33. Mortgages payable for funds borrowed. State the balance contained in account No. 317.

34. Other. State the total of the balances contained in accounts Nos. 320, 381, and 383 (portions applicable).

35. Debentures payable issued to SBA. State the balance contained in account No. 301.

36. Total liabilities. Enter the total of the appropriate amounts opposite items 29, 30, 33, 34, and 35.

37. Capital stock. State the total of the balances contained in accounts Nos. 400 through 404 minus the balances contained in accounts Nos. 405 through 409.

38. Paid-in surplus. State the balance contained in account No. 420.

39. Less:

shares of treasury stock at cost. State the total of the balances contained in accounts Nos. 415 through 419.

40. Total. Enter the total of items 37 and 38 minus item 39.

41. Capital stock subscribed. State the total of the balances contained in accounts Nos. 410 and 411.

(a) Less: Subscriptions receivable. State the total of the balances contained in accounts Nos. 413 and 414.

42. Total stockholders' paid-in capital and paid-in surplus. Enter the total of the appropriate amounts opposite items 40 and 41(a). 43. Retained earnings. State the balance contained in the account No. 425.

44. Appropriated retained earnings. State the balance contained in account No. 427. 45. Total capital stock and surplus. Enter the total of the appropriate amounts opposite items 42 and 44.

46. Total. Enter the total of items 36 and 45.

Memorandum footnote. Show in the space provided the market or fair value of loans and investments (shown at cost less allowance for losses in item 15 of the Statement of Financial Condition). In determining the market or fair value of portfolio securities (including securities which may be readily acquired through exercise of rights), securities for which market quotations are readily available shall be valued at the market bid price, provided the securities are registered, or readily registrable, and salable, and further provided that, in the opinion of the board of directors, the bid price could be realized on immediate liquidation of the investment.

Securities other than those referred to above shall be at cost less allowance for probable losses unless, because of steady progress in the affairs of the portfolio company, an increase above cost to the small business investment company is clearly indicated in the SBIC's equity in the book value of the portfolio company's securities as shown on the portfolio company's books. In the latter case the securities may be valued at fair value as determined in good faith by the board of directors.

be reduced for purposes of this report by the amount of what would be an appropriate provision for taxes in respect of the unrealized appreciation included in the determined value.

In column (10) of Schedules 1 through 4, and column (8) of Schedule 7, identify with an asterisk each security which was valued above cost in arriving at the amount shown as market or fair value of loans and investments.

Footnote on contingent liabilities. Complete the footnote on page 2, at the end of the Statement of Financial Condition, which indicates the total amount of all contingent liabilities of the company. This amount shall be the same as the grand total of Schedule 12 of the report.

STATEMENT OF SURPLUS RECONCILIATIONS

Set forth in this statement all activities in accounts for paid-in surplus, retained earnings, and appropriated retained earnings during the fiscal year to date, showing opening balances, additions and deductions, and balances at close of the period. State separately the various additions and deductions, describing clearly the nature of the transactions out of which the items arose. Net income or loss from page 3 should be labeled "from net income, or (loss)" and realized gain or loss on investments from page 4 should be labeled "from net realized gain or (loss) on investments."

STATEMENT OF INCOME AND EXPENSE FOR THE
FISCAL YEAR TO DATE
Income

Item

1. Commitment income. State the balance contained in account No. 500.

2. Interest on loans. State the balance contained in account No. 512.

3. Interest on debt securities. State the balance contained in account No. 516.

4. Interest on invested idle funds. State the balance contained in account No. 510. 5. Interest income-other. State the balance contained in account No. 520.

6. Management consulting service fees. State the balance contained in account No. 532.

7. Investigation and service fees charged other lenders. State the balance contained in account No. 534.

8. Application and appraisal fees. State the balance contained in account No. 536.

9. Dividends on capital stock of SBCs. State the balance contained in account No. 540.

10. Sharings in income or revenue of SBCs. State the balance contained in account No. 541.

11. Income less expense of $------- from assets acquired in liquidation of loans and debt securities. State the balance in account No. 582 minus the balance in account No. 710. Show the balance contained in account No. 710 as a separate item in the space pro

