<PAGE> 1
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 June 30, 1996
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ________ to ________
Commission File Number: 0-25174
SIRROM CAPITAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
TENNESSEE 62-1583116
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
500 CHURCH STREET, SUITE 200
NASHVILLE, TENNESSEE 37219
(Address of Principal (Zip Code)
Executive Offices)
(615) 256-0701
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report.)
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. The number of shares of
common stock, no par value per share, outstanding on August , 1996 was
11,430,116.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Page Number
-----------
<S> <C>
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of December 31, 1995 and June 30, 1996. . . . . . . . . . . . . . . . . . . 3
Statements of Operations for the Three Months Ended June 30, 1995 and 1996 and
for the Six Months Ended June 30, 1995 and 1996 . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows for the Three Months Ended June 30, 1995 and 1996 and
for the Six Months Ended June 30, 1995 and 1996 . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Portfolio of Investments as of December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . 10
Portfolio of Investments as of June 30, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Financial Condition, Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . . . . 28
Impact of Inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ITEM 2. CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ITEM 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . 30
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
2
<PAGE> 3
SIRROM CAPITAL CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
------------ ------------
1995 1996
ASSETS ------------ ------------
<S> <C> <C>
Investments, at fair value:
Loans $144,854,517 $187,556,418
Equity Interests $ 15,912,467 $ 25,488,907
Warrants $ 11,513,183 $ 13,748,118
------------ ------------
Total Investments (cost of $162,466,881 and
$188,430,081, respectively) $172,280,167 $226,793,443
Cash and cash equivalents $ 195,069 $ 39,818,682
Interest receivable $ 2,119,567 $ 2,704,360
Accounts receivable $ 0 $ 0
Debenture costs (less accumulated amortization of
$383,279 and $657,922, respectively) $ 2,020,030 $ 2,257,887
Furniture and equipment (less accumulated
depreciation of $18,565 and $41,236, respectively) $ 203,860 $ 220,067
Other assets $ 211,165 $ 615,362
------------ ------------
Total assets $177,029,858 $272,409,801
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Debentures payable to Small Business Administration $ 73,260,000 $ 83,260,000
Revolving credit facility $ 13,200,000 $ 35,887,766
Interest payable $ 936,818 $ 1,266,975
Accrued taxes payable $ 1,073,525 $ 2,353,368
Accounts payable and accrued expenses $ 213,901 $ 898,499
------------ ------------
Total liabilities $ 88,684,244 $123,666,609
------------ ------------
Shareholders' Equity:
Common stock $ 73,919,184 $124,512,161
Notes receivable from employees $ (1,980,000) $ (1,539,858)
Undistributed net realized earnings $ 6,593,144 $ 11,462,161
Unrealized appreciation of investments $ 9,813,286 $ 14,308,728
------------ ------------
Total shareholders' equity $ 88,345,614 $148,743,192
------------ ------------
Total liabilities and shareholders' equity $177,029,858 $272,409,801
============ ============
</TABLE>
See notes to financial statements.
3
<PAGE> 4
SIRROM CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Three Six Six
months ended months ended months ended months ended
June 30, June 30, June 30, June 30,
------------ ------------ ------------ ------------
1995 1996 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating Income:
Interest on investments $3,230,528 $5,585,856 $5,654,658 $10,448,319
Loan processing fees $ 313,500 $ 651,800 $ 854,492 $ 1,573,050
Other income $ 0 $ 62,055 $ 0 $ 62,055
---------- ---------- ---------- -----------
Total operating income $3,544,028 $6,299,711 $6,509,150 $12,083,424
---------- ---------- ---------- -----------
Operating Expenses:
Interest expense $1,170,346 $2,051,288 $2,169,217 $ 3,841,275
Salaries and benefits $ 219,755 $ 659,179 $ 668,893 $ 1,407,678
Other operating expenses $ 216,205 $ 338,330 $ 440,247 $ 805,908
State income tax on interest $ 106,645 $ 0 $ 62,426 $ 0
Amortization expense $ 38,100 $ 89,246 $ 68,109 $ 277,643
---------- ---------- ---------- -----------
Total operating expenses $1,751,051 $3,138,043 $3,408,892 $ 6,332,504
---------- ---------- ---------- -----------
Net operating income $1,792,977 $3,161,668 $3,100,258 $ 5,750,920
Realized gain (loss) on investments $ (37,934) $ 200,000 $ 11,861 $ 5,956,489
Change in unrealized appreciation
(depreciation) of investments $ 864,204 $2,254,868 $2,339,903 $ 4,495,427
Provision for income taxes $ 0 $ (70,000) $ (95,880) $(2,204,960)
---------- ---------- ---------- -----------
Net increase in partners' capital and
shareholders' equity
resulting from operations $2,619,247 $5,546,536 $5,356,142 $13,997,876
========== ========== ========== ===========
</TABLE>
See notes to financial statements.
4
<PAGE> 5
SIRROM CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three months Three months Six months Six months
ended ended ended ended
June 30, 1995 June 30, 1996 June 30, 1995 June 30, 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net increase in partners' capital and shareholders'
equity resulting from operations $ 2,619,247 $ 5,546,536 $ 5,356,142 $ 13,997,876
Adjustments to reconcile net increase to net cash provided
by operating activities:
Net unrealized (appreciation) depreciation of investments $ (864,204) $ (2,254,868) $ (2,339,903) $ (4,495,427)
Realized (gain) loss on investments $ 37,934 $ (200,000) $ (11,861) $ (5,956,489)
Amortization of debenture costs $ 36,600 $ 87,746 $ 65,109 $ 274,643
Increase in interest receivable $ (408,652) $ (169,586) $ (578,092) $ (584,793)
Increase (decrease) in accounts payable and
accrued expenses $ (147,511) $ 866,483 $ (28,376) $ 684,598
Amortization of organization costs $ 1,500 $ 1,500 $ 3,000 $ 3,000
Depreciation of fixed assets $ 2,533 $ 11,962 $ 4,155 $ 22,670
(Increase) decrease in accounts receivable $ 387,400 $ 0 $ (200,000) $ 0
Increase (decrease) in accrued taxes payable $ 56,486 $ 43,100 $ (385,318) $ 1,279,843
Increase (decrease) in interest payable $ (83,840) $ (14,358) $ 37,994 $ 330,157
------------ ------------ ------------ ------------
Net cash provided by operating activities $ 1,637,493 $ 3,918,515 $ 1,922,850 $ 5,556,078
------------ ------------ ------------ ------------
INVESTING ACTIVITIES:
Proceeds from sale of investments $ 6,619,978 $ 5,506,934 $ 8,601,644 $ 17,238,940
Investments originated or acquired $(15,208,429) $(28,721,422) $(41,647,351) $(61,242,993)
Purchase of fixed assets $ (11,418) $ (17,293) $ (57,395) $ (44,847)
Increase in other assets $ 0 $ (18,389) $ 0 $ (18,389)
------------ ------------ ------------ ------------
Net cash used in investing activities $ (8,599,869) $(23,250,170) $(33,103,102) $(44,067,289)
------------ ------------ ------------ ------------
FINANCING ACTIVITIES:
Proceeds from debentures payable to Small
Business Administration $ 14,600,000 $ 0 $ 14,600,000 $ 10,000,000
Proceeds from revolving credit facilities $ 16,498,000 $ 20,327,766 $ 24,973,594 $ 50,178,766
Repayment of credit facility borrowings $(20,542,000) $ (9,356,000) $(31,362,846) $(27,491,000)
Increase in debenture costs $ (529,250) $ (250,000) $ (418,901) $ (512,500)
Issuance of common stock $ (10,384) $ 51,402,622 $ 26,497,672 $ 51,402,622
Employee shares repurchased $ 0 $ (809,645) 0 (809,645)
Payment of dividends $ (1,077,316) $ (2,242,689) $ (1,077,316) $ (4,633,419)
Distribution of capital gains $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------
Net cash provided by financing activities $ 8,939,050 $ 59,072,054 $ 33,212,203 $ 78,134,824
------------ ------------ ------------ ------------
Increase (decrease) in cash and cash equivalents $ 1,976,674 $ 39,740,399 $ 2,031,952 $ 39,623,613
Cash and cash equivalents, beginning of period $ 192,525 $ 78,283 $ 137,247 $ 195,069
------------ ------------ ------------ ------------
Cash and cash equivalents, end of period $ 2,169,199 $ 39,818,682 $ 2,169,199 $ 39,818,682
============ ============ ============ ============
Supplemental disclosures of cash flow information:
Interest paid $ 1,254,187 $ 2,065,645 $ 2,131,223 $ 3,511,117
============ ============ ============ ============
Taxes paid $ 68,676 $ 12,949 $ 385,318 $ 964,066
============ ============ ============ ============
Supplemental disclosure of non-cash activities:
The Company foreclosed on real property securing an
investment in a portfolio company during the three
months ended March 31, 1996, which resulted in the
transfer of $578,808 from Investments to Other Assets.
</TABLE>
5
<PAGE> 6
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Sirrom Capital Corporation (the "Company"), a Tennessee Corporation, was
formed in November 1994 and Sirrom Capital, L.P. (the "Partnership") became a
partnership under the laws of the State of Tennessee in November 1991. The
accompanying financial statements have been prepared on a basis appropriate for
investment companies as enumerated in the American Institute of Certified
Public Accountants' Audit and Accounting Guide on Audits of Investment
Companies.
The Company is a non-diversified, closed-end investment company, which has
elected to be treated as a business development company under the Investment
Company Act of 1940. The Company is also a small business investment company
("SBIC") licensed under the Small Business Investment Act of 1958 (the "1958
Act"). The Company was licensed by the U.S. Small Business Administration (the
"SBA") on May 14, 1992. Under applicable SBA regulations, the Company is
restricted to investing only in qualified small business concerns in the manner
contemplated by the 1958 Act, as amended. Additionally, beginning in February
1995, the Company elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended.
Effective February 1, 1995, the partners of the Partnership transferred,
in a tax free conversion, their partnership interests to the Company in
exchange for the issuance of 5,050,116 shares of common stock of the Company.
The common stock was received by each partner in proportion to the partner's
percentage interest in the Partnership. As a result of this exchange, the
Partnership was dissolved and liquidated, with all of the assets and
liabilities of the Partnership (including the SBIC license which was obtained
by the Partnership in May 1992) being thereby assigned and transferred to the
Company. This transaction was accounted for as a reorganization of entities
under common control, in a manner similar to a pooling of interests.
The Company's objectives are to achieve both a high level of current
income from interest on loans and fees and long-term growth in the value of its
net assets through equity interests primarily in small, privately owned
companies. The Company targets small businesses that the Company believes meet
certain criteria, including the potential for significant growth, adequate
collateral coverage, experienced management teams, sophisticated outside equity
investors and profitable operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments
Portfolio investments are stated at fair value as determined by the Board
of Directors.
Under the Company's valuation policy, the fair values of loans to small
business concerns are based on the Board of Director's evaluation of the
financial condition of the borrowers and/or the underlying collateral. The
values assigned are considered to be amounts which could be realized in the
normal course of business which anticipates the Company holding the loan to
maturity and realizing the face value of the loan. Fair value for loans
normally corresponds to cost unless the borrower's condition or external
factors lead to a determination of fair value at a lower amount.
