10-Q 1 vc6q101.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 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. 814-139 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 --- --- No active market for the shares of the limited liability company exists, and therefore the market value of such shares cannot be determined. Forward-Looking Statements -------------------------- The Private Securities Litigation Reform Act of 1995 (the Act) provides a safe harbor for forward-looking statements made by or on behalf of the Fund. The Fund and its representatives may from time to time make written or oral statements that are "forward-looking", including statements contained in this report and other filings with the Securities and Exchange Commission, and reports to the Fund's shareholders and news releases. All statements that express expectations, estimates, forecasts and projections are forward-looking statements within the meaning of the Act. In addition, other written or oral statements which constitute forward-looking statements may be made by or on behalf of the Fund. Words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates", "projects", "forecasts", "may", "should", variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in or suggested by such forward- looking statements. The Fund undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. I. FINANCIAL INFORMATION Item 1. Financial Statements BALANCE SHEETS --------------

The accompanying notes are an integral part of these financial statements. STATEMENTS OF INVESTMENTS -------------------------

The accompanying notes are an integral part of these financial statements. STATEMENTS OF OPERATIONS (unaudited) ------------------------------------

The accompanying notes are an integral part of these financial statements. STATEMENTS OF CASH FLOWS (unaudited) ------------------------------------

The accompanying notes are an integral part of these financial statements. NOTES TO FINANCIAL STATEMENTS (unaudited) ---------------------------------------- 1. General ------- In the opinion of the Investment Managers, the accompanying interim financial statements reflect all adjustments necessary for the fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2000. Allocation of income and loss to Investors is based on cumulative income and loss. Adjustments, if any, are reflected in the current quarter balances. 2. Suspension of the Offering and the Uncertain Future of the Fund --------------------------------------------------------------- Technology Funding Securities Corporation suspended the offering of shares of the Fund on April 25, 2000. The small size of the Fund will make it more difficult than originally anticipated to achieve the investment objectives of the Fund. Therefore, the Fund Directors are considering the feasibility of offering all Fund investors a refund of the greater of their original capital contributions, plus interest, or their proportionate share of the Fund's net asset value, and are exploring all available options that would allow the Fund to accomplish that goal. Certain options being explored may require the approval of the Securities and Exchange Commission. There can be no assurance that the Fund Directors will be successful in this effort. The uncertainties arising from these circumstances raise substantial doubt about the Fund's ability to continue as a going concern. The accompanying interim financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Fund has been advised by its independent public accountants that should the uncertainties surrounding the Fund's future operations remain unresolved at year-end, their report on those financial statements will be modified for that contingency. 3. Financing of Partnership Operations ----------------------------------- The Investment Manager expects cash received from the sales of equity investments, interest on short-term investments and operating cash reserves along with Investment Managers' support to be adequate to fund operations through the next twelve months. 4. 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 Fund members are to report their respective shares of Fund income or loss on their individual tax returns. The accompanying financial statements are prepared using accounting principles generally accepted in the United States which may not equate to tax accounting. The cost of investments on a tax basis at March 31, 2001 and December 31, 2000, was $219,593 and $219,593, respectively. At March 31, 2001 and December 31, 2000, gross unrealized depreciation on investments based on cost for federal income tax purposes was $178,037 and $177,161, respectively. 5. Related Party Transactions -------------------------- Related party costs are included in investment expenses shown on the Statements of Operations. Related party costs for the three months ended March 31, 2001 and 2000 were as follows:

Management fees due to the Investment Managers were $33,521 and $30,942 at March 31, 2001 and December 31, 2000, respectively, and were included in due to related parties. Certain reimbursable expenses have been accrued based upon interim estimates prepared by the Investment Managers and are adjusted to actual costs periodically. At March 31, 2001 and December 31, 2000, due to related parties for such expenses were $588,605 and $528,410, respectively. 6. Equity Investments ------------------ All investments are valued at fair value as determined in good faith by the Investment Managers. Restricted Securities --------------------- At March 31, 2001 and December 31, 2000, restricted securities had aggregate fair values of $40,388 and $40,388, respectively, representing 7.6 percent and 8.4 percent, respectively, of the net liabilities of the Fund. 7. Cash and Cash Equivalents ------------------------- Cash and cash equivalents at March 31, 2001 and December 31, 2000 consisted of:

