interest and dividend income received $ 15,456 320,450
Cash paid to vendors (148,215) (237,807)
Cash paid to related parties (705,959) (759,154)
Interest paid on short-term borrowings (7,805) --
--------- ---------
Net cash used by
operating activities (846,523) (676,511)
--------- ---------
Cash flows from investing activities:
Purchase of equity investments (1,406,319) (1,377,335)
Notes receivable issued (2,766) (33,902)
Proceeds from sales of
equity investments 103,634 883,097
Repayments of convertible and other
notes receivable 92,047 92,645
Distributions from venture capital
limited partnership investments 285,504 117,537
--------- ---------
Net cash used by
investing activities (927,900) (317,958)
--------- ---------
Cash flows from financing activities:
Proceeds from short-term
borrowings, net 407,805 --
--------- ---------
Net cash provided by financing
activities 407,805 --
--------- ---------
Net decrease in cash and
cash equivalents (1,366,618) (994,469)
Cash and cash equivalents at
beginning of year 1,839,535 1,617,085
--------- ---------
Cash and cash equivalents
at September 30 $ 472,917 622,616
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited) (continued)
- -----------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
---------------------------
1998 1997
--------- ---------
<S> <C> <C>
Reconciliation of net (loss)
income to net cash used by
operating activities:
Net (loss) income $(4,483,102) 8,361,237
Adjustments to reconcile net (loss)
income to net cash used by operating
activities:
Amortization of discount on secured
notes receivable (339) --
Realized gain from sales of
equity investments, net (5,305) (630,159)
Realized losses from investment
write-downs 664,299 --
Net realized gain from venture capital
limited partnership investments (237,354) (85,480)
Change in net unrealized fair value:
Equity investments 3,371,524 (8,539,401)
Other investments (265,720) 265,720
Changes in:
Due from related parties 118,721 (21,450)
Other changes, net (9,247) (26,978)
--------- ---------
Net cash used by operating activities $ (846,523) (676,511)
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (unaudited)
- ----------------------------------------
1. General
-------
In the opinion of the Managing General Partners, the accompanying interim
financial statements reflect all adjustments necessary for a fair
presentation of the financial position, results of operations, and cash
flows for the interim periods presented. These statements should be read
in conjunction with the Annual Report on Form 10-K for the year ended
December 31, 1997. 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. Financing of Partnership Operations
-----------------------------------
The Managing General Partners expect cash received from the future
liquidation of Partnership investments and short-term borrowings will
provide the necessary liquidity to fund Partnership operations. The
Partnership may be dependent upon the financial support of the Managing
General Partners to fund operations if future proceeds are not received
timely. The Managing General Partners have committed to support the
Partnership's working capital requirements through short-term advances as
necessary.
3. 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, 1998 and 1997, were as follows:
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
Management fees $292,496 292,496
Individual General Partners' compensation 31,420 26,800
Reimbursable operating expenses 1,046,129 521,726
Expenses absorbed by General Partners (545,365) (103,318)
</TABLE>
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Managing General Partners and are adjusted to
actual cost periodically. There were $143 due to and $151,077 due from
related parties at September 30, 1998, and December 31, 1997,
respectively, for such reimbursable expenses.
Amounts payable for management fees were $32,500 and $64,999 at September
30, 1998, and December 31, 1997.
Pursuant to the Partnership Agreement, the Partnership shall reimburse
the Managing General Partners for operational costs incurred by the
Managing General Partners in conjunction with the business of the
Partnership. The Partnership may not pay nor reimburse the Managing
General Partners for operational costs that aggregate more than 1% of
total Limited Partner capital contributions. For the nine months ended
September 30, 1998, operating expenses incurred by the Managing General
Partners exceeded the limitation by $545,365, resulting in this amount
being absorbed by the Managing General Partners.
The Managing General Partners allocate operating expenses incurred in
connection with the business of the Partnership based on employee hours
incurred. In the third quarter of 1998, the Managing General Partners
reevaluated allocations to the Partnership and determined that they had
not fully recovered allocable operating expenses, primarily salary and
benefits, as permitted by the Partnership Agreement. As a result, the
Partnership was charged additional operating expenses in the third
quarter of 1998 of $174,114 consisting of $21,178 for the nine months
ended September 30, 1997 and $152,936 for prior years. Had the
additional expenses been recorded in prior years and had the limitation
not been in effect, total operating expenses for the three months ended
September 30, 1998 and 1997 would have been $326,204 and $321,572,
respectively, and total operating expenses for the nine months ended
September 30, 1998 and 1997 would have been $1,018,519 and $777,830,
respectively.
