Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Year Ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
--- ---
Commission File No. 814-124
TECHNOLOGY FUNDING VENTURE CAPITAL FUND VI, LLC.
------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 94-3266666
- ------------------------------- ---------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2000 Alameda de las Pulgas, Suite 250
San Mateo, California 94403
- --------------------------------------- --------
(Address of principal executive offices) (Zip Code)
(650) 345-2200
--------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited
Liability Company Investor shares.
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ]
No active market for the shares of the limited liability company
investor shares ("Shares") exists, and therefore the market value of
such Shares cannot be determined.
Documents incorporated by reference: Portions of the Prospectus of
Technology Funding Venture Capital Fund VI, LLC, as revised June 4,
1998 (accession number 0000950133-98-002220), forming a part of the
December 5, 1997 Pre-effective Amendment No. 1 to the Form N-2
Registration Statement No. 333-23913 dated July 11, 1997, filed
pursuant to Rule 424(c) of the General Rules and Regulations under
the Securities Act of 1933 are incorporated by reference in Parts I
and III hereof.
PART I
Item 1. BUSINESS
- ------ --------
Technology Funding Venture Capital Fund VI, LLC (the
"Fund") is a limited liability company organized under the
laws of the State of Delaware in February 1997, and was
inactive until it commenced the sale of Shares in January
1998. The purpose of the Fund is to make venture capital
investments in emerging growth companies and preserve
investor capital through risk management and active
involvement with such companies as described in the
"Summary of the Offering" and "Business of the Fund"
sections of the Prospectus dated June 4, 1998. The Fund
has elected to be a business development company under the
Investment Company Act of 1940, as amended (the "Act"), and
operates as a non-diversified investment company as that
term is defined in the Act. Additional characteristics of
the Fund's business are discussed in the "Risk Factors" and
"Conflicts of Interest" sections of the Prospectus, which
sections are also incorporated herein by reference. The
Fund will continue until December 31, 2007, subject to the
right of the Directors to extend the term for up to two
additional two-year periods.
Item 2. PROPERTIES
- ------ ----------
The Registrant has no material physical properties.
Item 3. LEGAL PROCEEDINGS
- ------ -----------------
There are no material pending legal proceedings to which
the Registrant is party or of which any of its property is
the subject, other than routine litigation incidental to
the business of the Fund.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
No matter was submitted to a vote of the holders of shares
of the Fund during 1998.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
- ------ -------------------------------------------------
STOCKHOLDER MATTERS
-------------------
(a) There is no established public trading market for the
Shares.
(b) At December 31, 1998, there were 98 shareholders of
record.
(c) The Registrant, does not pay dividends.
Distributions of cash and securities, however, may be
made to the investors in the Fund pursuant to the
Registrant's Operating Agreement.
Item 6. SELECTED FINANCIAL DATA
- ------ -----------------------
For the Period from
January 22 to
December 31, 1998
-------------------
Interest income $ 5,109
Net operating loss (96,994)
Net realized loss (96,994)
Net realized loss per Share (39)
Total assets 214,692
Refer to the financial statement notes entitled "Summary of
Significant Accounting Policies" and "Allocation of Profits and
Losses" for a description of the method of calculation of net
realized loss per Share.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
- ------ -------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
- -----------------------------------
Liquidity and Capital Resources
- -------------------------------
For the period from January 22 to December 31, 1998, net cash
used by operating activities totaled $25,427. The Fund
received proceeds of $371,000 from sales of investor shares
and $371 from Investment Managers' capital contributions.
The Fund paid $36,706 to the Independent Directors as
compensation for their services. Related parties advanced
$11,474 to the Fund to pay operating expenses and $5,304 in
operating expenses were paid by the Fund. Interest income of
$5,109 was received. The Fund paid related parties $170,000
for organizational and distribution costs. Other
distribution costs of $1,252 were paid.
Cash and cash equivalents at December 31, 1998, were
$153,692. Future proceeds from the sales of shares, interest
income earned on short-term investments and operating cash
reserves along with Investment Managers' support are expected
to be adequate to fund operations through the next twelve
months.