12. Other income. State the balance contained in account No. 584.

13. Total income. Enter the total of the appropriate amounts opposite items 1, 5, 8, 10, and 12.

Expenses

14. Commitment expense. State the balance contained in account No. 600.

15. Interest on obligations payable to SBA. State the balance contained in account No. 610.

16. Interest on obligations payable to other than SBA. State the balance contained in account No. 622.

17. Stock record and other financial expenses. State the balance contained in account No. 642.

18. Total financial expenses. Enter the total of items 14 through 17.

19. Advertising and promotional costs. State the balance contained in account No. 650.

20. Appraisal and investigation costs. State the balance contained in account No. 651. 21. Auditing and examination costs. State the balance contained in account No. 652. 22. Communications. State the balance contained in account No. 653.

23. Cost of space occupied. State the balance contained in account No. 654.

24. Depreciation of corporate premises owned, furniture, and equipment. State the balance contained in account No. 655.

25. Directors' and stockholders' meetings costs. State the balance contained in account No. 657.

26. Insurance. State the balance contained in account No. 658.

27. Investment adviser costs. State the balance contained in account No. 660.

28. Legal services. State the balance contained in account No. 661.

29. Salaries of officers. State the balance contained in account No. 663.1.

30. Salaries of employees. State the balance contained in account No. 663.2.

31. Taxes, excluding income taxes. State the balance contained in account No. 664.

32. Travel. State the balance contained in account No. 665.

33. Employee benefits expense. State the balance contained in account No. 670.

34. Organization expense. State the balance contained in account No. 672.

35. Miscellaneous operating expenses. State the balance contained in account No. 679. 36. through 39. (For unclassified items.) 40. Total operating expenses. Enter the total of items 19 through 39.

41. Other expenses. State the balance contained in account No. 715.

42. Total expenses. Enter the total of items 18, 40 and 41..

43. Net operating income before provision for probable losses and income taxes. Enter the balance resulting from the deduction of item 42 from item 13.

44. Provision for probable losses on receivables. State the balance contained in account No. 680.

45. Provision for probable losses on portfolio securities. State the balance contained in account No. 682.

46. Provision for probable losses on assets acquired in liquidation of loans and debt securities. State the balance contained in account No. 684.

47. Provision for probable losses on amounts due from debtors on sale of assets acquired in liquidation of loans and debt securities. State the balance contained in account No. 686.

48. Net operating income before provision for income taxes. Enter the balance resulting from the deduction of the appropriate amount opposite item 47 from item 43. 49. Provision for Federal income taxes— Net income. State the balance contained in account No. 720.1.

50. Provision for State and other income taxes. State the balance contained in account No. 720.2.

51. Net income (loss) from operations. Enter the balance resulting from the deduction of the appropriate amount opposite item 50 from item 48.

NOTE: The Statement of Income and Expense provides only for income and expenses from operations.

Extraordinary Income or Loss from transactions not in the ordinary course of operations shall be credited directly to retained earnings.

STATEMENT OF REALIZED GAIN OR LOSS ON
INVESTMENTS

1. U.S. Government securities. Show the aggregate cost, aggregate net proceeds, and net gain or net loss on the sale or other disposition of U.S. Government obligations, direct and fully guaranteed.

2. Debt securities of SBCs. Show the aggregate cost less allowance for losses, aggregate net proceeds, and net gain or loss on the sale or other disposition of debt securities of small business concerns.

3. Capital stock of SBCs. Show the aggregate cost less allowance for losses, aggregate net proceeds, and net gain or loss on the sale or other disposition of capital stock of small business concerns.

4. Warrants, options, and other stock rights acquired from SBCs. Show the aggregate cost less allowance for losses, aggregate net proceeds, and net gain or loss on the sale or other disposition of warrants, options, and other stock rights acquired by the company from small business concerns.

5. Assets acquired in liquidation of loans and debt securities. Show the aggregate cost less allowance for losses and mortgages payable, aggregate net proceeds, and net gain or loss on the sale or other disposition of assets acquired in liquidation of loans and debt securities of small business concerns. The aggregate cost shown for this item shall be the same as that recorded in the books of account on the basis determined by the board of directors from among (1) bid-in price of the property, (2) agreed considera

tion for the property, and (3) fair appraised value of the property, but not to exceed the total amount of the related loan or debt security involved.

