10-K 1 wtv10-k2001.txt FORM 10-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 2001 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission file number 0-16208 WESTFORD TECHNOLOGY VENTURES, L.P. ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3423417 ------------------------------------------------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 17 Academy Street, 5th Floor Newark, New Jersey 07102-2905 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (973) 624-2131 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- None None Securities registered pursuant to Section 12(g) of the Act: Units of Limited Partnership Interest ------------------------------------------------------------------------------- (Title of class) 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 ___ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] As of March 15, 2002, 11,204 units of limited partnership interest ("Units") were held by non-affiliates of the registrant. There is no established public trading market for such Units. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive proxy statement relating to the 2002 Annual Meeting of the Limited Partners of the Registrant, to be held on June 28, 2002 (the "Annual Meeting Proxy Statement") are incorporated herein by reference in Part III hereof. The Annual Meeting Proxy Statement will be filed with the Commission no later than 120 days after the close of the fiscal year ended December 31, 2001. PART I Item 1. Business. -------- Formation Westford Technology Ventures, L.P. (the "Partnership") is a Delaware limited partnership formed on September 3, 1987. WTVI Co., L.P., the managing general partner of the Partnership (the "Managing General Partner"), and four individuals (the "Individual General Partners") are the general partners of the Partnership. Hamilton Capital Management Inc. (the "Management Company") is the general partner of the Managing General Partner and the Partnership's management company. The Partnership began its principal operations on December 1, 1988. The Partnership operates as a business development company under the Investment Company Act of 1940. The Partnership's investment objective is to achieve long-term capital appreciation by making venture capital investments in new and developing companies and other special investment situations. The Partnership considers this activity to constitute the single industry segment of venture capital investing. In 1988 and 1989, the Partnership publicly offered 35,000 units of limited partnership interest ("Units") at $1,000 per Unit. The Units were sold through The Stuart-James Company, Incorporated (the "Selling Agent"). The Units were registered under the Securities Act of 1933 pursuant to a Registration Statement on Form N-2 (File No. 33-16891), which was declared effective on May 12, 1988. The Partnership held its initial and final closing on November 25, 1988 and January 31, 1989, respectively. A total of 11,217 Units were sold to limited partners (the "Limited Partners"). Gross capital contributions to the Partnership totaled $11,333,170, comprised of $11,217,000 from the Limited Partners, $112,170 from the Managing General Partner and $4,000 from the Individual General Partners. The Partnership's originally scheduled termination date was December 31, 1998. In November 2000, the Individual General Partners approved the final two-year extension of the Partnership's term. The Partnership is now scheduled to terminate no later than December 31, 2002. Portfolio Investments During its investment phase, the Partnership made investments in eight portfolio companies. The aggregate cost of such investments was $14,695,218, including non-cash investments of $3,639,405. The Partnership will not make investments in new portfolio companies. However, the Partnership may make additional follow-on investments in existing portfolio companies, if required. There were no portfolio liquidations or follow-on investments completed during 2001. As of December 31, 2001, the Partnership had three active portfolio investments with an aggregate cost of $7,733,952 and a fair value of $5,553,955. As of December 31, 2001, the Partnership had liquidated investments with a cumulative aggregate cost of $6,961,266. These liquidated investments returned $6,973,179, resulting in a cumulative net realized gain of $11,913. Additionally, from its inception to December 31, 2001, the Partnership had earned $800,160 of interest and dividend income from its portfolio investments and portfolio income. From its inception to December 31, 2001, the Partnership's combined net realized gain and portfolio income from portfolio investments totaled $812,073. Competition During its investment phase, the Partnership encountered competition from other entities having similar investment objectives. Primary competition for venture capital investments has been from venture capital partnerships and corporations, venture capital affiliates of large industrial and financial companies, small business investment companies and wealthy individuals. Competition also may result from foreign investors and from large industrial and financial companies investing directly rather than through venture capital affiliates. However, the Partnership has been a co-investor with other professional venture capital investors and these relationships have generally expanded the Partnership's access to investment opportunities. However, as discussed above, the Partnership will not make investments in any new portfolio companies. Employees The Partnership has no employees. The Managing General Partner, subject to the supervision of the Individual General Partners, manages and controls the Partnership's venture capital investments. The Management Company is responsible for the management and administrative services necessary for the operation of the Partnership, including managing the Partnership's idle cash balances which are invested in short-term securities. Item 2. Properties. ---------- The Partnership does not own or lease physical properties. Item 3. Legal Proceedings. ----------------- The Partnership is not a party to any legal proceedings. Item 4. Submission of Matters to a Vote of Security Holders. --------------------------------------------------- No matter was submitted to a vote of security holders during the fourth quarter of the calendar year covered by this report. