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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 0-25174
SIRROM CAPITAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
TENNESSEE 62-1583116
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
500 CHURCH STREET, SUITE 200
NASHVILLE, TENNESSEE 37219
(Address of Principal (Zip Code)
Executive Offices)
(615) 256-0701
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report.)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. The number of shares of common
stock, no par value per share, outstanding on November 4, 1997 was 15,546,613.
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TABLE OF CONTENTS
PAGE NUMBER
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31,
1996 and September 30, 1997 3
Consolidated Statements of Operations for the Three Months Ended September 30,
1996 and 1997 and for the Nine Months Ended
September 30, 1996 and 1997 4
Consolidated Statements of Cash Flows for the Three Months Ended
September 30, 1996 and 1997 and for the Nine Months Ended
September 30, 1996 and 1997 5
Notes to Consolidated Financial Statements 6
Consolidated Portfolio of Investments as of December 31, 1996 11
Consolidated Portfolio of Investments as of September 30, 1997 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General 31
Results of Operations 31
Financial Condition, Liquidity and Capital Resources 34
Impact of Inflation 35
Risks 36
Portfolio Turnover and Credit Quality 36
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS 37
ITEM 2. CHANGES IN SECURITIES 37
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 37
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 37
ITEM 5. OTHER INFORMATION 37
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 37
SIGNATURES
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SIRROM CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, September 30,
1996 1997
------------ -------------
ASSETS
Investments, at fair value
Loans $ 221,487,385 $ 363,414,296
Equity interests 34,965,801 46,059,547
Warrants 15,893,828 17,658,904
Other 2,990,282 2,294,769
------------- -------------
Total investments (cost of $262,943,963 and $419,149,544, respectively) 275,337,296 429,427,516
Investment in unconsolidated subsidiary 911,487 2,644,080
Cash 4,611,532 1,834,836
Interest receivable 2,870,138 4,064,932
Debenture costs (less accumulated amortization of $920,289 and $1,645,504,
respectively) 3,690,362 3,743,860
Fixed assets (less accumulated depreciation of $73,711 and $162,438 respectively) 275,454 775,180
Other assets 316,797 232,077
------------- -------------
Total Assets $ 288,013,066 $ 442,722,481
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Debentures payable to Small Business Administration $ 90,000,000 $ 90,000,000
Revolving credit facilities 30,858,213 60,951,000
Interest payable 1,348,252 1,663,809
Accrued taxes payable 4,333,144 500,000
Accounts payable, accrued expenses, and other liabilities 2,852,942 6,489,223
------------- -------------
Total Liabilities 129,392,551 159,604,032
------------- -------------
SHAREHOLDERS' EQUITY:
Common stock 140,061,092 250,181,184
Notes receivable from employees (1,539,858) (648,442)
Undistributed net realized earnings 7,705,948 23,307,761
Unrealized appreciation of investments 12,393,333 10,277,946
------------- -------------
Total Shareholders' Equity 158,620,515 283,118,449
------------- -------------
Total Liabilities and Shareholders' Equity $ 288,013,066 $ 442,722,481
============= =============
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SIRROM CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS THREE MONTHS NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1997 SEPTEMBER 30, 1996 SEPTEMBER 30, 1997
------------------ ------------------ ------------------ ------------------
Operating Income:
Interest on investments $ 6,388,837 $ 10,977,893 $ 16,837,156 $ 28,629,681
Loan processing fees 796,800 1,944,812 2,369,850 4,901,592
Other income 28,530 15,054 90,585 44,879
------------ ------------ ------------ ------------
Total Operating Income 7,214,167 12,937,759 19,297,591 33,576,152
------------ ------------ ------------ ------------
Operating Expenses:
Interest expense 2,138,079 2,431,058 5,979,355 6,391,182
Salaries and benefits 770,919 1,315,103 2,180,154 3,193,913
Other operating expenses 499,127 850,727 1,477,737 2,276,639
Amortization expense 100,867 204,225 378,510 637,179
------------ ------------ ------------ ------------
Total Operating Expenses 3,508,992 4,801,113 10,015,756 12,498,913
------------ ------------ ------------ ------------
Equity in pretax income of
unconsolidated subsidiary
(before taxes of $0, $228,842,
$0, and $444,197) 1,150,571 915,371 2,573,197 2,176,802
------------ ------------ ------------ ------------
Net Operating Income 4,855,746 9,052,017 11,855,032 23,254,041
------------ ------------ ------------ ------------
Realized gain (loss) on investments 1,250,000 2,238,614 7,206,489 9,682,823
Change in unrealized appreciation
