-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SNbLq+Itvbm+PQ/q6kWCrhnCYlLR7AKgD6Y2cMBP6Ic3dpue3mk+E0ELlSNvNtZ2 uzQziZ2Ov/+L2tXpxFTAqA== 0001169232-02-001713.txt : 20020920 0001169232-02-001713.hdr.sgml : 20020920 20020920143332 ACCESSION NUMBER: 0001169232-02-001713 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20020731 FILED AS OF DATE: 20020920 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEVC DRAPER FISHER JURVESTON FUND I INC CENTRAL INDEX KEY: 0001099941 IRS NUMBER: 943333311 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 814-00201 FILM NUMBER: 02768707 BUSINESS ADDRESS: STREET 1: 991 FOLSOM ST STREET 2: STE 301 CITY: SAN FRANCISCO STATE: CA ZIP: 94107 BUSINESS PHONE: 4159776150 MAIL ADDRESS: STREET 1: 991 FOLSOM ST CITY: SAN FRANCISCO STATE: CA ZIP: 94107 FORMER COMPANY: FORMER CONFORMED NAME: MEVC DRAPER FISHER JURVETSON FUND I INC DATE OF NAME CHANGE: 19991207 10-Q 1 d51944_10-q.txt QUARTERLY REPORT 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 July 31, 2002 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. (Exact name of the registrant as specified in its charter) DELAWARE 94-3346760 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 991 Folsom Street San Francisco, California 94107-1020 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (877) 474-6382 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class 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 September 16, 2002, there were 16,500,000 shares of Registrant's common stock, $.01 par value (the "Shares"), outstanding. The net asset value of a share at July 31, 2002 was $12.36. meVC Draper Fisher Jurvetson Fund I, Inc. (A Delaware Corporation) Index Part I. Financial Information Page Item 1. Financial Statements Balance Sheets - July 31, 2002 and October 31, 2001...................... 01 Statement of Operations - For the Period November 1, 2001 to July 31, 2002........ 02 Statement of Operations - For the Quarter May 1, 2002 to July 31, 2002 and the Quarter May 1, 2001 to July 31, 2001..................... 03 Statements of Cash Flows - For the Period November 1, 2001 to July 31, 2002 and the Period November 1, 2000 to July 31, 2001................. 04 Statement of Shareholders' Equity - Period ended July 31, 2002.............................. 05 Selected Per Share Data and Ratios - For the Period ended July 31, 2002 and the Year ended October 31, 2001.............................. 06 Schedule of Investments - July 31, 2002........................................... 07 Notes to Financial Statements................................ 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......................... 21 Item 3. Quantitative and Qualitative Disclosure about Market Risk.... 25 Part II. Other Information Item 1. Legal Proceedings............................................. 26 Item 4. Submission of Matters to a Vote of Security Holders........... 26 Item 6. Exhibits and Reports on Form 8-K.............................. 27 SIGNATURE................................................................... 29 Exhibits.................................................................... 30 Part I. Financial Information ITEM 1. FINANCIAL STATEMENTS meVC Draper Fisher Jurvetson Fund I, Inc. Balance Sheets (Unaudited)
ASSETS July 31, October 31, 2002 2001 ------------- ------------- Investments in preferred stocks, at fair value (cost $140,524,496 and $148,886,310, respectively) $ 55,577,321 $ 90,926,328 Investments in short-term securities, at market value (cost $59,456,055 and $151,320,526, respectively) . 59,431,227 151,373,377 Cash and cash equivalents (cost $91,025,823 and $12,353,422, respectively) .. 91,025,823 12,353,422 Subordinated notes (cost $5,327,475 and $0, respectively) 5,327,475 -- Interest receivable ..................................... 17,411 396,656 ------------- ------------- Total assets ............................................ 211,379,257 255,049,783 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities (Note 2, 7): Payable for investments purchased ....................... 6,089,918 -- Management fee payable .................................. 114,442 578,227 Custody/Accounting/Transfer Agency ...................... 23,015 -- Administration .......................................... 33,750 -- Audit Fees .............................................. 89,400 -- Legal Fees .............................................. 485,559 -- Director's Fees ......................................... 206,400 -- Employee Compensation & Benefits ........................ 221,735 -- Accrued Expenses ........................................ 206,561 -- ------------- ------------- Total liabilities ....................................... 7,470,780 578,227 ------------- ------------- Shareholders' Equity: Common Stock, $0.01 par value; 150,000,000 shares authorized and 16,500,000 outstanding .......... 165,000 165,000 Additional paid in capital .......................... 311,485,000 311,485,000 Retained deficit .................................... (107,741,523) (57,178,444) ------------- ------------- Total shareholders' equity .............................. 203,908,477 254,471,556 ------------- ------------- Total liabilities and shareholders' equity .............. $ 211,379,257 $ 255,049,783 ============= ============= Net asset value per share ............................... $ 12.36 $ 15.42 ============= =============
The accompanying notes are an integral part of these financial statements. 1 meVC Draper Fisher Jurvetson Fund I, Inc. Statement of Operations For the Period November 1, 2001 to July 31, 2002 (Unaudited) Investment Income: Interest income .................................. $ 2,776,045 Dividend income .................................. 9,745 ------------ Total investment income ................................... 2,785,790 ------------ Operating Expenses: Management fees .................................. 3,592,753 Custody/Accounting/Transfer Agency ............... 23,015 Administration ................................... 33,750 Audit Fees ....................................... 89,400 Legal Fees ....................................... 485,559 Director's Fees .................................. 206,400 Employee Compensation & Benefits ................. 221,736 Accrued Expenses ................................. 206,561 ------------ Total operating expenses .................................. 4,859,174 ------------ Net investment loss ....................................... (2,073,384) ------------ Net Realized and Unrealized Loss on Investment Transactions: Net realized loss on investment transactions .......................... (20,696,133) ------------ Net unrealized depreciation on investment transactions .......................... (27,064,872) ------------ Realized and unrealized loss on investment transactions .......................... (47,761,005) ------------ Net decrease in net assets resulting from operations ........................................... $(49,834,389) ============ Net decrease in net assets resulting from operations per share ................................. $ (3.02) ============ Dividends declared per Share .............................. $ 0.04 ============ The accompanying notes are an integral part of these financial statements. 2 meVC Draper Fisher Jurvetson Fund I, Inc. Statements of Operations (Unaudited) For the quarter For the quarter May 1, 2002 to May 1, 2001 to July 31, 2002 July 31, 2001 --------------- --------------- Investment Income: Interest income ..................... $ 806,238 $ 1,799,202 ------------ ------------ Operating Expenses: Management fees (Note 2) ............ 588,049 1,845,235 Custody/Accounting/Transfer Agency .. 23,015 -- Administration ...................... 33,750 -- Audit Fees .......................... 89,400 -- Legal Fees .......................... 485,559 -- Director's Fees ..................... 206,400 -- Employee Compensation & Benefits .... 221,736 -- Accrued Expenses .................... 206,561 -- ------------ ------------ Total operating expenses ..................... 1,854,470 1,845,235 ------------ ------------ Net investment loss .......................... (1,048,232) (46,033) ------------ ------------ Net Realized and Unrealized (Loss) Gain on Investment Transactions: Net realized (loss) gain on investment transactions ............. (17,368,574) 4,398 ------------ ------------ Net unrealized depreciation on investment transactions ............. (2,380,632) (16,569,793) ------------ ------------ Realized and unrealized loss on investment transactions ............. (19,749,206) (16,565,395) ------------ ------------ Net decrease in net assets resulting from operations .............................. $(20,797,438) $(16,611,428) ============ ============ Net decrease in net assets resulting from operations per share .................... $ (1.26) $ (1.01) ============ ============ Dividends declared per Share ................. $ -- $ -- ============ ============ The accompanying notes are an integral part of these financial statements. 3 meVC Draper Fisher Jurvetson Fund I, Inc. Statements of Cash Flows (Unaudited)
For the period For the period November 1, 2001 November 1, 2000 to July 31, 2002 to July 31, 2001 ---------------- ---------------- Cash Flows from Operating Activities: Net decrease in net assets resulting from operations .... $ (49,834,389) $ (26,141,567) Adjustments to reconcile net cash provided by operations: Realized loss (gain) ............................... 20,696,133 (4,295) Unrealized depreciation ............................ 27,064,872 28,079,658 Changes in assets and liabilities: Expenses payable .............................. 802,635 (56,002) Interest receivable ........................... 379,245 278,047 Investment purchased payable .................. 6,089,918 100,000 Purchases of preferred stock ....................... (20,506,754) (36,325,157) Purchases of short-term investments ................ (123,189,975) (106,432,239) Purchases of cash equivalents ...................... (770,704,696) (820,953,502) Sales of preferred stocks .......................... 8,170,283 -- Sales/Maturities of short-term investments ......... 203,421,303 102,946,261 Sales/Maturities of cash equivalents ............... 777,012,516 818,381,346 ------------- ------------- Net cash provided (used) by operating activities ... 79,401,091 (40,127,450) ------------- ------------- Cash Flows from Financing Activities: Distributions ...................................... (728,690) (5,644,650) ------------- ------------- Net cash used for financing activities ............. (728,690) (5,644,650) ------------- ------------- Net change in cash and cash equivalents for the period ...... 78,672,401 (45,772,100) ------------- ------------- Cash and cash equivalents, beginning of period .............. 12,353,422 115,760,166 ------------- ------------- Cash and cash equivalents, end of the period ................ $ 91,025,823 $ 69,988,066 ============= =============