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters. -------------------------------------------------------------------- There is no established public trading market for the Units and it is not anticipated that any public market for the Units will develop. Consequently, Limited Partners cannot easily liquidate their investment. Several independent broker/dealers provide an informal secondary market for limited partnership interests. Transfers of Units are subject to certain restrictions pursuant to the Partnership Agreement and also may be affected by restrictions on resale imposed by the laws of certain states. The approximate number of holders of Units as of March 15, 2002 is 1,599. The Managing General Partner and the four Individual General Partners of the Partnership also hold interests in the Partnership. Information contained in Item 12 of this report "Security Ownership of Certain Beneficial Owners and Management" is incorporated herein by reference. The Partnership did not make any cash distributions to its Partners during the three-year period ended December 31, 2001 and has not made any cash distributions to Partners since the inception of the Partnership. Item 6.Selected Financial Data. ----------------------- ($ in thousands, except for per unit information) Years Ended December 31, 2001 2000 1999 1998 1997 --------- --------- --------- -------- ---------- Total assets $ 6,124 $ 5,047 $ 5,594 $ 5,397 $ 6,655 Net assets 5,880 4,609 4,935 5,054 6,578 Net unrealized depreciation of investments (2,180) (3,668) (5,220) (5,421) (4,162) Net investment loss (218) (210) (273) (197) (222) Net realized loss from investments - (1,667) (46) (68) (32) Change in unrealized depreciation of investments 1,488 1,551 201 (1,259) (2,181) Increase in net assets from operations 1,270 (326) (119) (1,524) (2,435) Per unit of limited partnership interest: Net asset value $ 519 $ 407 $ 435 $ 446 $ 580 Net investment loss (20) (19) (25) (20) (22) Net realized loss from investments - (118) (3) (5) (2) Change in unrealized depreciation of investments 132 109 17 (109) (186)

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources As of December 31, 2001, the Partnership had $489,710 in an interest-bearing cash account. Interest earned on such cash balances and other short-term investments for the years ended December 31, 2001, 2000 and 1999 totaled $12,142, $22,567, and $187 respectively. Interest earned from cash balances and short-term investments in future periods is subject to fluctuations in short-term interest rates and changes in cash balances and amounts available for investment in short-term securities. The Partnership has fully invested the net proceeds received from the offering of Units and will not make investments in new portfolio companies. However, the Partnership may make additional follow-on investments in existing portfolio companies, if required. As of December 31, 2001, the Partnership's current liabilities of $244,940 included $201,304 due to the Management Company. The amount due to the Management Company represents unpaid management fees. Funds needed to cover current liabilities, future follow-on investments, if any, and operating expenses will be obtained from current cash reserves and from proceeds from the sale of the Partnership's remaining portfolio investments. In November 2000, the Individual General Partners approved the final two-year extension of the term of the Partnership. The Partnership is now scheduled to terminate no later than December 31, 2002. Results of Operations For the years ended December 31, 2001, 2000 and 1999 the Partnership had a net realized loss from operations of $217,970, $1,877,487 and $319,698, respectively. Net realized gain or loss from operations is comprised of (i) net realized gain or loss from portfolio investments and (ii) net investment income or loss (interest and dividend income less operating expenses). Realized Gains and Losses from Portfolio Investments - The Partnership had no realized gains or losses from its portfolio investments for the year ended December 31, 2001. For the year ended December 31, 2000, the Partnership had a net realized loss of $1,667,334 from its portfolio investments. In January 2000, SER Systems AG completed its acquisition of EIS International, Inc. at $6.25 per share. The Partnership received $1,429,623 for its EIS shares, compared to a cost of $3,096,597, resulting in a realized loss of $1,667,334. For the year ended December 31, 1999, the Partnership had a net realized loss from its portfolio investments of $46,223 resulting from the write-off of the remaining receivable balance due from the 1994 sale of Eidetics Incorporated. Eidetics Incorporated was sold in 1994 in a management buyout for a $4,190 cash down payment and potential future payments determined by the actual cash receipts of the acquiring company for five years from the buyout date. In 1994, the Partnership recorded a $250,597 receivable related to such expected future payments. At the end of the five-year period actual cash payments received against the receivable balance totaled $204,374. The