(depreciation) of investments (1,701,483) 1,079,036 2,793,944 (2,115,387)
Provision for income taxes (560,000) 4,290,807 (2,764,960) (357,681)
------------ ------------ ------------ ------------
Net increase in shareholders'
equity resulting from operations $ 3,844,263 $ 16,660,474 $ 19,090,505 $ 30,463,796
============ ============ ============ ============
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SIRROM CAPITAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months Three months Nine months Nine months
ended ended ended ended
September 30, 1996 September 30, 1997 September 30, 1996 September 30, 1997
------------------ ------------------ ------------------ ------------------
OPERATING ACTIVITIES:
Net increase in partners' capital and
shareholders' equity resulting from
operations $ 3,844,263 $ 16,660,474 $ 19,090,505 $ 30,463,796
Adjustments to reconcile net increase to
net cash provided by operating activities:
Net unrealized (appreciation) depreciation
of investments 1,701,483 (1,079,036) (2,793,944) 2,115,387
Realized gain on investments (1,250,000) (2,238,614) (7,206,489) (9,682,823)
Increase in investment in
unconsolidated subsidiary (1,164,572) (686,529) (2,587,199) (1,732,593)
Amortization of debenture costs 99,367 201,861 374,009 630,951
Increase in commercial paper discount 0 (34,668) 0 (204,156)
(Increase) decrease in interest receivable 93,784 (318,267) (499,166) (1,194,794)
(Increase) decrease in other assets (42,899) 105,459 (13,101) (21,507)
Increase in accounts payable and
accrued expenses 150,946 3,012,536 1,009,800 3,636,299
Amortization of organization costs 1,500 2,364 4,500 6,228
Depreciation of fixed assets 12,287 49,101 34,957 91,098
Increase (decrease) in accrued taxes payable 681,792 (4,525,857) 1,961,635 (3,833,144)
Increase in interest payable 125,803 357,817 455,960 315,557
------------- ------------- ------------- -------------
Net cash provided by operating activities 4,253,754 11,506,641 9,831,467 20,590,299
------------- ------------- ------------- -------------
INVESTING ACTIVITIES:
Proceeds from sale of investments 8,148,259 24,385,003 25,402,199 68,188,519
Investments originated or acquired (41,943,125) (79,013,119) (103,687,232) (214,611,318)
Purchase of fixed assets (12,844) (443,089) (51,745) (590,824)
------------- ------------- ------------- -------------
Net cash used in investing activities (33,807,710) (55,071,205) (78,336,778) (147,013,623)
------------- ------------- ------------- -------------
FINANCING ACTIVITIES:
Proceeds from debentures payable to Small
Business Administration 0 0 10,000,000 0
Proceeds from revolving credit facilities 23,022,000 119,940,000 73,200,766 156,001,132
Repayment of credit facility borrowings (17,098,767) (68,477,000) (44,589,766) (125,908,345)
Increase in debenture costs (261,510) (172,024) (774,009) (480,293)
Issuance of common stock 7,834,521 0 59,237,143 109,953,785
Employee shares repurchased 0 0 (809,645) (102,614)
Repayment of employee notes 0 28,789 440,142 891,416
Stock options exercised 0 54,271 0 268,921
Payment of dividends (2,971,830) (6,503,117) (7,605,249) (16,260,614)
Distribution of capital gains 0 0 0 (716,760)
------------- ------------- ------------- -------------
Net cash provided by financing activities 10,524,414 44,870,919 89,099,382 123,646,628
------------- ------------- ------------- -------------
Increase (decrease) in cash and cash equivalents (19,029,542) 1,306,355 20,594,071 (2,776,696)
Cash and cash equivalents, beginning of period 39,818,682 528,481 195,069 4,611,532
------------- ------------- ------------- -------------
Cash and cash equivalents, end of period $ 20,789,140 $ 1,834,836 $ 20,789,140 $ 1,834,836
============= ============= ============= =============
Supplemental disclosures of cash flow information:
Interest paid $ 2,018,473 $ 1,585,195 $ 5,529,590 $ 5,495,818
============= ============= ============= =============
Taxes paid $ 12,828 $ - $ 976,894 $ 3,738,278
============= ============= ============= =============
Loans transferred to other investments $ 0 $ 0 $ 778,808 $ 486,777
============= ============= ============= =============
Loans transferred to equity interests $ 500,000 $ 690,000 $ 2,925,000 $ 1,924,469
============= ============= ============= =============
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SIRROM CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Sirrom Capital Corporation (the "Company"), a Tennessee corporation,
was formed in November 1994. The accompanying financial statements have been
prepared on a basis appropriate for investment companies as enumerated in the
American Institute of Certified Public Accountants' Audit and Accounting Guide
on Audits of Investment Companies. The Company is a specialty finance company
that is primarily engaged in making loans to small businesses. The Company's
objectives are to achieve both a high level of current income from interest on
loans and fees and long-term growth in the value of its net assets through the
appreciation of equity interests primarily in small, privately owned companies.
