FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 31, 2004
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-28405
MEVC DRAPER FISHER JURVETSON FUND I, INC.
D/B/A MVC CAPITAL
(Exact name of the registrant as specified in its charter)
DELAWARE 94-3346760
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
287 Bowman Avenue
3rd Floor
Purchase, New York
(Address of principal executive 10577
offices) (Zip Code)
Registrant's telephone number, including area code: (914) 701-0310
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
registered
Common Stock New York Stock Exchange
------------------- ---------------------------------
Securities registered pursuant to Section 12(g) of the Act: None
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 [ ]
As of March 15, 2004, there were 12,293,042 shares of Registrant's common stock,
$.01 par value (the "Shares"), outstanding.
meVC Draper Fisher Jurvetson Fund I, Inc.
(A Delaware Corporation)
Index
Part I. Financial Information Page
Item 1. Financial Statements
Balance Sheets
- January 31, 2004 and October 31, 2003......................... 1
Statement of Operations
- For Period November 1, 2003 to January 31, 2004 and
the Period November 1, 2002 to January 31, 2003............... 2
Statement of Cash Flows
- For the Period November 1, 2003 to January 31, 2004 and
the Period November 1, 2002 to January 31, 2003............... 3
Statement of Shareholders' Equity
- For the Period November 1, 2003 to January 31, 2004 and
the Period November 1, 2002 to January 31, 2003............... 4
Selected Per Share Data and Ratios
- For the Period November 1, 2003 to January 31, 2004 and
the Year ended October 31, 2003............................... 5
Schedule of Investments
- January 31, 2004.............................................. 6
Notes to Financial Statements................................... 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 12
Item 3. Quantitative and Qualitative Disclosure about Market Risk....... 20
Item 4. Controls and Procedures......................................... 22
Part II. Other Information
Item 1. Legal Proceedings............................................... 23
Item 2. Changes in Securities and Use of Proceeds....................... 23
Item 6. Exhibits and Reports on Form 8-K................................ 24
SIGNATURE................................................................. 24
Exhibits.................................................................. 25
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FINAL STATEMENTS
MVC Capital
Balance Sheet
JANUARY 31, OCTOBER 31,
2004 2003
(UNAUDITED)
ASSETS
ASSETS
Cash and cash equivalents $ 5,117,990 $ 6,850
(cost $5,117,990 and $6,850, respectively)
Investments in short term securities, at market value
(cost $80,880,710 and $113,237,521, respectively) 80,880,710 113,237,521
Investments in subordinated notes, at fair value
(cost $4,500,000 and $4,500,000, respectively) (Note 7) - -
Investments in debt instruments, at fair value 6,999,787 12,471,288
(cost $10,873,140 and $16,439,343, respectively) (Note 7)
Investments in preferred/common stocks, at fair value 14,100,000 11,600,000
(cost $115,094,977 and $125,575,852, respectively) (Note 7)
Interest receivable 96,503 152,630
Prepaid expenses 82,759 412,003
Receivable for investment deposit 1,000,000 -
-------------- -----------------
TOTAL ASSETS $ 108,277,749 $ 137,880,282
============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Administration 18,168 19,771
Audit fees 32,500 70,736
Legal fees 127,483 43,046
Directors' fees 28,179 27,511
Employee compensation & benefits 71,633 102,337
Other accrued expenses 258,176 608,729
-------------- -----------------
TOTAL LIABILITIES $ 536,139 $ 872,130
-------------- -----------------
SHAREHOLDER'S EQUITY
Common Stock, $0.01 par value; 150,000,000 shares
authorized; 16,152,600 shares issued, respectively 165,000 165,000
Additional paid in capital 299,871,488 311,485,000
Accumulated deficit (157,828,777) (171,746,921)
Treasury Stock, at cost, 4,206,958 and 347,400 shares held, respectively (34,466,101) (2,894,917)
-------------- ----------------
TOTAL SHAREHOLDERS' EQUITY 107,741,610 137,008,162
-------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 108,277,749 $ 137,880,292
============== =================
NET ASSET VALUE PER SHARE $ 8.76 $ 8.48
============== ==================
The accompanying notes are an integral part of these financial statements.
-1-
MVC CAPITAL
STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 1, 2003 NOVEMBER 1, 2002
TO JANUARY 31, 2004 TO JANUARY 31, 2003
INVESTMENT INCOME:
Interest income $ 711,117 $ 566,055
Other income 5,059 -
-------------------- --------------------
TOTAL INVESTMENT INCOME 716,176 566,055
OPERATING EXPENSES:
Employee compensation & benefits 267,840 835,334
Legal fees 230,933 1,098,970
Insurance 368,638 21,861
Facilities (140,033) 232,206
Directors fees 81,906 86,369
Audit fees 36,764 42,017
Administration 27,632 37,562
Consulting and public relations fees 41,368 90,410
Printing and postage 41,768 140,269
Other expenses 189,606 35,972
-------------------- --------------------
TOTAL OPERATING EXPENSES 1,146,422 2,620,970
NET INVESTMENT LOSS (430,246) (2,054,915)
-------------------- --------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on
investments (10,340,698) (152,845)
Net unrealized appreciation (depreciation) on
investments 13,075,576 (27,584,209)
-------------------- --------------------
Net realized and unrealized gain (loss) on
investments 2,734,878 (27,737,054)
-------------------- --------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $ 2,304,632 $ (29,791,969)
==================== ====================
NET INCREASE (DECREASE) IN NET ASSETS PER SHARE
RESULTING FROM OPERATIONS $ 0.14 $ (1.83)
==================== ====================
DIVIDENDS DECLARED PER SHARE $ - -
==================== ====================
The accompanying notes are an integral part of these financial statements.
-2-
MVC CAPITAL
STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE PERIOD FOR THE PERIOD
NOVEMBER 1, 2003 NOVEMBER 1, 2002 TO
TO JANUARY 31, 2004 TO JANUARY 31, 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations $ 2,304,632 $ (29,791,969)
Adjustments to reconcile to net cash provided by
operating activities:
Realized loss 10,340,698 152,845
Net unrealized (gain) loss (13,075,576) 27,584,209
Changes in assets and liabilities:
Prepaid expenses 329,244 (295,868)
Interest receivable 56,127 83,327
Receivable for investment deposit (1,000,000) -
Liabilities (335,991) 691,732
Purchases of preferred/common stocks - (1,999,997)
Purchases of debt instruments - (17,950,000)
Purchases of short-term investments (80,807,409) (44,145,816)
Purchases of cash equivalents (46,907,725) (349,721,438)
Proceeds from preferred stocks 136,272 57,365
Proceeds from debt instruments 5,617,223 -
Sales/maturities of short-term investments 113,389,123 60,000,000
Sales/maturities of cash equivalents 46,635,706 376,726,918
--------------- -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 36,682,324 21,391,308
--------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases of capital stock (31,571,184) (1,660,464)
--------------- -----------------
NET CASH USED FOR FINANCING ACTIVITIES (31,571,184) (1,660,464)
--------------- -----------------
NET CHANGE IN CASH AND CASH EQUIVALENTS FOR THE PERIOD 5,111,140 19,730,844
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,850 78,873,485
--------------- -----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,117,990 $ 98,604,329
=============== =================
The accompanying notes are an integral part of these financial statements.
-3-
MVC CAPITAL
STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
FUND ADDITIONAL TOTAL
SHARES COMMON PAID IN TREASURY ACCUMULATED SHAREHOLDERS'
OUTSTANDING STOCK CAPITAL STOCK DEFICIT EQUITY
BALANCE AT NOVEMBER 1, 2002 16,500,000 $165,000 $311,485,000 $ - $(116,263,523) $195,386,477
Treasury Shares repurchased (203,200) - - (1,660,464) - (1,660,464)
Net decrease in net assets from operations - - - - (29,791,969) (29,791,969)
---------- -------- ------------ ------------ ------------- ------------
BALANCE AT JANUARY 31, 2003 16,296,800 $165,000 $311,485,000 $ (1,660,464) $(146,055,492) $163,934,044
---------- -------- ------------ ------------ ------------- ------------
BALANCE AT NOVEMBER 1, 2003 16,152,600 $165,000 $311,485,000 $ (2,894,917) $(171,746,921) 137,008,162
Return of Capital Statement of Position reclass - - (11,613,512) - 11,613,512 -
Treasury Shares repurchased (3,859,558) - - $(31,571,184) - (31,571,184)
Net increase in net assets from operations - - - - 2,304,632 2,304,632
---------- -------- ------------ ------------ ------------- ------------
BALANCE AT JANUARY 31, 2004 12,293,042 $165,000 $299,871,488 $(34,466,101) $(157,828,777) $107,741,610
========== ======== ============ ============ ============= ============
The accompanying notes are an integral part of these financial statements.