6
<PAGE> 7
Equity interests and warrants for which there is not a public market are
valued based on factors such as significant equity financing by sophisticated,
unrelated investors, history of positive cash flow from operations, the market
value of comparable publicly traded companies (discounted for illiquidity) and
other pertinent factors. The Board of Directors also considers recent offers
to purchase a portfolio company's securities when valuing warrants. At June
30, 1996, the investment portfolio included investments totaling $226,793,442,
whose values had been estimated by the Board of Directors in the absence of
readily ascertainable market values. Because of the inherent uncertainty of
the valuations, the estimated fair values may differ significantly from the
values that would have been used had a ready market for the securities existed,
and the difference could be material.
The Company's investments in stocks of public companies that it is not
permitted to sell in the public market as a result of securities laws
restrictions, lock-up agreements or other similar restrictions are typically
valued at 70% of market value at the balance sheet date. All other publicly
traded stocks are typically valued at 90% of market value at the balance sheet
date.
Realized and Unrealized Gain or Loss on Investments
Realized gains or losses are recorded upon disposition of investments and
are calculated based upon the difference between the proceeds and the cost
basis determined using the specific identification method. All other changes
in the valuation of portfolio investments are included as changes in the
unrealized appreciation or depreciation of investments in the statement of
operations.
Description of Loans Terms
The loans to small business concerns included in investments bear interest
at rates ranging from 4.00% to 14.00%. Typically, interest is payable in
monthly or quarterly installments over five years with the entire principal
amounts due at maturity. These loans are generally collateralized by the assets
of the borrower, certain of which are subject to prior liens, and/or guarantees.
Loan Processing Fees
The Company recognizes loan processing fees as income when received.
Cash and Cash Equivalents
The Company defines cash and cash equivalents as cash on hand, cash in
interest bearing and non-interest bearing operating bank accounts and highly
liquid investments such as time deposits with an original maturity of three
months or less.
Debenture Costs
Debenture costs are amortized over ten years which represents the term of
the 11 SBA debentures, as discussed in Note 3.
7
<PAGE> 8
Income Taxes
Beginning in February 1995, the Company elected to be taxed as a regulated
investment company ("RIC") under Subchapter M of the Internal Revenue Code (the
"Code"). If the Company, as a RIC, satisfies certain requirements relating to
the source of its income, the diversification of its assets and the
distribution of its net income, the Company is generally taxed as a pass
through entity which acts as a partial conduit of income to its shareholders.
In order to maintain its RIC status, the Company must in general: a)
derive at least 90% of its gross income from dividends, interest and gains from
the sale or disposition of securities b) derive less than 30% of its gross
income from the sale or disposition of securities held for less than three
months, c) meet investment diversification requirements defined by the Code
and d) distribute to shareholders at least 90% of its net income (other than
long-term capital gains).
The Company currently intends to meet the RIC qualifications in future
years. Therefore, the Company has not provided for federal income taxes on the
unrealized appreciation of investments.
3. DEBENTURES PAYABLE TO SMALL BUSINESS ADMINISTRATION
As of June 30, 1996, the Company had 11 debentures totaling $83,260,000
payable to the SBA with semiannual interest only payments based upon rates
ranging from 6.12% to 8.20% per annum, with scheduled maturity dates as
follows:
<TABLE>
<CAPTION>
Date Amount
----------------------------------------
<S> <C>
2002 $10,000,000
2003 24,000,000
2004 17,000,000
2005 22,260,000
2006 10,000,000
-----------
$83,260,000
</TABLE>
The debentures are subject to a prepayment penalty if paid prior to five
years from maturity. Interest expense related to these debentures for the
period ended June 30, 1996 totaled $1,457,335.
4. REVOLVING CREDIT FACILITY
During December 1995, the Company entered into a revolving credit
facility (the "Revolving Credit Facility") with a syndicate of banks, whereby
it may borrow up to $50,000,000 at LIBOR plus 1.75% (6.08% at June 30, 1996).
As of June 30, 1996, $35,887,766 was outstanding. This agreement expires on
December 27, 1998.
Interest expense related to the line of credit for the period ended June
30, 1996 was $593,951.
The Company entered into an interest rate swap agreement that effectively
converts the variable rate of $30,000,000 of borrowings on the revolving credit
facility to a fixed rate of 8.15%. Under the agreement, the Company has
exchanged the interest rate difference between the fixed and variable rates on
incremental amounts of $3,000,000 a month beginning in April 1996.
8
<PAGE> 9
5. INCOME TAXES
For the quarter ended June 30, 1996, the Company provided for taxes of
$70,000 on realized long-term capital gains not distributed to shareholders.
6. EMPLOYEE STOCK OPTION PLAN
In February 1996, the Company adopted the 1996 Incentive Stock Option Plan (the
"1996 Plan") that permits the issuance of options to purchase shares of the
Company's Common Stock to selected employees. The 1996 Plan reserves 390,000
shares of Common Stock for grant and provides that the terms of each award be
determined by a committee of the Board of Directors. Under the terms of the
1996 Plan, the options' exercise price may not be less than the fair market
value of a share of Common Stock on the date of grant. During 1996, the
Company has granted options to purchase 206,966 shares, at prices ranging from
$18.625 per share to $25.00 per share. The options vest 20% each year
beginning one year from the date of grant.
9
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SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
LOAN COUPON
MATURITY INTEREST
LOANS DATE RATE COST FAIR VALUE
- ------------------------------------------------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Affinity Fund, Inc.............................. 06/29/98 12.50% $ 1,485,000 $ 1,494,932
Affinity Fund, Inc.............................. 03/10/00 14.00 1,000,000 1,000,000
Affinity Fund, Inc.............................. 12/28/98 12.50 495,000 495,083
Alpha West Partners I, L.P...................... 12/31/97 12.50 771,308 675,058
American Remedial Tech., Inc.................... 03/26/00 13.50 1,485,000 1,487,500
American Remedial Tech., Inc.................... 07/11/00 14.00 495,000 495,498
Amscot Holdings, Inc............................ 05/26/00 14.00 800,000 800,000
Amscot Holdings, Inc............................ 09/20/00 14.00 200,000 200,000
Ashe Industries, Inc............................ 12/28/97 12.50 990,000 646,178
Ashe Industries, Inc............................ 03/25/99 12.50 445,500 447,150
Ashe Industries, Inc............................ 05/18/99 12.50 544,500 546,340
Ashe Industries, Inc............................ 06/12/96 14.00 750,000 750,000
Ashe Industries, Inc............................ 06/12/96 14.00 285,546 285,546
Associated Response Services, Inc............... 06/20/99 12.50 1,386,000 1,390,427
Associated Response Services, Inc............... 02/15/00 12.50 335,000 335,000
Associated Response Services, Inc............... 01/06/00 12.50 300,000 300,000
Assured Power, Inc.............................. 10/01/00 13.50 700,000 700,000
B & N Company, Inc.............................. 08/08/00 12.50 2,970,000 2,972,500
BankCard Services Corporation................... 01/21/98 13.00 297,000 298,800
BiTec Southeast, Inc............................ 11/03/97 12.50 445,500 448,350
BiTec Southeast, Inc............................ 11/30/98 12.50 1,188,000 1,193,000
BiTec Southeast, Inc............................ 11/03/97 12.50 445,500 447,300
BiTec Southeast, Inc............................ 08/01/99 13.50 521,321 521,321
C.J. Spirits, Inc............................... 05/01/97 13.50 750,171 455,546
Capital Network System, Inc..................... 11/30/98 12.50 990,000 994,342
Capital Network System, Inc..................... 01/18/99 12.50 990,000 994,008
Cardiac Control Systems, Inc.................... 03/31/00 13.50 1,500,000 1,500,000
Carter Kaplan Holdings, L.L.C................... 06/22/00 14.00 594,000 594,300
CCS Technology Group, Inc....................... 05/01/97 13.00 990,000 997,288
CellCall, Inc................................... 11/04/97 12.75 990,000 996,345
CF Data Corp.................................... 03/16/00 13.75 1,732,500 1,735,420
Champion Glove Mfg. Co., Inc.................... 07/27/00 13.50 1,250,000 1,250,000
Clearidge, Inc.................................. 09/29/99 13.00 2,000,000 2,000,000
Clearidge, Inc.................................. 12/28/00 13.50 500,000 500,000
Colonial Investments, Inc....................... 10/16/00 13.75 800,000 800,000
Consumat Systems, Inc........................... 11/01/00 14.00 500,000 500,000
Consumer Credit Associates, Inc................. 12/06/00 13.50 2,000,000 2,000,000
Continental Diamond Cutting Co.................. 10/28/99 13.00 1,500,000 1,500,000
Continental Diamond Cutting Co.................. 12/28/99 13.00 200,000 200,000
Continental Diamond Cutting Co.................. 05/31/96 14.00 300,000 300,000
Corporate Flight Mgmt., Inc..................... 12/04/97 12.50 346,500 348,645
Cougar Power Products, Inc...................... 10/05/96 13.00 495,000 495,083
Cougar Power Products, Inc...................... 10/05/96 13.00 495,000 497,003
Cougar Power Products, Inc...................... 10/05/96 14.00 325,000 325,000
Dalcon International, Inc....................... 01/31/02 13.00 150,000 150,000
Dalcon International, Inc....................... 01/31/00 13.00 200,000 200,000
</TABLE>
10
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SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
LOAN COUPON
MATURITY INTEREST
LOANS DATE RATE COST FAIR VALUE
- ------------------------------------------------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Dalt's, Inc..................................... 04/28/01 13.50% $ 2,000,000 $ 2,000,000
DentureCare, Inc................................ 07/29/99 11.50 990,000 993,006
DentureCare, Inc................................ 11/03/00 14.00 111,150 111,150
DentureCare, Inc................................ 08/31/00 14.00 800,000 800,000
Eastern Food Group LLC.......................... 08/30/00 8.00 500,000 500,000
Eastern Food Group LLC.......................... 12/20/00 8.00 200,000 200,000
Educational Medical, Inc........................ 03/31/00 14.00 2,200,000 2,200,000
Electronic Merchant Services.................... 02/27/00 13.50 1,237,500 1,239,788
Electronic Merchant Services.................... 12/31/95 14.00 242,450 242,450
Emerald Pointe Waterpark L.P.................... 04/29/99 12.50 594,000 596,000
Emerald Pointe Waterpark L.P.................... 03/09/00 13.50 400,000 400,000
Encore Orthopedics, Inc......................... 07/31/00 13.50 2,620,985 2,658,887
Express Shipping Centers, Inc................... 09/25/00 13.25 1,697,619 1,734,426