The Company generally targets small businesses that the Company believes meet
certain criteria, including the potential for significant growth, adequate
collateral coverage, experienced management teams, sophisticated outside equity
investors and profitable operations. In addition to making loans to small
businesses, the Company makes investments in public companies with a market
capitalization of less than $100.0 million that are marketed under the name
Tandem Capital ("Tandem") and provides merger and acquisition advisory services
through its wholly-owned subsidiary, Harris Williams & Co., ("Harris Williams").
The Company is a non-diversified, closed-end investment company, which
has elected to be treated as a business development company under the Investment
Company Act of 1940 (the "1940 Act"). Prior to August 1996, the Company was also
a small business investment company ("SBIC") licensed under the Small Business
Investment Act of 1958, as amended (the "1958 Act"). The Company was licensed by
the U.S. Small Business Administration (the "SBA") on May 14, 1992. In August
1996, the Company transferred its SBIC operations, including its SBIC license,
and the majority of its assets and liabilities, to its wholly-owned subsidiary,
Sirrom Investments Inc. ("SII"), a Tennessee corporation. Under applicable SBA
regulations, SII is restricted to investing only in qualified small business
concerns in the manner contemplated by the 1958 Act. Additionally, beginning in
February 1995, the Company elected to be taxed as a regulated investment company
("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended, and
in August 1996 SII elected the same tax treatment.
In August 1996, the Company acquired the ownership interests of Harris
Williams & Co., L.P. for 898,454 shares of common stock of the Company. After
the acquisition, Harris Williams began operating as a "C" corporation. The
acquisition of Harris Williams is accounted for as a pooling of interests. The
consolidated balance sheets as of December 31, 1996 and September 30, 1997 and
the consolidated statements of operations and cash flows for each of the
quarters and nine months ended September 30, 1996 and 1997 have been restated
accordingly to reflect the operations of Harris Williams as an unconsolidated
subsidiary accounted for by the equity method of accounting in conformity with
the requirements of the 1940 Act.
In December 1996, the Company formed a wholly-owned subsidiary, Sirrom
Funding Corporation ("SFC") to purchase loans originated by the Company and the
related warrants. These loans and warrants will be used as collateral to secure
borrowings under the Company's $100.0 million revolving credit facility. SFC has
also elected to be taxed as a RIC.
2. INTERIM FINANCIAL STATEMENTS
Certain notes and other information have been omitted from the interim
consolidated financial statements presented in this Quarterly Report on Form
10-Q. Therefore, these financial statements should be read in conjunction with
the consolidated financial statements and notes thereto contained in the
Company's 1996 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q
for the periods ended March 31, 1997 and June 30, 1997.
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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments
Portfolio investments are stated at fair value as determined by the
Board of Directors.
Under the Company's valuation policy, the fair values of loans to small
business concerns are based on the Board of Directors' evaluation of the
financial condition of the borrowers and/or the underlying collateral. The
values assigned are considered to be amounts which could be realized in the
normal course of business which anticipates the Company holding the loan to
maturity and realizing the face value of the loan. Fair value normally
corresponds to cost unless the borrower's condition or external factors lead to
a determination of fair value at a higher or a lower amount.
Equity interests and warrants for which there is not a public market
are valued based on factors such as significant equity financing by
sophisticated, unrelated new investors, history of positive cash flow from
operations, the market value of comparable publicly traded companies (discounted
for illiquidity) and other pertinent factors. The Board of Directors also
considers recent offers to purchase a portfolio company's securities when
valuing warrants.
The Company's investments in stocks of public companies that it is not
permitted to sell in the public market as a result of securities laws
restrictions, lock-up agreements and other similar restrictions are typically
valued at 70% of market value at the balance sheet date. All other publicly
traded stocks are typically valued at 90% of market value at the balance sheet
date.
At December 31, 1996 and September 30, 1997, the investment portfolio
included investments totaling $262,605,775 and $414,445,302, respectively, whose
values had been estimated by the Board of Directors in the absence of readily
ascertainable market values. Because of the inherent uncertainty of the
valuations, the estimated fair values may differ significantly from the values
that would have been used had a ready market for the securities existed, and the
differences could be material.
Realized and Unrealized Gain or Loss on Investments
Realized gains are recorded upon disposition of investments and are
calculated based upon the difference between the proceeds and the cost basis
determined using the specific identification method. Realized losses are
recorded upon the final disposition of the cost basis of investments according
to federal income tax guidelines and are calculated in the same manner. All
other changes in the valuation of portfolio investments, as determined by the
Board of Directors, are included as changes in the unrealized appreciation or
depreciation of investments in the Statement of Operations.