-4-
MVC CAPITAL
SELECTED PER SHARE DATA AND RATIOS
FOR THE PERIOD FOR THE
NOVEMBER 1, 2003 YEAR ENDED
TO JANUARY 31, 2004 OCTOBER 31, 2003
(UNAUDITED)
Net asset value, beginning of period $ 8.48 $ 11.84
Gain (Loss) from investment operations:
Net investment loss (0.03) (0.53)
Net realized and unrealized gain (loss) on 0.17 (2.89)
investments
Total gain (loss) from investment operations 0.14 (3.42)
Less distributions from:
Net investment income - -
Total distributions - -
Capital share transactions
Anti-dilutive effect of Share Repurchase Program 0.14 0.06
Net asset value, end of period $ 8.76 $ 8.48
Market value, end of period $ 8.21 $ 8.10
Market discount -6.28% -4.48%
TOTAL RETURN - AT NAV (a) -12.92% -28.38%
TOTAL RETURN - AT MARKET (a) -3.41% 2.53%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $ 107,742 $ 137,008
Ratios to average net assets:
Expenses 3.56% (b) 7.01% (c)
Net investment income -1.34% (b) -5.22% (c)
(a) Total annual return is historical and assumes changes in share price,
reinvestments of all dividends and distributions, and no sales charge for the
year.
(b) Annualized.
(c) The expense ratio for the year ended October 31, 2003 includes approximately
$4.0 million of proxy/litigation fees and expenses. When these fees and expenses
are excluded, the Fund's expense ratio is 4.52% and the net investment loss is
- -2.74%.
The accompanying notes are an integral part of
these financial statements.
-5-
MVC Capital
Schedule of Investments
January 31, 2004
(Unaudited)
Date of
Initial
Description Shares/Principal Investment Cost Fair Value
- -----------------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS-13.08% (a, b, d, g) (Note 6, 7, 8)
TECHNOLOGY INVESTMENTS - 13.08%
Actelis Networks, inc. Series C 1,506,025 May 2001 $ 5,000,003 $ 1,000,000
* Blue Star Solutions, Inc.:
Common Stock 49,474 May 2000 3,999,999 -
Series C Preferred 74,211 May 2000 5,999,999 -
* BlueStar Solutions Inc., Series D 4,545,455 Feb. 2002 3,000,000 1,500,000
CBCA, Inc., Series E 5,729,562 Apr. 2002 11,999,99 500,000
DataPlay, Inc., Series D (e) 2,500,000 June 2001 7,500,000 -
* Endymion Systems, Inc., Series A 7,156,760 June 2000 7,000,000 -
FOLIOfn, Inc., Series C 5,802,259 June 2000 15,000,000 -
Ishoni Networks, Inc., Series C 2,003,607 Nov. 2000 10,000,003 -
Lumeta Corporation, Series A 384,615 Oct.2000 250,000 43,511
Lumeta Corporation, Series B 266,846 June 2002 156,489 156,489
MainStream Data, Series D 85,719 Aug. 2002 3,750,000 -
Phosistor Technologies, Inc., Series B (f) 6,666,667 Jan. 2002 1,000,000 -
* ProcessClaims, Inc., Series C 6,250,000 June 2001 2,000,000 2,000,000
* ProcessClaims, Inc., Series D 849,257 May 2002 400,000 400,000
* ProcessClaims, Inc.
Series E warrants, expire 12/31/05 (g) 873,362 May 2002 20 -
* PTS Messaging, Inc., Series A-i (f) 217,336 July 2000 1,089,065 -
SafeStone Technologies PLC
Series A Ordinary Shares 2,106,378 Dec. 2000 4,015,402 -
ShopEaze Systems, Inc., Series B (f) 2,097,902 May 2000 6,000,000 -
Sonexis, Inc., Series C 2,590,674 June 2000 10,000,000 500,000
* Sygate Technologies, Inc., Series D 9,756,098 Oct. 2002 4,000,000 5,500,000
* Vendio Services, Inc., Common Stock (c) 10,476 June 2000 5,500,000 -
* Vendio Services, Inc., Series A(c) 6,443,188 Jan. 2002 1,134,001 500,000
The accompanying notes are an integral part
of these financial statements.
-6-
MVC Capital
Schedule of Investments (Continued)
January 31, 2004
(Unaudited)
Date of
Initial
Description Shares/Principal Investment Cost Fair Value
- -----------------------------------------------------------------------------------------------------------------------------------
* Yaga, Inc., Series A 300,000 Nov. 2000 $ 300,000 $ -
* Yaga, Inc.:
Series B 1,000,000 June 2001 2,000,000 -
Series B Warrants, expire 06/08/04 (g) 100,000 June 2001 - -
* 0-In Design Automation, Inc., Series E 2,239,291 Nov. 2001 4,000,001 2,000,000
-------------- --------------
TOTAL PREFERRED STOCKS 115,094,977 14,100,000
-------------- --------------
DEBT INSTRUMENTS-6.50% (a, b)
TECHNOLOGY INVESTMENTS - 6.50%
Arcot Systems, Inc. (h)
10.0000%, 12/31/2005 4,909,722 Dec. 2002 4,877,087 2,000,000
Determine Software, Inc.
12.0000%, 01/31/2006 1,968,889 Feb. 2003 1,955,039 1,955,039
Determine Software, Inc., Series C Warrants (g) 2,229,955 Feb. 2003 - -
Integral Development Corporation (h)
10.0000%, 12/31/2005 4,068,054 Dec. 2002 4,041,014 3,044,748
-------------- --------------
TOTAL DEBT INSTRUMENTS 10,873,140 6,999,787
-------------- --------------
SUBORDINATED NOTES-0.00% (a, b, g)
TECHNOLOGY INVESTMENTS - 0.00%
DataPlay, Inc. (e)
6.000%, 05/10/2005 2,000,000 May 2002 2,000,000 -
DataPlay, Inc. (e)
6.000%, 06/17/2005 500,000 June 2002 500,000 -
DataPlay, Inc. (e)
6.000%, 09/24/2005 200,000 Sept. 2002 200,000 -
DataPlay, Inc. (e)
6.000%, 08/16/2005 200,000 Aug. 2002 200,000 -
DataPlay, Inc. (e)
6.000%, 08/26/2005 400,000 Aug. 2002 400,000 -
DataPlay, Inc. (e)
6.000%, 09/03/2005 200,000 Sept. 2002 200,000 -
DataPlay, Inc. (e)
6.000%, 06/27/2005 1,000,000 June 2002 1,000,000 -
-------------- --------------
TOTAL SUBORDINATED NOTES 4,500,000 -
-------------- --------------
The accompanying notes are an integral part of
these financial statements.
-7-
MVC CAPITAL
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2004
(UNAUDITED)
Date of
Initial Fair Value/
Description Shares/Principal Investment Cost Market Value
- -----------------------------------------------------------------------------------------------------------------------------------
SHORT-TERM SECURITIES-75.07% (b)
U.S. GOVERNMENT & AGENCY SECURITIES-75.07% (b)
U.S. Treasury Bill
1.0300%, 02/05/2004 8,356,000 Nov. 2003 $ 8,355,192 $ 8,355,192
U.S. Treasury Bill
0.9700%, 02/12/2004 5,507,000 Nov. 2003 5,505,553 5,505,553
U.S. Treasury Bill
0.9250%, 02/19/2004 2,592,000 Nov. 2003 2,590,898 2,590,898
U.S. Treasury Bill
0.8000%, 03/25/2004 9,031,000 Dec. 2003 9,020,231 9,020,231
U.S. Treasury Bill
1.0200%, 04/01/2004 36,732,000 Jan. 2004 36,680,575 36,680,575
U.S. Treasury Bill
0.9800%, 04/08/2004 13,560,000 Jan. 2004 13,540,063 13,540,063
U.S. Treasury Bill
0.8700%, 04/29/2004 5,199,000 Jan. 2004 5,188,198 5,188,198
---------------- ---------------
TOTAL U.S. GOVERNMENT & AGENCY SECURITIES 80,880,710 80,880,710
---------------- ---------------
TOTAL SHORT-TERM SECURITIES 80,880,710 80,880,710
---------------- ---------------
CASH AND CASH EQUIVALENTS-4.75% (b)
MONEY MARKET FUNDS-0.22% (b)
First American Prime Obligations Fund - Class A 238,010 Jan. 2004 238,010 238,010
U.S. GOVERNMENT & AGENCY SECURITIES-4.53% (b)
U.S. Treasury Bill
0.9500%, 04/22/2004 4,889,000 Jan. 2004 4,879,980 4,879,980
---------------- ---------------
TOTAL CASH AND CASH EQUIVALENTS 5,117,990 5,117,990
---------------- ---------------
TOTAL INVESTMENTS-99.40% (b) $ 216,466,817 $ 107,098,487
================ ---------------
The accompanying notes are an integral part of
these financial statements.