8. Commitments and Contingencies ----------------------------- The Fund reimburses the Distributors for distribution costs incurred in connection with the offering of its shares. The Distributors will require the Fund to reimburse these costs up to 10.5 percent of capital raised. Through April 25, 2000 (see Note 2), capital raised totaled $515,700 and distribution costs reimbursed by the Fund totaled $54,148. At March 31, 2001, the Distributors had incurred additional distribution costs totaling $3,297,510, which would be payable to the Distributors in the unlikely event that additional capital is raised. The Fund reports the distribution costs as a deduction from Members' equity. Item 2. Management's Discussion and Analysis of Financial Condition Technology Funding Securities Corporation suspended the offering of shares of the Fund on April 25, 2000. The small size of the Fund will make it more difficult than originally anticipated to achieve the investment objectives of the Fund. Therefore, the Fund Directors are considering the feasibility of offering all Fund investors a refund of the greater of their original capital contributions, plus interest, or their proportionate share of the Fund's net asset value, and are exploring all available options that would allow the Fund to accomplish that goal. Certain options being explored may require the approval of the Securities and Exchange Commission. There can be no assurance that the Directors will be successful in this effort. The uncertainties arising from these circumstances raise substantial doubt about the Fund's ability to continue as a going concern. The accompanying interim financial statements do not include any adjustments that might result from the outcome of these uncertainties. The Fund has been advised by its independent public accountants that should the uncertainties surrounding the Fund's future operations remain unresolved at year-end, their report on those financial statements will be modified for that contingency. Financial Condition, Liquidity and Capital Resources ---------------------------------------------------- The fund operates as a business development company under the Investment Company Act of 1940 and makes venture capital investments in new and developing companies. The Fund's financial condition is dependent upon the success of the portfolio companies. There is no ready market for many of the Fund's investments. It is possible that some of its venture capital investments may be a complete loss or may be unprofitable and that others will appear likely to become successful, but may never realize their potential. The valuation of the Fund's investments in securities for which there are no available market quotes is subject to the estimate of the Directors of the Fund in accordance with the valuation guidance described in Note 1 to the financial statements included in the Fund's Form 10-K for the year ended December 31, 2000. In the absence of readily obtainable market values, the estimated fair value of the Fund's investments may differ significantly from the values that would have been used had a ready market existed. Cash and cash equivalents at March 31, 2001, were $58,792. Future proceeds from the sales of equity investments, interest income earned on short-term investments and operating cash reserves along with Investment Managers' support are expected to be adequate to fund Partnership operations through the next twelve months. Results of Operations --------------------- Current quarter compared to corresponding quarter in the preceding year ----------------------------------------------------------------------- Net decrease in members' equity resulting from operations for the three months ended March 31, 2001 and March 31, 2000 were $47,674 and $85,106, respectively. Investment expenses totaled $46,798 and $70,117 for the quarters ended March 31, 2001 and 2000, respectively. The decrease is due to decreased investment activity in response to the suspension of the offering of Fund shares on April 25, 2000. Net unrealized depreciation on equity investments was $178,037 and $177,161 at March 31, 2001 and December 31, 2000, respectively. During the quarter ended March 31, 2001, the $876 increase in unrealized depreciation of equity investments was attributable to a decrease in the value of the Fund's marketable equity securities. The increase in unrealized depreciation of $14,989 for the quarter ended March 31, 2000 was also attributable to a decrease in the value of the Fund's marketable equity securities. Given the inherent risk associated with the business of the Fund, the sale of additional investor shares and future performance of the portfolio company investments may significantly impact future operations. II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) No reports on Form 8-K were filed by the Fund during the quarter ended March 31, 2001. 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. TECHNOLOGY FUNDING LTD. Investment Managers Date: May 11, 2001 By: /s/Charles R. Kokesh ----------------------------------- Charles R. Kokesh President, Chief Executive Officer, Chief Financial Officer and Chairman of Technology Funding Inc. and Managing General Partner of Technology Funding Limited Technology Funding Venture Capital Fund VI, LLC 05/11/01 2:39 PM Page 3 of 12

TECHNOLOGY FUNDING VENTURE CAPITAL FUND VI LLC 10-Q