Derivative Financial Instruments
The Company uses interest rate swaps to hedge interest costs on its
floating rate revolving credit facilities. Any amounts paid or received on
interest rate swap agreements are recognized as an adjustment to interest
expense. Gains and losses on terminated swaps are recognized over the remaining
life of the underlying obligation as an adjustment to investment income or
interest expense. The fair value of the swap agreements are not recognized in
the consolidated financial statements as they are accounted for as hedges.
The Company does not hold derivative financial instruments for trading
purposes.
4. INVESTMENTS
Investments consist primarily of loans made to and warrants obtained
from borrowers of the Company and its SBIC subsidiary, SII. Investments are
recorded at fair value as determined by the Board of Directors or by current
market prices, if available, in accordance the Company's valuation policy (See
Note 3). While the Company
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markets to borrowers throughout the United States, approximately 49.8% of the
investment portfolio consists of loans and equity investments in companies that
are headquartered in the southeastern United States.
The aggregate cost basis of loans on non-accrual status, less realized
losses, totaled $15,873,178 and $20,522,670 at December 31, 1996 and September
30, 1997, respectively. The aggregate fair values of these loans as determined
by the Company's Board of Directors totaled $8,683,178 and $12,824,635 at
December 31, 1996 and September 30, 1997, respectively.
Included in the investment portfolio at September 30, 1997 are Other
Investments which consist of rights to royalty payments, a right to receive
payment from a potential arbitration settlement and certain tangible assets. The
Company obtained these rights upon foreclosure of three loans. The aggregate
cost of Other Investments at September 30, 1997 was $3,944,769 which represents
the cost basis of the original loans plus capitalized workout expenses. The
Company's Board of Directors has estimated the fair value of these investments
to be $2,294,769.
5. REVOLVING CREDIT FACILITIES
In October 1997, the Company's $50.0 million revolving credit facility
was increased to $125.0 million.
6. INCOME TAXES
For the quarter ended September 30, 1996 the Company provided for
federal income tax at a 35% rate and excise taxes at a 4% rate on taxable net
investment income as defined by the Code and realized gains not distributed to
shareholders. This tax provision for the quarter ended September 30, 1996 was
$560,000. During the quarter ended September 30, 1997, the Company changed its
policy with respect to the treatment of long term capital gains. The Company
intends to distribute substantially all of its long-term capital gains in a
special annual dividend, and as a result, will no longer provide for or pay
federal income taxes on realized gains. Accordingly, a $4,291,000 tax benefit
resulting from this change was recognized during the quarter ended September 30,
1997 to reverse taxes previously provided for against gains realized during the
first half of 1997. Excise taxes of 4% were also provided for during the
quarter ended September 30, 1997, to the extent the Company had taxable net
investment income and undistributed gains as defined by the Code. For the
quarter ended September 30, 1997, the Company also provided for taxes of
$229,000 on Harris Williams' pre-tax income.
7. STOCK OPTION PLANS
Employee Stock Option Plans. The Company's two employee stock option
plans, the Amended and Restated 1994 Employee Stock Option Plan (the "1994
Plan"), and the 1996 Employee Stock Incentive Plan (the "1996 Plan") provide for
the granting of options for 500,000 and 1,140,000 shares, respectively, of
common stock to selected employees at an exercise price not less than the fair
market value of the common stock on the date of the grant. The terms of each
award are determined by the Board of Directors. The options vest over a
five-year period and expire ten years from the date of grant.
A summary of stock option activity related to the plans is as follows,
and includes options that were granted subject to shareholder approval of an
increase in the number of shares available for grant:
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PRICE RANGE
PER SHARE SHARES
--------- ------
Outstanding, December 31, 1994 -- --
Granted $ 11 -18.50 466,966
Exercised -- --
Forfeited -- --
---------
Outstanding, December 31, 1995 466,966
Granted $ 18.625 - 35.75 767,581
Exercised $ 13.50 -17.875 15,000
Forfeited $ 18.50 - 26.33 25,000
---------
Outstanding, December 31, 1996 1,194,547
Granted $ 27.9375- 37.50 1,124,002
Exercised $ 18.50 - 26.33 6,000
Forfeited $ 18.50 16,000
---------
Outstanding, September 30, 1997 2,296,549
=========
Directors Stock Option Plan. During 1995, the Company adopted the 1995
Stock Option Plan for Non-Employee Directors which permits the issuance of
options to purchase the Company's stock to non-employee directors. The plan
reserves 114,000 shares of common stock for automatic grant. New directors will
receive options to purchase 6,000 upon initial election to the Company's Board
of Directors. The options' exercise price may not be less than the fair market
value of the common stock on the date of the grant. No options were granted in
1995, options on 84,000 shares were granted in 1996 at $24.25 per share, and
options on 6,000 shares were granted during the second quarter of 1997 at $27
15/16 per share. No shares were exercised prior to 1997, and during the second
quarter of 1997, 5,800 shares were exercised. No shares have been forfeited to
date.