-8-
MVC CAPITAL
SCHEDULE OF INVESTMENTS (CONTINUED)
JANUARY 31, 2004
(UNAUDITED)
(a) These securities are restricted from public sale without prior registration
under the Securities Act of 1933. The Fund negotiates certain aspects of the
method and timing of the disposition of these investments, including
registration rights and related costs.
(b) Percentages are based on net assets of $107,741,610.
(c) As defined in the Investment Company Act of 1940, at January 31, 2004, the
Fund was considered to have a controlling interest in Vendio Services, Inc.
(d) All of the Fund's preferred and common stock and debt investments are in
eligible portfolio companies, as defined in the Investment Company Act of 1940,
except SafeStone Technologies PLC. The Fund makes available significant
managerial assistance to all of the portfolio companies in which it has
invested.
(e) Company in bankruptcy/liquidation.
(f) Company in dissolution.
(g) Non-income producing assets.
(h) Also received warrants to purchase a number of shares of preferred stock to
be determined upon exercise.
* Affiliated Issuers (Total Market Value of $11,900,000): companies in which
the owns at least 5% of the voting securities.
The accompanying notes are an integral part of
these financial statements.
-9-
meVC Draper Fisher Jurvetson Fund I, Inc. (the "Fund")
Notes to Financial Statements
January 31, 2004
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared
in accordance with the instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. Certain amounts have been reclassified to
adjust to the current period's presentation. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. These statements should be read in
conjunction with the financial statements and notes thereto included in the
Fund's Annual Report on Form 10-K for the year ended October 31, 2003, as filed
with the Securities and Exchange Commission (the "SEC") on January 29, 2004
(File No. 814-00201).
2. CONCENTRATION OF MARKET RISK
Financial instruments that subjected the Fund to concentrations of market
risk consisted principally of preferred stocks, subordinated notes, and debt
instruments, which represent approximately 19.58% of the Fund's net assets. As
discussed in Note 3, investments consist of securities in companies with no
readily determinable market values and as such are valued in accordance with the
Fund's fair value policies and procedures. The Fund's investment strategy
represents a high degree of business and financial risk due to the fact that the
investments include entities with little operating history or entities that
possess operations in new or developing industries. These investments, should
they become publicly traded, would be: (i) subject to restrictions on resale,
because they were acquired from the issuer in private placement transactions;
and (ii) susceptible to market risk. At this time, the Fund's investments in
short-term securities are in 90-day Treasury Bills, which are federally insured
securities, except that the Fund's cash balances, if not large enough to be
invested in 90-day Treasury Bills, are swept into a designated money market
account.
3. PORTFOLIO INVESTMENTS
During the three months ended January 31, 2004, the Fund made no
investments in new or existing portfolio companies. The Fund had one return of
capital from PTS Messaging, Inc. ("PTS Messaging") with proceeds totaling
approximately $96,642 and a realized loss totaling approximately $10.4 million
from the initial disbursement of assets. There was one gain of $39,630
representing proceeds received from the cashless exercise of the Fund's warrants
of Synhrgy HR Technologies, Inc. ("Synhrgy") in conjunction with the early
repayment by Synhrgy of the $4.9 million remaining balance of the Fund's credit
facility. The Fund also began to receive the monthly principal repayments on the
credit facilities of Integral Development Corporation ("Integral"), Arcot
Systems, Inc. ("Arcot"), and Determine Software, Inc ("Determine"). Each made
payments according to their respective credit facility agreements totaling the
following amounts: Arcot $140,278, Determine, $56,111, and Integral $420,834.
For the three months ended January 31, 2004, the Valuation Committee of the
Board of Directors ("Valuation Committee") increased the fair value of the
Fund's investments in 0-In Design Automation, Inc. ("0-In") by $1 million and
Sygate Technologies, Inc. ("Sygate") by $1.5 million.
At January 31, 2004, the fair value of all portfolio investments, exclusive
of short-term securities, was $21.1 million with a cost of $130.5 million and at
October 31, 2003, the fair value of all portfolio investments, exclusive of
short-term securities, was $24.1 million with a cost of $146.5 million.
4. COMMITMENTS AND CONTINGENCIES
The Fund rents office space at 287 Bowman Avenue, 3rd Floor, Purchase, New
York 10577, under a lease which is scheduled to expire on November 30, 2005.
Future payments under this lease total $102,872, with minimum payments of
$41,456 from February 1, 2004 through October 31, 2004, $56,682 from November 1,
2004 through October 31, 2005, and $4,734 from November 1, 2005 through November
30, 2005. The building
-10-
at 287 Bowman Avenue, Purchase, New York is owned by Phoenix Capital Partners,
LLC, an entity which is 97% owned by Michael Tokarz, the Fund's Chairman.
5. CERTAIN REPURCHASES OF EQUITY SECURITIES BY THE ISSUER
During the three months ended January 31, 2004, the Fund commenced a tender
offer to acquire up to twenty-five percent (25%) of its outstanding shares of
common stock at a per share cash purchase price equal to ninety-five percent
(95%) of net asset value per share as of December 31, 2003, the day the offer
expired. Based on a final count by the depositary for the tender offer,
3,859,558 shares, or 23.9% of the Fund's outstanding common stock, were
tendered. Because less than 25% of the Fund's shares were tendered, the Fund
purchased all shares tendered. Each share accepted for purchase was purchased at
a price of $8.18 resulting in a total disbursement from the Fund of $31,571,184.
Repurchased shares are included in treasury stock on the Balance Sheet. Since
completion of the tender offer, MVC has 12,293,042 shares of common stock
outstanding. The anti-dilutive effect of the tender offer totaled $1,650,697 or
approximately $0.14 per share for all remaining shares after the tender offer.
6. MANAGEMENT
On November 6, 2003, Michael Tokarz assumed his new position as Chairman,
Portfolio Manager and director of the Fund. As Portfolio Manager, Mr. Tokarz
will be compensated by the Fund based upon his positive performance as the
Portfolio Manager. Under the terms of his agreement with the Fund, the Fund will
pay Mr. Tokarz an amount equal to the lesser of (a) 20% of the net income of the
Fund for the fiscal year; or (b) the sum of (i) 20% of the net capital gains
realized by the Fund in respect of the investments made during his tenure as
Portfolio Manager; and (ii) the amount, if any, by which the Fund's total
expenses for a fiscal year were less than two percent of the Fund's net assets
(determined as of the last day of the period). Any payments to be made shall be
calculated based upon the audited financial statements of the Fund for the
applicable fiscal year and shall be paid as soon as practicable following the
completion of such audit.
On January 12, 2004, Frances Spark was appointed Interim Chief Financial
Officer and Jackie Shapiro was appointed Secretary to the Fund.
7. RECOVERY OF EXPENSE
On January 21, 2004, the Fund reached an agreement with the property
manager at 3000 Sand Hill Road, Menlo Park, California to terminate its lease at
such location. Under the terms of the agreement, the Fund bought out its lease
directly from the property manager, for an amount equal to $232,835. As a
result, the Fund recovered approximately $250,000 of the remaining reserve
established at October 31, 2003. Without the recovery of the reserve, the gross
facilities expense for the three months ending January 31, 2004 would have been
approximately $110,000.
8. TAX MATTERS
RETURN OF CAPITAL STATEMENT OF POSITION (ROCSOP) ADJUSTMENT: The Fund
booked a reclassification during the three months ended January 31, 2004 for
permanent book to tax differences during the year ended October 31, 2003. The
differences were primarily due to net operating losses, which for tax purposes
cannot be used to offset future taxable income, under Subchapter M of the
Internal Revenue Code. The net operating loss resulted in a net decrease in
accumulated net investment loss, a net increase in accumulated net realized loss
on investment transactions and a corresponding decrease in additional paid-in
capital. This reclassification had no effect on net assets.