Factory Card Outlet Of America Ltd.............. 11/15/00 12.50 3,670,917 3,682,317
Front Royal, Inc................................ 10/01/99 13.00 1,550,000 1,550,000
Front Royal, Inc................................ 12/27/99 13.00 675,000 675,000
Fycon Technologies, Inc......................... 05/16/00 10.00 350,000 350,000
Fycon Technologies, Inc......................... 08/30/00 14.00 1,000,000 1,000,000
Fycon Technologies, Inc......................... 12/17/00 14.00 100,000 100,000
Gates Communications, L.P....................... 12/31/98 12.50 990,000 994,175
Gitman and Company.............................. 12/31/00 14.00 1,700,000 1,700,000
Global Finance and Leasing, Inc................. 01/03/00 13.00 1,500,000 1,500,000
Gold Medal Products, Inc........................ 11/19/00 13.50 1,250,000 1,250,000
Golf Corporation of America, Inc................ 09/16/99 11.00 300,000 300,000
Golf Corporation of America, Inc................ 12/28/00 14.00 200,000 200,000
Golf Corporation of America, Inc................ 12/29/00 10.00 455,589 455,589
Gulfstream International Airlines Inc........... 07/29/99 13.00 1,490,000 1,494,509
Gulfstream International Airlines Inc........... 09/25/00 14.00 1,000,000 1,000,000
Horizon Medical Products, Inc................... 09/22/00 13.75 1,500,000 1,500,000
Hoveround Corporation........................... 06/11/98 13.00 495,000 497,368
Hoveround Corporation........................... 11/08/99 13.50 250,000 250,000
Hoveround Corporation........................... 03/08/00 14.00 250,000 250,000
Hunt Incorporated............................... 03/31/00 14.00 3,300,000 3,300,000
In-Store Services, Inc.......................... 04/19/00 14.00 1,188,000 1,189,800
Innotech, Inc................................... 03/22/99 13.00 1,980,000 1,987,326
Intermed Healthcare Systems, Inc................ 06/29/99 12.00 742,500 744,875
Intermed Healthcare Systems, Inc................ 02/10/00 14.00 375,000 375,000
International Manufacturing and Trade, Inc...... 04/27/99 13.00 495,000 496,743
International Manufacturing and Trade, Inc...... 12/01/99 13.00 400,000 400,000
International Manufacturing and Trade, Inc...... 06/09/00 14.00 500,000 500,000
International Manufacturing and Trade, Inc...... 07/25/00 14.00 250,000 250,000
International Manufacturing and Trade, Inc...... 11/10/00 14.00 100,000 100,000
Johnston County Cable L.P....................... 08/31/00 14.00 1,990,000 1,990,668
Kentucky Kingdom, Inc........................... 04/04/99 8.50 250,000 250,000
Kentucky Kingdom, Inc........................... 01/05/98 12.50 1,980,000 1,991,989
Kentucky Kingdom, Inc........................... 09/26/99 10.50 1,200,000 1,200,000
</TABLE>
11
<PAGE> 12
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
LOAN COUPON
MATURITY INTEREST
LOANS DATE RATE COST FAIR VALUE
- ------------------------------------------------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Kentucky Kingdom, Inc........................... 03/01/00 14.00% $ 835,000 $ 835,000
Kentucky Kingdom, Inc........................... 11/06/00 12.50 1,500,000 1,500,000
Kryptonics, Inc................................. 12/14/00 12.90 2,500,000 2,500,000
Lovett's Buffet, Inc............................ 04/01/00 13.00 2,250,000 2,250,000
MBA Marketing Corporation....................... 02/04/99 12.50 1,782,000 1,788,900
Medical Associates of America, Inc.............. 11/01/97 12.50 1,485,000 392,000
Money Transfer Systems, Inc..................... 07/24/00 14.00 247,500 247,752
Money Transfer Systems, Inc..................... 12/20/00 14.00 148,500 148,525
Moore Diversified Products, Inc................. 06/16/00 13.50 800,000 800,000
Moovies, Inc.................................... 04/18/00 13.50 1,485,000 1,487,250
Multimedia Learning, Inc........................ 05/08/00 14.00 1,500,000 1,500,000
Nationwide Engine Supply, Inc................... 01/12/99 12.00 2,475,000 2,485,008
Nelson Juvenile Products L.L.C.................. 10/31/00 14.00 2,000,000 2,000,000
NRI Service and Supply L.P...................... 02/13/00 14.00 2,475,000 2,479,587
OcuTec Corporation.............................. 06/21/99 10.00 1,000,000 1,000,000
OcuTec Corporation.............................. 06/21/00 10.00 350,000 350,000
OcuTec Corporation.............................. 10/16/00 10.00 100,000 100,000
OcuTec Corporation.............................. 12/04/01 10.00 351,500 351,500
Orchid Manufacturing Group, Inc................. 09/14/00 13.00 2,960,000 2,960,667
Orchid Manufacturing Group, Inc................. 12/28/00 13.50 1,000,000 1,000,000
Palco Telecom Service, Inc...................... 11/22/99 12.00 1,800,000 1,800,000
Patton Management Corporation................... 05/26/00 13.50 1,900,000 1,900,000
Pharmaceutical Research Assoc., Inc............. 08/10/00 13.50 1,980,000 1,981,665
Pipeliner Systems, Inc.......................... 09/30/98 13.00 980,000 989,324
Plymouth, Inc................................... 09/28/00 13.00 1,000,000 1,000,000
Precision Fixtures & Graphics, Inc.............. 07/31/10 6.50 1,100,000 889,976
Precision Fixtures & Graphics, Inc.............. 05/26/00 6.50 250,000 202,267
Precision Fixtures & Graphics, Inc.............. 11/07/00 6.50 200,000 161,814
Precision Fixtures & Graphics, Inc.............. 12/27/00 6.50 100,000 80,907
Precision Fixtures & Graphics, Inc.............. 07/10/00 6.50 135,000 109,224
Precision Fixtures & Graphics, Inc.............. 08/28/00 6.50 110,000 88,998
Precision Fixtures & Graphics, Inc.............. 12/12/00 6.50 200,000 161,814
Precision Panel Products, Inc................... 01/11/00 12.75 1,485,000 1,488,000
Premiere Technologies, Inc...................... 05/01/97 12.50 990,000 997,345
Premiere Technologies, Inc...................... 12/23/98 12.00 990,000 994,175
Pritchard Paint & Glass Co...................... 03/21/00 14.00 250,000 250,000
Quest Group International, Inc.................. 11/15/00 13.25 1,125,000 1,129,166
Radio Systems Corporation....................... 12/27/99 13.00 905,725 926,148
SkillSearch Corporation......................... 02/05/98 13.00 496,000 498,545
Summit Publishing Group, Ltd.................... 03/17/99 12.00 1,485,000 1,490,500
Suncoast Medical Group, Inc..................... 09/14/99 13.50 485,000 489,498
Suncoast Medical Group, Inc..................... 06/07/00 14.00 495,000 495,083
TCOM Systems, Inc............................... 02/05/98 13.00 571,969 571,969
Tower Environmental, Inc........................ 11/30/98 10.00 2,440,000 2,201,990
</TABLE>
12
<PAGE> 13
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
LOAN COUPON
MATURITY INTEREST
LOANS DATE RATE COST FAIR VALUE
- ------------------------------------------------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Tower Environmental, Inc........................ 05/30/95 12.50% $ 150,000 $ 150,000
Trade Am International, Inc..................... 09/30/00 12.75 4,000,000 4,000,000
Treasure Coast Pizza Co......................... 07/29/98 12.00 841,500 845,760
Truckload Management Services, Inc.............. 03/14/98 13.00 150,000 150,000
Unique Electronics, Inc......................... 11/30/99 10.70 600,000 600,000
Universal Marketing Corporation................. 01/31/00 13.50 500,000 500,000
Valdawn, L.L.C.................................. 04/13/00 13.50 2,399,974 2,400,000
Viking Moorings Acquisition, L.L.C.............. 12/15/00 13.00 1,655,500 1,661,242
WWR Technology, Inc............................. 11/01/97 13.00 524,700 528,128
Zahren Alternative Power Corp................... 01/30/00 13.00 495,000 495,083
Zahren Alternative Power Corp................... 11/27/99 13.00 1,980,000 1,985,679
------------ ------------
Total Loans................................... $147,018,924 $144,854,517
============ ============
</TABLE>
The accompanying notes are an integral part of this schedule.
13
<PAGE> 14
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF COST OR
SHARES/PERCENTAGE CONTRIBUTED
EQUITY INTERESTS OWNERSHIP VALUE FAIR VALUE
- ----------------------------------------------------- ----------------- ----------- -----------
<S> <C> <C> <C>
PUBLICLY TRADED INVESTMENTS(a)
National Vision Associates, Ltd.
Common Stock -- restricted......................... 208,698 $ 1,771,149 $ 563,485
Concept Technologies Group, Inc. Common Stock --
restricted......................................... 23,408 5,300 30,723
Moovies Inc.
Common Stock....................................... 156,110 16,561 1,475,240
EQUITY INVESTMENTS IN PRIVATE COMPANIES
National Recovery Technologies, Inc.
Preferred Stock -- Series A........................ 20,000 -- --
Premiere Technologies, Inc.
Common Stock....................................... 8,000 100,400 1,280,000
Medical Associates of America, Inc.
Preferred Stock -- Series A........................ 66,667 -- --
Viking Moorings Acquisition, L.L.C.
Membership interest in L.L.C....................... 6.50% 344,500 344,500
Nelson Juvenile Products, L.L.C.
Membership interest in L.L.C....................... 30.00% -- --
Skillsearch Corporation
Common Stock....................................... 2,241 250,035 250,035
Potomac Group, Inc.
Preferred Stock -- Series A........................ 800,000 1,000,000 1,232,966
Potomac Group, Inc.
Common Stock....................................... 240,000 60,000 370,504
Kentucky Kingdom, Inc.
Common Stock....................................... 11,671 258,300 1,539,603
Golf Corporation of America, Inc.
Common Stock....................................... 100,000 100,000 100,000
International Risk Control, Inc.
Preferred Stock -- Series A........................ 200,000 50,000 50,000
DentureCare, Inc.
Preferred Stock -- Series D........................ 49,342 300,000 300,000
Unique Electronics, Inc.
Preferred Stock -- Series A........................ 1,000,000 1,000,000 1,000,000
Pipeliner Systems, Inc.
Preferred Stock -- Series D........................ 5,000 1,000,000 1,000,000
Front Royal, Inc.
Common Stock....................................... 110,000 275,000 275,000
Ocutec Acquisition Corporation
Preferred Stock -- Series A........................ 1,539,867 1,539,867 1,539,867
Fycon Technologies, Inc.
Preferred Stock -- Series A........................ 800,000 800,000 800,000
Carter Kaplan Holdings, L.L.C.
Membership interest in LLC......................... 24.00% 6,100 6,100
</TABLE>
14
<PAGE> 15
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF COST OR
SHARES/PERCENTAGE CONTRIBUTED
EQUITY INTERESTS OWNERSHIP VALUE FAIR VALUE
- ----------------------------------------------------- ----------------- ----------- -----------
<S> <C> <C> <C>
Virginia Gas Company
Preferred Stock -- Series A........................ 2,000% $ 2,000,000 $ 2,000,000
Johnston County Cable, L.P.
Class A Interest in L.P............................ 11.11 100,000 100,000
Eastern Food Group, L.L.C.
Class B Preferred Stock............................ 7,500 754,444 754,444
Dalcon International, Inc.
Series B Preferred Stock........................... 850,000 850,000 490,000
Zahren Alternative Power Corporation
Common Stock....................................... 700 210,000 210,000
Zahren Alternative Power Corporation
Preferred Stock.................................... 200 200,000 200,000
----------- -----------
Total Equity Interests..................... $12,991,656 $15,912,467
=========== ===========
</TABLE>
The accompanying notes are an integral part of this schedule.