The accompanying notes are an integral part of these financial statements. 4 meVC Draper Fisher Jurvetson Fund I, Inc. Statement of Shareholders' Equity (Unaudited)
Additional Total Common Paid in Retained Shareholders' Stock Capital Deficit Equity --------- ------------- ------------- ------------- Balance at March 31, 2000* ................................. $ 3 $ 4,997 $ -- $ 5,000 Issuance of 16,500,000 shares through Initial public offering (Net of Offering Costs) ......... 165,000 311,485,000 -- 311,650,000 Redemption of seed shares .................................. (3) (4,997) -- (5,000) Net decrease in net assets from operations ................. -- -- (203,261) (203,261) --------- ------------- ------------- ------------- Balance at October 31, 2000 ................................ $ 165,000 $ 311,485,000 $ (203,261) $ 311,446,739 --------- ------------- ------------- ------------- Distributions from net investment income ................... -- -- (5,644,650) (5,644,650) Net decrease in net assets from operations ................. -- -- (51,330,533) (51,330,533) --------- ------------- ------------- ------------- Balance at October 31, 2001 ................................ $ 165,000 $ 311,485,000 $ (57,178,444) $ 254,471,556 --------- ------------- ------------- ------------- Distributions from net investment income ................... -- -- (728,690) (728,690) Net decrease in net assets from operations ................. -- -- (49,834,389) (49,834,389) --------- ------------- ------------- ------------- Balance at July 31, 2002 ................................... $ 165,000 $ 311,485,000 $(107,741,523) $ 203,908,477 --------- ------------- ------------- -------------
* Commencement of operations. The accompanying notes are an integral part of these financial statements. 5 meVC Draper Fisher Jurvetson Fund I, Inc. Selected per Share Data and Ratios
For the Period November 1, 2001 For the Year to July 31, 2002 Ended (Unaudited) October 31, 2001 ---------------- ---------------- Net asset value, beginning of period ................. $ 15.42 $ 18.88 Income (loss) from investment operations: Net investment (loss) income ...................... (0.13) 0.10 Net realized and unrealized loss on investments.... (2.89) (3.22) ----------- ----------- Total from investment operations .................. (3.02) (3.12) ----------- ----------- Less distributions from and in excess of: Net investment income ............................. (0.04) (0.34) Net realized and unrealized gain .................. -- -- ----------- ----------- Total distributions ............................... (0.04) (0.34) ----------- ----------- Net asset value, end of period ....................... $ 12.36 $ 15.42 =========== =========== Market Value, end of period .......................... $ 7.65 $ 9.25 =========== =========== Total Return - At NAV (a) ............................ (19.49)% (15.99)% Total Return - At Market (a) ......................... (16.93)% (17.26)% Ratios and Supplemental Data: Net assets, end of period (in thousands) ............. $ 203,908 $ 254,472 Ratios to average net assets: Expenses (b) (Note 2, 7) ............................ 2.76% 2.50% Net investment income (b) ........................... (1.18)% 0.56%
(a) Total return is historical and assumes changes in share price, reinvestments of all dividends and distributions, and no sales charge. Total return for periods of less than one year is not annualized. (b) Annualized. The accompanying notes are an integral part of these financial statements. 6 meVC Draper Fisher Jurvetson Fund I, Inc. Schedule of Investments July 31, 2002 (Unaudited)
Date of Initial Description Shares/Principal Investment Cost Fair Value - ------------------------------------------------------------------------------------------------------------------------------------ Preferred Stocks-27.26% (a, b, c, d) (Note 3, 5) Actelis Networks, Inc., Series C .................. 1,506,025 May 2001 $ 5,000,003 $ 5,000,003 Annuncio Software, Inc., Series E ................. 625,000 July 2000 5,000,000 1,706,250 *AuctionWatch.com, Inc., Common Stock .............. 10,476 June 2000 5,500,000 -- *AuctionWatch.com, Inc., Series A .................. 6,443,188 Jan. 2002 1,134,001 1,134,001 *BlueStar Solutions, Inc.: Common Stock ................................ 49,474 May 2000 3,999,999 -- Series C Preferred .......................... 74,211 May 2000 5,999,999 1,499,990 Series C Warrants, expire 5/26/03 ........... 136,054 May 2000 -- -- *BlueStar Solutions Inc., Series D ................. 4,545,455 Feb. 2002 3,000,000 3,000,000 *CBCA, Inc., Series E .............................. 4,774,636 Apr. 2002 9,999,998 9,999,998 Cidera, Inc., Series D ............................. 857,192 Aug. 2000 7,500,001 500,000 DataPlay, Inc., Series D ........................... 2,500,000 June 2001 7,500,000 2,500,000 *Endymion Systems, Inc., Series A .................. 7,156,760 June 2000 7,000,000 2,000,314 *EXP Systems, Inc., Series C ....................... 330,750 June 2000 1,891,891 350,000 *Foliofn, Inc., Series C ........................... 5,802,259 June 2000 15,000,000 2,999,768 InfoImage, Inc.: Series AA Preferred ........................ 11,740,340 June 2001 352,210 -- Common Stock Warrants ...................... 92,663,933 June 2001 -- -- Common Stock ............................... 933,120 June 2001 2,004,480 -- Series C Warrants for common stock, expire 6/2/10 ............................. 259,200 June 2001 -- -- *Ishoni Networks, Inc., Series C ................... 2,003,607 Nov. 2000 10,000,003 2,499,900 *IQdestination, Series B ........................... 1,150,000 Sep. 2000 2,300,000 -- *IQdestination, Series C ........................... 1,295,775 June 2001 920,000 -- *IQdestination, Series C1 .......................... 535,714 Feb. 2002 300,000 -- Lumeta Corporation, Series A ...................... 384,615 Oct. 2000 250,000 269,231 Lumeta Corporation, Series B ...................... 266,846 June 2002 156,489 186,792
The accompanying notes are an integral part of these financial statements. 7 meVC Draper Fisher Jurvetson Fund I, Inc. Schedule of Investments July 31, 2002 (Unaudited)
Date of Initial Description Shares/Principal Investment Cost Fair Value - ------------------------------------------------------------------------------------------------------------------------------------ Preferred Stocks (cont.) *MediaPrise, Inc., Series A ...................... 2,196,193 Sep. 2000 $ 2,000,000 $ -- *Pagoo, Inc., Series C ........................... 3,412,969 July 2000 9,999,999 -- *Pagoo, Inc., Series D ........................... 2,098,636 Feb. 2001 4,000,000 2,600,000 *Phosistor Technologies, Inc., Series B .......... 6,666,667 Jan. 2002 1,000,000 1,000,000 *ProcessClaims, Inc., Series C ................... 6,250,000 June 2001 2,000,000 2,943,750 *ProcessClaims, Inc., Series D ................... 849,257 May 2002 400,000 400,000 *ProcessClaims, Inc. Series E warrants, expire 12/31/05 ........ 873,362 May 2002 20 20 *Safestone Technologies PLC, Series A ............ 1,714,455 Dec. 2000 3,515,402 2,187,302 *Safestone Technologies PLC, Series B ............ 391,923 July 2002 500,000 500,000 *ShopEaze Systems, Inc., Series B ................ 2,097,902 May 2000 6,000,000 -- *Sonexis, Inc., Series C ......................... 2,590,674 June 2000 10,000,000 7,000,001 *Yaga, Inc., Series A ............................ 300,000 Nov. 2000 300,000 300,000 *Yaga, Inc.: Series B .................................. 1,000,000 June 2001 2,000,000 1,000,000 Series B Warrants, expire 6/08/04 ......... 100,000 June 2001 -- -- *0-In Design Automation, Inc., Series E .......... 2,239,291 Nov. 2001 4,000,001 4,000,001 ------------ ------------ Total Preferred Stocks ..................................................................... 140,524,496 55,577,321 ------------ ------------ Subordinated Notes- 2.61% (b) InfoUSA, Inc. 6.000%, 09/29/2003 ........................ 1,827,475 Dec. 2001 1,827,475 1,827,475 Dataplay, Inc. 6.000%, 05/10/2005 ........................ 2,000,000 May 2002 2,000,000 2,000,000 Dataplay, Inc. 6.000%, 06/17/2005 ........................ 500,000 June 2002 500,000 500,000 Dataplay, Inc. 6.000%, 06/27/2005 ........................ 1,000,000 June 2002 1,000,000 1,000,000 ------------ ------------ Total Subordinated Notes .............................................................. 5,327,475 5,327,475 ------------ ------------
The accompanying notes are an integral part of these financial statements. 8 meVC Draper Fisher Jurvetson Fund I, Inc. Schedule of Investments July 31, 2002 (Unaudited)