9. SUBSEQUENT EVENTS
On February 26, 2004, the Fund filed a definitive proxy statement with the
SEC asking the stockholders to approve (i) the election of Emilio Dominianni,
Gerald Hellerman, Robert C. Knapp, Michael Tokarz, and Robert S. Everett to
serve as members of the Board of Directors of the Fund and (ii) adopting an
amendment to the Fund's Certificate of Incorporation changing the name of the
Fund from "meVC Draper Fisher Jurvetson Fund
-11-
I, Inc." to "MVC Capital, Inc." The proxy statement and related materials were
mailed on or about February 26, 2004.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains certain statements of a forward-looking nature
relating to future events or the future financial performance of the Fund and
its investment portfolio companies. Words such as MAY, WILL, EXPECT, BELIEVE,
ANTICIPATE, INTEND, COULD, ESTIMATE, MIGHT and CONTINUE, and the negative or
other variations thereof or comparable terminology, are intended to identify
forward-looking statements. Forward-looking statements are included in this
report pursuant to the "Safe Harbor" provision of the Private Securities
Litigation Reform Act of 1995. Such statements are predictions only, and the
actual events or results may differ materially from those discussed in the
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those relating to investment
capital demand, pricing, market acceptance, the effect of economic conditions,
litigation and the effect of regulatory proceedings, competitive forces, the
results of financing and investing efforts, the ability to complete transactions
and other risks identified below or in the Fund's filings with the Commission.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Fund undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events. The following analysis of the financial condition and
results of operations of the Fund should be read in conjunction with the
Financial Statements, the Notes thereto and the other financial information
included elsewhere in this report.
SELECTED FINANCIAL DATA
The following table sets forth, for the periods indicated, selected
financial data:
12
- ---------------------------------------------------------------- -------------------------- -------------------------
Statement of Operations data: THREE MONTHS ENDED THREE MONTHS ENDED
JANUARY 31, 2004 JANUARY 31, 2003
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Total investment income $716,176 $566,055
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Total operating expenses $1,146,422 $2,620,970
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Net investment loss $(430,246) $(2,054,915)
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Net realized loss on investments $(10,340,698) $(152,845)
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Net unrealized gain (loss) on investments $2,734,878 $$(27,737,054)
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
BALANCE SHEET DATA: JANUARY 31, 2004 OCTOBER 31, 2003
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Total assets $108,277,749 $137,880,292
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Total liabilities $536,139 $872,130
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Total Shareholders Equity $107,741,610 $137,008,162
- ---------------------------------------------------------------- -------------------------- -------------------------
- ---------------------------------------------------------------- -------------------------- -------------------------
Net asset value per share $8.76 $8.48
- ---------------------------------------------------------------- -------------------------- -------------------------
OVERVIEW
The Fund is a non-diversified investment company that is regulated as a
business development company under the Investment Company Act. The Fund's
investment objective, as amended by shareholder vote on September 16, 2003, is
to seek to maximize total return from capital appreciation and/or income. The
Fund seeks to achieve its investment objective by providing equity and debt
financing to Portfolio Companies.
Historically, the Fund's investing activities have focused primarily on
private equity securities. Generally, private equity investments are structured
as convertible preferred stock which do not pay dividends. Consequently, current
income has not been a significant part of the portfolio. Typically, a cash
return on the investment is not received until a liquidity event, such as a
public offering or merger, occurs.
The Fund is concentrating its investment efforts on companies that, in
Management's view, provide opportunities to maximize total return from capital
appreciation and/or income. Under the Fund's flexible investment approach, the
Fund has the authority to invest, without limit, in any one Portfolio Company,
subject to any diversification limits that may be required in order for the Fund
to continue to qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended.
The Fund did not complete any investments as of the end of its most
recently completed fiscal quarter. On November 6, 2003, Michael Tokarz assumed
his new position as Portfolio Manager and is in the process of seeking to
implement the new strategy of maximizing total return from capital appreciation
and/or income through investments primarily in senior and subordinated loans,
venture capital, mezzanine and preferred instruments or other private equity
instruments.
13
INVESTMENT INCOME
FOR THE THREE MONTHS ENDED JANUARY 31, 2004 AND 2003. Interest and other
income for the three months ended January 31, 2004 and 2003 was $716,176 and
$566,055, respectively, an increase of approximately $150,000. The increase in
interest and other income during the three months ended January 31, 2004 was
primarily the result of the Fund's assets being invested in credit facilities of
certain Portfolio Companies which earned a higher rate of interest than when the
assets were previously invested in short term investments.
OPERATING EXPENSES
FOR THE THREE MONTHS ENDED JANUARY 31, 2004 AND 2003. Operating expenses
for the three months ended January 31, 2004 and 2003 was $1.1 million and $2.6
million, respectively, a decrease of $1.5 million.
Significant components of operating expenses for the three months ended
January 31, 2004 include insurance premium expenses of $368,638, salaries and
benefits of $267,840, legal fees of $230,933, and a facilities recovery of
($140,033).
During the three months ended January 31, 2004, the Fund paid or accrued
$368,638 in insurance premium expense. During the three months ended January 31,
2003, the Fund paid or accrued $21,861 in insurance premium expense. In February
2003, the former management of the Fund ("Former Management") entered into new
Directors & Officers/Professional Liability Insurance policies with a premium of
approximately $1.4 million. The cost is being amortized over the life of the
policy, through February 2004.
During the three months ended January 31, 2004, the Fund paid or accrued
$267,840 in salaries and benefits. During the three months ended January 31,
2003, the Fund paid or accrued $835,334 in salaries and benefits. The reduced
expense for the three months ended January 31, 2004 is reflective of the
significant reduction in the number of Fund employees as compared to the
previous period.
During the three months ended January 31, 2004, the Fund paid or accrued
$230,933 in legal fees. During the three months ended January 31, 2003, the Fund
paid or accrued $1,098,970 in legal fees. The reduced expense for the three
months ended January 31, 2004 is reflective of a decreased need for legal
counsel due to the solidification of the Fund's intended direction by the
current Management and that the Fund was not involved in litigation during the
most recent quarter.
During the three months ended January 31, 2004, the Fund recovered $140,033
in facilities expenses. During the three months ended January 31, 2003, the Fund
paid or accrued $232,206 in facilities expenses. On January 21, 2004, the Fund
reached an agreement with the property manager at 3000 Sand Hill Road, Menlo
Park, California to terminate its lease at such location. Under the terms of the
agreement, the Fund bought-out its lease directly from the property manager, for
an amount equal to $232,835. As a result, the Fund recovered approximately
$250,000 of the remaining reserve established at October 31, 2003. Without the
recovery of the reserve, the gross facilities expense for the three months
ending January 31, 2004 was approximately $110,000.
REALIZED GAIN AND LOSS ON PORTFOLIO SECURITIES
FOR THE THREE MONTHS ENDED JANUARY 31, 2004 AND 2003. Net realized losses
for the three months ended January 31, 2004 and 2003 were $10.3 million and
$152,845, respectively, an increase of $10.1 million.
Realized losses for the three months ended January 31, 2004 resulted mainly
from the return of capital by PTS Messaging to it preferred shareholders,
resulting in a net loss of $10.4 million.
Realized losses for the three months ended January 31, 2003 resulted mainly
from the disbursement of assets from EXP Systems, Inc. to its preferred
shareholders.
14
UNREALIZED APPRECIATION AND DEPRECIATION OF PORTFOLIO SECURITIES
FOR THE THREE MONTHS ENDED JANUARY 31, 2004 AND 2003. Net decrease in
unrealized depreciation for the three months ended January 31, 2004 was $13.1
million and net increase in unrealized depreciation for the three months ended
January 31, 2003 was $27.6 million.
Such net decrease in unrealized depreciation on investment transactions for
the three months ended January 31, 2004 resulted mainly from the $10.4 million
depreciation reclassification from unrealized to realized effected by the return
of capital of PTS Messaging. Such net decrease also resulted from the
determinations of the Valuation Committee to increase the fair value of the
Fund's investments in Sygate and 0-In by $2.5 million. For a further discussion
on the Portfolio Companies, please refer to "Portfolio Investments" below.
Such net increase in unrealized depreciation on investment transactions for
the three months ended January 31, 2003 resulted mainly from the Valuation
Committee's decision to decrease the fair value of the Fund's investments in
Actelis Networks, Inc., Arcot, BlueStar Solutions, Inc., CBCA, Inc., Endymion
Systems, Inc., FOLIOFN, Inc., Ishoni Networks, Inc., Lumeta Corporation, Pagoo,
Inc., Phosistor Technologies, Inc., ProcessClaims, Inc. DataPlay, Inc.,
SafeStone Technologies PLC, Sonexis, Inc. and Yaga, Inc.