Results of Operations
- ---------------------
Net loss for the period from January 22 to December 31, 1998
totaled $96,994 and was comprised of operating expenses of
$40,477, Independent Directors' compensation of $44,206,
amortization of organizational costs of $10,000, and
management fees of $7,420, offset by interest income of
$5,109.
Given the inherent risk associated with the business of the
Fund, the future sale of Fund shares and the performance of
future portfolio company investments may significantly impact
future operations.
YEAR 2000
- ---------
Widespread use of computer programs that use two digits
rather than four to store, calculate, and display year values
in dates may cause computer systems to malfunction in the
year 2000, resulting in significant business delays and
disruptions.
The Fund's State of Readiness
- ------------------------------------
Computer services are provided to the Fund by its Investment
Manager, Technology Funding Inc. ("TFI".) For several years,
TFI has sought to use Year 2000 compliant storage formats and
algorithms in its internally-developed and maintained
systems. TFI has also completed initial evaluations of
computer systems, software, and embedded technologies. Those
evaluations confirmed that certain components of its network
server hardware and operating systems, voice mail system, e-
mail system, and accounting software may have Year 2000
compliance issues. These resources and several less-critical
components of the systems environment were all scheduled as
part of normal maintenance and replacement cycles to be
replaced or upgraded as Year 2000 compatible components
became available from vendors during 1998 and 1999. That
program remains on schedule to provide Year 2000 capable
systems timely without significant expenditures or disruption
of Fund operations. However, the risk remains that TFI may
not be able to verify whether Year 2000 compatibility claims
by vendors are accurate, or whether changes undertaken to
achieve Year 2000 compatibility will create other undetected
problems in associated systems. Therefore, TFI anticipates
that Year 2000 compliance testing and maintenance of these
systems will continue as needed into the first quarter of
2000.
As part of Year 2000 evaluation, TFI has also assembled a
database listing its significant suppliers to assess the
extent to which it needs to prepare for any of those parties'
potential failure to remediate their Year 2000 compliance
issues. TFI is reviewing public Year 2000 statements of
those suppliers and preparing questionnaires to be sent to
mission-critical vendors whose public statements were not
adequate for assessment. TFI will continue to monitor its
significant suppliers as part of its Year 2000 evaluation.
However, there can be no guarantee that the systems of other
companies on which TFI relies will be timely converted, or
that failure to convert will not have a material adverse
effect on the Fund and its operations. TFI is also working
with the Fund's potential portfolio companies to determine
the extent to which their operations are vulnerable to Year
2000 issues. There can be no guarantee that the systems of
portfolio companies in which the Fund may invest will be
timely converted, or that failure to convert will not have a
material adverse effect on the Fund.
The Cost to Address Year 2000 Issues
- ------------------------------------
Expenditures in 1998 related to Year 2000 issues were not
material to the Fund's financial statements. TFI expects
that additional expenditures for Year 2000 compliance will
not be material to the Fund.
The Risks Associated with Year 2000 Issues
- ------------------------------------------
Any failure by the portfolio companies in which the Fund may
invest, or by those portfolio companies' key suppliers or
customers, to anticipate and avoid Year 2000 related problems
at reasonable cost could have a material adverse effect on
the value of and/or the timing of realization of value from
the Fund's investments. If Year 2000 compliance issues are
not resolved by December 31, 1999, internal system failures
or miscalculations could cause a temporary inability to
process transactions, loss of ability to send or receive e-
mail and voice mail messages, or disruptions in other normal
business activities. Additionally, failure of third parties
on whom TFI relies to remediate their Year 2000 issues timely
could result in disruptions in the Fund's relationship with
its financial institutions, temporary disruptions in
processing transactions, unanticipated costs, and problems
related to the Fund's daily operations. While TFI continues
to address its internal Year 2000 issues, until TFI receives
and evaluates responses from a significant number of its
suppliers, the overall risks associated with the Year 2000
issue remain difficult to describe and quantify. There can
be no guarantee that the Year 2000 issue will not have a
material adverse effect on the Fund and its operations.