Date of Initial Description Shares/Principal Investment Cost Value - ------------------------------------------------------------------------------------------------------------------------------------ Short-Term Securities-29.15% (b) Corporate Bonds-2.83% CIT Group Holdings, Inc. 6.375%, 11/15/2002 ........................ 3,000,000 Dec. 2001 $ 3,032,808 $ 3,005,340 Public Service Electric Gas Co. 7.190%, 09/06/2002 ........................ 2,745,000 Nov. 2001 2,756,016 2,756,501 ------------ ------------ Total Corporate Bonds .................................................................. 5,788,824 5,761,841 ------------ ------------ Certificates of Deposit-2.20% National City Corp. 1.770%, 09/24/2002 ........................ 4,500,000 June 2001 4,500,000 4,500,000 ------------ ------------ U.S. Government & Agency Securities-12.92% Federal Home Loan Mortgage Disc. Cons 1.720%, 09/03/2002 ........................ 4,000,000 Jan. 2002 3,993,693 3,993,693 Federal Home Loan Mortgage Corp. 6.625%, 08/15/2002 ........................ 3,000,000 Aug. 2001 3,003,449 3,005,604 Federal National Mortgage Association Disc. Cons 1.920%, 08/09/2002 ........................ 4,850,000 Dec. 2001 4,847,931 4,847,931 Federal National Mortgage Association Disc. Cons 3.410%, 08/09/2002 ........................ 10,000,000 Dec. 2001 9,992,422 9,992,422 Federal National Mortgage Association 1.790%, 08/21/2002 ........................ 4,500,000 Apr. 2002 4,495,525 4,495,525 ------------ ------------ Total U.S. Government & Agency ......................................................... 26,333,020 26,335,175 ------------ ------------ Commercial Paper-7.77% General Electric Capital Corp. 1.970%, 09/10/02 .......................... 7,000,000 Dec. 2001 6,984,678 6,984,678 Home Depot 1.77%, 11/06/2002 ......................... 1,100,000 July 2002 1,094,754 1,094,754
The accompanying notes are an integral part of these financial statements. 9 meVC Draper Fisher Jurvetson Fund I, Inc. Schedule of Investments July 31, 2002 (Unaudited)
Date of Initial Description Shares/Principal Investment Cost Value - ------------------------------------------------------------------------------------------------------------------------------------ Commercial Paper (cont.) Shell Finance 1.780%, 09/20/2002 ........................ 2,100,000 June 2002 $ 2,094,808 $ 2,094,808 Societe Generale 1.86%, 12/16/2002 ......................... 5,700,000 June 2002 5,659,654 5,659,654 ------------ ------------ Total Commercial Paper .................................................................... 15,833,894 15,833,894 ------------ ------------ Certificate of Deposit-3.43% Deutsche Bank 1.77%, 10/22/2002 ......................... 7,000,000 July 2002 7,000,317 7,000,317 ------------ ------------ Total Short Term Securities ........................................................... 59,456,055 59,431,227 ------------ ------------ Cash and Cash Equivalents-44.64% (b) Commercial Paper-40.17% ABN Amro 1.770%, 08/08/2002 ........................ 2,000,000 June 2002 1,999,312 1,999,312 ABN Amro 1.760%, 10/11/2002 ........................ 1,000,000 July 2002 996,529 996,529 Alcon Finance 1.730%, 08/27/2002 ........................ 7,000,000 July 2002 6,991,254 6,991,254 American Gen Fin Corp. 1.760%, 09/09/2002 ........................ 2,000,000 July 2002 1,996,187 1,996,187 BNP Paribas 1.73%, 09/17/2002 ......................... 5,000,000 June 2002 4,988,707 4,988,707 CDC Commercial 1.730%, 08/02/2002 ........................ 2,500,000 June 2002 2,499,880 2,499,880 CDC Commercial 1.720%, 08/22/2002 ........................ 4,500,000 July 2002 4,495,485 4,495,485 Citicorp 1.750%, 08/01/2002 ........................ 2,000,000 July 2002 2,000,000 2,000,000
The accompanying notes are an integral part of these financial statements. 10 meVC Draper Fisher Jurvetson Fund I, Inc. Schedule of Investments July 31, 2002 (Unaudited)
Date of Initial Description Shares/Principal Investment Cost Value - ------------------------------------------------------------------------------------------------------------------------------------ Cash and Cash Equivalents (cont.) Citigroup, Inc. 1.750%, 08/20/2002 ........................ 5,000,000 July 2002 $ 4,995,382 $ 4,995,382 Danske Corp. 1.750%, 08/12/2002 ........................ 1,800,000 July 2002 1,799,037 1,799,037 Danske Corp. 1.765%, 08/22/2002 ........................ 3,100,000 July 2002 3,096,808 3,096,808 Formosa Plastics Corp. 1.750%, 08/20/2002 ........................ 4,000,000 July 2002 3,996,305 3,996,305 Fortis Funding 1.750%, 09/04/2002 ........................ 6,100,000 July 2002 6,089,918 6,089,918 Fuji Photo Film Finance 1.750%, 09/05/2002 ........................ 6,000,000 July 2002 5,989,792 5,989,792 Ing America 1.810%, 08/22/2002 ........................ 4,000,000 May 2002 3,995,777 3,995,777 Ing America 1.760%, 09/06/2002 ........................ 3,000,000 July 2002 2,994,720 2,994,720 Johnson and Johnson 1.770%, 08/06/2002 ........................ 2,200,000 May 2002 2,199,459 2,199,459 Nestles Capital Corp. 1.750%, 08/05/2002 ........................ 6,700,000 May 2002 6,698,697 6,698,697 Nestle Fin France 1.720%, 08/19/2002 ........................ 2,600,000 July 2002 2,597,764 2,597,764 Shell Finance 1.770%, 08/20/2002 ........................ 1,000,000 June 2002 999,066 999,066 Siemens Cap Corp. 1.730%, 08/12/2002 ........................ 5,500,000 June 2002 5,497,093 5,497,093 UBS Fin Inc. 1.770%, 08/07/2002 ........................ 5,000,000 July 2002 4,998,525 4,998,525 ------------ ------------ Total Commercial Paper .................................................................... 81,915,697 81,915,697 ------------ ------------
The accompanying notes are an integral part of these financial statements. 11 meVC Draper Fisher Jurvetson Fund I, Inc. Schedule of Investments July 31, 2002 (Unaudited)
Date of Initial Description Shares/Principal Investment Cost Fair Value/Value - ------------------------------------------------------------------------------------------------------------------------------------ Certificates of Deposit-1.47% Wells Fargo Bank 1.760%, 08/01/2002 ........................ 3,000,000 June 2002 $ 3,000,000 $ 3,000,000 ------------ ------------ Money Market Funds-3.00% SSgA Money Market Fund 1.596% .................................... 6,110,126 July 2002 6,110,126 6,110,126 ------------ ------------ Total Cash and Cash Equivalents .......................................................... 91,025,823 91,025,823 ------------ ------------ Total Investments ......................................................................... $296,333,849 $211,361,846 ============ ============
(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 $203,908,477. (c) As defined in the Investment Company Act of 1940, at July 31, 2002, the Fund was considered to have a controlling interest in Auctionwatch, Inc. (d) As defined in the Investment Company Act of 1940, all of the Fund's preferred stock investments are in eligible portfolio companies except Safestone Technologies PLC. The Fund provides significant managerial assistance to all of the portfolio companies in which it has invested, except InfoImage, Inc., IQdestination, Mediaprise, Inc., Shopeaze Systems, Inc, which are in the process of ceasing operations. The Fund provides significant managerial assistance to portfolio companies that comprise 100% of the total value of the investments in portfolio companies at July 31, 2002. * Affiliated Issuers (Total Market Value of $45,415,045): companies in which the Fund owns at least 5% of the voting securities. The accompanying notes are an integral part of these financial statements. 12 meVC Draper Fisher Jurvetson Fund I, Inc. Notes to Financial Statements July 31, 2002 (Unaudited) 1. Basis of Presentation The accompanying unaudited 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. 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 Company's Annual Report on Form 10-K for the year ended October 31, 2001, as filed with the Securities and Exchange Commission (File No. 814-00201). 2. Change of Fund Management Structure From the beginning of the fiscal quarter through June 19, 2002, the Fund was charged a management fee by meVC Advisers, Inc. ("meVC Advisers" or "the former Advisor") at a rate of 2.5% of the average weekly net assets of the Fund, paid monthly in arrears. The former Advisor had agreed to pay compensation to the directors and officers for any and all services rendered to the Fund and had agreed to pay all Fund expenses above and beyond the 2.5% management fee paid to the former Advisor by the Fund. The former Advisor resigned without notice on June 19, 2002. As a result, the Fund's board internalized the Fund's operations, including management of the Fund's investments, and began to pay it's own expenses directly. The previous 2.5% expense cap, the maximum amount of compensation to be paid to the former Advisor, was terminated at the time of the Adviser's resignation. 3. Concentration of Market Risk Financial instruments that subject the Fund to concentrations of market risk consist principally of preferred stocks, which represent approximately 27.26% of the Fund's net assets. The preferred stocks, as discussed in Note 5, consist of investments in companies with no readily determinable market values and as such are valued in accordance with the Fund's fair value policies. 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 are subject to restrictions on resale because they were acquired from the issuer in private placement transactions. 4. Transactions with Other Parties Through March 2002, Fleet Investment Advisors managed the Fund's cash portfolio under a sub-advisory agreement with the former Advisor. Subsequently, the former Advisor managed those assets until its resignation on June 19, 2002. Since that time, the Fund's cash portfolio is managed internally by Fund employees. On June 19, 2002, when meVC Advisers resigned as the Investment Advisor to the Fund effective immediately, the former Advisor's sub-advisory agreement with Draper Fisher Jurvetson MeVC Management Co. LLC ("Draper Advisers" or "the former Sub-Advisor") was terminated automatically as a matter of contract construction. On June 20, 2002, the Board voted to internalize all investment management and administrative functions of the Fund effective immediately. On June 26, 2002, the Fund acquired various assets from meVC Advisers necessary to run the Fund's information systems and web site, including but not limited to, website equipment, systems hardware and software, and intellectual property. The assets were purchased for $17,855. 13 In June and July 2002, the Fund utilized the services of Draper Fisher Jurvetson MeVC Management Co, LLC as a temporary payroll agent to facilitate the payment of the Fund's employees. Management believed it was in the stockholders' best interest to maintain continuity of payroll while operations were initiated with the Fund's ongoing payroll vendor. 