Officers of the Managing General Partners occasionally receive stock
options as compensation for serving on the Boards of Directors of
portfolio companies. At September 30, 1998, the Partnership had an
indirect interest in Conversion Technologies, Inc., Endocare, Inc., and
Physiometrix, Inc., non-transferable options at an exercise price higher
than the current market value.
<PAGE>
4. Equity Investments
------------------
<TABLE>
A full listing of the Partnership's equity investments at December 31, 1997, is in the 1997
Annual Report. Activity from January 1 through September 30, 1998, consisted of:
<CAPTION>
January 1 through
September 30, 1998
-------------------------
Principal
Investment Amount or Cost Fair
Industry/Company Position Date Shares Basis Value
- ---------------- -------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1998 $22,803,180 37,077,544
---------- ----------
Significant changes:
Biomedical
- ----------
Axys Pharmaceuticals, Common
Inc. shares 12/95 37,855 0 (147,256)
Biotechnology
- -------------
CV Therapeutics, Common
Inc. shares various 68,900 0 (195,814)
Prolinx, Series A
Inc. Preferred 05/95-
shares 09/96 1,099,363 0 462,000
Prolinx, Series B
Inc. Preferred
shares 07/97 192,308 0 128,847
Prolinx, Series C
Inc. Preferred
shares 04/98 167,915 360,732 364,376
Communications
- --------------
NetChannel, Series B
Inc. Preferred 10/96-
shares 05/97 183,458 (64,068) (96,882)
NetChannel, Convertible
Inc. notes various $30,029 (31,114) (31,114)
NetChannel, Escrowed sales
Inc. proceeds 06/98 $12,460 12,460 12,460
Women.com Series D
Networks Preferred
shares 06/98 15,199 50,005 50,005
Computer Systems and Software
- -----------------------------
Lynk Systems, Common shares
Inc. warrant,
exercised 6/98 07/93 105,000 (3,500) (369,600)
Lynk Systems, Common
Inc. shares 06/98 105,000 38,500 157,500
Pilot Network Services, Common 03/95 &
Inc. shares 07/96 891,054 0 400,974
Environmental
- -------------
Conversion Technologies Common
International, Inc. shares 05/96 207,547 0 (144,038)
Industrial/Business Automation
- ------------------------------
Avalon Imaging, Inc. Series C
Preferred
shares 03/98 138,888 149,999 149,999
Avalon Imaging, Inc. Series C
Preferred
shares 08/98 111,111 120,000 120,000
Portable Energy Series A
Products, Inc. Preferred
shares 06/95 1,100,000 0 (467,500)
Portable Energy Series A
Products, Inc. Preferred
shares
warrant at $0.10
expiring 9/01 10/96 186,816 0 (79,396)
Portable Energy Series B
Products, Inc. Preferred
shares 12/97 1,116,667 0 (470,213)
Portable Energy Series C
Products, Inc. Preferred
shares 07/98 1,500,000 300,000 300,000
Medical
- -------
Endocare, Common
Inc. shares 04/98 35,714 124,999 91,071
Megabios Common 09/94-
Corporation shares 07/95 301,274 0 (1,860,970)
Oxford Glycosciences, Common
Plc shares 08/93 213,546 0 (275,477)
Periodontix, Series C
Inc. Preferred
shares 02/98 26,531 65,001 65,001
Pharmadigm, Series A
Inc. Preferred 04/93-
shares 12/94 537,635 0 118,280
Pharmadigm, Series B
Inc. Preferred
shares 05/96 137,778 0 30,311
Pharmadigm, Series D
Inc. Preferred
shares 06/98 41,219 99,750 99,750
Physiometrix, Common
Inc. shares 04/96 287,021 0 (147,310)
Retail/Consumer Products
- ------------------------
Yes! Entertainment Common
Corporation shares 06/95 55,555 0 (74,833)
Venture Capital Limited Partnership Investments
- -----------------------------------------------
Various Limited
Partnership
Interests various $1,179,893 5,426 (267,625)
---------- ----------
Total significant changes during the nine
months ended September 30, 1998 1,228,190 (2,077,454)
Other changes, net (53,082) (118,962)
---------- ----------
Total equity investments at September 30, 1998 $23,978,288 34,881,128
========== ==========
</TABLE>
Marketable Equity Securities
- ----------------------------
At September 30, 1998 and December 31, 1997, marketable equity securities
had aggregate costs of $6,206,115 and $3,948,418, respectively, and
aggregate market values of $3,101,804 and $1,703,410, respectively. The
net unrealized losses at September 30, 1998 and December 31, 1997 included
gross gains of $444,618 and $103,141, respectively.
