FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending December 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ______________
Commission file number 0-22618
Venture Lending & Leasing, Inc.
-------------------------------
(Exact Name of Registrant as specified in its charter)
Maryland 13-3775187
- ---------------------------------------------- --------------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
2010 North First Street, Suite 310, San Jose, CA 95131
------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(408) 436-8577
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant has (i) filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (ii) has been subject to such
filing requirements for the past 90 days. Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding as of February 15, 1999
-------------- ------------------------------------
Common Stock, $.001 par value 48,318.58
Page 1 of 17; Exhibit Index appears on Page 16
<PAGE>
VENTURE LENDING & LEASING, INC.
INDEX
Page Number
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Financial Position 3
December 31, 1998 (Unaudited) and June 30, 1998 (Audited)
Statement of Operations (Unaudited) 4
Six months ended December 31, 1998 and December 31, 1997
Statement of Operations (Unaudited) 5
Three months ended December 31, 1998 and December 31, 1997
Statement of Changes in Shareholders Equity 6
Six months ended December 31, 1998 (Unaudited)
and the Year Ended June 30, 1998 (Audited)
Statement of Cash Flows (Unaudited) 7
Six months ended December 31, 1998 and
December 31, 1997
Notes to Financial Statements 8 - 12
Item 2. Management's Discussion and Analysis of Financial 13 - 15
Condition and Results of Operations
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits 16
SIGNATURES 17
2
<PAGE>
VENTURE LENDING & LEASING, INC.
Statement of Financial Position
- --------------------------------------------------------------------------------
(Unaudited) (Audited)
December 31 June 30
1998 1998
Assets
Loans and leases, at estimated fair value
(cost of $65,395,556 and $81,421,224) $65,381,740 $79,821,224
Investments in warrants, at estimated fair value
(cost of $1,146,850 and $1,208,550) 1,233,272 1,289,713
Investments in stocks, at estimated fair value
(cost of $192,330 and $650,263) 506,286 4,276,393
Cash and cash equivalents 6,522,716 2,301,753
Past due loans receivable 102,248 584,577
Other assets 172,581 215,423
-------------------------------
Total assets 73,918,843 88,489,083
-------------------------------
Liabilities & Shareholders' Equity
Liabilities
Bank loans 29,564,958 36,114,059
Management fees payable 460,986 560,821
Accounts payable and
other accrued liabilities 840,476 750,953
------------------------------
------------------------------
Total liabilities 30,866,420 37,425,833
------------------------------
Shareholders' Equity
Common stock, $.001 par value; 100,000,000
shares authorized; issued
and outstanding, 48,318.58 shares 49 49
Capital in excess of par value 46,641,051 46,641,051
Distributions (29,490,921) (16,871,073)
Accumulated earnings 25,902,244 21,293,223
-----------------------------
Total shareholders' equity 43,052,423 51,063,250
-----------------------------
Total liabilities & shareholders' equity $73,918,843 $88,489,083
=============================
The accompanying notes are an integral part of these statements.
3
<PAGE>
VENTURE LENDING & LEASING, INC.
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
For the Six Months Ended December 31,
1998 1997
Investment income:
Interest on loans and leases $6,517,485 $5,974,287
Interest on short-term investments 99,560 204,698
-------------- -----------
Total investment income 6,617,045 6,178,985
-------------- -----------
Expenses:
Interest expense 1,195,434 1,600,173
Management fee 975,698 1,167,588
Bank loan facility fee 170,391 38,997
Professional fees 61,047 72,574
Other operating expenses 71,962 64,509
-------------- -----------
Total expenses 2,474,532 2,943,841
-------------- -----------
Net investment income 4,142,513 3,235,144
Net change in unrealized loss from
investment transactions (1,720,732) (867,968)
Net realized gain from investment transactions 3,773,423 2,385,478
Realized loss on loans (1,586,183) ----
-------------- -----------
Net income $4,609,021 $4,752,654
============== ===========
Basic earnings per share $95.39 $102.42
============== ===========
Weighted average shares outstanding 48,318 46,405
============== ===========
4
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VENTURE LENDING & LEASING, INC.
Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
For the Three Months Ended December 31,
1998 1997
Investment income:
Interest on loans and leases $ 3,235,529 $ 3,227,374
Interest on short-term investments 54,044 129,705
-------------- -----------
Total investment income 3,289,573 3,357,079
-------------- -----------
Expenses:
Interest expense 561,833 832,015
Management fee 460,986 605,146
Other operating expenses 155,938 88,728
-------------- -----------
Total expenses 1,178,757 1,525,889
-------------- -----------
Net investment income 2,110,816 1,831,190
Net change in unrealized loss from
investment transactions (2,201,514) (1,331,406)
Net realized gain from investment transactions 3,903,122 1,147,559
-------------- -----------
Net income $ 3,812,424 $ 1,647,343
============== ===========
Basic earnings per share $ 78.90 $ 34.09
============== ===========
Weighted average shares outstanding 48,318 48,318
============== ===========
5
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VENTURE LENDING & LEASING, INC.
Statement of Changes in Shareholders' Equity (Unaudited)
- --------------------------------------------------------------------------------
For the Year Ended June 30, 1998 and
the Six Months Ended December 31, 1998
Common Stock
-------- Capital in
Excess of Accumulated
Shares Amount Par Value Distributions Earnings Total
-----------------------------------------------------------------
Balance,June 30
1997 39,054.38 $40 $37,317,282 ($5,828,791) $8,967,021 $40,455,552
Shares sold 9,264.20 9 9,323,769 -- -- 9,323,778
Distributions -- -- -- (11,042,282) -- (11,042,282)
Net income -- -- -- -- 12,326,202 12,326,202
----------------------------------------------------------------
Balance,June 30
1998 48,318.58 49 46,641,051 (16,871,073) 21,293,223 51,063,250
Distributions -- -- -- (12,619,848) -- (12,619,848)
Net income -- -- -- -- 4,609,021 4,609,021
----------------------------------------------------------------
Balance, December
31, 1998 48,318.58 $49 $46,641,051 ($29,490,921) $25,902,244 $43,052,423
=================================================================
6
<PAGE>
VENTURE LENDING & LEASING, INC.
Statement of Cash Flows (Unaudited)
- --------------------------------------------------------------------------------
For the Six For the Six
Months Ended Months Ended
December 31 December 31
1998 1997
Cash flows from operating activities:
Net income $4,609,021 $4,752,654
Adjustments to reconcile net investment income
to net cash provided by operating activities:
Amortization of organizational expenses 15,041 15,033
Amortization of bank loan expenses 33,391 38,997
Gain on sale of securities (3,773,423) (2,385,478)
Realized loss on loans 1,586,183 ----
Increase in unrealized gain from
investment transactions 1,720,732 867,968
Increase in past due loans receivable (999,717) ----
Decrease in other assets (5,590) (284,649)
Increase (decrease) in management fees payable (99,835) 125,658
Decrease in accounts payable and other
accrued liabilities 89,523 68,860
------------- ----------
Net cash provided by operating activities 4,657,372 3,199,043
------------- ----------
Cash flows from investing activities:
Acquisition of loans and leases (6,150,173) (33,354,134)
Principal payments on loans and leases 20,589,657 13,133,690
Acquisition of warrants and common stock (74,809) (252,362)
Proceeds from sale of securities 4,367,865 2,220,618
------------- ----------
Cash provided by (used in) investing activities 18,732,540 (18,252,188)
------------- ----------
Cash flows from financing activities:
Sales of common stock, net ---- 9,323,778
Distributions to shareholders (12,619,848) (4,202,787)
Loan from bank 4,500,000 15,000,000
Principal payments on bank loan (11,049,101) ----
------------- ----------
Net cash provided by (used in)
financing activities (19,168,949) 20,120,991
------------- ----------
Net increase in cash and cash equivalents 4,220,963 5,067,846
------------- ---------
Cash and cash equivalents -- beginning of period 2,301,753 3,946,955
------------- ----------
Cash and cash equivalents -- end of period $6,522,716 $9,014,801
============= ===========
7
<PAGE>
VENTURE LENDING & LEASING, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
DECEMBER 31, 1998
1. BASIS OF PRESENTATION:
The accompanying condensed financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission (SEC) and in
Management's opinion, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of results for such
interim periods. Certain information and note disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to SEC rules or regulations;
however, the Fund believes that the disclosures made are adequate to make the
information presented not misleading. The interim results for the six months
ended December 31, 1998 and 1997, are not necessarily indicative of results for
the full year. It is suggested that these financial statements be read in
conjunction with the financial Statements and the notes included in the Fund's
Annual Report for the year ended June 30, 1998.