5. Portfolio Investments During the nine months ended July 31, 2002, the Fund invested approximately $15,000,000 in three new companies, made ten follow-on investments in AuctionWatch.com, Inc., BlueStar Solutions, Inc., DataPlay, Inc., IQdestination, Lumeta Corporation, ProcessClaims, Inc., and Safestone PLC of approximately $9,006,756, had two portfolio company exit events with proceeds totaling approximately $8,170,283 and a realized loss of approximately $9,937,825 in the sale of infoUSA.com, Inc. to its parent entity and the disbursement of assets from EXP Systems, Inc., and had one portfolio company write-off with a realized loss of approximately $10,760,460 in the irreversible dilution of equity in Personic Software, Inc. Changes to and additions to the Fund's individual equity and equity-linked security investments, during the nine months ended July 31, 2002, were comprised of the following: AuctionWatch.com, Inc. On November 19, 2001, the Valuation Committee of the Board of Directors marked down the remaining valuation of the Fund's investment in the Series C Convertible Preferred Stock ("Series C Preferred Stock") issue of AuctionWatch.com, Inc. ("AuctionWatch") by 11%. The Fund's investment then consisted of 1,047,619 shares of Series C Preferred Stock at a valuation of $1.9688 per share. On January 31, 2002 the Fund entered into a follow-on investment of $1,134,001 in AuctionWatch. The Fund's investment consisted of 6,443,188 shares of Series A Convertible Preferred Stock ("Series A Convertible Preferred Stock") at $0.176 per share. The Series A Preferred Stock ranks senior, with respect to liquidation preference, to any series of Preferred Stock issued prior to the Series A and senior to the Common Stock. In the event of a Qualified Initial Public Offering ("Qualified IPO"), the Series A Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. Pursuant to the terms of the financing, the Series C Preferred Stock was converted into 10,476 shares of Common Stock, along with the entirety of AuctionWatch's Series A Convertible Preferred Stock, Series B Convertible Preferred Stock , and all other Series C Convertible Preferred Stock. The Fund's investments now consist of 10,476 shares of Common Stock at a valuation of $0.00 per share and 6,443,188 shares of Series A Preferred Stock at a valuation of $0.176 per share. 0-In Design Automation, Inc. On November 29, 2001 the Fund entered into approximately a $4,000,000 investment in 0-In Design Automation, Inc.. ("0-In"). The Fund's investment consisted of 2,239,291 shares of Series E Convertible Preferred Stock (Series E Preferred Stock") at $1.78628 per share. The Series E Preferred Stock ranks senior, with respect to liquidation preference, to any series of Preferred Stock issued prior to the Series E and senior to the Common Stock. In the event of a Qualified IPO, the Series E Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. infoUSA.com, Inc. On December 29, 2001 the Fund agreed to the acquisition of the assets of infoUSA.com, Inc. by infoUSA, Inc., the parent company of infoUSA.com, Inc. In return, the Fund received proceeds of $6,670,282.47 made up of $4,842,807.82 in cash and $1,827,474.65 in the form of a promissory note from infoUSA, Inc. The Fund shall receive interest on the unpaid principal balance of the Note at the rate of 6% per annum, paid quarterly. 14 The Note is due and payable on September 29, 2003. The entire transaction resulted in a realized loss of $3,329,714.53 for the Fund. Annuncio Software, Inc. On January 15, 2002, the Valuation Committee of the Board of Directors marked down the remaining valuation of the Fund's investment in the Series E Convertible Preferred Stock ("Series E Preferred Stock") issue of Annuncio Software, Inc. ("Annuncio") by 55%. The Valuation Committee's decision was based on the announcement of an impending acquisition of Annuncio by PeopleSoft, Inc. The Fund's investment now consists of 625,000 shares of Series E Preferred Stock at a valuation of $2.73 per share which is believed to be what the Fund will receive at the completion of the acquisition. Phosistor Technologies, Inc. On January 24, 2002 the Fund entered into a $1,000,000 investment in Phosistor Technologies, Inc. ("Phosistor"). The Fund's investment consisted of 6,666,667 shares of Series B Convertible Preferred Stock (Series B Preferred Stock") at $0.15 per share. The Series B Preferred Stock ranks pari passu, with respect to liquidation preference, to any series of Preferred Stock issued prior to the Series B and senior to the Common Stock. In the event of a Qualified IPO, the Series B Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. Cidera, Inc. On January 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series D Convertible Preferred Stock issue of Cidera, Inc. ("Cidera") by 76%. The Fund's investment then consisted of 857,192 shares of Series D Convertible Preferred Stock ("Series D Preferred Stock") at a valuation of $1.0499 per share. On April 19, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series D Preferred Stock issue of Cidera by 56%. The Fund's investment now consists of 857,192 shares of Series D Preferred Stock at a valuation of $0.5833 per share. EXP Systems, Inc. On January 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Convertible Preferred Stock issue of EXP Systems, Inc. ("EXP") by 33%. The Fund's investment then consisted of 1,748,252 shares of Series C Convertible Preferred Stock ("Series C Preferred Stock") at a valuation of $1.43 per share. On May 17, 2002, the Valuation Committee of the Board of Directors marked down the remaining valuation of the Fund's investment in the Series C Preferred Stock issue of EXP by 26%. The Valuation Committee's decision was based on the announcement of an impending disbursement of capital by EXP. The Fund's investment then consisted of 1,748,252 shares of Series C Preferred Stock at a valuation of $1.0582 per share was believed to be what the Fund would receive at the completion of the disbursement of capital. On June 19, 2002 the Fund agreed to certain assets of EXP being disbursed pro rata to the shareholders of each of the Series A Convertible Preferred stock, Series B Convertible Preferred Stock, and Series C Preferred Stock. In return, the Fund received proceeds of approximately $1,500,000 in cash. The entire transaction resulted in a realized loss of $6,608,111 for the Fund. The Fund's investment now consists of 330,750 shares of Series C Preferred Stock at a valuation of $1.0582 per share. Foliofn, Inc. On January 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series C Convertible Preferred Stock issue of Foliofn, Inc. ("Foliofn") by 33%. 15 The Fund's investment then consisted of 5,802,259 shares of Series C Convertible Preferred Stock ("Series C Preferred Stock") at a valuation of $0.8617 per share. On July 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series C Preferred Stock issue of Foliofn by 40%. The Fund's investment now consists of 5,802,259 shares of Series C Convertible Preferred Stock ("Series C Preferred Stock") at a valuation of $0.5170 per share. InfoImage, Inc. On January 31, 2002, the Valuation Committee of the Board of Directors marked down the value of the Fund's investment in the Series AA Convertible Preferred Stock issue of InfoImage, Inc. ("InfoImage") by 100%. The Fund's investments now consist of 933,120 shares of Common Stock at a valuation of $0.00, 11,740,340 shares of Series AA Convertible Preferred Stock ("Series AA Preferred Stock") at a valuation of $0.00 per share, 92,663,933 Common Stock warrants at a valuation of $0.00 and 259,200 Series C Warrants for Common Stock at a valuation of $0.00. Ishoni Networks, Inc. On January 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Convertible Preferred Stock issue of Ishoni Networks, Inc. ("Ishoni") by 33%. The Fund's investment then consisted of 2,003,607 shares of Series C Convertible Preferred Stock ("Series C Preferred Stock") at a valuation of $2.4955 per share. On July 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series C Preferred Stock issue of Ishoni by 50%. The Fund's investment now consists of 2,003,607 shares of Series C Preferred Stock at a valuation of $1.2477 per share. MediaPrise, Inc. On January 31, 2002, the Valuation Committee of the Board of Directors marked down the value of the Fund's investment in the Series A Convertible Preferred Stock issue of MediaPrise, Inc. ("MediaPrise") by 100%. The Fund's investment now consists of 2,196,193 shares of Series A Convertible Preferred Stock ("Series A Preferred Stock") at a valuation of $0.00 per share. Pagoo, Inc. On January 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series C Convertible Preferred Stock issue of Pagoo, Inc. ("Pagoo") by 54%. The Fund's investments then consisted of 3,412,969 shares of Series C Convertible Preferred Stock ("Series C Preferred Stock") at a valuation of $1.0255 per share and 2,098,636 shares of Series D Convertible Preferred Stock ("Series D Preferred Stock") at a valuation of $1.906 per share. On May 16, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series C Preferred Stock issue of Pagoo by 100% and marked down the value of the Fund's investment in the Series D Preferred Stock issue of Pagoo by 35%. The Fund's investments now consist of 3,412,969 shares of Series C Convertible Preferred Stock ("Series C Preferred Stock") at a valuation of $0.00 per share and 2,098,636 shares of Series D Convertible Preferred Stock ("Series D Preferred Stock") at a valuation of $1.2389 per share. ShopEaze Systems, Inc. On January 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Convertible Preferred Stock issue of ShopEaze Systems, Inc. ("ShopEaze") by 56%. The Fund's investment then consisted of 2,097,902 shares of Series B Convertible Preferred Stock ("Series B Preferred Stock") at a valuation of $0.4767 per share. 