Avalon Imaging, Inc.
- --------------------
In March 1998, the Partnership purchased 138,888 Series C Preferred shares
for $149,999. In August 1998, the Partnership purchased an additional
111,111 Series C Preferred shares for $120,000.
Endocare, Inc.
- --------------
In April 1998, the Partnership purchased 35,714 common shares for $124,999
in a private placement. At September 30, 1998, the Partnership recorded a
$44,595 decrease in the fair value of its investment in the company based
on the publicly-traded market price of the company's investment.
Lynk Systems, Inc.
- ------------------
In June 1998, the Partnership paid $35,000 to exercise its warrant for
105,000 common shares. The fair value of the common shares, as determined
by the company, represents a $247,100 decrease in fair value from the price
established in their last round of third-party financing.
NetChannel, Inc.
- ----------------
In June 1998, America Online, Inc. completed its acquisition of the
company. The Partnership realized a loss of $15,488 on the completion of
the sale transaction. Proceeds of $36,118 and $34,669 were received from
the sale of the Partnership's preferred shares and repayment of convertible
and other notes receivable. An amount of $12,460 in future sale proceeds
will remain in escrow through December 1999 pending final resolution of the
sale.
Oxford GlycoSciences, Plc.
- --------------------------
The company completed its initial public offering on the London Stock
Exchange in April, 1998 at 280 pence per common share. The Partnership's
preferred shares were converted to 213,546 common shares.
Periodontix, Inc.
- ----------------
In February 1998, the Partnership made an additional investment in the
company by purchasing 26,531 Series C Preferred shares for $65,001.
Pharmadigm, Inc.
- ----------------
In June 1998, the Partnership made an additional investment in the company
by purchasing 41,219 Series D Preferred shares for $99,750. The pricing of
this round, in which third parties participated, indicated a $151,101
increase in the fair value of the Partnership's existing investment.
Pilot Network Services, Inc.
- ----------------------------
In August 1998, the company completed its initial public offering at $14.00
per common share. Prior to the offering, the company effected a 2 to 1
stock split which increased the Partnership holdings to 891,054 common
shares.
Portable Energy Products, Inc.
- ------------------------------
In July 1998, the Partnership purchased 1,500,000 Series C Preferred shares
and 375,000 common share warrants for $300,000. The pricing of this round,
in which third parties participated, indicated a $1,017,109 decrease in the
fair value of the Partnership's existing investment.
Prolinx, Inc.
- -------------
In April 1998, the Partnership made an additional investment in the company
by purchasing 167,915 Series C Preferred shares and a common shares warrant
for $364,376. The pricing of this round, in which third parties
participated, indicated a $590,847 increase in the fair value of the
Partnership's existing investment.
Women.com Networks (formerly Wire Networks, Inc.)
- -----------------------------------------------
In February 1998, the company changed its name from Wire Networks, Inc. to
Women.com Networks. In June 1998, the Partnership made an additional
investment in the company by purchasing 15,199 Series D Preferred shares
for $50,005. The pricing of this round, in which third parties
participated, indicated a $44,318 increase in the fair value of the
Partnership's existing investment.
Venture Capital Limited Partnerships
- ------------------------------------
The Partnership made additional investments totaling $55,938 in venture
capital limited partnerships during the nine months ended September 30,
1998. The Partnership received cash distributions totaling $285,504 from
Spectrum Equity Investors LP, CVM Equity Fund IV, Ltd. and Trinity Ventures
IV. The Partnership also received stock distributions of PRI Automation,
Inc. with a fair value of $2,362. Distributions totaling $237,354 were
recorded as realized gains and distributions totaling $50,512 were recorded
as returns of capital.
The Partnership recorded a $267,625 decrease in fair value as a result of a
net decrease in the fair value of the underlying investments of the
partnerships, caused, in part, by distributions received from such
partnerships.