For the three months ended January 31, 2004, the accumulated deficit
decreased $2.3 million and for the three months ended January 31, 2003, the
accumulated deficit increased $29.8 million. The Fund's total accumulated
deficit for the three months ended January 31, 2004 and 2003 was $157.8 million
and $146.1 million, respectively. The decrease in accumulated deficit for the
three months ended January 31, 2004 is due primarily to the Valuation
Committee's increase of the fair valuations of certain Portfolio Company
investments by $2.5 million offset by a net investment loss of $430,246. The
decrease is also due to the reclassification of previously repurchased treasury
shares.
PORTFOLIO INVESTMENTS
FOR THE THREE MONTHS ENDED JANUARY 31, 2004 AND 2003. The cost of equity
investments held by the Fund for the three months ended January 31, 2004 and
2003 was $115.1 million and $129.3 million, respectively, a decrease of $14.2
million. The aggregate fair value of equity investments for the three months
ended January 31, 2004 and 2003 was $14.1 million and $29.1 million,
respectively, a decrease of $15 million. The decrease in the fair value of the
equity investments held by the Fund resulted mainly from the Valuation
Committee's decrease of the fair valuations of certain Portfolio Company equity
investments. The cost of debt instruments held by the Fund for the three months
ended January 31, 2004 and 2003 was $10.9 million and $18.0 million,
respectively, a decrease of $7.1 million. The aggregate fair value of debt
instruments for the three months ended January 31, 2004 and 2003 was $7.0
million and $15.6 million, respectively. The decrease in the cost and fair value
of the debt investments resulted mainly from the early repayment of the Fund's
credit facility in Synhrgy and the Valuation Committee's decrease of the fair
valuations of certain other Portfolio Company debt investments. The cost of
subordinated notes held by the Fund at January 31, 2004 and 2003 was $4.5
million and $4.5 million, respectively. The aggregate fair value of subordinated
notes for the three months ended January 31, 2004 and 2003 was $0 and $0,
respectively. The cost and aggregated fair value of short-term securities held
by the Fund for the three months ended January 31, 2004 and 2003 was $80.9
million and $19.9 million, respectively, an increase of $61.0 million. The
increase in short-term investments resulted mainly from the Fund's increased
investments in short-term securities as opposed to investments in cash and cash
equivalents. As a result, the cost and aggregate fair value of cash and cash
equivalents held by the Fund for the three months ended January 31, 2004 and
2003 was $5.1 million and $98.4 million, respectively, a decrease of $93.3
million. This change in position was also impacted by the return of $31.6
million in cash to the shareholders in January 2004 resulting from the
completion of the Fund's tender offer. Management continues to evaluate
opportunities for its Portfolio Companies to realize value for the Fund and its
stockholders.
At January 31, 2004, the Fund had active investments in the following
Portfolio Companies:
ACTELIS NETWORKS, INC.
Actelis Networks, Inc. ("Actelis"), Fremont, California, provides
authentication and access control solutions to secure the integrity of
e-business in Internet-scale and wireless environments.
At October 31, 2003 and January 31, 2004, the Fund's investment in Actelis
consisted of 1,506,025 shares of Series C Preferred Stock at a cost of $5.0
million. The investment has been assigned a fair value of $1.0 million, or
approximately $0.66 per share.
15
ARCOT SYSTEMS, INC.
Arcot Systems, Inc. ("Arcot"), Santa Clara, California, develops solutions
to address the challenges of securing e-business applications in Internet-scale
and transactional environments.
At October 31, 2003, the Fund's investment in Arcot consisted of an
outstanding balance on the loan of $5.05 million with a cost of $5.0 million.
The investment was assigned a fair value of $2.0 million and the warrants were
assigned a fair valued of $0.0.
During the three months ended January 31, 2004, Arcot made a scheduled
principal repayment totaling $140,278.
At January 31, 2004, the Fund's investment in Arcot consisted of an
outstanding balance on the loan of $4.91 million with a cost of $4.88 million.
The investment has been assigned a fair value of $2.0 million and the warrants
have been assigned a fair value of $0.0.
BLUESTAR SOLUTIONS, INC.
BlueStar Solutions, Inc. ("BlueStar"), Cupertino, California, is a provider
of enterprise applications outsourcing services. BlueStar delivers complete
end-to-end services for managing SAP applications.
At October 31, 2003 and January 31, 2004, the Fund's investments in
BlueStar consisted of 74,211 shares of Series C Preferred Stock, 4,545,455
shares of Series D Preferred Stock, and 49,474 shares of Common Stock with a
combined cost of $13.0 million. The investments have been assigned a fair value
of $1.5 million, or $0.00 per share of the Series C Preferred Stock,
approximately $0.33 per share of the Series D Preferred Stock, and $0.00 per
share of the Common Stock.
CBCA, INC.
CBCA, Inc. ("CBCA"), Oakland, California, has developed an automated health
benefit claims processing and payment system that includes full website
functionality.
At October 31, 2003 and January 31, 2004, the Fund's investment in CBCA
consisted of 5,729,562 shares of Series E Preferred Stock with a cost of $12.0
million. The investment has been assigned a fair value of $500,000, at
approximately $0.09 per share.
DATAPLAY, INC.
DataPlay, Inc. ("DataPlay"), Boulder, Colorado, developed new ways of
enabling consumers to record and play digital content.
At October 31, 2003 and January 31, 2004, the Fund's total investment in
DataPlay consisted of 2,500,000 shares of Series D Preferred Stock with a cost
basis of $7.5 million and seven promissory notes a combined cost of $4.5
million. The investments have been assigned a fair of $0.0.
DETERMINE SOFTWARE, INC.
Determine Software, Inc. ("Determine"), San Francisco, California, is a
provider of web-based contract management software.
At October 31, 2003, the Fund's investment in Determine consisted of an
outstanding balance on the loan of $2.02 million with a cost of $2.0 million and
2,229,955 warrants to purchase a future round of convertible preferred stock at
a price of $0.205 per share. The investment was assigned a fair value of $2.0
million and the warrants were assigned a fair value of $0.0.
During the three months ended January 31, 2004, Determine made scheduled
principal repayments totaling $56,111.
At January 31, 2004, the Fund's in Determine consisted of an outstanding
balance on the loan of $1.97 million with a cost of $1.96 million. The
investment has been assigned a fair value of $1.96 million and the warrants have
been assigned a fair value of $0.0.
ENDYMION SYSTEMS, INC.
Endymion Systems, Inc. ("Endymion"), Oakland, California, is a single
source supplier for strategic, web-enabled, end-to-end business solutions that
help its customers leverage Internet technologies to drive growth and increase
productivity.
At October 31, 2003 and January 31, 2004, the Fund's investment in Endymion
consisted of 7,156,760 shares of Series A Preferred Stock with a cost of $7.0
million. The investment has been assigned a fair value of $0.0.
FOLIOFN, INC.
FolioFN, Inc. ("FolioFN"), Vienna, Virginia, is a financial services
technology company that delivers investment solutions to financial services
firms and investors.
At October 31, 2003 and January 31, 2004, the Fund's investment in FolioFN
consisted of 5,802,259 shares of Series C Preferred Stock with a cost of $15.0
million. The investment has been assigned a fair value of $0.0.
16
INTEGRAL DEVELOPMENT CORPORATION
Integral Development Corporation ("Integral"), Mountain View, California,
is a developer of technology which enables financial institutions to expand,
integrate and automate their capital markets businesses and operations.
At October 31, 2003, the Fund's investment in Integral consisted of an
outstanding balance on the loan of $4.46 million with a cost of $4.46 million.
The investment was assigned a fair value of $3.5 million and the warrants were
assigned a fair value of $0.0.
During the three months ended January 31, 2004, Integral made scheduled
principal repayments totaling $420,834.
At January 31, 2004, the Fund's investment in Integral consisted of an
outstanding balance on the loan of $4.07 million with a cost of $4.04 million.
The investment has been assigned a fair value of $3.04 million.
ISHONI NETWORKS, INC.
Ishoni Networks, Inc. ("Ishoni"), Santa Clara, California, developed
technology that allowed customer premises equipment manufacturers and service
providers to offer integrated voice, data and security services over a single
broadband connection to residential and business customers.
At October 31, 2003, the Fund's investment in Ishoni consisted of 2,003,607
shares of Series C Preferred Stock with a cost of $10.0 million. The investment
was assigned a fair value of $0.0.
During the three months ended January 31, 2004, Ishoni filed for bankruptcy
under Chapter 11 of the U.S. Bankruptcy Code.
