<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 March 31, 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. 814-124
TECHNOLOGY FUNDING MEDICAL PARTNERS I, L.P.
-------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-3166762
- ------------------------------- ---------------------------------
(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 of 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)
March 31, December 31,
1995 1994
---------- ------------
<S> <C> <C>
ASSETS
Equity investments(cost basis of
$1,275,001 in both 1995 and 1994) $1,262,935 1,275,001
Cash and cash equivalents 4,403,589 3,571,768
Organizational costs (net of
accumulated amortization of
$12,000 and $10,000 in 1995
and 1994, respectively) 28,000 30,000
--------- ---------
Total $5,694,524 4,876,769
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued expenses $ 22,813 19,216
Due to related parties 33,399 32,143
Distributions payable 53,191 45,924
--------- ---------
Total liabilities 109,403 97,283
Commitments (Notes 3 and 7)
Partners' capital:
Limited Partners (Units
outstanding of 72,410 and
60,640 in 1995 and 1994,
respectively) 5,599,951 4,780,868
General Partners (2,764) (1,382)
Net unrealized fair value decrease
from cost of equity investments (12,066) --
--------- ---------
Total partners' capital 5,585,121 4,779,486
--------- ---------
Total $5,694,524 4,876,769
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF OPERATIONS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1995 1994
---- ----
<S> <C> <C>
Interest income $ 53,191 20,916
Costs and expenses:
Management fees 63,537 17,512
Individual general partners' compensation 4,500 4,500
Amortization of organizational costs 2,000 2,000
Operating expenses:
Administrative and investor services 90,046 34,737
Investment operations 32,982 18,457
Computer services 9,980 3,283
Professional fees 21,543 18,583
Expenses absorbed by General Partners (33,111) --
------- ------
Total operating expenses 121,440 75,060
------- ------
Total costs and expenses 191,477 99,072
------- ------
Net realized loss (138,286) (78,156)
Change in net unrealized fair value
of equity investments (12,066) --
------- ------
Net loss $(150,352) (78,156)
======= ======
Net realized loss per Unit $ (2) (2)
======= ======
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENT OF PARTNERS' CAPITAL (unaudited)
- -----------------------------------------
<TABLE>
<CAPTION>
Net unrealized
fair value
Limited General decrease from cost of
Partners Partners equity investments Total
-------- -------- --------------------- -----
<S> <C> <C> <C> <C>
Partners' capital,
December 31, 1994 $4,780,868 (1,382) -- 4,779,486
Sales of partnership interest 1,136,636 1,139 -- 1,137,775
Syndication fees (127,991) (606) -- (128,597)
Distributions of Offering
Period income (52,659) (532) -- (53,191)
Change in net unrealized fair
value of equity investments -- -- (12,066) (12,066)
Net realized loss (136,903) (1,383) -- (138,286)
--------- ----- ------ ---------
Partners' capital,
March 31, 1995 $5,599,951 (2,764) (12,066) 5,585,121
========= ===== ====== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
STATEMENTS OF CASH FLOWS (unaudited)
- -----------------------------------
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 53,191 20,916
Cash paid to vendors (26,448) (21,703)
Cash paid to related parties (158,176) (54,966)
--------- ---------
Net cash used by operating activities (131,433) (55,753)
--------- ---------
Cash flows from investing activities:
Purchase of equity investments -- (500,000)
--------- ---------
Net cash used by investing activities -- (500,000)
--------- ---------
Cash flows from financing activities:
Proceeds from sale of limited partnership
interests 1,136,636 875,600
General Partners' capital contribution 1,139 876
Distribution of offering period income (45,924) (16,706)
Payments for syndication fees (128,597) (126,962)
--------- ---------
Net cash provided by financing activities 963,254 732,808
--------- ---------
Net increase in cash and cash equivalents 831,821 177,055
Cash and cash equivalents at beginning
of year 3,571,768 2,459,416
--------- ---------
Cash and cash equivalents at March 31 $4,403,589 2,636,471
========= =========
Reconciliation of net loss to net cash
used by operating activities:
Net loss $ (150,352) (78,156)
Adjustments to reconcile net loss
to net cash used by operating activities:
Amortization of organizational costs 2,000 2,000
Change in net unrealized fair value
of equity investments 12,066 --
Changes in:
Accounts payable and accrued expenses 3,597 11,511
Due to related parties 1,256 8,892
--------- ---------
Net cash used by operating activities $ (131,433) (55,753)
========= =========
</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
March 31, 1995 and December 31, 1994, and the related Statement of
Partners' Capital for the three months ended March 31, 1995, Statements
of Operations and Statements of Cash Flows for the three months ended
March 31, 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 March 31, 1995 supplement the notes included in the
Annual Report on Form 10-K.