8. SECONDARY OFFERING
In February 1997, the Company completed a public offering of 3,335,000
shares of common stock at a price of $37.00 per share of which 3,146,286 shares
were sold by the Company. The net proceeds to the Company of the offering, after
underwriting commissions and expenses, were approximately $109,946,000.
9. DIVIDENDS AND DISTRIBUTIONS
During the quarter ended September 30, 1997, the Company paid dividends
of $6,503,117 of which $6,503,117 and $0 were derived from net operating income
and realized long-term capital gains, respectively.
10. INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
As discussed in Note 1, Harris Williams is accounted for by the equity
method of accounting. The balance sheet for Harris Williams as of September 30,
1997 and statements of income for the quarters ended September 30, 1996 and 1997
and for the nine months periods ended September 30, 1996 and 1997 are as
follows:
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BALANCE SHEETS
SEPTEMBER 30,
1997
----
ASSETS
Cash and cash equivalents $ 593,887
Accounts receivable 329,059
Other assets, net 4,169,656
------------
Total Assets 5,092,602
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities 2,448,520
Shareholders' equity 2,644,082
------------
Total liabilities and shareholders' equity 5,092,602
------------
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
----------------------- -------------------
1996 1997 1996 1997
---- ---- ---- ----
REVENUES:
Fee income $ 2,263,080 $ 1,831,457 $ 4,716,911 $ 5,312,229
Expense reimbursements and other 111,498 171,137 339,037 412,238
----------- ----------- ----------- -----------
Total revenues 2,374,578 2,002,594 5,055,948 5,724,467
----------- ----------- ----------- -----------
EXPENSES:
Salaries and benefits 864,098 657,705 1,881,103 2,449,534
Operating expenses 359,909 429,528 601,648 1,098,141
----------- ----------- ----------- -----------
Total expenses 1,224,007 1,087,233 2,482,751 3,547,675
----------- ----------- ----------- -----------
Operating income before taxes 1,150,571 915,361 2,573,197 2,176,792
Provision for income taxes 0 228,842 0 444,197
----------- ----------- ----------- -----------
Net income $ 1,150,571 $ 686,519 $ 2,573,197 $ 1,732,595
----------- ----------- ----------- -----------
Advisory services are typically provided by Harris Williams in
accordance with engagement contracts that stipulate a monthly retainer,
reimbursement of direct expenses and transaction closing fees. Retainer fees are
recognized ratably over the retainer period, expense reimbursements are
recognized monthly as billed and success fees are recognized at the time of
closing.
Prior to the acquisition by the Company, Harris Williams operated as a
Subchapter S corporation from inception to August 1994 and as a limited
partnership subsequent to August 1994. Accordingly, no provision for income tax
was recorded for the quarter ended September 30, 1996 and the nine months ended
September 30, 1996. Subsequent to the acquisition in August 1996, Harris
Williams began operating as a "C" corporation.
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SIRROM CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS AS OF DECEMBER 31, 1996
COUPON
INTEREST
LOANS MATURITY COST RATE FAIR VALUE
----- -------- ---- ---- ----------
AB Plastics Holding Corporation 9/27/01 $ 4,000,000 13.50% $ 4,000,000
Affinity Fund, Inc. 6/29/98 1,485,000 12.50 1,497,932
Affinity Fund, Inc. 3/10/00 1,000,000 14.00 1,000,000
Affinity Fund, Inc. 12/28/98 495,000 12.50 496,079