15
<PAGE> 16
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
COST OR
NUMBER OF PERCENTAGE CONTRIBUTED
WARRANTS SHARES OWNERSHIP VALUE FAIR VALUE
- ------------------------------------------ ------------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Affinity Fund, Inc........................ 1,725 8.62% $ 20,000 $ 600,000
Alpha West Partners I, L.P................ 2 units 20.00 7,500 --
American Remedial Tech., Inc.............. 244,168 17.05 20,000 230,000
Amscot Holdings, Inc...................... 1,121 18.10 -- --
Ashe Industries, Inc...................... 216 16.52 20,000 --
Associated Responses Services, Inc........ 343 24.27 14,000 400,000
Assured Power, Inc........................ 234 11.94 -- --
Auto Rental Systems, Inc.................. 144,869 8.00 -- 285,000
B & N Company, Inc........................ 18 2.14 30,000 30,000
BankCard Services Corporation............. 138,000 24.00 3,000 --
BiTec Southeast, Inc...................... 938 10.00 21,000 100,000
C.J. Spirits, Inc......................... 180,000 10.00 7,500 --
CF Data Corp.............................. 257 20.45 17,500 17,500
Capital Network System, Inc............... 173,409 3.50 20,000 --
Cardiac Control Systems, Inc.............. 100,000 3.51 -- 153,127
CCS Technology Group, Inc................. 30,000 2.68 10,000 10,000
CellCall, Inc............................. 31,836 1.25 10,000 125,000
Champion Glove Mfg. Co., Inc.............. 538,614 5.87 -- --
CLS Corporation........................... 126,997 4.22 -- --
Clearidge, Inc............................ 367,026 7.91 -- --
Colonial Investments, Inc................. 194 18.00 -- --
Consumer Credit Associates, Inc........... 3,669 15.78 -- --
Continental Diamond Cutting Co............ 112 10.00 -- --
Corporate Flight Mgmt., Inc............... 66,315 10.00 3,500 100,000
Cougar Power Products, Inc................ 336 16.29 10,000 --
Dalcon International, Inc................. 250,000 20.00 -- --
Dalt's, Inc............................... 125 25.00 -- --
Delaware Publishing Group, Inc............ 6,296 24.50 15,000 15,000
DentureCare, Inc.......................... 396,724 11.30 10,000 375,000
Electronic Merchant Services.............. 430 12.50 12,500 12,500
Eastern Food Group LLC.................... 17,647 15.00 -- --
Educational Medical, Inc.................. 85,000 8.00 -- --
Emerald Pointe Waterpark L.P.............. 10 units 10.00 6,000 250,000
Encore Orthopedics, Inc................... 291,550 4.92 379,015 379,015
Express Shipping Centers, Inc............. 73,752 5.10 552,402 552,402
Factory Card Outlet of America Ltd........ 23,658 2.50 329,083 329,083
Front Royal, Inc.......................... 240,458 3.58 -- 420,000
Fycon Technologies, Inc................... 58,677 15.00 -- --
Gates Communication, L.P.................. 47% of LP 47.00 10,000 10,000
Gitman Bros............................... 1,518 20.50 -- --
Global Finance and Leasing, Inc........... 5,000 25.00 -- --
Gold Medal Products, Inc.................. 90,000 30.00 -- --
Golf Corporation of America, Inc.......... 390,000 11.48 -- --
Gulfstream International Airlines Inc..... 260 21.00 10,000 --
Horizon Medical Products, Inc............. 9,486 8.25 -- --
Hoveround Corporation..................... 1,963 27.00 5,000 325,000
Hunt Incorporated......................... 309 11.09 -- 200,000
</TABLE>
16
<PAGE> 17
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
COST OR
NUMBER OF PERCENTAGE CONTRIBUTED
WARRANTS SHARES OWNERSHIP VALUE FAIR VALUE
- ------------------------------------------ ------------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Delaware Publishing Group, Inc............ 6,296 24.50 $ 15,000 $ 15,000
Innotech, Inc............................. 521,220 4.00% 20,000 300,000
In-Store Service, Inc..................... 429 12.50 12,000 12,000
Intermed Healthcare Systems, Inc.......... 11,884 10.50 7,500 --
International Manufacturing and Trade,
Inc..................................... 482 29.94 5,000 --
Johnston County Cable, L.P................ 27.5% of LP 27.50 10,000 10,000
Kryptonics, Inc........................... 1,255 9.00 -- --
Lovett's Buffet, Inc...................... 204,219 5.00 -- --
MBA Marketing Corporation................. 26 4.00 18,000 --
Money Transfer Systems, Inc............... 45 4.31 4,000 4,000
Moore Diversified Products, Inc........... 12 10.68 -- --
Multimedia Learning, Inc.................. 202 6.09 -- --
Nationwide Engine Supply, Inc............. 882,353 15.00 25,000 25,000
NRI Service and Supply, L.P............... 27.5% of LP 27.50 25,000 25,000
OcuTec Corp............................... 222,222 6.13 -- --
One Stop Acquisitions, Inc................ 794 24.40 -- 500,000
Orchid Manufacturing Group, Inc........... 1,719,047 4.50 40,000 540,000
Palco Telecom Services, Inc............... 157,895 5.00 -- --
Patton Management Corporation............. 12 10.00 -- 300,000
Pharmaceutical Research Assoc., Inc....... 150,114 7.82 20,000 20,000
Pipeliner Systems, Inc.................... 2,080,000 20.38 20,000 20,000
Plymouth, Inc............................. 92,647 15.00 -- --
Potomac Group, Inc........................ 239,115 1.85 125,000 368,530
Precision Fixtures & Graphics, Inc........ 132 5.00 -- --
Precision Panel Products, Inc............. 122 8.25 15,000 15,000
Premiere Technologies, Inc................ 23,863 2.08 20,000 3,820,000
Quest Group International, Inc............ 44,444 10.00 125,000 125,000
Radio Systems Corporation................. 129,734 7.27 94,275 330,000
SkillSearch Corporation................... 2,381 7.59 254,000 119,000
Suprex Corporation........................ 1,058,179 3.45 -- 7,500
Tower Environmental, Inc.................. 82 10.07 20,000 --
Trade Am International, Inc............... 335,106 6.00 -- --
Treasure Coast Pizza Company.............. 51 10.00 8,500 8,500
Valdawn, L.L.C............................ 2,658 21.00 26 26
Unique Electronics, Inc................... 55,732 20.00 -- --
Universal Marketing Corporation........... 111 10.00 -- --
Virginia Gas Company...................... 525 6.00 -- --
Zahren Alternative Power Corp............. 1,108 5.00 25,000 25,000
------------ ------------
Total Warrants.................. 2,456,301 11,513,183
------------ ------------
Total Investments............... $162,466,881 $172,280,167
============ ============
</TABLE>
The accompanying notes are an integral part of this schedule.
17
<PAGE> 18
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
LOAN COUPON
MATURITY INTEREST
LOANS DATE RATE COST FAIR VALUE
- ------------------------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Affinity Fund, Inc......................... 06/29/98 12.50% $ 1,485,000 $ 1,496,432
Affinity Fund, Inc......................... 03/10/00 14.00 1,000,000 1,000,000
Affinity Fund, Inc......................... 12/28/98 12.50 495,000 495,581
Amscot Holdings, Inc....................... 05/26/00 14.00 800,000 800,000
Amscot Holdings, Inc....................... 09/20/00 14.00 200,000 200,000
Amscot Holdings, Inc....................... 06/28/01 14.00 500,000 500,000
Ashe Industries, Inc....................... 12/28/97 12.50 990,000 382,058
Ashe Industries, Inc....................... 03/25/99 12.50 445,500 147,300
Ashe Industries, Inc....................... 05/18/99 12.50 544,500 146,524
Ashe Industries, Inc....................... 06/12/96 14.00 750,000 100,000
Ashe Industries, Inc....................... 06/12/96 14.00 285,546 0
Associated Response Services, Inc.......... 06/20/99 12.50 1,386,000 1,391,825
Associated Response Services, Inc.......... 02/15/00 12.50 335,000 335,000
Associated Response Services, Inc.......... 01/06/00 12.50 300,000 300,000
Assured Power, Inc......................... 10/01/00 13.50 700,000 700,000
B & N Company, Inc......................... 08/08/00 12.50 2,970,000 2,975,500
B & N Company, Inc......................... 03/28/01 13.00 990,000 990,668
BankCard Services Corporation.............. 01/21/98 13.00 297,000 299,100
BiTec Southeast, Inc....................... 10/31/97 12.50 445,500 448,800
BiTec Southeast, Inc....................... 11/30/98 12.50 1,188,000 1,194,200
BiTec Southeast, Inc....................... 10/31/97 12.50 445,500 447,750
BiTec Southeast, Inc....................... 08/01/99 13.50 521,321 521,321
C.J. Spirits, Inc.......................... 05/01/97 13.50 750,171 455,796
Caldwell/VSR Inc........................... 02/28/01 4.00 1,500,000 1,500,000
Capital Network System, Inc................ 11/30/98 12.50 990,000 995,344
Capital Network System, Inc................ 01/18/99 12.50 990,000 995,010
Cardiac Control Systems, Inc............... 03/31/00 13.50 1,500,000 1,500,000
Cartech Holdings, Inc...................... 04/29/01 13.00 1,500,000 1,500,000
Carter Kaplan Holdings, L.L.C.............. 06/22/00 14.00 594,000 594,800
CCS Technology Group, Inc.................. 05/01/97 13.00 990,000 998,290
Cedaron Medicval, Inc...................... 06/28/01 13.50 1,500,000 1,500,000
Cell Call, Inc............................. 11/04/97 12.75 990,000 997,347
CF Data Corp............................... 03/16/00 13.75 1,732,500 1,737,172
Champion Glove Manufacturing Co., Inc...... 07/27/00 13.50 1,250,000 1,250,000
Clearidge, Inc............................. 09/29/99 13.00 2,000,000 2,000,000
Clearidge, Inc............................. 12/28/00 13.50 500,000 500,000
Colonial Investments, Inc.................. 10/16/00 13.75 800,000 800,000
Colonial Investments, Inc.................. 05/08/01 13.75 300,000 300,000
Consumat Systems, Inc...................... 11/01/00 14.00 500,000 500,000
Consumat Systems, Inc...................... 01/01/01 14.00 500,000 500,000
Consumat Systems, Inc...................... 03/11/01 14.00 500,000 500,000
Consumer Credit Associates, Inc............ 12/06/00 13.50 2,000,000 2,000,000
Consumer Credit Associates, Inc............ 03/28/01 13.50 1,000,000 1,000,000
Continental Diamond Cutting Co............. 10/28/99 13.00 1,500,000 1,500,000
Continental Diamond Cutting Co............. 12/28/99 13.00 200,000 200,000
Continental Diamond Cutting Co............. 05/31/96 14.00 200,000 200,000
Corporate Flight Mgmt, Inc................. 12/04/97 12.50 346,500 348,993
Cougar Power Products, Inc................. 10/05/96 13.00 495,000 172,169
Cougar Power Products, Inc................. 10/05/96 13.00 495,000 270,249
Cougar Power Products, Inc................. 10/05/96 14.00 325,000 100,000
Dalcon International, Inc.................. 01/31/02 13.00 150,000 150,000
Dalcon International, Inc.................. 01/31/00 13.00 200,000 200,000
Dalcon International, Inc.................. 05/15/96 13.00 45,000 45,000
</TABLE>
18
<PAGE> 19
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
LOAN COUPON
MATURITY INTEREST
LOANS DATE RATE COST FAIR VALUE
- ------------------------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Dalt's, Inc................................ 04/28/01 13.50% $ 2,000,000 $ 2,000,000
DentureCare, Inc........................... 07/29/99 11.50 990,000 994,008