6. Other. Show the aggregate cost less allowance for losses, aggregate net proceeds, and net gain or loss on the sale or other disposition of any investments not included in items 1 through 5.

7. Net gain and/or loss on investments. Enter the net total of items 1 through 6.

8. Combined net gain (loss) on investments. Enter the balance resulting from the deduction of item 7, column (5) from item 7, column (4).

9. Add realized gain for current year from prior sales of investments (deferred credits). State the amount of deferred gain of prior years transferred to gain accounts in the current year.

10. Less portion of gain not realized in cash, demand certificates of deposit issued by FDIC-member banks, and/or negotiable direct obligations of the U.S. Government. State the amount of the above gain represented by proceeds other than cash, demand certificates of deposit issued by FDIC-member banks, and/or negotiable direct obligations of the U.S. Government.

11. Net realized gain (loss) on investments before provision for income taxes. Enter the balance resulting from the addition of item 9 and deduction of item 10 from item 8.

12. Federal income taxes-Net realized gain on investments. State the amount of estimated Federal income taxes applicable to net realized gain on investments for the fiscal year to date.

13. State and other income taxes-Net realized gain on investments. Show the amount of estimated State and other nonFederal income taxes applicable to net realized gain on investments for the fiscal year to date.

14. Total provision for income taxes. Enter the total of items 12 and 13.

15. Net realized gain (loss) on investments. Enter the balance resulting from the deduction of item 14 from item 11.

NOTE: Describe the transactions in this statement in accordance with the instructions set forth in the note at bottom of the form.

STATEMENT OF CHANGES IN FINANCIAL POSITION Part 1-Source of Funds

Item

1. Net income (loss) from operations. Enter the amount of Item 51 shown in the Statement of Income and Expense.

2. Net realized gain (loss) on investments. Enter the amount of Item 15 shown on the Statement of Realized Gain or Loss on Investments (page 4 of SBA Form 468).

3. Total net income. Enter the total of Items 1 and 2.

4. Provision for probable losses. Enter the total amount of Items 45, 46, and 47 shown in the Statement of Income and Expense. (Excludes Item 44-Provision for Probable Losses on Receivables.)

5. Depreciation and amortization. Enter the amount of Item 24 and any other amounts of depreciation or amortization contained in the Statement of Income and Expense.

6. Total funds provided by net income. Enter the total of Items 3, 4, and 5 of this statement.

7. Extraordinary income. Enter amount of income from transactions not in the ordinary course of operations. Attach explanation sheet.

8. From repayments and sales of loans. Enter the total of column 7 (cash deductions) of Schedule 1.

9. From repayments and sales of debt securities. Enter the total of column 7 (cash deductions) of Schedule 2.

10. From repayments and sales of capital stock. Enter the total of column 7 (cash deductions) of Schedule 3.

11. From repayments and sales of warrants, options and other stock rights. Enter the total of column 7 (cash deductions) of Schedule 4.

12. From repayments and sales of assets acquired in liquidation and amounts due from debtors on sale of assets acquired in liquidation. Enter the total principal reduction for the period resulting from repayments and sales.

13. From sale of licensees capital stock. Enter the capital stock increase for the period resulting from sales for cash and capital stock subscriptions paid for in cash.

14. Paid-in surplus. Enter the increase for the period resulting from cash donations. 15. Funds borrowed from SBA. Enter the amount borrowed during the period.

16. Funds borrowed from banks. Enter the amount borrowed during the period. Do not include any borrowings reflected in ShortTerm Liabilities-Items numbered 21 through 28 in SBA Form 468 Page 2.

17. Other funds borrowed. Identify and enter the amount borrowed during the period on mortgages and other long term borrowings not accounted for elsewhere.

18. Total source of funds. Enter the total of Items 6 through 17.

19. Funds disbursed for loans. Enter the total of column 5 (cash additions) of Schedule 1.

20. Funds disbursed for debt securities. Enter the total of column 5 (cash additions) of Schedule 2.

21. Funds disbursed for capital stock of SBCs. Enter the total of column 5 (cash additions) of Schedule 3.

22. Funds disbursed for warrants, options and other stock rights. Enter the total of column 5 (cash additions) of Schedule 4.

23. Funds disbursed for other asset acquisitions. Identify and enter the total increase in other asset acquisitions for the period involving cash transactions.