Partnership also received interest payments totaling $72,965 over the five-year period. Investment Income (Loss) and Expenses - Net investment loss for the years ended December 31, 2001, 2000 and 1999 was $217,970, $210,153 and $273,475, respectively. The $7,817 unfavorable change in net investment loss for 2001 compared to 2000 resulted from a $7,492 decrease in investment income and a $325 increase in operating expenses. The decrease in investment income for 2001 is comprised of a $10,425 decrease in interest from short-term investments partially offset by a $2,933 increase in interest income from portfolio investments. The decrease in interest from short-term investments primarily resulted from a reduction in interest rates during 2001 as well as a reduction of the Partnership's idle cash balances during 2001 as compared to 2000. The increase in interest income from portfolio investments primarily resulted from the additional promissory note of Thunderbird Technologies acquired by the Partnership in September 2000. The small increase in operating expenses for 2001 compared to 2000 resulted from small increases in professional fees partially offset by small declines in mailing and printing and other expenses. The $63,322 favorable change in net investment loss for 2000 compared to 1999 resulted from a $26,410 increase in investment income and a $36,912 decrease in operating expenses. The increase in investment income for 2000 is comprised of a $22,380 increase in interest from short-term investments and a 4,030 increase in interest income from portfolio investments. The increase in interest from short-term investments primarily resulted from the increased cash balance held by the Partnership during 2000 as compared to 1999. In January 2000 the Partnership received $1.4 million from the sale of its remaining shares of EIS. The increase in interest income from portfolio investments primarily resulted from additional promissory notes of Thunderbird Technologies held by the Partnership during 2000 as compared to 1999. The decrease in operating expenses included a $50,000 decline in the management fee, as discussed below, and a $15,000 decline in fees paid to the Independent General Partners. Effective on January 1, 2000, the Independent General Partners voluntary agreed to waive of all future meeting fees, which were previously paid at $1,000 per meeting. Reductions due to the management fee and fees paid to the Independent General Partners were partially offset by increases in other operating expenses, primarily professional fees and mailing and printing expenses. Professional fees increased $23,812 for 2000 compared to 1999, primarily due to additional accounting fees relating to the quarterly financial statement review, which is now required for all business development companies filing SEC Form 10-Q. Mailing and printing expenses increased by $4,115 for 2000 compared to 1999 due to additional proxy costs and certain accrual adjustments made in the 1999 period. The Management Company is responsible for the management and administrative services necessary for the operation of the Partnership. For these services, the Management Company received a management fee through December 31, 1999 at an annual rate of 2.5% of the gross capital contributions to the Partnership (net of selling commissions and organizational expenses paid by the Partnership), reduced by capital distributed and realized losses, with a minimum fee of $200,000 per annum. The Management Company voluntarily agreed to reduce the minimum management fee payable by the Partnership to $150,000 per annum, effective January 1, 2000. The management fee for the years ended December 31, 2001, 2000 and 1999 was $150,000, $150,000 and $200,000, respectively. To the extent possible, the management fee and other expenses incurred by the Partnership are paid with funds provided from operations. Funds provided from operations primarily are obtained from interest received from short-term investments, interest and other income earned from portfolio investments and proceeds received from the sale of portfolio investments. Unrealized Gains and Losses and Changes in Unrealized Depreciation of Portfolio Investments - For the year ended December 31, 2001, the Partnership had a $1,488,216 favorable change in net unrealized depreciation of investments, resulting from the upward revaluation of the Partnership's investment in Spectrix Corporation. For the year ended December 31, 2000, the Partnership had a $1,551,346 favorable change in net unrealized depreciation of investments, resulting from the transfer of $1,774,541 from unrealized loss to realized loss relating to the sale of the Partnership's investment in EIS International, Inc., as discussed above, partially offset by a $223,195 downward revaluation of the Partnership's investment in Inn-Room Systems, Inc. For the year ended December 31, 1999, the Partnership had $201,080 favorable net change in unrealized depreciation of investments, resulting from a $921,862 upward revaluation its investment in EIS International, Inc. and a $720,782 downward revaluation of its investment in Spectrix Corporation during 1999. Net Assets - Changes in net assets resulting from operations are comprised of (1) net realized gain or loss from operations and (2) changes in net unrealized appreciation or depreciation of portfolio investments. As of December 31, 2001, the Partnership's net assets were $5,879,528, reflecting an increase of $1,270,246 from net assets of $4,609,282 as of December 31, 2000. This increase reflects the increase in net assets resulting from operations, comprised of the $1,488,216 favorable change in net unrealized depreciation exceeding the $217,970 net realized loss from operations for 2001. As