16 On April 16, 2002, the Valuation Committee of the Board of Directors marked down the valuation of the Fund's approximately $6,000,000 investment in the Series B Preferred Stock issue of ShopEaze by the remaining 16%. The Fund's investment now consists of 2,097,902 shares of Series B Convertible Preferred Stock ("Series B Preferred Stock") at a valuation of $0.00 per share. IQdestination On February 5, 2002 the Fund entered into a follow-on investment of approximately $300,000 in IQdestination. The Fund's investment consisted of 535,714 shares of Series C1 Convertible Preferred Stock ("Series C1 Preferred Stock") at $0.56 per share. The Series C1 Preferred Stock ranks senior, with respect to liquidation preference, to any series of Preferred Stock issued prior to the Series C1 and senior to the Common Stock. In the event of a Qualified IPO, the Series C1 Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. Due to the investment in Series C1 Preferred Stock at a lower price per share than the Series B Convertible Preferred Stock ("Series B Preferred Stock") and the Series C Convertible Preferred Stock ("Series C Preferred Stock"), the values of the Series B Preferred Stock and the Series C Preferred Stock were subsequently marked down in accordance with the valuation policies as set forth in the Fund's Registration Statement. Pursuant to the terms of the financing, the markdown only considers the anti-dilutive covenants of the Series C Preferred Stock as contained in IQdestination's Articles of Incorporation. The Fund's investments then consisted of 1,150,000 shares of Series B Preferred Stock at a valuation of $0.56 per share, 1,295,775 shares of Series C Preferred Stock at a valuation of $0.6089 and 535,714 shares of Series C1 Preferred Stock at a valuation of $0.56 per share. On April 30, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investments in the Series B Preferred Stock, the Series C Preferred Stock, and the Series C1 Preferred Stock issues of IQdestination. The Valuation Committee's decision was based on the announcement of the winding down of IQdestination. The Fund's investments now consist of 1,150,000 shares of Series B Preferred Stock at a valuation of $0.00 per share, 1,295,775 shares of Series C Preferred Stock at a valuation of $0.00 and 535,714 shares of Series C1 Preferred Stock at a valuation of $0.00 per share which is believed to be what the Fund will receive at the completion of the wind down. Lumeta Corporation On February 13, 2002 the Fund entered into a follow-on investment of approximately $30,303 in Lumeta Corporation ("Lumeta"). The Fund's investment consisted of a Convertible Promissory Note (the "Note") with a face value of $30,303 and earning interest at a rate of 12% per annum. The Note is due and payable on May 31, 2002. On June 10, 2002, the Fund entered into a follow-on investment of approximately $126,186.20 in Lumeta. The Fund's investment consisted of 180,266 shares of Series B Convertible Preferred Stock ("Series B Preferred Stock") at $0.70 per share. In conjunction with the Series B Preferred stock financing, the Fund converted its $30,303 note into 86,580 shares of Series B Preferred Stock at $0.35 per share The Series B Preferred Stock ranks senior, with respect to liquidation preference, to any series of Preferred Stock issued prior to the Series B and senior to the Common Stock. In the event of a Qualified Initial Public Offering ("Qualified IPO"), the Series B Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. Due to the investment in the Series B Preferred Stock at a higher price per share than the Series A Convertible Preferred Stock, the value of the Series A Convertible Preferred Stock was subsequently marked up in accordance with the valuation policies as set forth in the Fund's Registration Statement. 17 BlueStar Solutions, Inc. On February 28, 2002 the Fund entered into a follow-on investment of approximately $3,000,000 in BlueStar Solutions, Inc ("BlueStar"). The Fund's investment consisted of 4,545,455 shares of Series D Convertible Preferred Stock ("Series D Preferred Stock") at $0.66 per share. The Series D Preferred Stock ranks senior, with respect to liquidation preference, to any series of Preferred Stock issued prior to the Series D and senior to the Common Stock. In the event of a Qualified Initial Public Offering ("Qualified IPO"), the Series D Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. Pursuant to the terms of the financing, (i) the Fund's Series C Preferred Stock was recapitalized in an 11-for-1 reverse split, along with the entirety of BlueStar's Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, and all other Series C Convertible Preferred Stock, and (ii) the Fund's Series C Preferred Stock was partially effected by a "pay-to-play" provision pursuant to which the preferred stock of certain existing preferred shareholders was converted to Common Stock, along with certain of BlueStar's Series A Convertible Preferred Stock, Series B Convertible Preferred Stock , and other Series C Convertible Preferred Stock. The Fund's investments now consist of 49,474 shares of Common Stock (as converted from the Series C Preferred Stock) at a valuation of $0.00 per share, 74,211 shares of Series C Preferred Stock at a valuation of $20.2125 per share, 136,054 warrants for Series C Preferred Stock at a valuation of $0.00 per share, and 4,545,455 shares of Series D Preferred Stock at a valuation of $0.66 per share. CBCA, Inc. On April 15, 2002 and April 29, 2002, the Fund entered into approximately a $10,000,000 investment (two closing dates) in CBCA, Inc. ("CBCA"). The Fund's investment consisted of 4,774,636 shares of Series E Convertible Preferred Stock (Series E Preferred Stock") at $2.0944 per share. The Series E Preferred Stock ranks senior, with respect to liquidation preference, to any series of Preferred Stock issued prior to the Series E and senior to the Common Stock. In the event of a Qualified IPO, the Series E Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. Endymion Systems, Inc. On April 19, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series A Convertible Preferred Stock issue of Endymion Systems, Inc. ("Endymion") by 43%. The Fund's investment then consisted of 7,156,760 shares of Series A Convertible Preferred Stock ("Series A Preferred Stock") at a valuation of $0.4192 per share. On July 31, 2002, the Valuation Committee of the Board of Directors marked down the remaining value of the Fund's investment in the Series A Preferred Stock issue of Endymion by 33%. The Fund's investment now consists of 7,156,760 shares of Series A Preferred Stock ("Series A Preferred Stock") at a valuation of $0.2795 per share. ProcessClaims, Inc. On May 7, 2002, the Fund entered into approximately a $400,000 follow-on investment in ProcessClaims, Inc. ("ProcessClaims"). The Fund's investment consisted of 849,257 shares of Series D Convertible Preferred Stock ("Series D Preferred Stock") at $0.471 per share. The Fund's investment also consisted of 873,362 warrants to purchase Series E Preferred Stock at $0.000023 per share. The warrants expire on December 31, 2005. The Series D Preferred Stock ranks pari passu, with respect to liquidation preference, to the Series C Convertible Preferred Stock and the Series E Convertible Preferred Stock and senior to any series of Preferred Stock issued prior to the Series C and senior to the Common Stock. In the event of a Qualified IPO, the Series D Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. 18 Due to the investment in the Series D Preferred Stock at a higher price per share than the Series C Convertible Preferred Stock, the value of the Series C Convertible Preferred Stock was subsequently marked up in accordance with the valuation policies as set forth in the Fund's Registration Statement. DataPlay, Inc. On May 9, 2002 the Fund entered into a follow-on investment of $2,000,000 in DataPlay, Inc. ("DataPlay"). The Fund's investment consisted of a Convertible Promissory Note (the "Note") with a face value of $2,000,000 and earning interest at a rate of 6% per annum. The Note is due and payable on May 10, 2005. On June 14, 2002 the Fund entered into a follow-on investment of $500,000 in DataPlay. The Fund's investment consisted of a Convertible Promissory Note (the "Note") with a face value of $500,000 and earning interest at a rate of 6% per annum. The Note is due and payable on June 17, 2005. On June 26, 2002 the Fund entered into a follow-on investment of $1,000,000 in DataPlay. The Fund's investment consisted of a Convertible Promissory Note (the "Note") with a face value of $1,000,000 and earning interest at a rate of 6% per annum. The Note is due and payable on June 27, 2005. Safestone PLC On July 3, 2002 Fund entered into a $500,000 follow-on investment in Safestone PLC ("Safestone"). The Fund's investment consisted of 391,923 shares of Series B Convertible Preferred Stock ("Series B Preferred Stock") at $1.2758 per share. In conjunction with the Series B Preferred Stock financing, the Fund exercised its Series A Share Anti-Dilution Warrant, purchasing 1,064,054 shares of Series A Convertible Preferred Stock ("Series A Preferred Stock") at $0.01526 per share. The Series B Preferred Stock ranks senior, with respect to liquidation preference, to the Series A Preferred Stock and any series of Preferred Stock issued prior to the Series B and senior to the Common Stock. In the event of a Qualified IPO, the Series B Preferred Stock, as converted to common stock, will not be transferred in a public distribution prior to one hundred and eighty days after the date of the final prospectus used in such Qualified IPO. Due to the investment in the Series B Preferred Stock at a lower price per share than the Series A Preferred Stock, the value of the Series A Preferred Stock was subsequently marked down in accordance with the valuation policies as set forth in the Fund's Registration Statement. Personic Software, Inc. On July 31, 2002 the Fund removed Personic Software, Inc. ("Personic") from its accounting records as the Fund's equity position, along with all of the other preferred equity investors, had been irreversibly diluted by an investor holding a senior secured note. The entire transaction resulted in a realized loss of approximately $10,760,460 for the Fund. Sonexis, Inc. On July 31, 2002, the Valuation Committee of the Board of Directors marked down the value of the Fund's investment in the Series C Convertible Preferred Stock issue of Sonexis, Inc. ("Sonexis") by 30%. The Fund's investment now consists of 2,590,674 shares of Series C Convertible Preferred Stock ("Series C Preferred Stock") at a valuation of $2.702 per share. Yaga, Inc. On July 31, 2002, the Valuation Committee of the Board of Directors marked down the value of the Fund's investments in the Series A Convertible Preferred Stock and Series B Convertible Stock issues of Yaga, Inc. ("Yaga") by 50%. The Fund's investments now consist of 300,000 shares of Series A Convertible Preferred Stock ("Series A Preferred Stock") at a valuation of $1.00 per share, 2,000,000 shares of Series B Convertible 19 Preferred Stock ("Series B Preferred Stock") at a valuation of $1.00 per share and 100,000 warrants to purchase Series B Preferred Stock at a valuation of $0.00 per share. 