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 Conversion Technologies International, Inc. and Physiometrix,
Inc. investments are restricted. The Partnership may not sell its Pilot
Network Services, Inc. shares before February, 1999.
5. Other Investments
-----------------
In June 1998, the Partnership wrote off the fair value and cost basis of
its investment in Transphase Systems, Inc. and realized a loss of $664,299
based on the opinion of the Managing General Partner that the unlikely
prospects for recovery of the investment indicated a permanent decline in
value.
6. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents at September 30, 1998, and December 31, 1997
consisted of:
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Demand accounts $451,237 4,221
Money-market accounts 21,680 1,835,314
------- ---------
Total $472,917 1,839,535
======= =========
At September 30, 1998, the majority of the funds were on deposit at a
single financial institution.
</TABLE>
7. Short-Term Borrowings
---------------------
The Partnership has a borrowing account with a financial institution. At
September 30, 1998, the borrowing capacity of this account, which
fluctuates based on collateral value, was $772,015; as of November 9, 1998,
the borrowing capacity was $1,140,904. The weighted-average interest rate
for this nine months ended September 30, 1998 was 9%. Interest expense was
$7,805 for the nine months ended September 30, 1998. The Partnership's
investments in Megabios Corporation, CV Therapeutics, Inc. and Axys
Pharmaceuticals, Inc. are pledged as collateral.
8. 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, 1998 the Partnership had unfunded commitments
as follows:
<TABLE>
<CAPTION>
Type
- ----
<S> <C>
Equity investments $200,000
Equipment lease guarantees 300,000
Venture capital limited partnership investments 85,407
-------
$585,407
=======
</TABLE>
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, 1998, net cash used by operating
activities totaled $846,523. The Partnership paid management fees of
$324,995 to the Managing General Partners and reimbursed related parties
for operating expenses of $349,544. In addition, $31,420 was paid to the
Individual General Partners as compensation for their services. Other
operating expenses of $148,215 and interest expense of $7,805 were paid.
Interest income of $15,456 was received.
During the nine months ended September 30, 1998, the Partnership funded
equity investments of $1,406,319 primarily to portfolio companies in the
medical, biotechnology and industrial/business automation industries.
Proceeds from sales of equity investments were $103,634 and repayments of
convertible and other notes receivable were $92,047. Cash distributions
from venture capital limited partnerships provided $285,504. As of
September 30, 1998, the Partnership was committed to fund additional
investments totaling $585,407 as discussed in Note 8 to the financial
statements.
The Partnership has a borrowing account with a financial institution. The
borrowing capacity of this account, which fluctuates based on collateral
value, was $772,015 at September 30, 1998. The outstanding balance was
$407,805 at September 30, 1998. The Partnership's investments in Megabios
Corporation, CV Therapeutics, Inc. and Axys Pharmaceuticals, Inc. are
pledged as collateral. The borrowing capacity of the account was
$1,140,904 at November 9, 1998.
Cash and cash equivalents at September 30, 1998, were $472,917. Future
interest income on short-term investments, proceeds from investment sales,
and Managing General Partners' support 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 $1,414,891 for the three months ended September 30, 1998, as
compared to net income of $3,956,570 for the three months ended September
30, 1997. The change was primarily due to a $5,462,346 decrease in the
change in net unrealized fair value of equity investments and a $204,104
decrease in net realized gain from equity investment sales, partially
offset by a $117,799 decrease in operating expenses.
During the three months ended September 30, 1998, the decrease in fair
value of equity investments of $1,227,706 was primarily due to decreases in
portfolio companies in the medical industry. During the same period in
1997, the increase in fair value of equity investments of $4,234,640 was
primarily due to increases in portfolio companies in the medical, computer
systems and software and biotechnology industries.
For the quarter ended September 30, 1997, realized gains from equity
investment sales of $204,104 related primarily to the common stock sale of
Bolder Technologies Corporation. There were no sales of investments in the
quarter ended September 30, 1998.