At January 31, 2004, the Fund's investment in Ishoni consisted of 2,003,607
shares of Series C Preferred Stock with a cost of $10.0 million. The investment
has been assigned a fair value of $0.0.
LUMETA CORPORATION
Lumeta Corporation ("Lumeta"), Somerset, New Jersey, is a developer of
network management, security, and auditing solutions. The company provides
businesses with a comprehensive analysis of their network security that reveals
the vulnerabilities and inefficiencies of their corporate intranets.
The Fund's investment in Lumeta consisted of 384,615 shares of Series A
Preferred Stock and 266,846 shares of Series B Preferred Stock with a combined
cost of approximately $406,000. At October 31, 2003 and January 31, 2004, the
investments have been assigned a fair value of $200,000, or approximately $0.11
per share of Series A Preferred Stock and approximately $0.59 per share of
Series B Preferred Stock.
MAINSTREAM DATA, INC.
Mainstream Data, Inc. ("Mainstream"), Salt Lake City, Utah, builds and
operates satellite, internet, and wireless broadcast networks for the world's
largest information companies. Mainstream Data networks deliver text news,
streaming stock quotations, and digital images to subscribers around the world.
At October 31, 2003 and January 31, 2004, the Fund's investment in
Mainstream consisted of 85,719 shares of Series D Preferred Stock with a cost of
$3.75 million. The investment has been assigned a fair value of $0.0.
PHOSISTOR TECHNOLOGIES, INC.
Phosistor Technologies, Inc. ("Phosistor"), Pleasanton, California,
designed and developed integrated semiconductor components and modules for
global telecommunications and data communications networks.
At October 31, 2003 and January 31, 2004, the Fund's investment in
Phosistor consisted of 6,666,667 shares of Series B Preferred Stock with a cost
of $1.0 million. The investment has been assigned a fair value of $0.0.
PROCESSCLAIMS, INC.
ProcessClaims, Inc. ("ProcessClaims"), Manhattan Beach, California,
provides web-based solutions and value added services that streamline the
automobile insurance claims process for the insurance industry and its partners.
At October 31, 2003 and January 31, 2004, the Fund's investments in
ProcessClaims consisted of 6,250,000 shares of Series C Preferred Stock, 849,257
shares of Series D Preferred Stock, and 873,362 warrants to purchase 873,362
shares of Series E Convertible Preferred Stock with a combined cost of $2.4
million. The investment in the Series C Preferred Stock has been assigned a fair
value of $2.0 million, or approximately $0.32 per share of Series C Preferred
Stock, the investment in the Series D Preferred Stock has been assigned a fair
value of $400,000 or approximately $0.471 per share of Series D Preferred Stock,
and the investment in the Series E warrants has been assigned a fair value of
$0.0.
17
Nino Marakovic, an employee of the Fund, serves as a director of
ProcessClaims.
PTS MESSAGING, INC. (FORMERLY PAGOO, INC.)
PTS Messaging, Inc. ("PTS Messaging"), formerly Pagoo, Inc., Lafayette,
California, developed Internet voice technologies offering Internet services
direct to the consumer.
At October 31, 2003, the Fund's investment in PTS Messaging consisted of
1,956,026 shares of Series A-1 Convertible Preferred Stock with a cost of $11.6
million. The investment was assigned a fair value of $0.0.
During the three months ended January 31, 2004, PTS Messaging initiated a
partial return of capital with proceeds totaling approximately $96,642 and a
realized loss totaling approximately $10.4 million.
At January 31, 2004, the Fund's investment in PTS Messaging consisted of
217,336 shares of Series A-1 Convertible Preferred Stock with a cost of $1.09
million. The investment has been assigned a fair value of $0.0.
Nino Marakovic, an employee of the Fund, serves as a director of PTS
Messaging.
SAFESTONE TECHNOLOGIES PLC
SafeStone Technologies PLC ("SafeStone"), Old Amersham, UK, provides
organizations with secure access controls across the extended enterprise,
enforcing compliance with security policies and enabling effective management of
the corporate IT and e-business infrastructure.
The Fund's investments in SafeStone consisted of 2,106,378 shares of Series
A Ordinary Stock with a cost of $4.0 million. At October 31, 2003 and January
31, 2004, the investment has been assigned a fair value of $0.0.
SHOPEAZE SYSTEMS, INC.
ShopEaze Systems, Inc. ("ShopEaze"), Sunnyvale, California, partnered with
established retailers to help them build online businesses to complement their
existing brick-and-mortar businesses.
The Fund's investment in ShopEaze consisted of 2,097,902 shares of Series B
Preferred Stock with a cost of $6.0 million. At October 31, 2003 and January 31,
2004, the investment has been assigned a fair value of $0.0. ShopEaze ceased
operations during 2002.
SONEXIS, INC.
Sonexis, Inc. ("Sonexis"), Boston, Massachusetts, is the developer of a new
kind of conferencing solution - Sonexis ConferenceManager - a modular platform
that supports a breadth of audio and web conferencing functionality to deliver
rich media conferencing.
The Fund's investment in Sonexis consisted of 2,590,674 shares of Series C
Preferred Stock with a cost of $10.0 million. At October 31, 2003 and January
31, 2004, the investment has been assigned a fair value of approximately
$500,000, or approximately $0.19 per share.
SYGATE TECHNOLOGIES, INC.
Sygate Technologies, Inc. ("Sygate"), Fremont, California, is a provider of
enterprise-focused security policy enforcement solutions which provide the
infrastructure to maintain an unbroken chain of control to IT Management.
At October 31, 2003, the Fund's investment in Sygate consisted of 9,756,098
shares of Series D Preferred Stock with a cost of $4.0 million. The investment
was assigned a fair value of $4.0 million, or approximately $0.41 per share.
18
During the three months ended January 31, 2004, the Valuation Committee
determined to increase the carrying value of the Fund's investments in the
Series D Preferred Stock of Sygate by approximately $1.5 million to $5.5
million. The increase of the fair value was based upon the company's improved
financial condition.
At January 31, 2004, the Fund's investment in Sygate consisted of 9,756,098
shares of Series D Preferred Stock with a cost of $4.0 million. The investment
has been assigned a fair value of $5.5 million, or approximately $0.56 per
share.
SYNHRGY HR TECHNOLOGIES, INC.
Synhrgy HR Technologies, Inc. ("Synhrgy"), Houston, Texas, provides human
resources technology and outsourcing services to Fortune 1000 companies.
At October 31, 2003, the Fund's investment in Synhrgy consisted of an
outstanding balance on the loan of $5.0 million with a cost of $4.96 million.
The investment was assigned a fair value of $4.96 million and the warrants were
assigned a fair value of $0.0.
During the three months ended January 31, 2004, Synhrgy repaid the balance
of its original $5.0 million credit facility to the Fund. In conjunction with
the repayment of the credit facility, the Fund also exercised its 43,750
warrants in a cashless transaction for a gain of approximately $40,000.
At January 31, 2004, the Fund no longer held an investment in Synhrgy.
VENDIO SERVICES, INC.
Vendio Services, Inc. ("Vendio"), San Bruno, California, enables small
businesses and entrepreneurs to build Internet sales channels by providing
software solutions to help these merchants efficiently market, sell and
distribute their products.
The Fund's investments in Vendio consisted of 10,476 shares of Common Stock
and 6,443,188 shares of Series A Preferred Stock at a cost of $6.6 million. At
October 31, 2003 and January 31, 2004, the investments have been assigned a fair
value of approximately $500,000, or $0.00 per share for the Common Stock and
approximately $0.08 per share for the Series A Preferred Stock.
Nino Marakovic, an employee of the Fund, serves as a director of Vendio.
YAGA, INC.
Yaga, Inc. ("Yaga"), San Francisco, California, provides an advanced hosted
application service provider (ASP) platform that addresses emerging revenue and
payment infrastructure needs of online businesses. Yaga's sophisticated payment
and accounting application supports micropayments, aggregated billing and stored
value accounts while also managing royalty/affiliate accounting and split
payments.
The Fund's investment in Yaga consisted of 300,000 shares of Series A
Preferred Stock, 1,000,000 shares of Series B Preferred and 100,000 warrants to
purchase 100,000 shares of Series B Preferred Shares with a combined cost of
$2.3 million. At October 31, 2003 and January 31, 2004, the investments have
been assigned a fair value of $0.0.
0-IN DESIGN AUTOMATION, INC.
0-In Design Automation, Inc. ("0-In"), San Jose, California, is an
electronic design automation (EDA) company providing functional verification
products that help verify multi-million gate application specific integrated
circuit (ASIC) and system-on-chip (SOC) chip designs.