DentureCare, Inc........................... 11/03/00 14.00 111,150 111,150
DentureCare, Inc........................... 08/31/00 14.00 800,000 800,000
DentureCare, Inc........................... 01/11/01 12.50 550,000 550,000
Eastern Food Group L.L.C................... 08/30/00 8.00 500,000 500,000
Eastern Food Group L.L.C................... 12/20/00 8.00 200,000 200,000
Eastern Food Group L.L.C................... 01/21/01 8.00 200,000 200,000
Eastern Food Group L.L.C................... 02/14/01 8.00 265,000 265,000
Eastern Food Group L.L.C................... 04/30/01 8.00 200,000 200,000
Educational Medical Inc.................... 03/31/00 14.00 2,200,000 2,200,000
Electronic Merchant Services............... 02/27/00 13.50 1,237,500 1,040,204
Electronic Merchant Services............... 02/29/96 14.00 272,450 272,450
Electronic Merchant Services............... 02/29/96 14.00 134,000 134,000
Encore Orthopedics, Inc.................... 07/31/00 13.50 2,620,985 2,696,789
Encore Orthopedics, Inc.................... 02/28/01 13.00 1,667,680 1,695,375
Entek Scientific, Inc...................... 06/28/01 13.00 2,500,000 2,500,000
Express Shipping Centers, Inc.............. 09/22/00 13.25 1,697,598 1,789,668
Factory Card Outlet of America Ltd......... 11/15/00 12.50 3,670,917 3,715,227
Factory Card Outlet of America, Ltd........ 06/27/01 12.50 915,622 917,028
Front Royal, Inc........................... 10/01/99 13.00 1,550,000 1,550,000
Front Royal, Inc........................... 12/27/99 13.00 675,000 675,000
FX Direct, Inc............................. 01/23/01 13.50 2,324,000 2,341,598
Fycon Technologies, Inc.................... 05/30/96 12.50 100,000 100,000
Fycon Technologies, Inc.................... 06/30/96 12.50 130,000 130,000
Fycon Technologies, Inc.................... 05/16/00 10.00 450,000 450,000
Fycon Technologies, Inc.................... 08/30/00 14.00 1,000,000 800,000
Fycon Technologies, Inc.................... 12/17/00 14.00 100,000 100,000
Fycon Technologies, Inc.................... various 13.50 202,838 0
Gardner Wallcovering, Inc.................. 03/28/01 13.50 1,485,000 1,486,000
Gates Communications, Inc.................. 12/31/98 14.00 125,000 125,000
Gates Communications, L.P.................. 12/31/98 12.50 990,000 995,010
Gitman and Company......................... 12/31/00 14.00 1,700,000 1,600,000
Gitman and Company......................... 06/28/01 10.25 200,000 200,000
Global Finance and Leasing, Inc............ 01/03/00 13.00 1,500,000 1,500,000
Global Marine Electronics, Inc............. 05/01/01 13.00 1,500,000 1,500,000
Gold Medal Products, Inc................... 11/19/00 13.50 1,250,000 1,250,000
Gold Medal Products, Inc................... 02/15/01 13.00 25,000 25,000
Gold Medal Products, Inc................... 06/27/01 13.50 100,000 100,000
Golf Corporation of America, Inc........... 07/13/96 14.00 100,000 100,000
Golf Corporation of America, Inc........... 09/16/99 11.00 300,000 300,000
Golf Corporation of America, Inc........... 12/28/00 14.00 200,000 200,000
Golf Corporation of America, Inc........... 12/29/00 10.00 455,589 455,589
Golf Video, Inc............................ 03/27/01 14.00 250,000 250,000
Gulfstream International Airlines, Inc..... 07/29/99 13.00 1,490,000 1,495,511
Gulfstream International Airlines, Inc..... 09/25/00 14.00 1,000,000 1,000,000
Horizon Medical Products, Inc.............. 09/22/00 13.75 1,500,000 1,500,000
Hoveround Corporation...................... 06/11/98 13.00 495,000 497,866
Hoveround Corporation...................... 11/08/99 13.50 250,000 250,000
Hoveround Corporation...................... 03/08/00 14.00 250,000 250,000
HSA International.......................... 01/04/01 14.00 1,485,000 1,386,500
HSA International, Inc..................... 05/15/01 14.00 300,000 300,000
HSA International, Inc..................... 05/23/01 14.00 100,000 100,000
Hunt Incorporated.......................... 03/31/00 14.00 3,300,000 3,300,000
ILD Communications, Inc.................... 05/10/01 13.50 1,500,000 1,500,000
I.S. Acquisition, LLC...................... 04/01/01 14.00 2,000,000 2,000,000
In Store Services, Inc..................... 04/19/00 14.00 1,188,000 1,191,000
Innotech, Inc.............................. 03/22/99 13.00 1,980,000 1,989,324
Intermed Healthcare Systems, Inc........... 06/29/99 12.00 742,500 745,625
Intermed Healthcare Systems, Inc........... 02/10/00 14.00 375,000 375,000
Johnston County Cable L.P.................. 08/31/00 14.00 1,990,000 1,991,670
Kentucky Kingdom, Inc...................... 04/04/99 8.75 250,000 250,000
</TABLE>
19
<PAGE> 20
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
LOAN COUPON
MATURITY INTEREST
LOANS DATE RATE COST FAIR VALUE
- ------------------------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Kentucky Kingdom, Inc...................... 01/05/98 12.50% $ 1,980,000 $ 1,993,987
Kentucky Kingdom, Inc...................... 09/26/99 10.50 1,200,000 1,200,000
Kentucky Kingdom, Inc...................... 03/01/00 14.00 835,000 835,000
Kentucky Kingdom, Inc...................... 11/06/00 12.50 1,500,000 1,500,000
Kentucky Kingdom, Inc...................... 09/15/96 14.00 2,000,000 2,000,000
Kryptonics, Inc............................ 12/14/00 12.90 2,500,000 2,500,000
KWC Management Co.,LLC..................... 04/25/01 14.00 500,000 500,000
Leisure Clubs International, Inc........... 04/01/01 14.00 1,485,000 1,485,750
Lovett's Buffet, Inc....................... 04/01/00 13.00 2,250,000 2,250,000
MBA Marketing Corporation.................. 02/04/99 12.50 1,782,000 1,790,700
Mayo Hawaiian Corp......................... 06/27/01 14.00 2,200,000 2,200.000
Medical Associates of America, Inc......... 11/01/97 12.50 385,000 392,000
Money Transfer Systems, Inc................ 05/02/01 14.00 150,000 150,000
Money Transfer Systems, Inc................ 07/24/00 14.00 247,500 248,004
Money Transfer Systems, Inc................ 12/20/00 14.00 148,500 148,675
Money Transfer Systems, Inc................ 03/01/01 14.00 148,500 148,600
Monogram Products, Inc..................... 06/18/01 13.50 916,000 917,400
Moore Diversified Products, Inc............ 06/16/00 13.50 800,000 800,000
Moovies Inc................................ 04/18/00 13.50 1,485,000 1,488,750
Moovies Inc................................ 01/04/01 13.00 1,980,000 1,981,998
Multicom Publishing, Inc................... 03/29/01 13.00 2,200,000 2,253,332
Multimedia Learning, Inc................... 04/18/01 13.50 500,000 500,000
Multimedia Learning, Inc................... 05/08/00 14.00 1,500,000 1,500,000
Nationwide Engine Supply L.P............... 01/12/99 12.00 2,475,000 2,487,510
NASC, Inc.................................. 06/26/01 13.50 1,500,000 1,500,000
Nelson Juvenile Products L.L.C............. 10/31/00 14.00 2,000,000 2,000,000
Novavision Inc............................. 06/21/99 10.00 1,000,000 1,000,000
Novavision Inc............................. 06/21/00 10.00 350,000 350,000
Novavision Inc............................. 10/16/00 10.00 100,000 100,000
Novavision Inc............................. 12/04/01 10.00 351,500 351,500
NRI Service and Supply L.P................. 02/13/00 14.00 2,325,000 2,332,098
Orchid Manufacturing Group, Inc............ 09/14/00 13.00 2,960,000 2,964,669
Orchid Manufacturing Group, Inc............ 12/28/00 13.50 1,000,000 1,000,000
PFIC Corporation........................... 02/28/01 13.00 1,000,000 1,000,000
Palco Telecom Service, Inc................. 11/22/99 12.00 1,300,000 1,300,000
Patton Management Corporation.............. 05/26/00 13.50 1,900,000 1,900,000
Pharmaceutical Research Assoc., Inc........ 08/10/00 13.50 1,980,000 1,983,663
Pipeliner Systems, Inc..................... 09/30/98 13.00 980,000 991,322
P. A. Plymouth Inc......................... 09/28/00 13.00 1,000,000 1,000,000
Precision Fixtures & Graphics, Inc......... 04/11/01 14.00 1,095,000 1,095,000
Precision Fixtures & Graphics, Inc......... 05/08/01 14.00 100,000 100,000
Precision Fixtures & Graphics, Inc......... 05/28/01 14.00 75,000 75,000
Precision Fixtures & Graphics, Inc......... 04/11/01 14.00 300,000 300,000
Precision Panel Products, Inc.............. 01/11/00 12.75 1,485,000 1,489,500
Pritchard Paint & Glass Co................. 02/14/01 14.00 1,100,000 1,100,000
Quest Group International, Inc............. 11/15/00 13.25 1,125,000 1,141,664
Radio Systems Corporation.................. 12/27/99 13.00 905,725 935,574
Scandia Technologies, Inc.................. 04/09/01 14.00 1,825,000 1,825,000
Sheet Metal Specialties, Inc............... 06/20/01 14.00 162,875 162,875
SkillSearch Corporation.................... 02/05/98 13.00 496,000 498,947
</TABLE>
20
<PAGE> 21
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
LOAN COUPON
MATURITY INTEREST
LOANS DATE RATE COST FAIR VALUE
- ------------------------------------------- -------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Softsense Computer Products, Inc........... 06/27/01 14.00 $ 2,760,000 $ 2,764,000
Southern Specialty Group................... 06/30/01 14.00% 1,732,500 1,734,252
Summit Publishing Group, Ltd............... 03/17/99 12.00 1,485,000 1,492,000
Suncoast Medical Group, Inc................ 09/14/99 13.50 485,000 490,998
Suncoast Medical Group, Inc................ 06/07/00 14.00 495,000 495,581
Suncoast Medical Group, Inc................ 02/23/01 14.00 495,000 495,415
TCOM Systems, Inc.......................... 02/05/98 13.00 519,919 519,919
Tower Environmental, Inc................... 11/30/98 10.00 2,440,000 2,201,990
Tower Environmental, Inc................... 05/30/95 12.50 150,000 150,000
Trade Am International, Inc................ 09/30/00 12.75 4,000,000 4,000,000
Treasury Coast Pizza Company............... 07/29/98 12.00 841,500 846,612
Ultrafab, Inc.............................. 06/27/01 14.00 1,500,000 1,500,000
Unique Electronics, Inc.................... 11/30/99 10.70 600,000 600,000
Universal Marketing Corporation............ 01/31/00 13.50 500,000 500,000
Urethane Technologies, Inc................. 03/16/01 13.50 1,636,520 1,660,752
Valdawn L.L.C.............................. 04/13/00 13.50 2,399,974 2,400,000
Viking Moorings Acquisition, LLC........... 12/15/00 13.00 1,655,500 1,695,694
Vista Information Solutions, Inc........... 04/20/01 13.50 2,032,157 2,039,954
WWR Technology, Inc........................ 11/01/97 13.50 394,700 398,656
Zahren Alternative Power Corp.............. 01/30/00 13.00 495,000 495,577
Zahren Alternative Power Corp.............. 11/27/99 13.00 1,980,000 1,987,688
------------ ------------
Total Loans.............................. $191,239,238 $187,556,418
============ ============
</TABLE>
21
<PAGE> 22
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Number of Cost or
EQUITY INTERESTS Shares/Percentage Contributed
Ownership Value Fair Value
- ------------------------------------------------------- --------- ----- ----------
<S> <C> <C> <C>
PUBLICLY TRADED INVESTMENTS(a)
American Exchange Network
Common Stock - restricted...................... 139,651 $ 21,879 $ 247,299
Cardiac Control Systems, Inc.