6. Submission of Matters to a Vote of Security Holders During the Fund's Annual Meeting of Shareholders in March 2002, the proposed revised advisory agreement between the former Advisor and the Fund and the proposed new investment advisory agreement between the former Sub-Advisor and the Fund were not approved by the shareholders. Pursuant to an interim agreement dated March 27, 2002, meVC Advisers continued to serve as the Fund's investment advisor, until its resignation on June 19, 2002. Also pursuant to an interim agreement dated March 27, 2002, Draper Advisers continued to serve as the Fund's investment sub-advisor, until the contract terminated automatically on June 19, 2002 when the former Advisor resigned. At that time the Board voted to internalize all management and administrative functions of the Fund effective immediately and continues to consider options available to the Fund in light of the outcome of the Annual Meeting and subsequent resignation of the former Advisor and former Sub-Advisor. 7. Subsequent Events On August 16, 2002, the Fund entered into an investment of $200,000 in the form of a 6% Subordinated Promissory Note with DataPlay, Inc maturing on August 16, 2005. On August 23, 2002, the Fund entered into an investment of $400,000 in the form of a 6% Subordinated Promissory Note with DataPlay, Inc maturing on August 26, 2005. On August 27, 2002 the Fund removed the Common Stock, Series AA Convertible Preferred Stock, Common Stock warrants, and Series C Warrants for Common Stock of InfoImage from its accounting records, as InfoImage had filed for bankruptcy under Chapter 7 of the US Code. The entire transaction resulted in a realized loss of approximately $2,356,690 for the Fund. On August 30, 2002, the Fund entered into an investment of $200,000 in the form of a 6% Subordinated Promissory Note with DataPlay, Inc maturing on September 3, 2005. Subsequent to the resignation of meVC Advisers, the Fund determined that the former Advisor had not paid certain vendors for services performed on behalf of the Fund, as called for under the Advisory Agreement with the Fund. On August 30, 2002, the Fund paid or accrued $463,535.48 in expenses to pay those vendors, which resulted in a $0.028 decrease in net asset value per share. The Fund is considering action it may take against the former Advisor to recover these expenses; although, there is no guarantee of recovery. On September 10, 2002 the Fund removed the Series B Convertible Preferred Stock, Series C Convertible Preferred Stock, and the Series C1 Convertible Preferred Stock of IQdestination from its accounting records as the company had ceased operations and the inside investors had signed a certificate of dissolution. The entire transaction resulted in a realized loss of approximately $3,520,000 for the Fund. On September 10, 2002 the Fund agreed to the acquisition of the assets of Annuncio by PeopleSoft. In return, the Fund received proceeds of $1,585,381.20 made up of $1,205,749.55 in cash and $379,631.65 to be held in escrow until January 31, 2003. The entire transaction resulted in a realized loss of $3,414,618.80 for the Fund. On September 13, 2002 the Fund agreed to the partial return of capital for Pagoo in the amount of $2,430,059.97. In conjunction with the return of capital, the Fund's Series C Preferred Stock and Series D Preferred Stock was recapitalized into Series A-1 Convertible Preferred Shares, along with the entirety of Pagoo's Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and Series D Convertible Preferred Stock. The Series D-1 Convertible Preferred Stock was recapitalized into Series A-2 Convertible Preferred Stock. 20 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 Company 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 Company'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 Company 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 Company should be read in conjunction with the Financial Statements, the Notes thereto and the other financial information included elsewhere in this report. Overview The Fund continues to operate as a closed-end, non-diversified management investment company that has elected to be treated as a business development company under the Investment Company Act of 1940, as amended (the "1940 Act"). From March 27, 2000 to June 19, 2002, the Fund's advisor was meVC Advisers pursuant to an investment advisory agreement dated March 27, 2000 and an interim investment advisory agreement dated March 27, 2002. In general, the duties of the former adviser were to manage the Fund's day-to-day operations and administration, record keeping and regulatory compliance functions, and oversee the operations of the Sub-Advisor. From March 27, 2000 to June 19, 2002, the Fund's Sub-Advisor was Draper Advisers pursuant to an investment sub-advisory agreement dated March 27, 2000 and an interim investment advisory agreement dated March 27, 2002 by and between meVC Advisers and Draper Advisers. In general, the duties of the former sub-adviser were to manage the investment and reinvestment of the Fund's assets and provide or make available managerial assistance to the companies in which the Fund invests. On March 27, 2002, the Fund held its Annual Meeting of Shareholders. At the meeting the shareholders were also asked to approve a revised advisory agreement between the former Advisor and the Fund and a new advisory agreement between the former sub-advisor and the Fund. As the agreements did not receive the required votes, they were not approved. In light of that, and in accordance with rules adopted by the Securities Exchange Commission ("SEC"), the former Advisor continued to serve as the Fund's investment adviser, pursuant to an interim agreement dated March 27, 2002, for a period not to exceed 150 days and the former Sub-Advisor continued to provide service to the Fund pursuant to an interim agreement dated March 27, 2002, for a period not to exceed 150 days. On June 17, 2002, Paul Wozniak and Peter Freudenthal resigned their respective roles with meVC Advisers and the Fund. Mr. Wozniak served as the Secretary and Vice-President of Operations for meVC Advisers and as the Vice-President, Chief Operating Officer, Treasurer, and Secretary for the Fund. Mr. Freudenthal served as the Chief Executive Officer and President of meVC Advisers and Vice-Chairman of the Fund. On June 19, 2002, meVC Advisers resigned as the Fund's investment adviser, effective immediately. As a result, the sub-advisory agreement with Draper Advisers was terminated automatically as a matter of contract construction. As a result of the resignation of the former adviser and termination of the sub-advisors contract, the 150 day period that related to the interim investment advisory agreements was no longer applicable. 21 On June 20, 2002, the Board voted to internalize all investment management and administrative functions of the Fund, effective immediately. The Board concluded that the internalized structure would be a more efficient way to run the Fund and that it would provide shareholders greater visibility with respect to the Fund's expenses than they had previously. An administrative team was hired by the Fund to manage the Fund's day-to-day operations and administration, record keeping and regulatory compliance functions. John Grillos, the Fund's Chief Executive Officer, accepted the Board's request to manage, on an interim basis, the investment and reinvestment of the Fund's assets and provide or make available managerial assistance to the companies in which the Fund invests. The Board continues to engage in a systematic review of candidates to serve as the Fund's ongoing manager and has announced that it expects to conclude its review and name a manager by September 30, 2002 to serve on an ongoing basis. On September 11, 2002, the Court of Chancery in New Castle County, Delaware, rejected a motion by Millenco LP ("Millenco'), a Cayman-based hedge fund, that would have prevented the Board from hiring such a manager without shareholder approval. Results of Operations The Fund began operations upon the completion of an initial public offering on March 31, 2000. Since inception, the Fund has operated in a depressed market with an economy experiencing a mild recession. Recently, the markets have had to bear the weight of various accounting and financial scandals further weakening an already unstable market environment. The Fund, along with many other venture capital funds launched in the same time period, have not yielded the returns historically experienced in the venture capital community. For the three months ended July 31, 2002, the Fund had a decrease in net assets resulting from operations of $20,797,438 as compared to the three months ended July 31, 2001, during which the Fund had a decrease in net assets resulting from operations of $16,611,428. The Fund's principal investment objective remains the realization of long-term capital appreciation. Pending the completion of investments that meet the Fund's investment objective, available funds are invested in short-term securities. Liquidity and Capital Resources At July 31, 2002, the Fund had $55,577,321 of its net assets (the value of total assets less total liabilities) of $203,908,477 invested in portfolio securities of 23 companies, $5,327,475 in four subordinated notes, $59,431,227 of its net assets invested in temporary investments consisting of Certificates of Deposit, commercial paper, corporate bonds and U.S. government and agency securities, and $91,025,823 in money market funds and cash and cash equivalents. 