TFI's Contingency Plan
- ----------------------
As part of its normal efforts to assure business continuation
in the event of natural disasters, systems failures, or other
disruptions, TFI has prepared contingency plans including an
extensive Year 2000 contingency plan. Taken together with
TFI's Year 2000 remediation plan, it identifies potential
points of failure, approaches to correcting known Year 2000
problems, dates by which the preferred corrections are
anticipated to be made and tested, and alternative approaches
if the corrections are not completed timely or are later
found to be inadequate. Although backup systems and
contingency approaches have been identified for most mission-
critical systems and vendor dependencies, there remain some
systems for which no good alternative exists, and there may
be some problems that prove more intractable than currently
anticipated.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------ -------------------------------------------
The financial statements of the Registrant are set forth in
Item 14.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
- ------ ------------------------------------------------
ACCOUNTING AND FINANCIAL DISCLOSURE
-----------------------------------
None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------- --------------------------------------------------
The Directors are responsible for the management and
administration of the Fund. The Directors consist of three
Independent Directors and a representative from each of
Technology Funding Ltd., a California limited partnership
("TFL"), and its wholly owned subsidiary, Technology Funding
Inc., a California corporation ("TFI"). TFL and TFI are the
Investment Managers. The Fund has no executive officers.
Information concerning the ownership of TFL and the business
experience of the key officers of TFI, the partners of TFL
and the Independent Directors is incorporated by reference
from the sections entitled "Management of the Fund - The
Investment Managers, "Management of the Fund - Key Personnel
of the Investment Managers" and "Management of the Fund-The
Fund Directors" on pages 23 to 25 of the Prospectus as
revised June 4, 1998 (accession number 0000950133-98-002220),
forming a part of the December 5, 1997 Pre-effective
Amendment No 1 to the Form N-2 Registration Statement No 333-
23913 dated July 11, 1997.
Item 11. EXECUTIVE COMPENSATION
- ------- ----------------------
The Registrant has no officers. The Fund pays the Investment
Managers a management fee for supervising the venture capital
operations of the Fund. In 1998, the Fund incurred $7,420 in
management fees. As compensation for their services, the
Independent Directors each receive $10,000 annually beginning
on the Commencement Date, $1,000 for each attended meeting of
the Directors, $1,000 for each attended committee meeting
unless such committee meeting is held on the same day as a
meeting of the Directors, and related expenses. For the
period from January 22 to December 31, 1998, $44,206 of such
fees were incurred.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
- ------- ---------------------------------------------------
MANAGEMENT
- ----------
Not applicable. No Investor beneficially holds more than 5%
of the aggregate number of shares offered for sale, and
neither the Investment Managers nor any of their officers,
directors or partners own any shares. None of the
Independent Directors own any shares.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------- ----------------------------------------------
The Registrant, has engaged in no transactions with the
Investment Managers or their officers and partners other than
as described above, in the notes to the financial statements,
or in the Fund's Operating Agreement.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
- ------- -------------------------------------------------------
FORM 8-K
--------
(a) List of Documents filed as part of this Annual Report on
Form 10-K
(1) Financial Statements - the following financial
statements are filed as a part of this Report:
Independent Auditors' Report
Balance Sheet as of December 31, 1998
Statement of Operations for the period from
January 22, to December 31, 1998
Statement of Members' Equity for the period from
January 22, to December 31, 1998
Statement of Cash Flow for the period from
January 22, to December 31, 1998
Notes to Financial Statements
(2) Financial Statement Schedules
All schedules have been omitted because they are
not applicable or the required information is
included in the financial statements or the notes
thereto.
(3) Exhibits
Registrant's Operating Agreement (incorporated by
reference to Exhibit A to Registrant's Prospectus
dated June 4, 1998 (accession number 0000950133-98-
002220), forming a part of the December 5, 1997
pre-effective Amendment No. 1 to the Form N-2
Registration Statement No. 333-23913 dated July 11,
1997 filed pursuant to Rule 424(b) of the General
Rules and Regulations under the Securities Act of
1933).
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant
during the period from January 22 to December 31, 1998.
(c) Financial Data Schedule for the period from January 22
to December 31, 1998 and as of December 31, 1998
(Exhibit 27).