Total operating expenses were $79,277 and $197,076 for the quarters ended
September 30, 1998 and 1997, respectively. As explained in Note 3 to the
financial statements, the Managing General Partners absorbed $421,041 and
$103,318 during the quarters ended September 30, 1998 and 1997,
respectively. Additionally, operating expenses for the three months ended
September 30, 1998 include additional expenses of $174,114 related to prior
years which were not previously charged to the Partnership. Had the
additional expenses been recorded in prior years and had the operating
expense limitation not been in effect, operating expenses for the quarters
ended September 30, 1998 and 1997 would have been $326,204 and $321,572,
respectively
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 $4,483,102 for the nine months ended September 30, 1998,
compared to net income of $8,361,237 during the same period in 1997. The
change was primarily due to a $11,910,925 decrease in the change in net
unrealized fair value of equity investments, a $664,299 increase in
realized losses from investment write-downs, a $624,854 decrease in net
realized gain from sales of equity investments, and a $329,021 decrease in
total income.
During the nine months ended September 30, 1998, the decrease in fair value
of equity investments of $3,371,524 was primarily due to decreases in
portfolio companies in the medical and industrial/business automation
industries, partially offset by increases in the biotechnology industry.
During the same period in 1997, the increase of $8,539,401 was primarily
due to increases in portfolio companies in the medical, microelectronics
and communications industries, partially offset by decreases in the
biomedical and industrial/business automation industries.
The Partnership recorded realized losses of $664,299 from investment write-
downs for the nine months ended September 30, 1998 related to a portfolio
company in the environmental industry. During the same period in 1997,
there were no realized losses from investment write-downs recorded.
For the nine months ended September 30, 1998, realized gains from sales of
equity investments were $5,305. During the same period in 1997, realized
gains of $630,159 mainly related to the common stock sale of Bolder
Technologies Corporation.
Total income was $15,526 and $344,547 for the nine months ended September
30, 1998 and 1997, respectively. The decrease was due to lower notes
receivable balances and a $280,010 dividend received in 1997. No such
dividend was received in 1998.
Total operating expenses were $647,268 and $653,334 for the nine months
ended September 30, 1998 and 1997, respectively. As explained in Note 3 to
the financial statements, the Managing General Partners absorbed $545,365
and $103,318 for the nine months ended September 30, 1998 and 1997,
respectively. Additionally, operating expenses for the nine months ended
September 30, 1998 include additional expenses of $174,114 related to prior
years which were not previously charged to the Partnership. Had the
additional expenses been recorded in prior years and had the operating
expense limitation not been in effect, operating expenses for the nine
months ended September 30, 1998 and 1997 would have been $1,018,519 and
$777,830, respectively. The increase is attributable to increased
administrative and investor services and investment operations expenses due
to an increased level of investment monitoring activity.
The Year 2000
- -------------
The widespread use of computer programs that rely on two-digit date
programs to perform computations and decision-making functions may cause
computer systems to malfunction in the year 2000 and lead to significant
business delays and disruptions.
The Managing General Partners have completed a preliminary assessment of
the internal financial, information and operating systems which it provides
to the Partnership. Implementation and testing of necessary system
modifications is in progress and will be completed well before December 31,
1999. The Managing General Partners are also monitoring the progress of
software vendors and third-party processors on which they rely, as well as
the progress of portfolio companies in which the Partnership has made
significant investments.
The Managing General Partners do not expect the cost of the internal system
modifications to be material to the Partnership's financial statements.
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, 1998.
b) Financial Data Schedule for the nine months ended and as of September
30, 1998 (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 12, 1998 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, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER>1
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<PERIOD-TYPE> 9-MOS
<INVESTMENTS-AT-COST> 23,978,288
<INVESTMENTS-AT-VALUE> 34,881,128
<RECEIVABLES> 0
<ASSETS-OTHER> 9,643
<OTHER-ITEMS-ASSETS> 472,917
<TOTAL-ASSETS> 35,363,688
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 476,813
<TOTAL-LIABILITIES> 476,813
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23,984,035
<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> 10,902,840
<NET-ASSETS> 34,886,875
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 15,526
<OTHER-INCOME> 0
<EXPENSES-NET> 971,184
<NET-INVESTMENT-INCOME> (955,658)
<REALIZED-GAINS-CURRENT> (421,640)
<APPREC-INCREASE-CURRENT> (3,105,804)
<NET-CHANGE-FROM-OPS> (4,483,102)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (4,483,102)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 292,496
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 973,484
<AVERAGE-NET-ASSETS> 37,128,426
<PER-SHARE-NAV-BEGIN> 63
<PER-SHARE-NII> (3)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 60
<EXPENSE-RATIO> 2.6
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
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>