2. Net Realized Loss Per Limited Partner Unit
------------------------------------------
Net realized loss per Unit is calculated by dividing total net realized
loss allocated to the Limited Partners by the weighted average number of
Limited Partner Units outstanding of 66,347 and 36,831 for the three
months ended March 31, 1995 and 1994, respectively.
3. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statements of Operations and Partners' Capital. Related party costs for
the three months ended March 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Management fees $ 63,537 17,512
Syndication fees 128,597 126,962
Individual general partners' compensation 4,500 4,500
Amortization of organizational costs 2,000 2,000
Reimbursable operating expenses 124,506 41,846
Expenses absorbed by General Partners (33,111) --
</TABLE>
In 1995 and 1994, pursuant to the Partnership Agreement, the Partnership
may not pay or reimburse the Managing General Partners for operational
costs that aggregate more than 3% of total Limited Partner capital
contributions of the Partnership. For the three months ended March 31,
1995, the Partnership recognized $55,975 of the $89,086 contingent
liability at December 31, 1994 based on additional Limited Partner
capital contributions received by the end of the offering period, May 3,
1995. The remaining balance of $33,111 was absorbed by the Managing
General Partners.
Certain reimbursable expenses have been accrued based upon interim
estimates prepared by the Managing General Partners and are adjusted to
actual costs periodically. Amounts due to related parties for such
expenses were $19,040 and $21,480 at March 31, 1995 and December 31,
1994, respectively.
Amounts due to related partied for management fees were $14,359 and
$10,663 at March 31, 1995 and December 31, 1994, respectively.
During the three months ended March 31, 1995, the Partnership paid
Technology Funding Securities Corporation ("TFSC"), the dealer-manager,
commissions and fees of $67,989 of which $56,360 was reallowed to
participating broker-dealers. During the same period ended March 31,
1994, the Partnership paid $78,804 of which $62,413 was reallowed. In
addition, the Partnership also paid $3,778 and 4,378 for the three months
ended March 31, 1995 and 1994, respectively, to TFSC for due diligence
expenses which TFSC paid to unaffiliated broker-dealers.
4. Equity Investments
------------------
A complete listing of the Partnership's equity investments at December
31, 1994 is in the 1994 Annual Report. Equity investments had a cost
basis of $1,275,001 and fair values of $1,262,935 and $1,275,001 at March
31, 1995 and December 31, 1994, respectively. The only activity related
to the Partnership recording a decrease of $12,066 due to a decline in
the fair value of its Medical Science Partners II investment.
As of March 31, 1995, all equity investments are privately held and no
public market existed.
5. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents at March 31, 1995 and December 31, 1994
consisted of:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Demand accounts $ 3,041 --
Money-market accounts 4,400,548 3,571,768
--------- ---------
Total $4,403,589 3,571,768
========= =========
</TABLE>
6. Distributions Payable
---------------------
At March 31, 1995, distributions related to offering period interest of
$53,191 were payable to the partners; these distributions were paid in
April 1995. The accrued distributions at December 31, 1994 were paid in
January 1995.
7. Commitments
-----------
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 March 31, 1995, the Partnership had unfunded
commitments of $125,000 related to venture capital limited partnership
investments and $80,000 related to equity investments.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership commenced the offering of limited partnership units
("Units") in May 1993. In October 1993, the minimum number of Units
required by the Partnership Agreement to commence operations were sold.