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 any future commitments. The Fund reserves the right to retain net long-term capital gains in excess of net short-term capital losses for reinvestment or to pay contingencies and expenses. Such retained amounts, if any, will be taxable to the Fund as long-term capital gains, and shareholders will be able to claim their proportionate share of the federal income taxes paid by the Fund on such gains as a credit against their own federal income-tax liabilities. Shareholders will also be entitled to increase the adjusted tax basis of their Fund shares by the difference between their undistributed capital gains and their tax credit. Investment Income and Expenses Net investment loss after all operating expenses amounted to $1,048,232 for the three months ended July 31, 2002, and $46,033 for the three months ended July 31, 2001, respectively. As the Fund continues to invest in preferred stock of portfolio companies, fewer assets are available to invest in short-term, interest-bearing securities. In addition and in connection with general economic trends, the Fund has received a lower interest rate on short-term securities in which it has invested. From the beginning of the fiscal quarter through June 19, 2002, the Fund was charged a management fee by meVC Advisers at a rate of 2.5% of the average weekly net assets of the Fund, paid monthly in arrears. The former Advisor had agreed to pay compensation to the directors and officers for any and all services rendered to the Fund and had agreed to pay all Fund expenses above and beyond the 2.5% management fee paid to the 22 former Advisor by the Fund. The former Advisor resigned without notice on June 19, 2002. As a result, the Fund's board internalized the Fund's operations, including management of the Fund's investments, and began to pay it's own expenses directly. The previous 2.5% expense cap, the maximum amount of compensation to be paid to the former Advisor, was terminated at the time of the Adviser's resignation. From June 20, 2002 through the end of the fiscal quarter, the Fund accrued $1,266,421 in operating expenses. Such total fees amounted to $1,854,470 for the three months ended July 31, 2002 (including $1,266,421 in operating expenses and $588,049 in management fees) and $1,845,235 for the three months ended July 31, 2001, respectively. The Fund's Board of Directors approved an operating budget for the Fund's internalized structure which may result in fees lesser or greater than 2.5% on an annualized basis. Unrealized Appreciation and Depreciation of Portfolio Securities During the nine months ended July 31, 2002, the Fund had a net increase in unrealized depreciation on investment transactions of $27,064,872. Such depreciation resulted mainly from the Valuation Committee of the Board of Directors' decision to mark down the value of the Fund's investments in Annuncio Software, Inc., AuctionWatch.com, Inc., Cidera, Inc., DataPlay, Inc., Endymion Systems, Inc., EXP Systems, Inc., Foliofn, Inc., InfoImage, Inc., IQdestination, Ishoni Networks, Inc., Lumeta Corporation, MediaPrise, Inc., Pagoo, Inc., Safestone Technologies PLC, ShopEaze Systems, Inc., Sonexis, Inc., and Yaga, Inc. For the nine months ended July 31, 2002, the increase in the Fund's retained deficit is $49,834,389 and the total retained deficit since inception is $107,741,523; the retained deficit is due primarily to the Valuation Committee of the Board of Director's decision to mark down the valuations of certain portfolio company investments, as private companies experienced a decline in valuations similar to that of public companies. Management expects the unrealized losses of the Fund's investments in InfoImage Inc., IQdestination, Mediaprise, Inc., and Shopeaze Systems, Inc. to be realized as soon as dissolution papers are completed and signed by the companies' respective inside investors. During the nine months ended July 31, 2001, the Fund had a net increase in unrealized depreciation on investment transactions of $28,079,658. Such depreciation also resulted mainly from the Valuation Committee of the Board of Directors' decision to mark down the value of the Fund's investments in certain portfolio companies. During the nine months ended July 31, 2001, the Fund's retained deficit was $31,989,478. Such deficit also resulted mainly from the Valuation Committee of the Board of Directors' decision to mark down the value of the Fund's investments in certain portfolio companies. Realized Gain and Loss on Portfolio Securities For the nine months ended July 31, 2002, the Fund had a net realized loss of $20,696,133. Such loss was realized mainly from the transactions involving the assets of infoUSA.com, Inc. being acquired by infoUSA, Inc., the parent company of infoUSA.com, Inc., the disbursement of assets from EXP Systems, Inc. to its preferred shareholders, and the write-off of Personic Software, Inc. due to the irreversible dilution of the Fund's equity position. Management expects the unrealized losses of the Fund's investments in InfoImage Inc., IQdestination, Mediaprise, Inc., and Shopeaze Systems, Inc. to be realized as soon as dissolution papers are completed and signed by the companies' respective inside investors. For the nine months ended July 31, 2001, the Fund had a net realized gain of $4,295. Due to the recent nature of the portfolio company investments, there were no portfolio company exit events during the period ended July 31, 2001 to create any significant realized gains or losses. Dividends On December 4, 2001, the Fund announced an ordinary income cash dividend of $0.044163 per share, payable on January 3, 2002, to stockholders of record at the close of business on December 10, 2001. The Fund went ex-dividend on December 6, 2001. Distributions can be made payable by the Fund in the form of either a cash distribution or a stock dividend. On the Fund's ex-dividend date, the Fund was trading on the New York Stock Exchange (the "NYSE") at a discount to net asset value. In accordance with the Dividend Reinvestment 23 Plan, the Dividend Distribution Agent purchased shares on the open market of the NYSE for those shareholders electing to take their distributions in the form of stock dividends. Portfolio Investments At July 31, 2002, the cost of equity and equity-linked security investments held by the Fund to date was $140,524,496, and their aggregate market value was estimated to be $55,577,321. While the current values of certain Portfolio Companies have been greatly reduced, Management believes that a number of the companies identified have upside potential for long-term growth in sales and earnings. The Investment Staff continuously evaluates opportunities to realize value for the Fund and its stockholders. In that regard the Investment Staff will periodically evaluate potential acquisitions, financing transactions, initial public offerings, strategic alliances and sale opportunities involving the Fund's Portfolio Companies. These transactions and activities, while reflected in the Fund's calculation of net asset value, are generally not disclosed to the Fund's shareholders and the investing public until such time as the transactions are publicly announced or completed, as the case may be. Subsequent Events On August 16, 2002, the Fund entered into an investment of $200,000 in the form of a 6% Subordinated Promissory Note with DataPlay, Inc maturing on August 16, 2005. On August 23, 2002, the Fund entered into an investment of $400,000 in the form of a 6% Subordinated Promissory Note with DataPlay, Inc maturing on August 26, 2005. On August 27, 2002 the Fund removed the Common Stock, Series AA Convertible Preferred Stock, Common Stock warrants, and Series C Warrants for Common Stock of InfoImage from its accounting records, as InfoImage had filed for bankruptcy under Chapter 7 of the US Code. The entire transaction resulted in a realized loss of approximately $2,356,690 for the Fund. On August 30, 2002, the Fund entered into an investment of $200,000 in the form of a 6% Subordinated Promissory Note with DataPlay, Inc maturing on September 3, 2005. On September 10, 2002 the Fund removed the Series B Convertible Preferred Stock, Series C Convertible Preferred Stock, and the Series C1 Convertible Preferred Stock of IQdestination from its accounting records as the company had ceased operations and the inside investors had signed a certificate of dissolution. The entire transaction resulted in a realized loss of approximately $3,520,000 for the Fund. On September 10, 2002 the Fund agreed to the acquisition of assets of Annuncio by PeopleSoft. In return, the Fund received proceeds of $1,585,381.20 made up of $1,205,749.55 in cash and $379,631.65 to be held in escrow until January 31, 2003. The entire transaction resulted in a realized loss of $3,414,618.80 for the Fund. On September 13, 2002 the Fund agreed to the partial return of capital for Pagoo in the amount of $2,430,059.97. In conjunction with the return of capital, the Fund's Series C Preferred Stock and Series D Preferred Stock was recapitalized into Series A-1 Convertible Preferred Shares, along with the entirety of Pagoo's Common Stock, Series A Convertible Preferred Stock, Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and Series D Convertible Preferred Stock. The Series D-1 Convertible Preferred Stock was recapitalized into Series A-2 Convertible Preferred Stock. 