24. Repayment of borrowed funds to SBA. Enter the total principal paid during the period.

25. Repayment of borrowed funds to banks. Enter the total principal paid during the period.

26. Repayment of borrowed funds to others. Enter the total principal paid during the period on mortgages and other long-term debts.

27. Funds disbursed for redemption of licensee's stock. Enter the total paid during the period.

28. Payment of dividends. Enter the total paid for dividends during the period.

29. Extraordinary expenses. Identify and enter the amount of expenses paid from transactions not in the ordinary course of operations. Attach explanation sheet.

30. Total disposition of funds. Enter the total of Items 19 through 29.

31. Net increase or (decrease) in funds available. Enter the difference between Item 18 and Item 30.

32. Funds available-At

beginning of

period. Enter the total short-term assets (SBA Form 468, Page 1, Item No. 8) for the immediate prior year less total Short-Term Liabilities (SBA Form 468 Page 2 Item No. 29) for the same date.

33. Funds available-At end of period. Enter the total of Items 31 and 32.

Part 2-Changes in Financial Position
From Noncash Transaction

Transactions not involving an outlay of cash contained in Balance Sheet Items numbered 9 through 46 on pages 1 and 2 of SBA Form 468 must be fully described in general journal entry form indicating the classification of accounts affected and the dollar amounts recorded.

SCHEDULE 1-LOANS (SECTION 305)

The items to be listed in this schedule shall include all loans held, made, or otherwise obtained, or disposed of by the company during the fiscal year to date setting forth the pertinent data indicated by the column heading. The reporting company's portion of participation in loans shall be included.

List each loan by employer identification number; owner group code number designating the group classification of the principal ownership of the small business concern as follows: (0) Negroes; (1) Puerto Ricans; (2) American Indians; (3) Spanish Americans; (4) Asians (Japanese, Chinese, Koreans, Filipinos); (5) Eskimos and Aleuts; (6) Undetermined and (7) Others-including whites; financing number; interest rate; Standard Industrial Classification code; name of financed small business concern, together with street address, city, State, zip code, and county in which located; date and maturity date; principal balance at beginning of period; cash additions during period; noncash additions during period (include refinancing); cash deductions during period; noncash deductions during period; and principal balance at close of period. The total in column (9) shall agree with Item 9 of the Statement of Financial Condition.

Show in column (10) the market value, or fair value as determined by the board of directors, of each loan which is determined to be worth less than the cost amount shown for it in column (9) minus any allowance for losses established for it. Any loan for which an allowance for losses has been established shall not be listed in column (10) at any value higher than cost less such allowance.

An explanatory notation or footnote shall be entered in the schedule with respect to any loan (or any interest therein) obtained from another Licensee.

Treat multiple disbursements under the same financing agreement as a single financing. Show the total of all loan financing on the last sheet of this schedule.

In column (1) enter the employer identification number of each listed small business concern; if a concern does not have such number, it should obtain one by filing Form SS-4 with the U.S. Director of Internal Revenue for the area in which the concern is located. Insert the appropriate owner group code number, in parentheses, following the employer identification number of each small business concern.

Enter for each listed small business concern the four-digit Standard Industrial Classification Code of the principal industry in which the concern is engaged; refer to the SIC Manual issued by the Bureau of the Budget.

If the Licensee has had more than one financing in the same category outstanding to the same small business concern (cumulative beginning with March 31, 1966, outstanding balances), each such similar financing should be assigned a financing number (1-2-3, etc.) for identification purposes, and this number should be shown in the applicable column on this report and on future reports in relation to the same financing. A number once assigned to a specific financing of a small business concern should never be reassigned to another financing in the same category to the same concern.

In column (9) identify each item "pledged" or "earmarked" by letter (P) or letter (E), as appropriate. Also, identify by the letter (V) each item qualifying under the regulations as venture capital and by the letters (SP) each item qualifying under the regulations as special discretionary porfolio. Show the total of all venture capital amounts on the last sheet of this schedule immediately under the "Totals" line at the foot of column (9). Show the total of all special discretionary portfolio amounts on the last sheet of this schedule immediately under the "Total venture capital".