of December 31, 2000, the Partnership's net assets were $4,609,282, reflecting a decrease of $326,141 from net assets of $4,935,423 as of December 31, 1999. This decline reflects the decrease in net assets resulting from operations comprised of the $1,877,487 net realized loss from operations partially offset by the $1,551,346 favorable change in net unrealized depreciation for 2000. As of December 31, 1999, the Partnership's net assets were $4,935,423, reflecting a decrease of $118,618 from net assets of $5,054,041 as of December 31, 1998. This decline reflects the decrease in net assets resulting from operations, comprised of the $201,080 favorable change in net unrealized deprecation of investments offset by the $319,698 net realized loss from operations for 1999. Gains and losses from investments are allocated to the Partners' capital accounts when realized in accordance with the Partnership Agreement (see Note 3 of Notes to Financial Statements). However, for purposes of calculating the net asset value per unit of limited partnership interest ("Unit"), net unrealized appreciation or depreciation of investments has been included as if it had been realized and allocated to the Limited Partners in accordance with the Partnership Agreement. Pursuant to such calculation, the net asset value per $1,000 Unit as of December 31, 2001, 2000 and 1999 was $519, $407, and $435, respectively. Item 7A. Quantitative and Qualitative Disclosures about Market Risk The Partnership is subject to market risk arising from changes in the value of its portfolio investments, short-term investments and interest-bearing cash equivalents, which may result from fluctuations in interest rates and equity prices. The Partnership has calculated its market risk related to its holdings of these investments based on changes in interest rates and equity prices utilizing a sensitivity analysis. The sensitivity analysis estimates the hypothetical change in fair values, cash flows and earnings based on an assumed 10% change (increase or decrease) in interest rates and equity prices. To perform the sensitivity analysis, the assumed 10% change is applied to market rates and prices on investments held by the Partnership at the end of the accounting period. The Partnership's portfolio investments had an aggregate fair value of $5,553,955 as of December 31, 2001. An assumed 10% decline from this December 31, 2001 fair value would result in a reduction to the fair value of such investments and an unrealized loss of $555,396. The Partnership had no short-term investments as of December 31, 2001. Market risk relating to the Partnership's interest-bearing cash equivalents held as of December 31, 2001 is considered to be immaterial. Item 8. Financial Statements WESTFORD TECHNOLOGY VENTURES, L.P. INDEX Report of Independent Certified Public Accountants Balance Sheets as of December 31, 2001 and 2000 Schedule of Portfolio Investments as of December 31, 2001 Schedule of Portfolio Investments as of December 31, 2000 Statements of Operations for the years ended December 31, 2001, 2000 and 1999 Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999 Statements of Changes in Partners' Capital for the years ended December 31, 2001, 2000 and 1999 Notes to Financial Statements NOTE - All schedules are omitted because of the absence of conditions under which they are required or because the required information is included in the financial statements or the notes thereto. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Partners of Westford Technology Ventures, L.P. Newark, New Jersey We have audited the accompanying balance sheets of Westford Technology Ventures, L.P. (the "Partnership"), including the schedule of portfolio investments, as of December 31, 2001 and 2000, and the related statements of operations, changes in partners' capital, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. As discussed in Note 1, the Partnership is scheduled to terminate no later than December 31, 2002. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Westford Technology Ventures, L.P. at December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 in conformity with accounting principles generally accepted in the United States of America. As explained in Note 2, the financial statements include investments valued at $5,553,955 and $4,065,739, as of December 31, 2001 and 2000, respectively, representing 94% and 88% of partners' capital, respectively, whose values have been estimated by the managing general partner in the absence of readily ascertainable market values. We have reviewed the procedures used by the managing general partner in arriving at its estimates of value of such investments and have inspected underlying documentation and, in the circumstances, we believe the procedures are reasonable and the documentation appropriate. However, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. BDO Seidman, LLP New York, New York March 13, 2002 WESTFORD TECHNOLOGY VENTURES, L.P. BALANCE SHEETS December 31, 2001 2000 --------------- ----------------- ASSETS Portfolio investments at fair value (cost of $7,733,952 as of December 31, 2001 and 2000) $ 5,553,955 $ 4,065,739 Cash and cash equivalents 489,710 919,613 Accrued interest receivable 80,803 61,901 --------------- ---------------- TOTAL ASSETS $ 6,124,468 $ 5,047,253 =============== ================ LIABILITIES AND PARTNERS' CAPITAL Liabilities: Accounts payable and accrued expenses $ 36,136 $ 36,667 Due to Management Company 201,304 401,304 Due to Independent General Partners 7,500 - --------------- ---------------- Total liabilities 244,940 437,971 --------------- ---------------- Partners' Capital: Managing General Partner 240,575 238,751 Individual General Partners 2,743 2,821 Limited Partners (11,217 Units) 7,816,207 8,035,923 Unallocated net unrealized depreciation of investments (2,179,997) (3,668,213) --------------- ---------------- Total partners' capital 5,879,528 4,609,282 --------------- ---------------- TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 6,124,468 $ 5,047,253 =============== ================