American Corporate Literature, Inc. 9/29/01 1,683,000 14.00 1,684,132
ARAC Holding Co., Inc. 9/27/01 3,000,000 13.50 3,000,000
American Network Exchange 11/30/98 990,000 13.00 996,346
American Network Exchange 1/18/99 990,000 13.00 996,012
Amscot Holdings, Inc. 5/26/00 800,000 14.00 800,000
Amscot Holdings, Inc. 9/20/00 200,000 14.00 200,000
Amscot Holdings, Inc. 6/28/01 500,000 14.00 500,000
Amscot Holdings, Inc. 12/27/01 250,000 14.00 250,000
Argenbright Holdings Limited 7/7/01 2,750,000 13.50 3,500,000
Ashe Industries, Inc. 12/28/97 990,000 12.50 132,058
Ashe Industries, Inc. 3/25/99 445,500 12.50 122,300
Ashe Industries, Inc. 5/18/99 544,500 12.50 121,524
Ashe Industries, Inc. 6/12/96 750,000 14.00 100,000
Ashe Industries, Inc. 6/12/96 285,546 14.00 0
Associated Response Services, Inc. 6/20/99 1,386,000 12.50 1,393,223
Associated Response Services, Inc. 2/15/00 335,000 12.50 335,000
Associated Response Services, Inc. 1/6/00 300,000 12.50 300,000
Associated Response Services, Inc. 11/8/01 500,000 12.50 500,000
Assured Power, Inc. 10/1/00 700,000 13.50 700,000
Avionics Systems, Inc. 7/19/01 3,000,000 13.50 3,000,000
B & N Company, Inc. 8/8/00 2,970,000 12.50 2,978,500
B & N Company, Inc. 3/28/01 990,000 13.00 991,670
BankCard Services Corporation 1/21/98 297,000 13.00 299,400
BiTec Southeast, Inc. 7/1/99 2,600,321 12.70 2,614,171
BiTec Southeast, Inc. 8/9/01 950,000 14.00 950,000
C.J. Spirits, Inc. 6/1/97 750,171 13.50 455,796
Caldwell/VSR Inc. 2/28/01 1,500,000 8.00 1,500,000
Caldwell/VSR Inc. 9/27/01 116,000 14.00 116,000
Cardiac Control Systems, Inc. 3/31/00 1,500,000 13.50 1,500,000
Cartech Holdings, Inc. 4/29/01 1,500,000 13.00 1,500,000
Carter Kaplan Holdings, LLC. 6/22/00 594,000 14.00 94,800
Cedaron Medical, Inc. 6/28/01 1,500,000 13.50 1,500,000
Cell Call, Inc. 11/4/97 990,000 12.75 998,349
CF Data Corp 3/16/00 1,732,500 13.75 1,738,924
Champion Glove Manufacturing Co., Inc. 7/27/00 1,250,000 13.50 1,250,000
Colonial Investments, Inc. 10/16/00 800,000 13.75 800,000
Colonial Investments, Inc. 5/8/01 300,000 13.75 300,000
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COUPON
INTEREST
LOANS MATURITY COST RATE FAIR VALUE
----- -------- ---- ---- ----------
Consumat Systems, Inc. 11/1/00 $ 500,000 14.00% $ 500,000
Consumat Systems, Inc. 1/1/01 500,000 14.00 500,000
Consumat Systems, Inc. 3/11/01 500,000 14.00 500,000
Continental Diamond Cutting Co. 10/28/91 500,000 13.00 1,500,000
Continental Diamond Cutting Co. 11/16/99 200,000 13.00 200,000
Corporate Flight Mgmt., Inc. 12/4/97 346,500 12.50 349,341
Corporate Link, Inc. 12/13/01 600,000 14.00 600,000
Corporate Link, Inc. 3/13/97 300,000 14.00 300,000
CreditCorp and affiliates 11/7/01 539,000 14.00 546,683
Dalcon International, Inc. 1/31/02 150,000 13.00 150,000
Dalcon International, Inc. 1/31/00 200,000 13.00 200,000
Dalts, Inc. 4/28/01 2,000,000 13.50 2,000,000
DentalCare Partners, Inc. 1/11/01 1,951,150 12.50 1,956,160
Eastern Food Group LLC 8/30/00 500,000 8.00 25,000
Eastern Food Group LLC 12/20/00 200,000 8.00 25,000
Eastern Food Group LLC 1/21/01 200,000 8.00 25,000
Eastern Food Group LLC 2/14/01 265,000 8.00 25,000
Eastern Food Group LLC 4/30/01 200,000 8.00 100,000
Eastern Food Group LLC 9/10/01 180,000 8.00 80,000
Electronic Merchant Services 2/27/00 1,237,500 13.50 1,040,204
Electronic Merchant Services 2/29/96 168,572 14.00 168,572
Encore Orthopedics, Inc. 7/31/00 2,620,985 13.50 2,734,691
Encore Orthopedics, Inc. 2/28/01 1,667,680 13.00 1,728,609
Entek Scientific, Inc. 6/28/01 2,500,000 13.00 2,500,000
Express Shipping Centers, Inc. 9/22/00 1,697,598 13.25 1,844,910