24 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK We invest in small companies, and our investments are considered speculative in nature. Our 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, we are subject to risk of loss which may prevent our stockholders from achieving price appreciation and dividend distributions. The portion of our portfolio consisting of investments in private companies is also subject to valuation risk. We value our privately held investments based on a determination of their fair value made in good faith by our board of directors on a quarterly basis and otherwise required in accordance with our established guidelines. 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." 25 Part II. Other Information ITEM 1. LEGAL PROCEEDINGS On February 20, 2002, Millenco, filed a complaint in the United States District Court for the District of Delaware against the former Advisor and the Fund. The Fund was designated a "nominal" defendant for purposes of effectuating the relief sought in the complaint. The complaint alleges that the fees received by the former Advisor from the Fund for fiscal year 2001 were excessive, in violation of Section 36(b) of the Investment Company Act of 1940. Neither the former Sub-Advisor nor any of the Fund's directors or officers is named as a defendant in the case. The Fund moved to dismiss the complaint against it, on the ground that it may not be named as a defendant in a Section 36(b) suit. During a telephonic hearing with the court, Millenco said it did not oppose dismissal of the suit against the Fund, but it vigorously opposed dismissal or transfer of the suit against the former Advisor. On April 3, 2002, Millenco filed a complaint against the Fund in the Court of Chancery, New Castle County, Delaware, seeking a judicial determination of the stockholder's vote of March 27, 2002, to approve investment advisory agreements between the Fund and the former Advisor and between the Fund and the former Sub-Advisor. See Item #4. On April 5, 2002, Millenco moved to accelerate the trial of the case. However, on April 8, 2002, the Fund informed the Chancery Court that the Fund's Board of Directors decided that the two challenged agreements had failed, that a stockholder's meeting would not be reconvened on his matter, and that plaintiff had withdrawn its request to accelerate the trial. Subsequently, on April 17, 2002, the Fund moved to dismiss the suit as moot. Millenco never filed a response to that motion, and the Court never acted upon it. On July 30, 2002, Millenco filed an amended complaint against the Fund and the Fund's directors in the Court of Chancery, New Castle County, Delaware, seeking to (i) invalidate the election of two of the Fund's four directors, John M. Grillos and Larry Gerhard, at the 2001 and 2002 Annual Meetings of Stockholders, to three-year terms expiring 2004 and 2005, respectively; and (ii) require the Fund to hold a special Meeting of Stockholders, for the purpose of holding new elections to the board seats currently held my Mr. Grillos and Mr. Gerhard and the vacant board seat due to Peter Freudenthal's resignation in June 2002. Subsequent Events On August 21, 2002, Judge Farnan of the U.S. District Court for the District of Delaware issued an order granting the Fund's motion to dismiss the Fund from the February 20, 2002 lawsuit, as filed by Millenco, since Section 36(b) of the Investment Company Act of 1940 prohibits an action against the Fund because it has not received compensation or payments from a registered investment company. On August 23, 2002, Millenco moved for leave to file a second amended complaint, in which it proposed to add another allegation to its first amended complaint. On September 4, 2002, Millenco moved for leave to file a re-written version of its proposed second amended complaint, in which it added two more allegations to its first amended complaint. On September 11, 2002, Vice Chancellor Stephen Lamb of the Chancery Court (1) granted the Fund's motion to dismiss the claims in the first amended complaint for an expedited proceeding to invalidate the director elections and order new elections, (2) denied Millenco's motion for a "status quo" order that would have prevented the Fund from internally hiring a Fund manager without shareholder approval, (3) allowed Millenco to file the September 4th version of its second amended complaint, subject to a motion by the Fund to dismiss several of the claims in it, and (4) denied the Fund's motion to dismiss a breach of fiduciary duty claim in the second amended complaint based on the Fund's alleged failure to disclose in past proxy statements certain outside relationships of several of the Fund's directors. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On March 27, 2002, the Fund held its Annual Meeting of Shareholders. Of the 16,500,000 shares outstanding and entitled to vote, 15,008,220 were represented at the meeting by proxy or in person. As a result 26 of a last minute change in position by the New York Stock Exchange the evening before the Annual Meeting, brokers' ability to vote shares with discretion on behalf of their clients was called into question. This affected approximately half of the votes submitted, all of which had been voted in favor of the proposals. The Fund originally proposed an adjournment of the Annual Meeting until April 25, 2002 to resolve the status of these broker votes and to permit shareholders the opportunity to cast their votes on the proposals. However, the Fund's Board of Directors later determined not to reconvene the Annual Meeting. At the meeting the shareholders were asked to re-elect Larry J Gerhard to serve on the Fund's Board of Directors for a three-year term. For Mr. Gerhard, 10,231,514 shares voted for his reelection, with 4,616,759 voted against and 159,947 share votes withheld. As Mr. Gerhard received a majority of the votes cast, he was subsequently reelected as a director of the Fund until 2005. At the meeting the shareholders were also asked to approve a revised advisory agreement between the former Advisor and the Fund. Regarding the contract, 2,641,655 shares voted for the approval, with 5,024,676 votes against, 116,737 votes withheld and 7,225,152 broker non-votes. As the agreement did not receive the required votes, it was subsequently not approved. The former Advisor continued to serve as the Fund's investment adviser, pursuant to an interim agreement dated March 27, 2002, until its resignation on June 19, 2002. At that time, the Board voted to internalize all management and administrative functions of the Fund effective immediately and continues to consider options available to the Fund in light of the outcome of the Annual Meeting and subsequent resignation of the former Advisor. At the meeting the shareholders were also asked to approve a new investment advisory agreement between the former Sub-Advisor and the Fund. Regarding the contract, 2,634,963 shares voted for the approval, with 5,026,165 voted against, 121,940 votes withheld and 7,225,152 broker non-votes. As the agreement did not receive the required votes, it was subsequently not approved. The former Sub-Advisor continued to serve as the Fund's investment sub-adviser, pursuant to an interim dated March 27, 2002, until its required resignation on June 19, 2002. At that time, the Board voted to internalize all management and administrative functions of the Fund effective immediately and continues to consider options available to the Fund in light of the outcome of the Annual Meeting and subsequent resignation of the former Sub-Advisor. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Exhibit 99.1 Certification of Chief Executive Officer and Acting Chief Operating Officer of meVC Draper Fisher Jurvetson Fund I, Inc. Other required Exhibits are included in this Form 10-Q or have been previously filed in the Company's Registration Statement on Form N-2 (Reg. No. 333-92287). 27 (b) Reports on Form 8-K During the period ended July 31, 2002, the Fund filed three reports on Form 8-K. The first report, dated April 5, 2002, was filed to report the Board of Directors' decision not to reconvene the Annual Meeting and to announce that two proposals had failed to receive the necessary votes for approval as of March 27, 2002. The second report, dated June 18, 2002, was filed to report the Board of Directors' acceptance of the resignations of Peter S. Freudenthal and Paul D. Wozniak from the Fund. The third report, dated June 20, 2002, was filed to report the Board of Directors' unanimous decision to internalize all management and administrative functions of the Fund effective immediately. 28 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: September 20, 2002 /s/ JOHN M GRILLOS ------------------------------------------ John M. Grillos Chief Executive Officer, Director MEVC DRAPER FISHER JURVETSON FUND I, INC. Date: September 20, 2002 /s/ ANN E. OGLANIAN ------------------------------------------ Ann E. Oglanian Acting Chief Operating Officer 29 EX-99.1 3 d51944_ex99-1.txt CERTIFICATION Exhibit 99.1 CERTIFICATION Each of the undersigned, in his capacity as an officer of meVC Draper Fisher Jurvetson Fund I, Inc., provides the following certifications required by 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, and 17 C.F.R.ss.240.13a-14. I, John M. Grillos, certify that: 1. I have reviewed this quarterly report on Form 10-Q of meVC Draper Fisher Jurvetson Fund, Inc.; 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; and 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. Dated: September 20, 2002 /s/ John M. Grillos ---------------------------------- Chief Executive Officer I, Ann E. Oglanian, certify that: 1. I have reviewed this quarterly report on Form 10-Q of meVC Draper Fisher Jurvetson Fund, Inc.; 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; and 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. Dated: September 20, 2002 /s/ Ann E. Oglanian ---------------------------------- Acting Chief Operating Officer EXPLANATORY NOTE REGARDING CERTIFICATIONS: Representations 4, 5 and 6 of the Certification as set forth in Form 10-Q have been omitted, consistent with the Transition Provisions of SEC Exchange Act Release No. 34-46427, because this Quarterly report of Form 10-Q covers a period ending before the Effective Date of Rules 13a-14 and 15d-14. 30 -----END PRIVACY-ENHANCED MESSAGE-----