See notes to financial statements. WESTFORD TECHNOLOGY VENTURES, L.P. SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2001 Initial Investment Investment Description Date Cost Fair Value ------------------------------------------------------------------------------------------------------------------------------- Inn-Room Systems, Inc.* Automated in-room vending units for the lodging industry 15,485 shares of Common Stock Oct. 1989 $ 1,320,349 $ 76,805 Convertible Demand Note at prime plus 1% 102,940 102,940 -------------- ---------------- 1,423,289 179,745 -------------------------------------------------------------------------------------------------------------------------------- Spectrix Corporation* Infrared data transfer technology for networks 60,547 shares of Series A Preferred Stock June 1989 784,319 90,821 2,216,626 shares of Series B Preferred Stock 4,261,901 3,324,940 699,256 shares of Common Stock 354,878 1,048,884 Warrants to purchase 50,000 shares of Common Stock at $4.00 per share, expiring 04/30/03 0 0 -------------- ---------------- 5,401,098 4,464,645 -------------------------------------------------------------------------------------------------------------------------------- Thunderbird Technologies, Inc. Designer of high performance, low power integrated circuit products 788,796 shares of Series A Preferred Stock Oct. 1992 788,796 788,796 Convertible Demand Notes at prime 120,769 120,769 -------------- ---------------- 909,565 909,565 -------------------------------------------------------------------------------------------------------------------------------- TOTAL PORTFOLIO INVESTMENTS $ 7,733,952 $ 5,553,955 ============== ================

* May be deemed an affiliated person of the Partnership as defined by the Investment Company Act of 1940. See notes to financial statements. WESTFORD TECHNOLOGY VENTURES, L.P. SCHEDULE OF PORTFOLIO INVESTMENTS December 31, 2000 Initial Investment Investment Description Date Cost Fair Value ------------------------------------------------------------------------------------------------------------------------------- Inn-Room Systems, Inc.* Automated in-room vending units for the lodging industry 15,485 shares of Common Stock Oct. 1989 $ 1,320,349 $ 76,805 Convertible Demand Note at prime plus 1% 102,940 102,940 -------------- ---------------- 1,423,289 179,745 -------------------------------------------------------------------------------------------------------------------------------- Spectrix Corporation* Infrared data transfer technology for networks 60,547 shares of Series A Preferred Stock June 1989 784,319 60,547 2,216,626 shares of Series B Preferred Stock 4,261,901 2,216,626 699,256 shares of Common Stock 354,878 699,256 Warrants to purchase 50,000 shares of Common Stock at $4.00 per share, expiring 04/30/03 0 0 -------------- ---------------- 5,401,098 2,976,429 -------------------------------------------------------------------------------------------------------------------------------- Thunderbird Technologies, Inc. Designer of high performance, low power integrated circuit products 788,796 shares of Series A Preferred Stock Oct. 1992 788,796 788,796 Convertible Demand Notes at prime 120,769 120,769 -------------- ---------------- 909,565 909,565 -------------------------------------------------------------------------------------------------------------------------------- TOTAL PORTFOLIO INVESTMENTS $ 7,733,952 $ 4,065,739 ============== ================

* May be deemed an affiliated person of the Partnership as defined by the Investment Company Act of 1940. See notes to financial statements. WESTFORD TECHNOLOGY VENTURES, L.P. STATEMENTS OF OPERATIONS For the Years Ended December 31, 2001 2000 1999 -------------- ------------- ------------- INVESTMENT INCOME AND EXPENSES Income: Interest from short-term investments $ 12,142 $ 22,567 $ 187 Interest and other income from portfolio investments 20,103 17,170 13,140 -------------- ------------- -------------- Total investment income 32,245 39,737 13,327 -------------- ------------- -------------- Expenses: Management fee 150,000 150,000 200,000 Professional fees 54,028 52,297 28,485 Independent General Partners' fees 15,000 15,000 30,000 Mailing and printing 24,416 25,730 21,615 Custody fees 6,000 6,025 6,000 Other expenses 771 838 702 -------------- ------------- -------------- Total expenses 250,215 249,890 286,802 -------------- ------------- -------------- NET INVESTMENT LOSS (217,970) (210,153) (273,475) Net realized loss from portfolio investments - (1,667,334) (46,223) -------------- ------------- -------------- NET REALIZED LOSS FROM OPERATIONS (217,970) (1,877,487) (319,698) Change in unrealized depreciation of investments 1,488,216 1,551,346 201,080 -------------- ------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 1,270,246 $ (326,141) $ (118,618) ============== ============= ==============