2. SUMMARY OF INVESTMENTS:
Loans and leases generally are made to borrowers pursuant to commitments whereby
the Fund commits to finance assets up to a specified amount for the term of the
commitments, upon the terms and subject to the conditions specified by such
commitment. The Fund's investments in loans and leases are entirely within the
United States and are diversified among the following industries.
The percentage of net assets that each industry group represents is shown with
the industry totals:
Outstanding
Borrower December 31, 1998
Biotechnology:
Biosys, Inc. $1,411,463
Ceres, Inc. 463,147
Desmos, Inc. 116,681
Advanced Therapies, Inc. 150,000
Gene Logic, Inc. 743,233
Idec Pharmaceuticals Corporation 428,537
Protien Delivery, Inc. 22,116
Regen Biologics, Inc. 778,932
Telek, Inc. 762,170
Therics, Inc. 382,767
---------------------
Total biotechnology (12.2%) 5,259,046
---------------------
8
<PAGE>
Communications:
AUnet Corporation 427,922
Brocade Communications, Inc. 1,200,651
Cerent Corporation 4,153,652
Digital Generation Systems, Inc. 3,678,715
Exodus Communications, Inc. 3,150,430
Fabrik Communications, Inc. 1,930,169
Jetstream Communications, Inc. 833,928
Juniper Networks, Inc. 2,016,785
Optimal Networks Corporation 309,567
Optivision, Inc. 397,189
Silicon Wireless, Inc. 1,319,559
Socket Communications, Inc. 43,504
Yago Systems, Inc. 233,294
---------------------
Total communications (45.7%) 19,695,365
---------------------
Computers and peripherals:
Das Devices, Inc. 3,768,313
Headway Technologies, Inc. 4,772,149
Aptix Corporation 624,401
Neomagic Corporation 361,062
SVision, Inc. 658,327
---------------------
Total computers and peripherals (23.7%) 10,184,252
---------------------
Internet:
Active Software, Inc. 212,220
Adforce, Inc. 1,484,784
Intermedia Communications 269,141
Inverse Network Technology 270,825
Keynote Systems Incorporated 363,008
Netratings, Inc. 73,817
Wallop Software, Inc. 761,383
---------------------
Total Internet (8.0%) 3,435,178
---------------------
Medical devices:
Ciphergen Biosystems 251,362
eMed 148,400
Encelle, Inc. 260,043
Heartstent Corporation 130,822
Integ Incorporated 4,082,380
Aerogen, Inc. 279,030
Intratherapeutics, Inc. 863,330
Myelotec, Inc. 179,234
Oratec Interventions, Inc. 213,749
Spinal Concepts, Inc. 215,734
Survivalink Corporation 510,383
---------------------
Total medical devices (16.6%) 7,134,467
---------------------
9
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Other:
Intelligent Systems for Retail 1,483,462
Volumetrics Medical Imaging Inc. 273,945
Larex, Inc. 1,246,841
Uniax Corporation 1,012,737
---------------------
Total other (9.3%) 4,016,985
---------------------
Semiconductors and equipment:
Abpac, Inc. 892,815
Apache, Inc. 21,015
Dynachip Corporation 1,159,759
Equator Technologies, Inc. 1,891,566
iCompression, Inc. 86,270
I-Cube, Inc. 833,994
Lightwave Microsystems Corporation 579,191
Poseidon Technology, Inc. 375,956
Quantum3D, Inc. 108,209
SiRF Technology 669,046
Telecruz Technology, Inc. 493,687
Tessera, Inc. 113,136
Transmeta Corporation 2,814,894
O-In Design Automation 339,902
ZSP Corporation 918,689
---------------------
Total semiconductors and equipment (26.2%) 11,298,129
---------------------
Software:
Calico Technology, Inc. 472,745
Commerce One, Inc. 275,568
Comps Infosystems, Inc. 1,502,163
Datamind Corporation 449,807
Mineshare Corpration 195,024
Personic Software Inc. 124,697
Persistence Software, Inc. 208,932
Perspecta, Inc. 312,450
Release Software Corporation 315,137
Relevance Technologies, Inc. 242,306
Solopoint, Inc. 86,755
Tenth Planet Exploration, Inc. 163,718
Xatrix Entertainment, Inc. 22,831
---------------------
Total software (10.2%) 4,372,133
