10-Q 1 vc6q202.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 June 30, 2002 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) 1107 Investment Boulevard, Suite 180 El Dorado Hills, California 95762 --------------------------------------- -------- (Address of principal executive offices) (Zip Code) (916) 947-1400 -------------------------------------------------- (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. Interim Financial Statements ---------------------------- The accompanying unaudited financial statements included herein have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes which would be presented were such financial statements prepared in accordance with generally accepted accounting principles. These statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2001. 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. Allocation of income and loss to Investors and Investment Managers is based on cumulative income and loss. Adjustments, if any, are reflected in the current quarter balances. The results of operations for such interim periods are not necessarily indicative of results of operations to be expected for the full year. 2. Termination 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. In June 2001, the Independent Directors terminated the offering because current market conditions and the small size of the Fund would have made it unlikely that the Fund would ever achieve its investment objectives and directed the Investment Mangers to attempt to sell the Fund's assets to non-affiliates. On March 15, 2002, the Independent Directors recommended a proxy be sent to the Fund's Investors to allow them to vote on an early termination of the Fund before the end of 2002. Should the Investors vote to dissolve the Fund, the audited financial statements of the Fund will be prepared on a liquidation basis rather than as a going concern. The accompanying interim financial statements do not include any adjustments that might result from a change to accounting on a liquidation basis. The Fund has been advised by its independent public accountants that should the Investors approve the early dissolution of the Fund, their report on those financial statements will be modified for that matter. 3. Financing of Partnership Operations ----------------------------------- The Investment Manager has agreed to support the Fund's operations through the deferral of payments on the Fund's obligations. This support and cash received from the sales of equity investments are expected 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 June 30, 2002 and December 31, 2001, was $159,593. At June 30, 2002 and December 31, 2001, gross unrealized depreciation on investments based on cost for federal income tax purposes was $139,347 and $131,389, respectively. 5. Related Party Transactions -------------------------- Related party costs are included in investment expenses shown on the Statements of Operations. Related party costs for the six months ended June 30, 2002 and 2001 were as follows:

Management fees due to the Investment Managers were $45,213 and $41,256 at June 30, 2002 and December 31, 2001, 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 June 30, 2002 and December 31, 2001, due to related parties for such expenses were $713,415 and $613,779, respectively. 6. Equity Investments ------------------ All investments are valued at fair value as determined in good faith by the Investment Managers. Restricted Securities --------------------- At June 30, 2002 and December 31, 2001, restricted securities had aggregate fair values of $16,388 and $22,388, respectively, representing 2.2 percent and 3.5 percent, respectively, of the net liabilities of the Fund. There were no significant purchases or sales of equity investments during the six months ended June 30, 2002. 7. Cash and Cash Equivalents ------------------------- Cash and cash equivalents at June 30, 2002 and December 31, 2001, consisted of:

8. Commitments and Contingencies ----------------------------- From time to time, the Partnership is subject to routine litigation incidental to the business of the Partnership. Although there can be no assurances as to the ultimate disposition of these matters, it is the opinion of the Investment Managers, based upon the information available at this time, that the expected outcome of these matters, individually or in the aggregate, will not have a material adverse effect on the results of operations and financial condition of the Partnership. 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. In June 2001, the Independent Directors terminated the offering because current market conditions and the small size of the Fund would have made it unlikely that the Fund would ever achieve its investment objectives and directed the Investment Mangers to attempt to sell the Fund's assets to non-affiliates. On March 15, 2002, the Independent Directors recommended a proxy be sent to the Fund's Investors to allow them to vote on an early termination of the Fund before the end of 2002. Should the Investors vote to dissolve the Fund, the audited financial statements of the Fund will be prepared on a liquidation basis rather than as a going concern. The accompanying interim financial statements do not include any adjustments that might result from a change to accounting on a liquidation basis. The Fund has been advised by its independent public accountants that should the Investors approve the early dissolution of the Fund, their report on those financial statements will be modified for that matter. 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, 2001. 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 June 30, 2002, were $66. The Investment Manager has agreed to support the Fund's operations through the deferral of payments on the Fund's obligations. This support and cash received from the sales of equity investments are expected to be adequate to fund 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 quarter ended June 30, 2002 and June 30, 2001, were $59,843 and $16,525, respectively. Net unrealized depreciation on equity investments was $139,347 and $134,909 at June 30 and March 31, 2002, respectively. During the quarter ended June 30, 2002, the $4,438 increase in unrealized depreciation of equity investments was attributable to a decrease in the publicly-traded price of iVillage, Inc. The decrease in unrealized depreciation of $45,271 for the quarter ended June 30, 2001, was attributable to an increase in the value of the Fund's Sanarus Medical, Inc. shares. Investment expenses totaled $55,405 and $61,811 for the quarters ended June 30, 2002 and 2001, respectively. Given the inherent risk associated with the business of the Fund, the future performance of the portfolio company investments may significantly impact future operations. Current six months compared to corresponding six months in the preceding ----------------------------------------------------------------------- year ---- Net decrease in members' equity resulting from operations for the six months ended June 30, 2002 and June 30, 2001, were $108,127 and $64,199, respectively. Net unrealized depreciation on equity investments was $139,347 and $131,389 at June 30, 2002 and December 31, 2001, respectively. During the six months ended June 30, 2002, the $7,958 increase in unrealized depreciation of equity investments was primarily attributable to a decrease in the fair value of the Fund's Resolution Sciences Corporation shares. The decrease in unrealized depreciation of $44,395 for the six months ended June 30, 2001, was attributable to an increase in the fair value of the Fund's Sanarus Medical, Inc. shares. Investment expenses totaled $100,169 and $108,609 for the six months ended June 30, 2002 and 2001, respectively. II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) A report on Form 8-K was filed by the Registrant on June 28, 2002, to report the appointment of Grant Thornton LLP as the Partnership's public accountants. No financial statements were filed. CERTIFICATION ------------- The undersigned hereby certifies, to such officer's knowledge, that this report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial condition and results of operation of the Partnership. Date: August 14, 2002 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 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: August 14, 2002 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 10-Q