See notes to financial statements. WESTFORD TECHNOLOGY VENTURES, L.P. STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2001 2000 1999 ------------- ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net investment loss $ (217,970) $ (210,153) $ (273,475) Adjustments to reconcile net investment loss to cash (used for) provided by operating activities: Increase in accrued interest receivable (18,902) (18,853) (3,429) (Decrease) increase in liabilities (193,031) (220,478) 315,144 ------------- ------------- ------------- Cash (used for) provided from operating activities (429,903) (449,484) 38,240 ------------- ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES Cost of portfolio investments purchased - (60,769) (60,000) Proceeds from the sale of portfolio investments - 1,429,263 14,365 ------------- ------------- ------------- Cash provided from (used for) investing activities - 1,368,494 (45,635) ------------- ------------- ------------- (Decrease) increase in cash and cash equivalents (429,903) 919,010 (7,395) Cash and cash equivalents at beginning of year 919,613 603 7,998 ------------- ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 489,710 $ 919,613 $ 603 ============= ============= ============= Supplemental disclosure of non-cash investing and financing activities: Conversion of accrued interest into cost of portfolio investment - Spectix Corporation $ - $ - $ 249,566

See notes to financial statements. WESTFORD TECHNOLOGY VENTURES, L.P. STATEMENTS OF CHANGES IN PARTNERS' CAPITAL For the Years Ended December 31, 1999, 2000 and 2001 Unallocated Managing Individual Net Unrealized General General Limited Depreciation Partner Partners Partners of Investments Total Balance as of December 31, 1998 $ 593,816 $ 3,477 $ 9,877,387 $ (5,420,639) $ 5,054,041 Net investment loss (105) (97) (273,273) - (273,475) Net realized loss from portfolio investments (9,611) (13) (36,599) - (46,223) Change in unrealized depreciation of investments - - - 201,080 201,080 ------------ ---------- --------------- --------------- --------------- Balance as of December 31, 1999 584,100 3,367 9,567,515(A) (5,219,559) 4,935,423 Net investment loss 1,320 (75) (211,398) - (210,153) Net realized loss from portfolio investments (346,669) (471) (1,320,194) - (1,667,334) Change in unrealized depreciation of investments - - - 1,551,346 1,551,346 ------------ ---------- --------------- --------------- --------------- Balance as of December 31, 2000 238,751 2,821 8,035,923 (A) (3,668,213) 4,609,282 Net investment loss 1,824 (78) (219,716) - (217,970) Change in unrealized depreciation of investments - - - 1,488,216 1,488,216 ------------ ---------- --------------- --------------- --------------- Balance as of December 31, 2001 $ 240,575 $ 2,743 $ 7,816,207 (A) $ (2,179,997) $ 5,879,528 ============ ========== ============== ============== ===============

(A) The net asset value per unit of limited partnership interest, including an assumed allocation of net unrealized depreciation of investments, was $519, $407 and $435 as of December 31, 2001, 2000 and 1999, respectively. See notes to financial statements. WESTFORD TECHNOLOGY VENTURES, L.P. NOTES TO FINANCIAL STATEMENTS 1. Organization and Purpose Westford Technology Ventures, L.P. (the "Partnership") is a Delaware limited partnership formed on September 3, 1987. WTVI Co., L.P., the managing general partner of the Partnership (the "Managing General Partner") and four individuals (the "Individual General Partners") are the general partners of the Partnership. Hamilton Capital Management Inc. (the "Management Company") is the general partner of the Managing General Partner and the management company of the Partnership. The Partnership began its principal operations on December 1, 1988. The Partnership's objective is to achieve long-term capital appreciation by making venture capital investments in new and developing companies and other special investment situations. The Partnership will not engage in any other business or activity. The Partnership is scheduled to terminate no later than December 31, 2002. 2. Significant Accounting Policies Valuation of Investments - Short-term investments are carried at amortized cost, which approximates market. Portfolio investments are carried at fair value, as determined quarterly by the Managing General Partner under the supervision of the Individual General Partners. Publicly held portfolio securities are valued at the closing public market price on the valuation date discounted by a factor of between 0% to 50% for sales restrictions. Factors considered in the determination of an appropriate discount include, underwriter lock-up or Rule 144 trading restrictions, insider status where the Partnership either has a representative serving on the Board of Directors or is greater than a 10% shareholder, and other liquidity factors such as the size of the Partnership's position in a given company compared to the trading history of the public security. Privately held portfolio securities are valued at cost until significant developments affecting the portfolio company provide a basis for change in valuation. The fair value of private securities is adjusted to reflect 1) meaningful third-party transactions in the private market or 2) significant progress or slippage in the development of the company's business such that cost is no longer reflective of fair value. As a venture capital investment fund, the Partnership's portfolio investments involve a high degree of business and financial risk that can result in substantial losses. The Managing General Partner considers such risks in determining the fair value of the Partnership's portfolio investments. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Investment Transactions - Investment transactions are recorded on the accrual method. Portfolio investments are recorded on the trade date, the date the Partnership obtains an enforceable right to demand the securities or payment therefore. Realized gains and losses on investments sold are computed on a specific identification basis. WESTFORD TECHNOLOGY VENTURES, L.P. NOTES TO FINANCIAL STATEMENTS, continued Income Taxes - No provision for income taxes has been made since all income and losses are allocable to the Partners for inclusion in their respective income tax returns. The Partnership's net assets for financial reporting purposes differ from its net assets for tax purposes. Net unrealized depreciation of $2.2 million as of December 31, 2001, was recorded for financial statement purposes but has not been recognized for tax purposes. Additionally, from inception to December 31, 2001, other timing differences relating to the sale of Units totaling $1.2 million were charged to partners' capital on the financial statements but have not been deducted or charged against partners' capital for tax purposes. Cash Equivalents - The Partnership considers all highly liquid debt instruments (primarily money market funds) to be cash equivalents. Reclassifications - Certain reclassifications were made to the prior period financial statements in order to conform to the current period presentation. 3. Allocation of Partnership Profits and Losses The Partnership Agreement provides that the Managing General Partner will be allocated, on a cumulative basis over the life of the Partnership, 20% of the Partnership's aggregate investment income and net realized gains from venture capital investments, provided that such amount is positive. All other gains and losses of the Partnership are allocated among all the Partners, including the Managing General Partner, in proportion to their respective capital contributions to the Partnership. 4. Related Party Transactions The Management Company is responsible for the management and administrative services necessary for the operation of the Partnership. For these services, the Management Company received a management fee through December 31, 1999 at an annual rate of 2.5% of the gross capital contributions to the Partnership (net of selling commissions and organizational expenses paid by the Partnership), reduced by capital distributed and realized losses, with a minimum fee of $200,000 per annum. The Management Company voluntarily agreed to reduce the minimum management fee payable by the Partnership to $150,000 per annum, effective January 1, 2000. The Management Company also directly provides certain shareholder services and database management support for the Limited Partners of the Partnership. For such services, the Management Company had charged the Partnership an additional fee of $8,500 per quarter through December 31, 1998. This amount was paid to the Management Company in addition to the regular management fee discussed above. Effective January 1, 1999, however, the Management Company agreed to provide such services for no additional fee. From inception of the Partnership to December 31, 1998, each of the three Independent General Partners received an annual fee of $10,000 and $1,000 for each meeting of the Independent General Partners attended, plus out-of-pocket expenses. Effective January 1, 1999, the annual fee paid to each Independent General Partner was reduced to $5,000. Additionally, effective January 1, 2000, the Independent General Partners voluntarily waived all future meeting fees. WESTFORD TECHNOLOGY VENTURES, L.P. NOTES TO FINANCIAL STATEMENTS, continued 5. Classification of Portfolio Investments As of December 31, 2001 and 2000 the Partnership's portfolio investments were categorized as follows: As of December 31, 2001: Percentage of Investment Type Cost Fair Value Net Assets* --------------- --------------- --------------- ----------- Preferred Stock $ 5,835,016 $ 4,204,557 71.51% Common Stock 1,675,227 1,125,689 19.15% Debt Securities 223,709 223,709 3.80% ---------------- -------------- ------- Total $ 7,733,952 $ 5,553,955 94.46% ================ ============== ====== Country/Geographic Region Midwestern U.S. $ 6,824,387 $ 4,644,390 78.99% Eastern U.S. 909,565 909,565 15.47% ---------------- -------------- ------- Total $ 7,733,952 $ 5,553,955 94.46% ================ ============== ======== Industry Wireless Communications $ 5,401,098 $ 4,464,645 75.93% Vending Equipment 1,423,289 179,745 3.06% Semiconductors 909,565 909,565 15.47% ---------------- -------------- ------ Total $ 7,733,952 $ 5,553,955 94.46% ================ ============== ====== As of December 31, 2000: Percentage of Investment Type Cost Fair Value Net Assets* --------------- --------------- --------------- ----------- Preferred Stock $ 5,835,016 $ 3,065,969 66.52% Common Stock 1,675,227 776,061 16.84% Debt Securities 223,709 223,709 4.85% ---------------- -------------- ------- Total $ 7,733,952 $ 4,065,739 88.21% ================ ============== ====== Country/Geographic Region Midwestern U.S. $ 6,824,387 $ 3,156,174 68.48% Eastern U.S. 909,565 909,565 19.73% ---------------- -------------- ------ Total $ 7,733,952 $ 4,065,739 88.21% ================ ============== ====== Industry Wireless Communications $ 5,401,098 $ 2,976,429 64.58% Vending Equipment 1,423,289 179,745 3.90% Semiconductors 909,565 909,565 19.73% ---------------- -------------- ------- Total $ 7,733,952 $ 4,065,739 88.21% ================ ============== ======

* Fair value as a percentage of net assets. WESTFORD TECHNOLOGY VENTURES, L.P. NOTES TO FINANCIAL STATEMENTS, continued 6. Quarterly Financial Information (Unaudited) Net Increase Total Net Realized (Decrease) in Net Investment Loss Assets Resulting Income From Operations From Operations --------------- ---------------------- ---------------------- 2001 First Quarter $ 9,607 $ (51,419) $ (51,419) Second Quarter 8,696 (55,913) 1,432,303 Third Quarter 7,675 (66,580) (66,580) Fourth Quarter 6,267 (44,058) (44,058) 2000 First Quarter 8,948 (1,720,242) 54,299 Second Quarter 10,302 (52,681) (52,681) Third Quarter 9,856 (63,160) (63,160) Fourth Quarter 10,631 (41,404) (264,599)