Common Stock - restricted...................... 50,000 $ 250,000 $ 100,625
Innotech, Inc.
Common Stock - restricted...................... 65,995 $ 20,000 $ 503,348
National Vision Associates, Ltd.
Common Stock - restricted...................... 208,698 $1,771,149 $ 817,835
Concept Technologies Group, Inc.
Common Stock - restricted...................... 28,088 $ 5,300 $ 30,721
Moovies Inc.
Common Stock................................... 156,110 $ 16,561 $ 906,088
Premiere Technologies, Inc.
Common Stock................................... 378,360 $ 0 $7,768,992
EQUITY INVESTMENTS IN PRIVATE COMPANIES
Skillsearch Corporation
Common Stock................................... 2,241 $ 250,035 $ 250,035
Potomac Group
Preferred Stock - Series A..................... 800,000 $1,000,000 $2,000,000
Potomac Group
Common Stock................................... 479,115 289,779 1,299,038
Kentucky Kingdom, Inc.
Common Stock................................... 13,260 $ 258,316 $1,650,000
Golf Club of America
Common Stock................................... 100,000 $ 100,000 0
International Risk Control, Inc.
Preferred Stock - Series A..................... 200,000 $ 50,000 $ 50,000
DentureCare, Inc.
Preferred Stock - Series D..................... 49,342 $ 300,000 $ 300,000
Unique Electronics, Inc.
Preferred Stock - Series A..................... 1,000,000 $1,000,000 $1,000,000
Pipeliner Systems, Inc.
Preferred Stock - Series D..................... 5,000 $1,000,000 $1,000,000
Front Royal, Inc.
Common Stock................................... 110,000 $ 275,000 $ 275,000
NovaVision, Inc.
Preferred Stock - Series A..................... 1,763,846 1,763,846 1,763,846
</TABLE>
22
<PAGE> 23
<TABLE>
<CAPTION>
Number of Cost or
EQUITY INTERESTS Shares/Percentage Contributed
Ownership Value Fair Value
-------- ----- ----------
<S> <C> <C> <C>
Fycon Technologies, Inc.
Preferred Stock - Series A 597,162 $ 597,162 $ 0
Carter Kaplan Holdings L.L.C.
Membership interest in L.L.C. 24.00% $ 6,100 $ 0
Virginia Gas Company
Preferred Stock - Series A 2,000 $ 2,000,000 $ 2,000,000
Johnston County Cable L.P.
Class A Interest in L.P. 11.11% of L.P. $ 100,000 $ 100,000
Eastern Food Group L.L.C.
Class B Preferred Units 7,500 $ 754,444 $ 0
Dalcon International, Inc.
Series B Preferred Stock 850,000 $ 850,000 $ 490,000
Zahren Alternative Power Corporation
Common Stock 700 $ 210,000 $ 210,000
Zahren Alternative Power Corporation
Preferred Stock 200 $ 200,000 $ 200,000
Viking Moorings Acquisition, L.L.C.
Membership interest in L.L.C. 6.50% $ 344,500 $ 344,500
Electronic Merchant Services
Series B Preferred Stock 163 $ 0 $ 0
Nelson Juvenile Products L.L.C.
Membership interest in LP 30.00% $ 0 $ 0
Palco Telecom Service
Common Stock 157,895 $ 1,579 $ 1,579
Pharmaceutical Research Associates Inc.
Class F Preferred Stock 29,195 $ 190,000 $ 190,000
Precision Fixtures & Graphics, Inc.
Preferred Stock 1,500,000 $ 1,500,000 $ 1,100,000
Caldwell/VSR Inc.
Preferred Stock 890 $ 890,000 $ 890,000
----------- -----------
TOTAL EQUITY INTERESTS $16,015,650 $25,488,907
=========== ===========
</TABLE>
23
<PAGE> 24
SIRROM CAPITAL CORPORATION
PORTFOLIO OF INVESTMENTS
AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Cost or
Number of Percentage Contributed
WARRANTS Shares/Units Ownership Value Fair Value
- ------------------------------------------------------- ------ --------- ----- ----------
<S> <C> <C> <C> <C>
PUBLICLY TRADED COMPANIES(a)
American Network Exchange.............................. 13,988 0.00% $ 0 $ 0
Cardiac Control Systems, Inc........................... 100,000 2.90% $ 0 $ 201,250
Consumat Systems, Inc.................................. 250,000 20.00% $ 0 $ 568,750
Moovies, Inc........................................... 20,000 0.20% $ 20,000 $ 116,083
Multicom Publishing, Inc............................... 335,423 6.00% $800,000 $ 754,804
Urethane Technologies, Inc............................. 484,640 4.66% $363,480 $ 487,669
Vista Information Solutions, Inc....................... 1,247,582 5.00% $467,843 $1,728,421
PRIVATE COMPANIES
Affinity Fund, Inc..................................... 2,041 8.62% $ 20,000 $ 385,000
Alvin Carter Holdings Corp............................. 2% 2.00% $ 0 $ 0
Amscot Holdings, Inc................................... 1,409 17.50% $ 0 $ 0
Ashe Industries, Inc................................... 216 16.52% $ 20,000 $ 0
Associated Response Services, Inc...................... 343 34.30% $ 14,000 $1,000,000
Assured Power, Inc..................................... 374 16.00% $ 0 $ 0
Auto Rental Systems, Inc............................... 144,869 8.00% $ 0 $ 285,000
B & N Company, Inc..................................... 33 4.00% $ 40,000 $ 40,000
BankCard Services Corporation.......................... 149,261 28.00% $ 3,000 $ 0
BiTec Southeast, Inc................................... 938 10.00% $ 21,000 $ 55,000
C.J. Spirits, Inc...................................... 180,000 10.00% $ 7,500 $ 0
CF Data Corporation.................................... 257 20.50% $ 17,500 $ 17,500
Caldwell/VSR Inc....................................... 159 15.93% $ 0 $ 0
Cartech Holdings Inc................................... 210,527 20.00% $ 0 $ 0
CCS Technology Group, Inc.............................. 30,000 2.00% $ 10,000 $ 10,000
Cedaron Medical Inc.................................... 174,425 4.25% $ 0 $ 0
CellCall, Inc.......................................... 332 1.23% $ 10,000 $ 125,000
Champion Glove Manufacturing Co., Inc.................. 538,614 6.88% $ 0 $ 0
CLS Corporation........................................ 126,997 4.90% $ 0 $ 0
Clearidge, Inc......................................... 449,039 7.90% $ 0 $ 0
Colonial Investments................................... 194 18.00% $ 0 $ 0
Consumer Credit Associates, Inc........................ 3,669 15.50% $ 0 $ 0
Continental Diamond Cutting Co......................... 112 12.22% $ 0 $ 0
Corporate Flight Mgmt., Inc............................ 66,315 10.00% $ 3,500 $ 100,000
Cougar Power Products, Inc............................. 336 22.61% $ 10,000 $ 0
Dalcon International, Inc.............................. 250,000 20.00% $ 0 $ 0
Dalt's, Inc............................................ 125 25.00% $ 0 $ 0
DentureCare, Inc....................................... 546,545 12.65% $ 10,000 $ 375,000
Electronic Merchant Services, Inc...................... 430 12.50% $ 12,500 $ 0
Eastern Food Group L.L.C............................... 17,647 15.00% $ 0 $ 0
Educational Medical, Inc............................... 85,000 8.00% $ 0 $ 400,000
Encore Orthopedics, Inc................................ 466,455 7.36% $711,335 $ 711,335
Entek Scientific Corp.................................. 18,548 4.25% $ 0 $ 0
Express Shipping Centers, Inc.......................... 73,752 3.00% $552,402 $ 552,402
Factory Card Outlet of America Ltd..................... 23,658 2.50% $413,461 $ 584,378
Front Royal, Inc....................................... 240,458 3.59% $ 0 $ 420,000
Fycon Technologies, Inc................................ 58,677 15.00% $ 0 $ 0
Gardner Wallcovering, Inc.............................. 2 2.00% $ 15,000 $ 15,000
Gates Communication, L.P............................... 47% of LP 47.00% $ 10,000 $ 0
Global Finance and Leasing, Inc........................ 5,000 25.00% $ 0 $ 0
Gold Medal Products, Inc............................... 90,000 30.00% $ 0 $ 0
Golf Corporation of America, Inc....................... 300,000 31.50% $ 0 $ 0
Golf Video, Inc........................................ 98 49.50% $ 0 $ 0
Gulfstream International Airlines, Inc................. 271 21.00% $ 10,000 $ 0
Horizon Medical Products, Inc.......................... 9,486 8.25% $ 0 $ 0
Hoveround Corporation.................................. 1,963 27.00% $ 5,000 $1,500,000
HSA International...................................... 100,999 12.00% $ 15,000 $ 0
Hunt Incorporated...................................... 44 10.00% $ 0 $ 100,000
Hunt Leasing & Rental Corp............................. 265 10.00% $ 0 $ 100,000
I. Schneid Holdings LLC................................ 11% of LLC 11.00% $ 0 $ 0
</TABLE>
24
<PAGE> 25
<TABLE>
<CAPTION>
Cost or
Number of Percentage Contributed
WARRANTS Shares/Units Ownership Value Fair Value
- -------------------------------------------------- ------------ --------- ----- ----------
<S> <C> <C> <C> <C>
ILD Communications Inc............................ 5,429 3.20% $ 0 $ 0
In Store Services, Inc............................ 429 12.50% $ 12,000 $ 12,000
Intermed Healthcare Systems, Inc.................. 11,884 10.50% $ 7,500 $ 7,500
Johnston County Cable, L.P........................ 27.5% of LP 27.50% $ 10,000 $ 10,000
Kryptonics, Inc................................... 1,255 9.00% $ 0 $ 0
Leisure Clubs International, Inc.................. 144 10.00% $ 15,000 $ 15,000
Lovett's Buffet, Inc.............................. 204,219 5.00% $ 0 $ 0
MBA Marketing Corporation......................... 11,100 4.29% $ 18,000 $ 18,000
Mayo Hawaiian Corp................................ 81 7.50% $ 0 $ 0
Money Transfer Systems, Inc....................... 78 7.00% $ 5,500 $ 5,500
Monogram Products, Inc............................ 12 11.00% $ 84,000 $ 84,000
Moore Diversified Products, Inc................... 12 11.00% $ 0 $ 0
Multimedia Learning, Inc.......................... 217 6.00% $ 0 $ 0
NASC, Inc......................................... 130 13.00% $ 0 $ 0
Nationwide Engine Supply, Inc..................... 952,381 16.19% $ 25,000 $ 25,000
NRI Service and Supply L.P........................ 27.5% of LP 27.50% $ 25,000 $ 25,000
Novavision, Inc................................... 222,222 10.00% $ 0 $ 0
KWC Management Corp............................... 794 24.40% $ 0 $ 500,000
Orchid Manufacturing Group, Inc................... 1,719,047 4.50% $ 40,000 $ 540,000
PFIC Corporation.................................. 5,917 6.00% $ 0 $ 0
Palco Telecom Service, Inc........................ 157,895 5.00% $ 0 $ 0
Patton Management Corporation..................... 426 10.00% $ 0 $ 300,000
Pharmaceutical Research Associates, Inc........... 259,848 6.00% $ 20,000 $ 20,000
Pipeliner Systems, Inc............................ 2,080,000 20.55% $ 20,000 $ 20,000
P.A. Plymouth, Inc................................ 92,647 15.00% $ 0 $ 0
Precision Fixtures & Graphics Inc................. 399 5.00% $ 0 $ 0
Precision Panel Products, Inc..................... 122 8.25% $ 15,000 $ 15,000