FoodNet Holdings, LLC 7/22/01 1,000,000 13.50 1,000,000
Fortrend Engineering Corp 8/30/01 1,500,000 12.99 1,500,000
FX Direct, Inc. 1/23/01 2,324,000 13.50 2,359,199
Fypro, Inc. 12/17/01 3,117,480 12.50 3,117,480
Fypro, Inc. 12/17/01 592,000 4.00 152,000
Gardner Wallcovering, Inc. 3/28/01 1,485,000 13.50 1,487,500
General Materials Management, Inc. 7/29/01 2,500,000 13.50 2,500,000
Generation 2 Worldwide LLC 10/31/00 2,000,000 14.00 2,000,000
Global Finance and Leasing, Inc. 1/3/00 1,500,000 13.00 1,500,000
Global Marine Electronics, Inc. 5/1/01 1,350,000 13.00 1,350,000
Gold Medal Products, Inc. 11/19/00 1,250,000 13.50 1,250,000
Gold Medal Products, Inc. 2/15/01 25,000 13.50 25,000
Gold Medal Products, Inc. 6/27/01 100,000 13.50 100,000
Gold Medal Products, Inc. 7/31/01 100,000 13.50 100,000
Golf Corporation of America, Inc. 9/16/99 300,000 11.00 150,000
Golf Corporation of America, Inc. 12/28/00 200,000 14.00 150,000
Golf Corporation of America, Inc. 12/29/00 455,589 10.00 180,589
Golf Corporation of America, Inc. 7/13/96 100,000 14.00 100,000
Golf Corporation of America, Inc. 10/5/96 50,000 14.00 50,000
Golf Corporation of America, Inc. 12/1/96 52,000 14.00 52,000
Golf Corporation of America, Inc. 12/31/96 39,000 14.00 39,000
Golf Video, Inc. 3/27/01 500,000 14.00 50,000
Good Food Fast Companies, The 12/13/01 1,300,000 13.50 1,300,000
Gulfstream International Airlines, Inc. 7/29/99 1,490,000 13.00 1,496,513
Gulfstream International Airlines, Inc. 9/25/00 1,000,000 13.50 1,000,000
12
13
COUPON
INTEREST
LOANS MATURITY COST RATE FAIR VALUE
----- -------- ---- ---- ----------
Home Link Services, Inc. 12/30/01 $ 79,750 14.00% $ 79,750
Horizon Medical Products, Inc. 9/22/00 1,500,000 13.75 1,500,000
HPC America, Inc. 8/15/01 2,970,000 13.50 2,972,500
Hunt Incorporated 3/31/00 3,250,000 14.00 3,250,000
H & H Acq. Corp 8/30/01 1,500,000 14.00 1,500,000
HTR, Inc. 10/30/01 3,000,000 13.50 ,000,000
I.Schneid Acquisition, LLC 4/1/01 2,000,000 14.00 2,000,000
ILD Communications 5/10/01 1,500,000 13.50 1,500,000
In-Store Services, Inc. 4/19/00 1,188,000 14.00 1,192,200
Innotech, Inc. 3/22/99 1,980,000 13.00 1,991,322
IV Infusion Corporation 12/19/01 1,000,000 14.00 1,000,000
Johnston County Cable, L.P. 8/31/00 1,990,000 14.00 1,992,672
Kentucky Kingdom, Inc. 4/4/99 250,000 8.25 250,000
Kentucky Kingdom, Inc. 1/5/98 1,980,000 12.50 1,995,985
Kentucky Kingdom, Inc. 9/26/99 1,200,000 10.50 1,200,000
Kentucky Kingdom, Inc. 3/1/00 835,000 14.00 835,000
Kentucky Kingdom, Inc. 11/6/00 1,500,000 12.50 1,500,000
Kentucky Kingdom, Inc. 3/30/98 2,000,000 14.00 2,000,000
Kryptonics, Inc. 12/14/00 2,500,000 12.90 2,500,000
KWC Management Co., LLC 4/25/01 500,000 14.00 50,000
Lane Acquisition Corporation 11/21/01 4,000,000 13.75 4,000,000
Leisure Clubs International, Inc. 4/1/01 1,485,000 14.00 1,487,250
Lovett's Buffet, Inc. 4/1/00 2,250,000 13.00 2,250,000
Mayo Hawaiian Corp 6/27/01 2,200,000 14.00 2,200,000
MBA Marketing Corporation 2/4/99 1,782,000 12.50 1,792,500
McAuley's Incorporated 7/31/01 3,000,000 13.00 3,000,000
Medical Associates of America, Inc. 11/1/97 385,000 12.50 392,000
Metals Recycling Technologies, Inc. 10/31/01 2,000,000 14.00 2,000,000
Money Transfer Systems, Inc. 7/24/00 247,500 14.00 248,256
Money Transfer Systems, Inc. 12/20/00 148,500 14.00 148,825
Money Transfer Systems, Inc. 3/1/01 148,500 14.00 148,750
Money Transfer Systems, Inc. 5/2/01 148,500 14.00 148,650
Money Transfer Systems, Inc. 7/8/01 148,500 14.00 148,650
Money Transfer Systems, Inc. 10/1/01 148,500 14.00 148,575