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. ----------------------------------------------------------------- None. PART III Item 10. Directors and Executive Officers of the Registrant. -------------------------------------------------- The Partnership The information set forth under the caption "Election of General Partners" in the Annual Meeting Proxy Statement is incorporated herein by reference. The Management Company The Management Company is responsible for the management and administrative services necessary for the operation of the Partnership pursuant to the Management Agreement between the Partnership and the Management Company. As of March 15, 2002, the directors and executive officers of the Management Company are: Name and Age Position Held Director Since Jeffrey T. Hamilton (64) President, Secretary and September 3, 1987 Chairman of the Board of Directors Louise M. Hamilton (61) Director August 23, 1991 Susan J. Trammell (47) Treasurer and Director February 27, 1991

The directors of the Management Company will serve as directors until the next annual meeting of stockholders and until their successors are elected and qualified. The officers of the Management Company will hold office until the next annual meeting of the Board of Directors of the Management Company and until their successors are elected and qualified. The information with respect to Mr. Hamilton, the sole shareholder of the Management Company, set forth under the subcaption "Election of Individual General Partners" in the Annual Meeting Proxy Statement is incorporated herein by reference. There are no family relationships among any of the Individual General Partners of the Partnership. Jeffrey T. Hamilton and Louise M. Hamilton, President, Secretary and Chairman of the Board of Directors and Director of the Management Company, respectively, are husband and wife. Item 11. Executive Compensation. ---------------------- The information with respect to the compensation of the Individual General Partners set forth under the subcaption "Election of Individual General Partners" in the Annual Meeting Proxy Statement is incorporated herein by reference. The information with respect to the allocation and distribution of the Partnership's profits and losses to the Managing General Partner set forth under the subcaption "Election of Managing General Partner" in the Annual Meeting Proxy Statement is incorporated herein by reference. The information with respect to the management fee payable to the Management Company set forth under the caption "The Terms of the Current Management Agreement and the Proposed Management Agreement" in the Annual Meeting Proxy Statement is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management. -------------------------------------------------------------- The information concerning the security ownership of the Individual General Partners set forth under the subcaption "Election of Individual General Partners" in the Annual Meeting Proxy Statement is incorporated herein by reference. As of March 15, 2002, no person or group is known by the Partnership to be the beneficial owner of more than 5 percent of the Units. Mr. Ames, an Individual General Partner of the Partnership, owns 10 Units and Ms. Trammell, the Treasurer and Director of the Management Company, owns 3 Units. The Individual General Partners and the directors and officers of the Management Company as a group own 13 Units or less than one percent of the total Units outstanding. The Partnership is not aware of any arrangement that may, at a subsequent date, result in a change of control of the Partnership. Item 13. Certain Relationships and Related Transactions. ---------------------------------------------- Not applicable. PART IV Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K. ----------------------------------------------------------------- (a) Notes to Financial Statements (b) No reports on Form 8-K have been filed during the fourth quarter of the fiscal year covered by this report. (c) Exhibits 3.1 Amended and Restated Certificate of Limited Partnership of the Registrant (filed as Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 3.2 Amended and Restated Agreement of Limited Partnership of the Registrant (filed as Exhibit 1(c) to the Registrant's Registration Statement on Form N-2 (No. 33-16891) and incorporated herein by reference). 10 Management Agreement dated as of February 28, 1991 between the Registrant and the Management Company (filed as Exhibit A to the Registrant's definitive proxy statement in connection with the 1991 Annual Meeting of Limited Partners and incorporated herein by reference). SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, in the capacities indicated on the 1st day of April 2002. WESTFORD TECHNOLOGY VENTURES, L.P. By: WTVI Co., L.P. its managing general partner By: Hamilton Capital Management Inc. its general partner By: /s/ Jeffrey T. Hamilton President, Secretary and Director (Principal ----------------------------------------------------- Jeffrey T. Hamilton Executive Officer) of Hamilton Capital Management Inc. and Individual General Partner of Westford Technology Ventures, L.P. By: /s/ Susan J. Trammell Treasurer and Director (Principal Financial ----------------------------------------------------- Susan J. Trammell and Accounting Officer) of Hamilton Capital Management Inc. By: /s/ Robert S. Ames Individual General Partner of ----------------------------------------------------- Robert S. Ames Westford Technology Ventures, L.P. By: /s/ Alfred M. Bertocchi Individual General Partner of ----------------------------------------------------- Alfred M. Bertocchi Westford Technology Ventures, L.P. By: /s/ George M. Weimer Individual General Partner of ----------------------------------------------------- George M. Weimer Westford Technology Ventures, L.P.

WESTFORD TECHNOLOGY VENTURES LP 10-K