At October 31, 2003, the Fund's investment in 0-In consisted of 2,239,291
shares of Series E Preferred Stock at a cost of $4.0 million. The investment was
assigned a fair value of $1.0 million, or approximately $0.45 per share.
During the three months ended January 31, 2004, the Current Valuation
Committee determined to increase the carrying value of the Fund's investments in
the Series E Preferred Stock of 0-In by $1.0 million to $2.0 million. The
19
increase of the fair value was based upon the company's improved financial
situation.
At January 31, 2004, the Fund's investment in 0-In consisted of 2,239,291
shares of Series E Preferred Stock at a cost of $4.0 million. The investment has
been assigned a fair value of $2.0 million, or approximately $0.89 per share.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 2004, the Fund had $107.0 million of investments consisting
of investments in preferred and common stocks totaling $14.1 million,
investments in debt instruments totaling $7.0 million, investments in U.S.
government and agency securities totaling $80.9 million and cash and cash
equivalents totaling approximately $5.1 million. The Fund considers all money
market and all highly liquid temporary cash investments purchased with an
original maturity of three months or less to be cash equivalents.
Current balance sheet resources are believed to be sufficient to finance
anticipated future commitments.
During the three months ended January 31, 2004, the Fund commenced and
completed a tender offer to acquire up to twenty-five percent (25%) of its
outstanding shares of common stock at a per share cash purchase price equal to
ninety-five percent (95%) of net asset value per share as of December 31, 2003,
the day the offer expired. Based on a final count by the depositary for the
tender offer, 3,859,558 shares were tendered at a price of $8.18 resulting in a
total disbursement from the Fund of $31,571,184.
SUBSEQUENT EVENTS
On February 26, 2004, the Fund filed a definitive proxy statement with the
SEC asking the stockholders to approve (i) the election of Emilio Dominianni,
Gerald Hellerman, Robert C. Knapp, Michael Tokarz, and Robert S. Everett to
serve as members of the Board of Directors of the Fund and (ii) adopting an
amendment to the Fund's Certificate of Incorporation changing the name of the
Fund from "meVC Draper Fisher Jurvetson Fund I, Inc." to "MVC Capital, Inc." The
proxy statement and related materials were mailed on or about February 26, 2004.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Historically the Fund has invested in small companies, and its
investments in these companies are considered speculative in nature. The Fund's
investments often include securities that are subject to legal or contractual
restrictions on resale that adversely affect the liquidity and marketability of
such securities. As a result, the Fund is subject to risk of loss which may
prevent our stockholders from achieving price appreciation, dividend
distributions and return of capital.
ILLIQUID INVESTMENTS. The Fund typically invests in securities which
are subject to legal or other restrictions on transfer or for which no liquid
market exists. The market prices, if any, for such securities tend to be
volatile and may not be readily ascertainable, and the Fund may not be able to
sell them when it desires to do so or to realize what it perceives to be their
fair value in the event of a sale. The sale of restricted and illiquid
securities often requires more time and results in higher brokerage charges or
dealer discounts and other selling expenses than does the sale of securities
eligible for trading on national securities exchanges or in the over-the-counter
markets. The Fund may not be readily able to dispose of such illiquid
investments and, in some cases, may be contractually prohibited from disposing
of such investments for a specified period of time. Restricted securities may
sell at a price lower than similar securities that are not subject to
restrictions on resale.
EQUITY MARKET RISK. Generally the Fund does not invest in publicly
traded securities. However, if the Fund were to make such investments in the
future, the Fund will be subject to equity market risk.
20
INVESTMENTS IN UNLISTED SECURITIES. The Fund typically invests in
unlisted securities. Because of the absence of any trading market for these
investments, it may take longer to liquidate, or it may not be possible to
liquidate, these positions than would be the case for publicly traded
securities. Although these securities may be resold in privately negotiated
transactions, the prices realized on these sales could be less than those
originally paid by the Fund. Further, companies whose securities are not
publicly traded may not be subject to public disclosure and other investor
protection requirements applicable to publicly traded securities.
GROWTH STAGE COMPANIES. While investments in growth stage companies
offer the opportunity for significant capital gains, such investments involve a
high degree of business and financial risk which can result in substantial
losses. The stock market has experienced volatility which has particularly
affected the securities of technology companies. As a result, the Fund's
performance may experience substantial volatility. An investment in the Fund
should not constitute a complete investment program for the investor.
EVENTS OF SEPTEMBER 11, 2001. On September 11, 2001, terrorist attacks
on the United States caused significant loss of life and property damage and
disruptions in U.S. markets and in global markets. Since that time, the United
States has commenced military action and imposed economic and diplomatic
sanctions. The long-term impact of these events, and of further possible
terrorist attacks, is unclear, but could have a material effect on general
economic conditions and market liquidity.
VALUATION RISK. The portion of our portfolio consisting of investments
in private companies is also subject to valuation risk. The market value of the
Fund's shares in large part depends on the values of the Fund's investments and
the prospects and financial results of the companies in which the Fund invests.
Many of the Fund's investments are securities of private companies that are not
publicly traded. The financial and other information regarding the issuers of
these securities that is available to the Fund may be more limited than the
information available in the case of issuers whose securities are publicly
traded. The Board and/or the Valuation Committee determine the fair value of
these securities in accordance with procedures deemed reasonable. However, fair
value is an estimate and, notwithstanding the good faith efforts of the Board of
Directors to determine the fair value of securities held by the Fund, there can
be no assurance that those values accurately reflect the prices that the Fund
would realize upon sales of those securities. Moreover, the prospects and
financial condition of the companies in which the Fund invests may change and
these changes may have a significant impact on the fair values of the Fund's
investments. We value our privately held investments based on a determination
made by the Board and/or the Valuation Committee on a quarterly basis and as
otherwise required in accordance with our established fair value procedures. In
the absence of a readily ascertainable market value, the estimated values of our
investments may differ significantly from the values that would exist if a ready
market for these securities existed. Any changes in valuation are recorded in
our statements of operations as "Net unrealized gain (loss) on investments."
Investments in short term securities and cash and cash equivalents
comprised approximately 79.86% of the Fund's net assets at January 31, 2004. The
Fund has invested a portion of its capital in debt securities, the yield and
value of which may be impacted by changes in market interest rates.
VALUATION OF INVESTMENTS. Investments in non-publicly traded preferred
and common stock are carried at fair value with the net change in unrealized
appreciation or depreciation included in the determination of increases or
decreases in net assets resulting from its operations. Cost is used to
approximate fair value of these investments until developments affecting an
investment provide a basis for valuing such investment at a value other than
cost.
The fair value of investments for which no market exists and for which
the Board and/or the Fund's Valuation Committee have determined that the
original cost of the investment is no longer an appropriate fair valuation will
be determined on the basis of procedures approved by the Board. Valuations are
based upon such factors as the financial and/or operating results of the most
recent fiscal period, the performance of the company relative to planned
budgets/forecasts, the issuer's financial condition and the markets in which it
does business, the prices of any recent transactions or offerings regarding such
securities or any proxy securities, any available analysis, media, or other
reports or information regarding the issuer, or the markets or industry in which
it operates, the nature of any restrictions on disposition of the securities and
other analytical data. In the case of unsuccessful operations, the valuation may
be based upon anticipated liquidation proceeds.
21
Because of the inherent uncertainty of the valuation of portfolio
securities which do not have readily ascertainable market values, the Fund's
determination of fair value may significantly differ from the fair market value
that would have been used had a ready market existed for the securities. Such
values do not reflect brokers' fees or other normal selling costs which might
become payable on disposition of such investments.
Investments in securities that are publicly traded on an organized
exchange are valued at their quoted closing market price, less a discount to
reflect the estimated effects of restrictions on the sale of such securities
("Valuation Discount"), if applicable. Investments in companies whose securities
are actively traded in the over the counter market are valued at the average
closing of their Bid and Ask prices, less a Valuation Discount to reflect the
estimated effects of restrictions on the sale of such securities, if applicable.
If a reliable last bid and ask price are not available, market values for equity
securities are determined based on the last reliable bid quotation available
from a market maker in the security.
Short-term investments, including cash equivalents, having maturities of 90
days or less are stated at amortized cost, which approximates fair value. Other
fixed income securities are stated at fair value. Fair value of these securities
is determined at the most recent bid or yield equivalent from dealers that make
markets in such securities.
ITEM 4. CONTROLS AND PROCEDURES
The Fund recognizes management's responsibility for establishing and
maintaining adequate internal control over financial reporting for the Fund.