INDEPENDENT AUDITORS' REPORT
----------------------------
The Members
Technology Funding Venture Capital Fund VI, LLC:
We have audited the accompanying balance sheet of Technology Funding
Venture Capital Fund VI, LLC (a Delaware limited liability company) as of
December 31, 1998, and the related statements of operations, members'
equity, and cash flows for the period from January 22 to December 31,
1998. These financial statements are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Technology
Funding Venture Capital Fund VI, LLC as of December 31, 1998, and the
results of its operations and its cash flows for the period from January
22 to December 31, 1998, in conformity with generally accepted accounting
principles.
Albuquerque, New Mexico /S/KPMG LLP
March 26, 1999
BALANCE SHEET
- -------------
December 31, 1998
------------------
ASSETS
Cash and cash equivalents $153,692
Restricted cash 21,000
Organizational costs (net of
accumulated amortization of $10,000) 40,000
-------
Total assets $214,692
=======
LIABILITIES AND MEMBERS' EQUITY
Accounts payable and accrued expenses $ 35,173
Due to related parties 277,394
-------
Total liabilities 312,567
Commitments, contingencies, and subsequent events
(Notes 2, 5, and 6)
Members' equity:
Investors (shares outstanding
of 3,710) 274,976
Investment Managers (599)
Deferred distribution costs (372,252)
-------
Total members' equity (97,875)
-------
Total liabilities and
members' equity $214,692
=======
See accompanying notes to financial statements.
STATEMENTS OF OPERATIONS
- ------------------------
For the Period
From January 22 to
December 31, 1998
------------------
Income:
Interest income $ 5,109
-------
Total income 5,109
Costs and expenses:
Management fees 7,420
Independent Directors' compensation 44,206
Amortization of organizational costs 10,000
Operating expenses:
Administrative and investor services 4,068
Professional fees 36,409
-------
Total operating expenses 40,477
-------
Total costs and expenses 102,103
-------
Net realized loss $(96,994)
=======
Net realized loss per Share $ (39)
=======
See accompanying notes to financial statements.
STATEMENT OF MEMBERS' EQUITY
- ----------------------------
For the period from January 22, to December 31, 1998:
Deferred
Investment Distribution
Investors Managers Costs Total
--------- ---------- ------------ -----
Sales of Fund shares $371,000 -- -- 371,000
Investment Managers'
capital contributions -- 371 -- 371
Deferred distribution costs -- -- (372,252) (372,252)
Net realized loss (96,024) (970) -- (96,994)
------- --- ------- -------
Members' equity, December 31, 1998 $274,976 (599) (372,252) (97,875)
======= === ======= =======
See accompanying notes to financial statements.
STATEMENT OF CASH FLOWS
- -----------------------
For the Period
From January 22 to
December 31, 1998
------------------
Cash flows from operating activities:
Interest received $ 5,109
Cash paid to vendors (5,304)
Cash paid to related parties (25,232)
-------
Net cash used by operating activities (25,427)
-------
Cash flows from financing activities:
Proceeds from sale of investor shares 371,000
Investment Managers' capital contributions 371
Payments for organizational and
distribution costs (171,252)
Payments to restricted cash (21,000)
-------
Net cash provided by financing activities 179,119
-------
Net increase in cash and cash equivalents 153,692
-------
Cash and cash equivalents at December 31 $153,692
=======
Reconciliation of net realized loss to net
cash provided by operating activities:
Net realized loss $(96,994)
Adjustments to reconcile net realized loss to
net cash used by operating activities:
Amortization of organizational costs 10,000
Changes in assets and liabilities net of
effects from noncash financing activities:
Accounts payable and accrued expenses 35,173
Due to related parties 26,394
-------
Net cash used by operating activities $(25,427)
=======
Noncash financing activities:
Deferred distribution costs due
to Investment Managers $251,000
=======
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
- -----------------------------
1. Summary of Significant Accounting Policies
------------------------------------------
General
-------
Technology Funding Venture Capital Fund VI, LLC (the Fund) is a
Delaware limited liability company (LLC) organized in February 1997.
The Fund has elected to be regulated as a business development company
under the Investment Company Act of 1940, as amended (the Act). The
Fund will operate as a nondiversified investment company as defined in
the Act.