SCHEDULE 2-DEBT SECURITIES (SECTION 304, (§ 107.302 (B) (2) OF REGULATIONS)

The items to be listed shall include all debt securities held, acquired, converted, or disposed of during the fiscal year to date, setting forth the pertinent data indicated by the column headings. The reporting com

pany's portion of participation in debt securities shall be included.

List each debt security by employer identification number; owner group code number designating the group classification of the principal ownership of the small business concern as follows: (0) Negroes; (1) Puerto Ricans; (2) American Indians; (3) Spanish Americans; (4) Asians (Japanese, Chinese, Koreans, Filipinos); (5) Eskimos and Aleuts; (6) Undetermined and (7) Others-including whites; financing number; interest rate; Standard Industrial Classification code; name of financed small business concern, together with street address, city, State, zip code, and county in which located; date and maturity date; principal balance at beginning of period; cash additions during period; noncash other additions during period; cash deductions during period; noncash deduction during period; and principal balance at close of period. The total in column (9) shall agree with Item 10 of the Statement of Financial Condition.

Show in column (10) the market value, or fair value as determined by the board of directors, of each debt security which is determined to be worth more than the cost amount shown for it in column (9) and each debt security which is determined to be worth less than the cost amount shown for it in column (9), minus any allowance for losses established for it. Any debt security for which an allowance for losses has been established shall not be listed in column (10) at any value higher than cost less such allowance.

Show in column (11) opposite each debt security financing the percentage of the financed small business concern's voting securities which has been and/or can be obtained by the Licensee through exercise of conversion privileges and/or stock purchase warrants or options received in connection with the specific financing. This percentage shall be computed without giving consideration to the possibility of simultaneous exercise of stock rights by other investment interests. Wherever a Licensee considers it important to disclose that its percentage of actual and potential ownership is affected by the probable action of others in exercising their stock rights, a footnote should be appended to the percentage figure arrived at by consideration of only the Licensee's action. In such footnote the percentage of actual and potential ownership giving consideration to the probable action of others should be set forth, together with an explanation including the names of the other investors who are likely to exercise their rights, the percentages of actual and potential ownership they hold, and the general terms of their stock rights.

An explanatory notation or footnote shall be entered in the schedule with respect to any debt security (or any interest therein) obtained from another Licensee.

Treat multiple disbursements under the same financing agreement as a single financ

84-05373- 8

ing. Show the total of all debt security financing on the last sheet of this schedule.

In column (1) enter the employer identification number of each listed small business concern; if a concern does not have such number, it should obtain one by filing Form SS-4 with the U.S. Director of Internal Revenue for the area in which the concern is located.

Insert the appropriate owner group code number, in parentheses, following the employer identification number of each small business concern.

Enter for each listed small business concern the four-digit Standard Industrial Classification Code of the principal industry in which the concern is engaged; refer to the SIC Manual issued by the Bureau of the Budget.

If the Licensee has had more than one financing in the same category outstanding to the same small business concern (cumulative beginning with March 31, 1966, outstanding balances), each such similar financing should be assigned a financing number (1-2-3, etc.) for identification purposes, and this number should be shown in the applicable column on this report and on future reports in relation to the same financing. A number once assigned to a specific financing of a small business concern should never be reassigned to another financing in the same category to the same concern.

In column (9) identify each item "pledged" or "earmarked" by letter (P) or letter (E), as appropriate. Also, identify by the letter (V) each item qualifying under the regulations as venture capital and by the letters (SP) each item qualifying under the regulations as special discretionary portfolio. Show the total of all venture capital amounts on the last sheet of this schedule immediately under the "Totals" line at the foot of column (9). Show the total of all special discretionary portfolio amounts on the last sheet of this schedule immediately under the "Total venture capital".

SCHEDULE 3-CAPITAL STOCK OF SBC'S

Furnish in this schedule a summary of all capital stock of small business concerns setting forth the pertinent data indicated by the column headings. The items to be listed shall include all capital stock of small business concerns held, acquired, converted, or disposed of during the fiscal year to date setting forth the pertinent data indicated by the column headings. The reporting company's portion of participation in investments shall be included.

List each investment by employer identification number; Owner Group Code number; financing number; Standard Industrial Classification code; name of financed small business concern, together with street address, city, State, zip code, and county in which located; date acquired, type and class, number of shares, etc.; balance at cost at beginning of period; cash additions during period; noncash additions during period at