10-Q 1 vc6q302.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 September 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 Blvd., Suite 180 Eldorado Hills, California 95762 --------------------------------------- -------- (Address of principal executive offices) (Zip Code) (916)941-1400 -------------------------------------------------- (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 fair 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 Partnership. The Partnership 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 Partnership'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 Partnership. 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 that 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 Partnership 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 that 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 Managers 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. 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. Should the Fund not be terminated by the end of 2002, the uncertainties arising from the timing of future liquidation events 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. 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 September 30, 2002 and December 31, 2001, were $159,593. At September 30, 2002, and December 31, 2001, gross unrealized depreciation on investments based on cost for federal income tax purposes was $144,776 and $131,389, respectively. 4. Related Party Transactions -------------------------- Related party costs are included in investment expenses shown on the Statements of Operations. Related party costs for the nine months ended September 30, 2002 and 2001 were as follows:

Management fees due to the Investment Managers were $47,492 and $41,256 at September 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 September 30, 2002 and December 31, 2001, due to related parties for such expenses were $753,581 and $613,779, respectively. 5. Equity Investments ------------------ All investments are valued at fair value as determined in good faith by the Investment Managers. Restricted Securities --------------------- At September 30, 2002 and December 31, 2001, restricted securities had aggregate fair values of $13,041 and $22,388, respectively, representing 1.6 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 nine months ended September 30, 2002. 6. Cash and Cash Equivalents ------------------------- Cash and cash equivalents at September 30, 2002 and December 31, 2001, consisted of:

7. 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 Managers 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. 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. Should the Fund not be terminated by the end of 2002, the uncertainties arising from the timing of future liquidation events 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, 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 September 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 September 30, 2002 and September 30, 2001, were $35,509 and $53,278, respectively. Investment expenses totaled $30,080 and $51,594 for the quarters ended September 30, 2002 and 2001, respectively. The decrease is due to decreased administrative costs and investment monitoring activity, along with decreased professional fees. Net unrealized depreciation on equity investments was $144,776 and $139,347 at September 30 and June 30, 2002, respectively. During the quarter ended September 30, 2002, the $5,429 increase in unrealized depreciation of equity investments was attributable to a decrease in the publicly-traded price of iVillage, Inc. and the fair value of WorldRes, Inc., a private portfolio company in the information technology industry. There was an increase in unrealized depreciation of $1,684 for the quarter ended September 30, 2001. 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 nine months compared to corresponding nine months in the ---------------------------------------------------------------- preceding year -------------- Net decrease in members' equity resulting from operations for the nine months ended September 30, 2002 and September 30, 2001, was $143,636 and $117,477, respectively. Net unrealized depreciation on equity investments was $144,776 and $131,389 at September 30, 2002 and December 31, 2001, respectively. During the nine months ended September 30, 2002, the $13,387 increase in unrealized depreciation of equity investments was primarily attributable to decreases in the fair value of private portfolio companies in the information technology and medical industries and a decrease in the publicly-traded price of iVillage.com. The decrease in unrealized depreciation of $42,711 for the nine months ended September 30, 2001, was attributable to the sale of the Fund's Sanarus Medical, Inc. shares. Investment expenses totaled $130,249 and $160,203 for the nine months ended September 30, 2002 and 2001, respectively. The decrease is primarily due to decreased professional fees, partially offset by increased personnel costs. Item 4. Procedures and Controls The undersigned is responsible for establishing and maintaining disclosure controls and procedures for Technology Funding Venture Capital Fund VI, LLC. Such officer has concluded (based upon his evaluation of these controls and procedures as of a date within 90 days of the filing of this report) that Technology Funding Venture Capital Fund VI, LLC's disclosure controls and procedures are effective to ensure that information required to be disclosed by Technology Funding Venture Capital Fund VI, LLC in this report is accumulated and communicated to Technology Funding Venture Capital Fund VI, LLC's management, including its principal executive officers as appropriate, to allow timely decisions regarding required disclosure. The certifying officer also has indicated that there were no significant changes in Technology Funding Venture Capital Fund VI, LLC's internal controls or other factors that could significantly affect such controls subsequent to the date of their evaluation, and there were no corrective actions with regard to significant deficiencies and material weaknesses. CERTIFICATION ------------- I, Charles R. Kokesh, President, Chief Executive Officer, Chief Financial Officer and Chairman of Technology Funding Inc. and Managing General Partner of Technology Funding Limited, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Technology Funding Venture Capital Fund VI, LLC.; 2. Based on my knowledge, this quarterly 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 quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly 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 quarterly report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant is made known to me by others within the entity, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the Evaluation Date); and c) presented in this quarterly report my conclusions about the effectiveness of the disclosure controls and procedures based on my evaluation as of the Evaluation Date; 5. I have disclosed, based on my most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls 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 controls; and 6. I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of my most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 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 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 September 30, 2002. 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: November 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 CERTIFICATION ------------- In connection with the Technology Funding Venture Capital Fund VI, LLC (the Fund) Quarterly Report on Form 10-Q for the period ending September 30, 2002, as filed with the Securities and Exchange Commission (the Report), I Charles, R. Kokesh, President, Chief Executive Officer, Chief Financial Officer and Chairman of Technology Funding Inc. and Managing General Partner of Technology Funding Limited, certify, pursuant to 18 U.S.C. Section 1350, as added Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 15(d) of the Securities Exchange Act of 1934; and 2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund as of and for the period covered by the Report. Date: November 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