Pritchard Paint & Glass........................... 12,500 25.00% $ 0 $ 0
Quest Group Int'l, Inc............................ 44,444 10.00% $ 125,000 $ 125,000
Radio Systems Corporation......................... 129,734 7.27% $ 94,275 $ 600,000
Scandia Technologies.............................. 282 22.00% $ 0 $ 0
SkillSearch Corporation........................... 2,381 7.20% $ 254,000 $ 119,000
Southern Specialty Brands, Inc.................... 10,000 10.00% $ 17,500 $ 17,500
Delaware Publishing Group, Inc.................... 6,296 24.50% $ 15,000 $ 15,000
Softsense Computer Products, Inc.................. 114,237 1.00% $ 240,000 $ 240,000
Suncoast Medical.................................. 580,159 23.00% $ 25,000 $ 25,000
Suprex Corporation................................ 1,058,179 3.45% $ 0 $ 7,500
The Ryland Co..................................... 1,518 20.50% $ 0 $ 0
Tower Environmental, Inc.......................... 82 10.07% $ 20,000 $ 0
Trade Am International, Inc....................... 335,106 6.00% $ 0 $ 0
Treasure Coast Pizza Company...................... 51 10.00% $ 8,500 $ 8,500
Valdawn L.L.C..................................... 2,658 21.00% $ 26 $ 26
UltraFab, Inc..................................... 120,000 12.00% $ 0 $ 0
UltraFab Vessels, Inc............................. 120,000 12.00% $ 0 $ 0
Unique Electronics, Inc........................... 20% 20.00% $ 0 $ 0
Universal Marketing Corporation................... 111 10.00% $ 0 $ 487,669
Virginia Gas Company.............................. 525 6.00% $ 0 $ 160,000
Voice FX Corporation.............................. 233,112 8.00% $ 176,000 $ 176,000
Zahren Alternative Power Corp..................... 1,168 9.80% $ 25,000 $ 25,000
------------ ------------
Total Warrants............................ $ 4,879,822 $ 13,748,118
------------ ------------
TOTAL INVESTMENTS $212,134,709 $226,793,442
============ ============
</TABLE>
(a) All publicly traded stocks that may not be sold in the public market as a
result of securities laws restrictions, lock-up agreements or other
similar restrictions are typically valued at 70% of market value
at the balance sheet date. All other publicly traded stocks are
typically valued at 90% of market value at the balance sheet date.
25
<PAGE> 26
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's principal investment objectives are to achieve both a high
level of income from interest on loans and fees and long-term growth in its
shareholders' equity through the appreciation in value of equity interests in
its portfolio companies. Therefore, the Company's loans are typically made in
the form of secured debt with relatively high fixed interest rates and with
warrants to purchase equity securities of the borrower. In addition to interest
on investments, the Company also typically collects an up-front processing fee
on each loan it originates.
The Company's financial performance in the Statements of Operations is
composed of three primary elements. The first is "Net operating income," which
is the difference between the Company's income for interest, dividends and fees
and its total operating expenses, including interest expense. The second element
is "Realized gain (loss) on investments," which is the difference between the
proceeds received from the disposition of portfolio assets in the aggregate at
the end of the period and their stated costs at the beginning of the period. The
third element is the "Change in unrealized appreciation (depreciation) of
investments," which is the net change in the fair values of the Company's
portfolio assets compared with their fair values at the beginning of the period
or their stated costs, as appropriate. Generally, "Realized gain (loss) on
investments" and "Change in unrealized appreciation (depreciation) of
investments" are inversely related in that when an appreciated asset is sold to
realize a gain, a decrease in unrealized appreciation occurs when the gain
associated with the asset is transferred from the "unrealized" category to the
"realized" category. Conversely, when a loss is realized on a depreciated
portfolio asset, the reclassification of the loss from "unrealized" to
"realized" causes an increase in unrealized appreciation and an increase in
realized loss.
Net Operating Income. During the quarter ended June 30, 1996, interest
on investments was $5.6 million, a 75.0% increase over the $3.2 million earned
in the same quarter of 1995. During the second quarter of 1996, the Company
collected $652,000 in processing fees, a 108.3% increase over the $313,000
collected in the same quarter of 1995. This increase in interest income and
processing fees is a result of the increase both in the dollar amount of loans
outstanding during the quarter and of loans originated during the period.
The Company's loan portfolio increased 81.4% to $187.6 million at June 30,
1996, from $103.4 million at June 30, 1995. The $28.7 million of loans
originated during the second quarter of 1996 was a 80.5% increase over the $15.9
million of loans originated in the same quarter of 1995. In addition, the
weighted average interest rate charged on the loan portfolio at June 30, 1996
was 13.0%, as compared to 12.7% at June 30, 1995.
26
<PAGE> 27
The most significant portion of the Company's total operating expenses
is interest expense. The Company's interest expense, most of which is related
to the SBA-guaranteed debentures of the Company and the Revolving Credit
Facility, increased to $2.1 million in the second quarter of 1996, an
75.0% increase over the $1.2 million paid in the second quarter of 1995. The
increase in interest expense from 1995 to 1996 is primarily attributable to
increased borrowings from the SBA and establishment of and borrowing under the
Revolving Credit Facility. Borrowings from the SBA were $83.3 million on June
30, 1996, and $65.6 million on June 30, 1995. Amounts outstanding under the
Revolving Credit Facility at June 30, 1996, were $35.9 million.
The other significant components of total operating expenses are (i)
overhead, which primarily relates to employee compensation, travel and marketing
expenses, office expenses and legal fees, (ii) amortization of borrowing costs
and (iii) state taxes. These expenses totaled $998,000 million in the second
quarter of 1996, a 129% increase over the $436,000 of such expenses in the same
quarter of 1995. These increases can be largely attributed to the increase in
the number of employees in 1996 versus 1995 and due to beginning to accrue
bonuses in the current year versus past practice of expensing bonuses when paid
in the first quarter of each year. The bonus accrual added approximately
$300,000 to operating expenses in the second quarter of 1996.
During the quarter ended June 30, 1996, the Company paid dividends of $2.2
million from net operating income. The Company paid dividends of $1.1 million
in the second quarter of 1995.
Realized Gain (Loss) on Investments. The Company's net realized gain
on investments was $200,000 during the quarter ended June 30, 1996, resulting
from a gain on the sale of its warrant in Emerald Pointe Waterpark, L.P. There
were no realized losses during the quarter. The net realized loss for the
second quarter of 1995 was $37,000, primarily resulting from $700,000 in gains
on the sale of equity positions in Behavioral Healthcare Corp., WXMT-Channel 30
TV, and Truckload Management Inc., which were offset by write-offs of equity
positions totaling $140,000 in Healthfield, Inc., and Quality Care Networks and
a loan write-off of $600,000 to Quality Care Networks. Management does not
attempt to maintain a comparable level of realized gains from year to year, but
instead attempts to maximize total investment portfolio appreciation.
Change in Unrealized Appreciation (Depreciation) of Investments. For the
quarters ended June 30, 1996, and 1995, the Company recorded net increases in
unrealized appreciation of investments before income taxes of $2.3 million and
$4.5 million, respectively. These increases are the result of the Company's
quarterly revaluation of its portfolio in accordance with its Valuation Policy
to reflect the fair value of each of its portfolio assets.
27
<PAGE> 28
The following table sets forth information regarding significant changes
in unrealized appreciation (depreciation) of assets in the Company's portfolio
made during the second quarter of 1995 and 1996.
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30,
----------------------
1995 1996
- -----------------------------------------------------------------
(IN THOUSANDS)
<S> <C> <C>
LOANS:
Ashe Industries, Inc. $ $ (150)
Tower Environmental, Inc. (250)
Cougar Power Products, Inc. (525)
Quality Care Networks 150
Freshnuts Foods (200)
Fycon Technologies, Inc. (200)
WARRANTS AND EQUITY SECURITIES:
Premiere Technologies, Inc. 1,611
Vista Information Solutions, Inc. 1,261
Hoveround, Inc. 1,175
Consumat Systems, Inc. 569
Emerald Pointe Waterpark 244 (244)
Fycon Technologies, Inc. (500)
Moovies, Inc. 335 (528)
Eastern Foods LLC (654)
Front Royal, Inc. 300
Innotech, Inc. 273
American Remedial Technologies, Inc. 210
Truckload Management Inc. (145)
Tower Environmental, Inc. (300)
</TABLE>
Provision for Income Taxes. Beginning in February 1995, the Company
elected to be taxed as a Regulated Investment Company ("RIC") under Subchapter
M of the Internal Revenue Code (the "Code"). If the Company, as a RIC,
satisfies certain requirements relating to the source of its income, the
diversification of its assets and the distribution of its net income, the
Company is generally taxed as a pass through entity which acts as a partial
conduit of income to its shareholders. In order to maintain its RIC status, the
Company must in general derive at least 90% of its gross income from dividends,
interest and gains from the sale or disposition of securities; derive less than
30% of its gross income from the sale or disposition of securities held for
less than three months; meet investment diversification requirements defined by
the Code; and distribute to shareholders at least 90% of its net income (other
than long-term capital gains). The Company presently intends to meet the RIC
qualifications in future years, and therefore, the Company has not provided for
federal income taxes on the unrealized appreciation of investments. However,
no assurance can be given that the Company will continue to elect such
treatment.