The Fund's investment objectives are long-term capital appreciation
from venture capital investments in emerging growth companies and
preservation of investor capital through risk management and active
involvement with such companies.
The Fund's Investment Managers are Technology Funding Ltd. (TFL) and
Technology Funding Inc. (TFI), a wholly owned subsidiary of TFL. Three
Independent Directors and two persons affiliated with the Investment
Managers (Affiliated Directors) serve as Directors of the Fund. The
Investment Managers are responsible for the Fund's investments, subject
to the supervision of the Directors.
From February 1997 through January 22, 1998, the Fund was inactive.
The Fund is offering 1,000,000 shares in an aggregate amount of up to
$100,000,000. The offering commenced on January 22, 1998, (the
Commencement Date). There is no minimum offering amount. The shares
are being offered and sold through Technology Funding Securities
Corporation (TFSC), a wholly owned subsidiary of TFI, and a registered
member of the National Association of Securities Dealers, Inc. The
offering will terminate at the discretion of the Investment Managers,
but no later than June 4, 2000.
The Fund's fiscal year-end is December 31. The Fund will continue until
December 31, 2007, subject to the right of the Directors to extend the
term for up to two additional two-year periods.
Preparation of Financial Statements
-----------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents are principally comprised of cash invested in
demand accounts and money market instruments and are stated at cost
plus accrued interest. The Fund considers all money market and short-
term investments with an original maturity of three months or less to
be cash equivalents.
Deferred Distribution Costs
---------------------------
Distribution costs primarily consist of offering costs incurred
pursuant to a Distribution Agreement with TFSC and TFI (the
Distributors). The Fund will reimburse the Distributors for such
costs. The Fund reports these deferred distribution costs, to the
extent that investor capital has been raised, as a liability and as a
deduction from Members' equity. Merchant fees charged on shares
purchased by credit card are also included in deferred distribution
costs. Deferred distribution costs will be allocated to investors'
capital accounts on a straight-line basis over the offering period,
beginning in the period in which Fund investment activity commences.
Organizational Costs
--------------------
Organizational costs of $50,000 are amortized over sixty months using
the straight-line method.
In the first quarter of 1999, the unamortized portion of these costs
will be expensed in full in accordance with Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities.
Provision for Income Taxes
--------------------------
No provision for income taxes has been made by the Fund as the Fund has
elected to be treated as a partnership for income tax purposes, and,
therefore, the Fund is not directly subject to taxation. The LLC
members are to report their respective shares of LLC income or loss on
their individual tax returns.
Net Realized Loss Per Investor Share
------------------------------------
Net realized loss per investor share is calculated by dividing the
weighted average number of investor shares outstanding for the period
from January 22, 1998 to December 31, 1998 of 2,481 shares into total
net realized loss allocated to investors. The Investment Managers
contributed an amount equal to 0.1% of investors' capital contributions
and did not receive any shares.
2. Related Party Transactions
--------------------------
Related party costs are included in costs and expenses shown on the
Statement of Operations. Related party costs for the period from
January 22, 1998 to December 31, 1998, were as follows:
1998
-------
Management fees $ 7,420
Independent Directors' compensation 44,206
Amortization of organizational costs 10,000
Management fees are equal to 2% of total investor capital contributions
for each of the years of Fund operation during the offering period. In
subsequent years, the management fee will be 2% of the cost basis of
Fund assets. Management fees compensate the Investment Managers solely
for Investment Manager Overhead (as defined in the Operating Agreement)
incurred in supervising the investment operations of the Fund.
Pursuant to the Operating Agreement, a full first-year fee is paid to
the Investment Managers as each additional investor is admitted to the
Fund, regardless of the date the investor is admitted. At December 31,
1998, management fees payable totaled $7,420.
Pursuant to the Operating Agreement, the Fund shall reimburse the
Investment Managers for operational costs incurred by the Investment
Managers in conjunction with the business of the Fund. At December 31,
1998, due to related parties for such expenses was $11,474.
The Fund reimburses the Investment Managers and Distributors for
organizational and distribution costs. Organization costs charged to
the Fund and paid by the Fund in 1998 were $50,000. Distribution costs
charged to the Fund during 1998 were $371,000 and the amount payable at
December 31, 1998 was $251,000. As discussed in Note 5, additional
distribution costs have and will be incurred by the Distributors.