From inception through March 31, 1995, the sale of Units generated cash
of $7,200,636 and the Managing General Partners contributed cash of
$7,205. In connection with the capital raised, the Partnership expended
$967,877 in syndication fees and capitalized $40,000 in organizational
costs. Such fees are applied to the capital accounts of the partners
while organizational costs are amortized over a 60 month period. On May
3, 1995, the offering terminated and generated total cash of $7,929,844
from the sale of Units.
During the three months ended March 31, 1995, net cash used by operations
totaled $131,433. The Partnership paid management fees of $59,841 to the
Managing General Partners and reimbursed related parties for operating
expenses of $93,835. In addition, $4,500 was paid to the individual
general partners as compensation for their services. Other operating
expenses of $26,448 were paid. The Partnership received $53,191 in
interest income. Accrued distributions at December 31, 1994 for interest
earned during the offering period of $45,924 were paid.
Cash and cash equivalents at March 31, 1995 were $4,403,589. At March
31, 1995, the Partnership was committed to fund additional investments
totaling $205,000. Proceeds from the sale of Units, interest income
earned on short-term investments, 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 loss was $150,352 and $78,156 during the three months ended March 31,
1995 and 1994, respectively. The increase in net loss was primarily due
to a $46,380 increase in total operating expenses due to the sale of new
Units as well as a $46,025 increase in management fees. These changes
were partially offset by a $32,275 increase in interest income.
Total operating expenses were $121,440 for the quarter ended March 31,
1995 compared to $75,060 for the same period in 1994. Operating expenses
are expected to increase as the Partnership increases its investment
activities and its number of partners. For the current quarter, the
Partnership recognized $55,975 of the $89,086 contingent liability at
December 31, 1994 based on final Unit sales. The remaining balance of
$33,111 was absorbed by the Managing General Partners pursuant to the
Partnership Agreement. Had the limitation not been in effect, total
operating expenses for 1995 would have been $154,551.
The Partnership incurred management fees of $63,537 and $17,512 during
the quarters ended March 31, 1995 and 1994, respectively. The management
fee as defined in the Partnership Agreement is equal to two percent of
total Limited Partners' capital contributions for the first year of
Partnership operations through the sixth year. Pursuant to the
Partnership Agreement, a full first year fee is paid to the Managing
General Partners as each additional Limited Partner is admitted to the
Partnership, regardless of the date the Limited Partner is admitted.
Management fees are expected to increase as the Partnership continues to
sell Units.
The Partnership recorded interest income of $53,191 and $20,916 for the
quarters ended March 31, 1995 and 1994, respectively. The increase was
mainly due to higher cash and cash equivalents balance for the quarter
ended March 31, 1995 as the Partnership continues to sell new Units.
Given the inherent risk associated with the business of the Partnership,
the future performance of the portfolio company investments may
significantly impact future operations.
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 March 31, 1995.
(b) Financial Data Schedule for the quarter ended and as of March 31,
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 MEDICAL PARTNERS I, L.P.
By: TECHNOLOGY FUNDING INC.
Managing General Partner
Date: May 12, 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 MARCH 31, 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> MAR-31-1995
<PERIOD-TYPE> 3-MOS
<INVESTMENTS-AT-COST> 1,275,001
<INVESTMENTS-AT-VALUE> 1,262,935
<RECEIVABLES> 0
<ASSETS-OTHER> 28,000
<OTHER-ITEMS-ASSETS> 4,403,589
<TOTAL-ASSETS> 5,694,924
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 109,403
<TOTAL-LIABILITIES> 109,403
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,597,187
<SHARES-COMMON-STOCK> 72,410
<SHARES-COMMON-PRIOR> 60,640
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (12,066)
<NET-ASSETS> 5,585,121
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 53,191
<OTHER-INCOME> 0
<EXPENSES-NET> 191,477
<NET-INVESTMENT-INCOME> (138,286)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (12,066)
<NET-CHANGE-FROM-OPS> (150,352)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> (53,191)
<NUMBER-OF-SHARES-SOLD> 11,770
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 805,635
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 63,537
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 224,588
<AVERAGE-NET-ASSETS> 5,182,304
<PER-SHARE-NAV-BEGIN> 79
<PER-SHARE-NII> (2)
<PER-SHARE-GAIN-APPREC> 0 <F1>
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 77
<EXPENSE-RATIO> .04
<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>