Within the 90 days prior to the filing date of this quarterly report on Form
10-Q, the Fund carried out an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures. This evaluation was carried
out under the supervision and with the participation of management, including
the individual who performs the functions of a Principal Executive Officer (the
"CEO") and the individual who performs the functions of a Principal Financial
Officer (the "CFO"). Based upon that evaluation, the CEO and the CFO have
concluded that the Fund's disclosure controls and procedures are adequate and
effective.
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our CEO and CFO, as appropriate to allow
timely decisions regarding required disclosure.
There have been no significant changes in the Fund's internal controls or
in other factors that could significantly affect internal controls subsequent to
the date we carried out the evaluation discussed above.
-22-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 20, 2002, Millenco LP ("Millenco"), a stockholder, filed a
complaint in the United States District Court for the District of Delaware on
behalf of the Fund against meVC Advisers, Inc. (the "Former Advisor"). The
complaint alleges that the fees received by the Former Advisor beginning one
year prior to the filing of the complaint were excessive, in violation of
Section 36(b) of the Investment Company Act. The Former Advisor's motions to
dismiss the action or transfer it to California were both denied. The case is in
discovery, which has been stayed temporarily for the purpose of settlement
negotiations and mediation scheduled to begin in April 2004. The Fund is
monitoring this litigation inasmuch as any net recovery would accrue to the
Fund.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The following table provides information for Fund repurchases made during
the three months ended January 31, 2004:
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
(A) (B) (C) (D)
TOTAL AVERAGE TOTAL NUMBER OF SHARES MAXIMUM NUMBER OF
NUMBER OF PRICE PURCHASED AS PART OF SHARES THAT MAY YET
SHARES PAID PER PUBLICLY ANNOUNCED BE PURCHASED UNDER
PERIOD PURCHASED SHARE PLANS OR PROGRAMS THE PLANS OR PROGRAMS
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
November 1, 2003 to - - - -
November 30, 2003
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
December 1, 2003 to 3,859,558 $8.18 3,859,558+ 0
December 31, 2003
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
January 1, 2004 to - - - -
January 31, 2004
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
Total 3,859,558 $8.18 3,859,558+ 0
- --------------------------- ----------------- ------------ ----------------------------- -----------------------------
+On November 26, 2003, the Fund announced a tender offer to acquire up to
twenty-five percent (25%) of its outstanding shares of common stock, or
4,038,150 shares, at a per share cash purchase price equal to ninety-five
percent (95%) of net asset value per share as of December 31, 2003, the day the
offer expired. As the tender offer expired during the three months ended January
31, 2004, there are no further purchases to be made.
23
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Exhibit
------------- ---------
31 Rule 13a-14(a) Certifications.
32 Section 1350 Certification.
Other required Exhibits are included in this Form 10-Q or have been
previously filed with the Securities and Exchange Commission (the
"SEC") in the Fund's Registration Statement on Form N-2 (Reg. No.
333-92287) or the Fund's Annual Report on Form 10-K for the year ended
October 31, 2003, as filed with the Securities and Exchange Commission
(the "SEC") on January 29, 2004 (File No. 814-00201).
(b) Reports on Form 8-K
On November 6, 2003, the Fund filed a report on Form 8-K advising
that Michael Tokarz had assumed his new position as Chairman,
Portfolio Manager and a director of MVC Capital, pursuant to a
shareholder vote held on September 16, 2003. Concurrent with Mr.
Tokarz's appointment, Robert Everett stepped down after completing his
role as interim CEO of the Fund. Separately, as part of its fiscal
year-end review process, the Fund announced that the valuation
committee of the Fund's Board of Directors had written down the fair
value of certain Fund holdings. The write-down has decreased the
Fund's NAV by $5.0 million ($0.31 per share).
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed by the
undersigned, thereunto duly authorized.
MEVC DRAPER FISHER JURVETSON FUND I, INC.
Date: March 15, 2004 /s/ Michael Tokarz
-----------------------------------------
Michael Tokarz
In the capacity of the officer who
performs the functions of Principal
Executive Officer.
MEVC DRAPER FISHER JURVETSON FUND I, INC.
Date: March 15, 2004 /s/ Frances Spark
-----------------------------------------
Frances Spark
In the capacity of the officer who
performs the functions of Principal
Financial Officer.
-24-
EXHIBIT 31
RULE 13a-14(a) CERTIFICATIONS
I, Michael Tokarz, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
meVC Draper Fisher Jurvetson Fund I, Inc.;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to
state a material fact necessary to make the
statements made, in light of the circumstances under
which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report,
fairly present in all material respects the financial
condition, results of operations and cash flows of
the registrant as of, and for, the periods presented
in this report;
4. The registrant's other certifying officer(s) and I
are responsible for establishing and maintaining
disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and
procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this report
is being prepared; and
b) evaluated the effectiveness of the
registrant's disclosure controls and procedures and
presented in this report our conclusions about the
effectiveness of the disclosure controls and
procedures, as of the end of the period covered by
this report based on such evaluation; and
c) disclosed in this report any change in
the registrant's internal control over financial
reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has
materially affected, or is reasonably likely to
materially affect, the registrant's internal control
over financing reporting; and
5. The registrant's other certifying officer(s) and I
have disclosed, based on our most recent evaluation,
to the registrant's auditors and the audit committee
of registrant's Board of Directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the
design or operation of internal control over
financial reporting which could adversely affect the
registrant's ability to record, process, summarize
and report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that
involves management or other employees who have a
significant role in the registrant's internal control
over financial reporting.
Dated:
March 15, 2004 /s/ Michael Tokarz
-----------------------------------------
Michael Tokarz
In the capacity of the officer who performs the
functions of Principal Executive Officer meVC
Draper Fisher Jurvetson Fund I, Inc.
-25-
I, Frances Spark, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
meVC Draper Fisher Jurvetson Fund I, Inc.;
2. Based on my knowledge, this report does not contain
any untrue statement of a material fact or omit to
state a material fact necessary to make the
statements made, in light of the circumstances under
which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and
other financial information included in this report,
fairly present in all material respects the financial
condition, results of operations and cash flows of
the registrant as of, and for, the periods presented
in this report;
4. The registrant's other certifying officer(s) and I
are responsible for establishing and maintaining
disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and
procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this report
is being prepared; and
b) evaluated the effectiveness of the
registrant's disclosure controls and procedures and
presented in this report our conclusions about the
effectiveness of the disclosure controls and
procedures, as of the end of the period covered by
this report based on such evaluation; and
c) disclosed in this report any change in
the registrant's internal control over financial
reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has
materially affected, or is reasonably likely to
materially affect, the registrant's internal control
over financing reporting; and
5. The registrant's other certifying officer(s) and I
have disclosed, based on our most recent evaluation,
to the registrant's auditors and the audit committee
of registrant's Board of Directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the
design or operation of internal control over
financial reporting which could adversely affect the
registrant's ability to record, process, summarize
and report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that
involves management or other employees who have a
significant role in the registrant's internal control
over financial reporting.
Dated:
March 15, 2004 /s/ Frances Spark
------------------------------
Frances Spark
In the capacity of the officer who performs
the functions of Principal Financial Officer
meVC Draper Fisher Jurvetson Fund I, Inc.
-26-
EXHIBIT 32
CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Michael Tokarz, in the capacity of the officer who performs the functions of
Principal Executive Officer of meVC Draper Fisher Jurvetson Fund I, Inc., a
Delaware corporation (the "Registrant"), certifies that:
1. The Registrant's quarterly report on Form 10-Q for the period ended January
31, 2004 (the "Form 10-Q") fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
In the capacity of the officer who performs the functions of Principal Executive
Officer of meVC Draper Fisher Jurvetson Fund I, Inc.
/S/ MICHAEL TOKARZ
- --------------------------
Michael Tokarz
Date: March 15, 2004
Frances Spark, in the capacity of the officer who performs the functions of
Principal Financial Officer, of meVC Draper Fisher Jurvetson Fund I, Inc., a
Delaware corporation (the "Registrant"), certifies that:
1. The Registrant's quarterly report on Form 10-Q for the period ended January
31, 2004 (the "Form 10-Q") fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Form 10-Q fairly presents, in all material
respects, the financial condition and results of operations of the Registrant.
In the capacity of the officer who performs
the functions of Principal Financial Officer
of meVC Draper Fisher Jurvetson Fund I, Inc.
/S/ FRANCES SPARK
- ---------------------------
Frances Spark
Date: March 15, 2004
-27-