These additional costs will be payable by the Fund as additional
investor capital is raised.
As compensation for their services, the Independent Directors each
receive $10,000 annually beginning on the Commencement Date plus $1,000
for each of the Directors meetings attended. For the period ended
December 31, 1998, $44,206 of such fees were incurred by the Fund. At
December 31, 1998, fees payable to Independent Directors were $7,500.
The Investment Managers contribute capital equal to 0.1% of total
capital contributions made by the investors, payable as capital
contributions are made by such investors. Through December 31, 1998,
the Investment Managers contributed capital of $371.
3. Allocation of Profits and Losses
--------------------------------
Net realized profits and losses of the Fund are allocated as follows:
(a) Profits
i) First, to those investors and Investment Managers with
deficit capital account balances until the deficits have
been eliminated; then,
ii) Second, to those investors and Investment Managers as
necessary to offset net loss previously allocated under
(b)(ii) below; then,
iii) Third, 80% to the investors in proportion to capital
account balances, and 20% to the Investment Managers.
(b) Losses
i) First, to the investors and Investment Managers as
necessary to offset net profit previously allocated to
the investors under (a)(iii) above; then,
ii) Second, 99% to the investors and 1% to the Investment
Managers.
Losses allocable to investors in excess of their capital account
balances will be allocated to investors that have positive balances in
their capital accounts in proportion to the respective amounts of such
positive balances until all such balances have been reduced to zero and
thereafter solely to the Investment Managers. Net profit thereafter
otherwise allocable to the investors will be allocated to the
Investment Managers to the extent of such allocated losses. In no
event shall the Investment Managers be allocated less than 1% of the
net profit of the Fund, plus their pro rata share based on capital
contributed.
4. Cash and Cash Equivalents
-------------------------
Cash and cash equivalents at December 31, 1998 consisted of:
1998
------
Demand account $ 1,500
Money-market account 152,192
-------
Total $153,692
=======
As of December 31, 1998, the Fund's monies were on deposit at a single
financial institution.
5. Commitments and Contingencies
-----------------------------
As discussed in Note 2, the Fund reimburses the Distributors for
distribution costs incurred in connection with the offering of its
shares. The Distributors expect the Fund to reimburse these costs to
the extent capital has been raised. At December 31, 1998, the
Distributors had incurred distribution costs totaling $2,146,630, of
which $120,000 has been paid and $251,000 has been recorded as a
liability of the Fund, with the remaining portion of $1,775,630 payable
to the Distributors as additional capital is raised. Additional
distribution costs are expected to be incurred throughout the offering
period and will be payable by the Fund as additional capital is raised.
Under terms of an agreement with the Fund's bank, the use of the funds
arising from sales of shares via automatic clearing house (ACH) wire
transfers and credit card transactions are restricted for a maximum
period of 90 days. At December 31, 1998, such restricted funds totaled
$21,000.
6. Subsequent Events
-----------------
In March 1999, the Fund purchased 23,076 Series F Preferred shares of
Biex, Inc. for $60,000. Biex, Inc. is a privately held company in the
medical industry and there is no public market for these shares.
The Fund also purchased 11,157 Series D Preferred shares of WorldRes,
Inc. for $67,500 in March 1999. WorldRes, Inc. is a privately held
company in the information technology industry and there is no public
market for these shares.
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
TECHNOLOGY FUNDING VENTURE CAPITAL FUND VI, LLC
By: TECHNOLOGY FUNDING INC.
Investment Manager
Date: March 29, 1999 By: /s/Michael Brenner
------------------------------
Michael Brenner
Controller
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:
Signature Capacity Date
--------- -------- ----
/s/Charles R. Kokesh President, Chief March 29, 1999
- ------------------------ Executive Officer,
Charles R. Kokesh Chief Financial
Officer and Chairman of
Technology Funding Inc.
and Managing General
Partner of Technology
Funding, Ltd.
The above represents the Board of Directors of Technology Funding Inc.
and the General Partners of Technology Funding Ltd.