---------------------
Total $65,395,555
=====================
10
<PAGE>
The Fund provides asset-based financing primarily to start-up and emerging
growth venture-capital-backed companies. As a result, the Fund is subject to
general credit risk associated with such companies. At September 30, 1998, the
Fund has unfunded commitments to borrowers of $41.1 million.
The Fund's investments in warrants are entirely within the United States and are
diversified among the following industries. The percentage of net assets that
each industry group represents is shown with the industry totals:
Percentage of Net
Industry Warrant Value Assets
- --------------------------------------------------------------------------------
Biotechnology $163,163 0.4%
Communications 313,000 0.7%
Computer and peripherals 141,000 0.3%
Internet 43,250 0.1%
Medical devices 162,300 0.4%
Semiconductor 225,600 0.5%
Software 119,700 0.3%
Other 60,000 0.2%
--------------------------------
Total warrants $1,233,272 2.9%
================================
The Fund's investment in common stock at December 31, 1998 consists of
investments in three securities within the United States and is diversified
among the software, semiconductor and communications industries. These
investments have a carrying value of $0.5 million and represents 1.2 percent of
the Fund's net assets.
At December 31, 1998, the Fund held 0.3 million warrants to purchase the common
and preferred shares of 7 publicly traded companies. Because of the illiquid
nature of these warrants, the Fund is carrying the public companies at a
discounted value of $260,000. The warrants issued by private companies do not
have a readily ascertainable market value and were assigned a minimal value at
the time of acquisition. These warrants had a value of $1.0 million at December
31, 1998.
3. EARNINGS PER SHARE:
The Fund adopted Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share," effective December 31, 1997. SFAS No. 128 replaces primary
and fully diluted earnings per share with basic and diluted earnings per share
calculations. Basic earnings per share are computed by dividing net income, less
dividends on preferred stock, by the weighted average common shares outstanding.
Diluted earnings per share are computed by dividing net income, less dividends
on preferred stock, by the weighted average common shares outstanding, including
the dilutive effects of potential common shares (e.g., stock options). The Fund
has no preferred stock or instruments that would be potential common shares;
thus, reported basic and diluted earnings are the same.
11
<PAGE>
4. FUTURE FINANCIAL ACCOUNTING STANDARDS:
In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 establishes accounting and reporting standards requiring that every
derivative instrument (including certain derivative instruments embedded in
other contracts) be recorded in the balance sheet as either an asset or
liability measured at its fair value. SFAS No. 133 requires that changes in the
derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement and requires that a company formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999, and
the Fund plans to adopt its provisions effective July 1, 1999. From time to
time, the Fund enters into interest rate swaps to hedge its interest rate.
Additionally, certain of its investments and long-term borrowings may have
embedded options due to call or put features that would be required to be
accounted for differently under SFAS No. 133 as compared to current accounting
principles. The Fund has not yet quantified the impact of adopting SFAS No. 133
on its financial statements; however, SFAS No. 133 could increase the volatility
of future earnings.