For the quarter ended June 30, 1996, the Statements of Operations
include a provision for taxes totaling $70,000 for federal income tax at a 35%
rate on realized gains not distributed to shareholders. This tax related
to the retained long-term capital gain of $200,000 on the Company's sale of its
warrant in Emerald Pointe Waterpark, L.P.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had $39.8 million in cash and cash
equivalents, and approximately $10.4 million of the Company's investment
portfolio consisted of publicly-traded securities, which have an ascertainable
market value and represent an additional source of liquidity. However, the
Company's ability to realize such values on a short-term basis is limited by
market conditions and various securities law restrictions. See "Summary of
Significant Accounting Policies" in the Notes to Financial Statements.
The Company's principal sources of capital to fund its portfolio growth
have been borrowings through the SBA sponsored SBIC debenture program, sales of
the Company's equity securities, both privately and publicly, and funds borrowed
from banking institutions. In February 1995, the Company consummated an initial
public offering of 2,645,000 shares of Common Stock resulting in net proceeds of
$26.5 million. In August 1995, the Company consummated a second public offering
of 1,500,000 shares of Common Stock generating net proceeds to the Company of
approximately $21.2 million. In June 1996, the Company consummated a third
public offering of 2,000,000 shares of Common Stock generating net proceeds of
$51.4 million. The Company used the proceeds of the first two offerings to
originate new loans, and the Company has used and will use the proceeds of the
most recent offering to originate new loans.
During the second quarter of 1996, the Company received no additional
funding from the SBA, leaving total SBA borrowings at $83.3 million at June
30, 1996. Each borrowing from the SBA has a term of ten years and can be prepaid
without penalty after five years. The interest rate on these borrowings was
7.02% as of June 30, 1996, and none of these borrowings mature prior to 2002.
Based on the Company's leverageable capital, it is eligible to borrow up to a
total of $90.0 million from the SBA, the maximum amount of SBA loans available
to an SBIC. The Company intends to request the remaining $6.7 million of SBA
funding available to it during August 1996. Given the increased demand for
borrowings under the SBA sponsored SBIC debenture program and concurrent
decrease in funds appropriated by Congress to the SBA, no assurances can be
given as to the amount of additional SBA borrowing that will be granted to the
Company.
As of June 30, 1996, the Company had $35.9 million outstanding under its
$50.0 million Revolving Credit Facility, which is secured by all of the
Company's assets. The interest rate on these borrowings was 6.55% at June 30,
1996. The Revolving Credit Facility matures on December 27, 1998. The Revolving
Credit Facility requires that the Company obtain the lenders' consent prior to,
among other things, encumbering its assets, merging or consolidating with
another entity and making investments other than those permitted by the SBA. In
addition, the Revolving Credit Facility provides that the repayment of any
amounts outstanding can be accelerated if either George M. Miller, II or David
M. Resha ceases to be employed by the Company. The Company did not use the net
proceeds of the public offering of its Common Stock consummated in June 1996 to
repay the amounts owing under the Revolving Credit Facility due to tax
considerations related to the Company's pending reorganization. The Company
has negotiated a temporary reduction in the interest rate paid on the Revolving
Credit Facility to the extent the debt outstanding under the Revolving Credit
Facility is secured by cash remaining from the June 1996 public offering.
28
<PAGE> 29
In order to manage the interest rate risk associated with the variable
interest rate provided for under the Revolving Credit Facility, the Company
has entered into an interest rate swap agreement that effectively converts the
variable rate on a portion of the Revolving Credit Facility to a fixed rate of
8.15% per annum. Under this agreement, the Company will convert $30.0 million to
this fixed rate in $3.0 million increments per month beginning April 1996.
The Company has signed a commitment letter with ING Capital Markets,
Inc. ("ING") to establish a credit facility (the "Special Purpose Facility") in
the amount of $100.0 million. Under the Special Purpose Facility, it is
anticipated that the Company would form a special purpose, bankruptcy remote
subsidiary ("Newco"), that would buy new loans originated by the Company and
the related warrants and use the loans and warrants purchased as collateral to
secure the issuance of commercial paper by ING. Newco would pay a spread to ING
over the rate paid on the commercial paper issued, along with other fees to
originate and administer the Special Purpose Facility. It is anticipated that
Newco would enter into appropriate swap agreements to attempt to hedge the
interest rate risk inherent in the maturing and reissuing of commercial paper
at market rates. Based on current commercial paper rates, the total cost of the
debt is anticipated to be approximately 8.5% to 8.75%. The Special Purpose
Facility will require Newco to be capitalized with a minimum of $20.0 million
in equity, so it is anticipated that some or all of the new loans originated
from the proceeds of the public of fering of Common Stock consummated in June
1996 will be contributed as equity to Newco. Definitive documentation with
respect to the Special Purpose Facility have not yet been negotiated, and no
assurance can be given that such definitive documentatons will be negotiated on
terms satisfactory to the Company.
The Company believes that anticipated borrowings from the SBA and under the
Company's Revolving Credit Facility, together with cash on hand and cash flow
from operations (after distributions to shareholders), will be adequate to fund
the continuing growth of the Company's investment portfolio through the end of
1996 and through the end of 1997 if the Special Purpose Facility is obtained.
In order to provide the funds necessary for the Company to continue its growth
strategy beyond that period, the Company expects to incur, from time to time,
additional short and long-term borrowings from other sources, and to issue,
in public or private transactions, its equity and debt securities. The
availability and terms of any such borrowings will depend upon interest rate,
market and other conditions. There can be no assurance that such additional
funding will be available on terms acceptable to the Company.
IMPACT OF INFLATION
The Company does not believe that its business is materially affected by
inflation, other than the impact which inflation may have on the securities
markets, the valuations of business enterprises and the relationship of such
valuations to underlying earnings, all of which will influence the value of the
Company's investments.
RISKS
The significant risks inherent in the Company's business, which primarily
consists of making loans to small businesses, are set forth in part in the
Company's 1995 Annual Report and should be kept in mind when evaluating the
Company's financial performance.
PORTFOLIO TURNOVER
During the quarter ended June 30, 1996, the Company made loans to 28
companies totaling approximately $28.7 million and experienced six repayments
(either partial or full) aggregating $5.3 million. During the quarter ended
June 30, 1995, the Company made loans to 17 companies totaling approximately
$15.9 million and experienced 5 repayments (either partial or full)
aggregating approximately $5.7 million. The Company can not control all
changes in its portfolio of investments, as borrowers have the right to prepay
loans made by the Company without penalty and the first loans made by the
Company begin maturing in May 1997.
29
<PAGE> 30
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The Company's Annual Shareholder's Meeting was held on April 19,
1996 to (i) elect the directors of the Company for the ensuing
year, (ii) approve the adoption of the Company's Amended and
Restated 1994 Stock Option Plan and the issuance of options
thereunder, (iii) approve the adoption of the Company's 1995 Stock
Option Plan for Non-Employee Directors and the issuance of options
thereunder, (iv) approve the adoption of the Company's 1996
Incentive Stock Option Plan and the issuance of options thereunder,
and (v) ratify the selection of Arthur Andersen LLP to serve as
independent public accountants for the Company for the year ending
December 31, 1996.
b. The following directors were elected at the Annual Meeting of
Shareholders:
<TABLE>
<CAPTION>
For Withheld
--------- --------
<S> <C> <C>
E. Townes Duncan 5,757,002 34,340
William D. Eberle 5,757,007 34,335
Edward J. Mathias 5,757,007 34,335
Robert A. McCabe, Jr. 5,757,007 34,335
George M. Miller, II 5,757,002 34,340
John A. Morris, Jr. 5,757,002 34,340
Raymond H. Pirtle, Jr. 5,757,002 34,340
L. Edward Wilson, P.E. 5,757,002 34,340
</TABLE>
c. The resolutions passed were as follows:
1. To approve the adoption of the Company's Amended and Restated
1994 Stock Option Plan and the issuance of options thereunder.
FOR 4,561,426 AGAINST 107,660 WITHHELD 30,575
2. To approve the adoption of the Company's Stock Option Plan for
Non-Employee Directors and the issuance of options thereunder.
FOR 4,566,035 AGAINST 102,851 WITHHELD 30,775
3. To approve the adoption of the Company's 1996 Incentive Stock
Option Plan and the issuance of options thereunder.
FOR 4,558,935 AGAINST 112,251 WITHHELD 28,475
4. To ratify the selection of Arthur Andersen LLP to serve as
independent public accountants for the Company for the year
ending December 31, 1996.
FOR 5,771,379 AGAINST 1,000 WITHHELD 18,963
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K.
None.
30
<PAGE> 31
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 thereunto duly authorized.
SIRROM CAPITAL CORPORATION
Date: August 14, 1996 By: /s/ Carl W. Stratton
-------------------------
Carl W. Stratton
Chief Financial Officer
31
<PAGE> 32
EXHIBIT INDEX
Exhibit No. Description
- ----------- ------------------------------------------
Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule (for SEC use only).
<PAGE> 1
EXHIBIT 11
SIRROM CAPITAL CORPORATION
Per share data
For the quarter ending June 30, 1996(1)
<TABLE>
<S> <C>
Net asset value, beginning of period $10.27
---------
Net operating income $0.28
Net realized and unrealized gains and
losses on investments(2) $3.01
---------
Total from investments operations $3.29
Less: Dividend on net investment income $0.20
Distribution on realized capital gains $0.00
---------
Total distributions $0.20
Net asset value, end of period $13.36
Per share market value, end of period $27.25
Shares outstanding, end of period 11,130,116
</TABLE>
(1) All shown are based on shares outstanding per share data at end of period.
(2) Per share net realized and unrealized gains or losses include the effect of
stock issuances at per share prices in excess of the Company's per share
net asset value.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 212,134,709
<INVESTMENTS-AT-VALUE> 226,793,442
<RECEIVABLES> 2,704,360
<ASSETS-OTHER> 42,911,998
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 272,409,801
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 119,147,766
<OTHER-ITEMS-LIABILITIES> 4,518,842
<TOTAL-LIABILITIES> 123,666,609
<SENIOR-EQUITY> 124,512,161
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 11,130,116
<SHARES-COMMON-PRIOR> 7,695,116
<ACCUMULATED-NII-CURRENT> 7,090,361
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,371,800
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14,308,728
<NET-ASSETS> 148,743,192
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5,585,856
<OTHER-INCOME> 713,855
<EXPENSES-NET> 3,138,043
<NET-INVESTMENT-INCOME> 3,161,668
<REALIZED-GAINS-CURRENT> 200,000
<APPREC-INCREASE-CURRENT> 2,384,868
<NET-CHANGE-FROM-OPS> 5,546,536
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,242,689
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,000,000
<NUMBER-OF-SHARES-REDEEMED> 65,000
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 6,112,708
<ACCUMULATED-GAINS-PRIOR> (1,137,381)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 2,051,288
<GROSS-EXPENSE> 3,138,043
<AVERAGE-NET-ASSETS> 118,544,403
<PER-SHARE-NAV-BEGIN> 9.61
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 3.65
<PER-SHARE-DIVIDEND> 0.46
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.36
<EXPENSE-RATIO> .026
<AVG-DEBT-OUTSTANDING> 102,803,883
<AVG-DEBT-PER-SHARE> 9.24
</TABLE>