12
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
Venture Lending & Leasing, Inc. ("Fund") is a non-diversified
closed-end management investment company electing status as a "business
development company" ("BDC") under the Investment Company Act of 1940 ("1940
Act") whose investment objective is to achieve a high total return. The Fund
provides asset-based financing to carefully selected venture capital-backed
companies, in the form of secured loans, installment sales contracts or
equipment leases. The Fund generally receives warrants to acquire equity
securities in connection with its portfolio investments. There can be no
assurance that the Fund will attain its investment objective.
The Fund's shares of Common Stock, $.001 par value (`Shares") were sold
to subscribers pursuant to capital calls made through August 8, 1997. Total
committed capital of $46.6 million has been fully funded as of December 31,
1998. The Fund has completed its investment period and will now focus on
efficiently managing the Fund's portfolio. As of December 31, 1998, the Fund has
distributed $29.5 million to its investors, including approximately $7.1 million
of committed capital.
In addition to the historical information contained herein, this
Quarterly Report contains certain forward-looking statements. The reader of this
Quarterly Report should understand that all such forward-looking statements are
subject to various uncertainties and risks that could affect their outcome. The
Fund's actual results could differ materially from those suggested by such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, variances in the actual versus
projected growth in assets, return on assets, loan losses, expenses, rates
charged on loans and earned on securities investments and competition effects as
well as other factors. This entire Quarterly Report should be read to put such
forward-looking statements in context and to gain a more complete understanding
of the uncertainties and risks involved in the Fund's business.
Results of Operations -- Six Months Ended December 31, 1998 and December 31,
1997
Total investment income for the six months ending December 31, 1998 and
1997 were $6.6 million and $6.2 million, respectively, of which $6.5 million and
$6.0 million, respectively, consisted of interest on venture loans outstanding
during the period. Remaining income consisted of interest on the temporary
investment of cash, pending investment in venture loans and leases or
application to the Fund's expenses.
Expenses for the six months ending December 31, 1998 and 1997 were $2.5
million and $2.9 million, respectively. Net income for the six months ended
December 31, 1998 and 1997 was $4.6 million and $4.8 million and includes net
change in realized and unrealized gains (losses) of $0.5 million and $1.5
million. On a per share basis, for the six months ending December 31, 1998 and
1997 net income was $95 and $102.
13
<PAGE>
Net investment income increased to $4.1 million for the six months
ending December 31, 1998 compared to $3.2 million for the six months ending
December 31, 1997, reflecting the early pay-off of several loans, lower
management fees and interest expense. As the Fund distributes contributed
capital to its investors, management fees based on the Fund's total asset base
are expected to continue to decrease accordingly. The most significant factor
effecting net income for the period was the net change in realized and
unrealized gain of $0.5 million for the six months ending December 31, 1998
compared to the net gain of $1.5 million for the six months ending December 31,
1997.
The Fund's policy is to place a loan on non-accrual status when either
principal or interest has become past due for 90 days or more. As of December
31, 1998 and 1997, the Fund had loan balances outstanding of $1.6 million and
$2.5 million to borrowers that were carried on a non-accrual basis. The amount
that the Fund will ultimately recover on these loans cannot be determined with
certainty.
Liquidity and Capital Resources -- December 31, 1998 and 1997
Total capital committed to the purchase of shares pursuant to
subscription agreements was approximately $46.6 million at December 31, 1998 and
1997. As of December 31, 1998 and 1997, 100% of committed capital was called to
fund investments in venture loans and leases and to meet the Fund's expenses.
The Fund has in place a $45 million securitization debt facility to
finance the acquisition of asset-based loans and leases. The principal balance
is a 39-month term loan. Additional amounts can be drawn on the credit facility
by a minimum of $5 million and in $1 million increments in excess thereof. At
December 31, 1998, there was $23.4 million outstanding under this facility. The
interest rate on the facility is LIBOR plus .50 percent.
Borrowings under the facility are collateralized by the equipment
financed by the Fund under loans and leases with assignment to the financial
institution, plus other assets of the Fund. The amortization schedule for each
borrowing under the facility is expected to correspond to the amortization of
the loans and leases acquired with the proceeds of each borrowing. The Fund pays
a commitment fee of 0.25 percent annually based on the average daily unused
portion of the commitment with respect to this facility.
Additionally, the Fund has a $10 million warehouse line of credit with
$6.2 million outstanding on December 31, 1998. The interest rate on the
warehouse line is LIBOR plus 1.25 percent.
The Fund enters into interest rate swap transactions to hedge its
interest rate on the debt facility. The net interest received or paid on the
transactions is included in interest expense. At December 31, 1998, the Fund had
interest swap transactions outstanding with a total notional principal amount of
$37.3 million. The effect of the swap is to convert the variable LIBOR rate into
a fixed rate on the contract notional value.
As long as the Fund qualifies as a RIC, it will not pay any federal or
state corporate income tax on income that is distributed to shareholders
(pass-through status). Should the Fund
14
<PAGE>
lose its qualification as a RIC, it could be taxed as an ordinary corporation on
its taxable income for that year (even if that income is distributed to its
shareholders), and all distributions out of its earnings and profits will be
taxable to shareholders as ordinary income.
Year 2000 Issue
The Fund utilizes software and related information technologies that
will be affected by the date change in the year 2000. The year 2000 issue exists
because many computer systems and applications currently use two-digit date
fields to designate a year. When the century date change occurs, certain
date-sensitive systems may recognize the year 2000 as 1900, or not at all. This
inability to recognize or properly treat the year 2000 may result in a systems
failure or cause systems to process critical financial and operational
information incorrectly. Additionally, many of the Fund's customers and service
providers use software and information technology that could also be affected by
the date change.
Based on ongoing assessments and testing, the Fund believes that there
is no material risk of business interruption as a result of computer errors or
inefficiencies. Consequently, the Fund does not anticipate that the remediation
costs associated with the year 2000 issue will be material. The Fund is also
working with its vendors and customers to obtain reasonable assurances that they
are taking comparable steps with respect to their year 2000 exposures. However,
in the event that significant vendors or customers do not adequately address the
year 2000 issue, it could have a material adverse effect on the Fund's
operations and financial position. The Fund's contingency plan includes
switching to vendors that are year 2000 compliant and utilizing backup systems
that do not rely on computers. The steps the Fund is taking and intends to take
do not guarantee complete success or eliminate the possibility that the Fund
will not be adversely affected by the matters related to the year 2000.
15
<PAGE>
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On November 11, 1998, the Fund held its Annual Meeting of Shareholders.
The incumbent board of directors was elected, with all of the 47,294.067 votes
cast voting in favor of each nominee. At the meeting, the selection of Arthur
Andersen LLP as the Fund's independent auditors was ratified, with all the
47,294.067 votes cast voting in favor of such ratification.
Item 6. Exhibits
Ex 27.1 Financial Data Schedule
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
Venture Lending & Leasing, Inc.
Registrant
By: /S/ Ronald W. Swenson By: /S/ Salvador O.Gutierrez
- ---------------------------- ------------------------------
Ronald W. Swenson Salvador O. Gutierrez
Chairman President & Treasurer
[Chief Executive Officer] [Chief Financial Officer]
Date: February 15, 1999 Date: February 15, 1999
17
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ACCUMULATED-NII-PRIOR> 1,529
<ACCUMULATED-GAINS-PRIOR> 786
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 976
<INTEREST-EXPENSE> 1,195
<GROSS-EXPENSE> 2,475
<AVERAGE-NET-ASSETS> 46,891
<PER-SHARE-NAV-BEGIN> 1,056.80
<PER-SHARE-NII> 85.73
<PER-SHARE-GAIN-APPREC> -
<PER-SHARE-DIVIDEND> 131.32
<PER-SHARE-DISTRIBUTIONS> -
<RETURNS-OF-CAPITAL> 85.59
<PER-SHARE-NAV-END> 891.01
<EXPENSE-RATIO> 5.46%
<AVG-DEBT-OUTSTANDING> 33,497
<AVG-DEBT-PER-SHARE> 693.26
</TABLE>