Monogram Products, Inc. 6/18/01 916,000 13.50 925,800
Moore Diversified Products, Inc. 6/16/00 800,000 13.50 800,000
Multicom Publishing, Inc. 3/29/01 2,200,000 13.00 2,333,330
Multimedia Learning, Inc. 5/8/00 1,500,000 14.00 1,500,000
Multimedia Learning, Inc. 4/18/01 500,000 13.50 500,000
Multimedia Learning, Inc. 9/12/01 750,000 13.50 750,000
Multi-Media Data Systems, Inc. 11/20/01 2,000,000 14.00 2,000,000
NASC, Inc. 6/26/01 1,500,000 13.50 1,500,000
NASC, Inc. 12/13/98 500,000 13.50 500,000
Nationwide Engine Supply, Inc. 1/12/99 2,475,000 12.00 2,490,012
Nationwide Engine Supply, Inc. 9/26/01 1,000,000 13.50 1,000,000
Novavision, Inc. 12/18/01 520,000 13.00 520,000
NRI Service and Supply L.P. 2/13/00 2,225,000 14.00 2,234,591
Orchid Manufacturing Group, Inc. 9/14/00 2,960,000 13.00 2,968,671
Orchid Manufacturing Group, Inc. 12/28/00 1,000,000 13.50 1,000,000
Palco Telecom Service, Inc. 11/22/99 1,300,000 12.00 1,300,000
13
14
COUPON
INTEREST
LOANS MATURITY COST RATE FAIR VALUE
----- -------- ---- ---- ----------
Paradigm Valve Services, Inc. 11/12/01 $ 1,600,000 13.50% $ 1,600,000
Patton Management Corporation 5/26/00 1,900,000 13.50 1,900,000
PaySys International, Inc. 6/1/97 990,000 13.00 999,292
PFIC Corporation 2/28/01 1,000,000 13.00 1,000,000
Pipeliner Systems, Inc. 9/30/98 980,000 10.00 993,320
Plymouth, Inc. 9/28/00 1,000,000 13.00 1,000,000
PRA International, Inc. 8/10/00 1,980,000 13.50 1,985,661
Precision Fixtures & Graphics, Inc. 4/11/01 1,095,000 14.00 1,095,000
Precision Fixtures & Graphics, Inc. 4/11/01 300,000 14.00 300,000
Precision Fixtures & Graphics, Inc. 5/8/01 100,000 14.00 100,000
Precision Fixtures & Graphics, Inc. 5/28/01 75,000 14.00 75,000
Precision Fixtures & Graphics, Inc. 7/12/01 75,000 14.00 75,000
Precision Fixtures & Graphics, Inc. 7/22/01 100,000 14.00 100,000
Precision Fixtures & Graphics, Inc. 8/27/01 750,000 14.00 750,000
Precision Fixtures & Graphics, Inc. demand 100,000 14.00 100,000
Precision Panel Products, Inc. 1/11/00 1,485,000 12.75 1,491,000
Pritchard Paint & Glass Co 2/14/01 567,431 14.00 567,431
Quest Group International, Inc. 11/15/00 1,125,000 13.25 1,154,162
Quest Group International, Inc. 9/3/01 1,350,000 13.25 1,360,000
Radiant Systems, Inc. 6/27/01 2,760,000 14.00 2,788,000
Radiant Systems, Inc. 9/24/01 1,500,000 14.00 1,500,000
Rocky Mountain Radio Company LLC 11/10/01 2,500,000 13.50 2,500,000
Rynel Ltd., Inc. 10/1/01 1,250,000 14.00 1,250,000
Scandia Technologies, Inc. 4/9/01 1,825,000 14.00 1,825,000
Sheet Metal Specialties, Inc. 6/20/01 250,000 14.00 250,000
Sheet Metal Specialties, Inc. 12/4/01 211,750 12.00 211,750
SkillSearch Corporation 3/10/97 150,000 14.00 150,000
Southern Specialty Brands, Inc. 6/30/01 1,732,500 14.00 1,736,004
Sqwincher Corporation 1/31/00 500,000 13.50 500,000
Studley Products Corp. 11/18/99 107,000 12.00 107,000
Studley Products Corp. 12/1/99 440,800 8.00 440,800
Summit Publishing Group, Ltd. 3/17/99 1,485,000 12.00 1,493,500
Summit Publishing Group, Ltd. 7/26/01 625,000 14.00 625,000
Suncoast Medical Group, Inc. 9/14/99 485,000 13.50 441,998
Suncoast Medical Group, Inc. 6/7/00 495,000 14.00 445,913
Suncoast Medical Group, Inc. 2/23/01 522,000 14.00 472,747
TCOM Systems, Inc. 2/5/98 462,610 0.00 462,608
Tower Environmental, Inc. 11/30/98 2,440,000 10.00 1,601,990
Tower Environmental, Inc. 5/30/95 150,000 12.50 150,000
Trade Am International, Inc. 9/30/00 4,000,000 12.75 4,000,000
TRC Acquisition Corporation 10/21/01 1,000,000 13.50 1,000,000
UltraFab, Inc. 6/27/01 1,500,000 14.00 1,500,000
Unique Electronics, Inc. 11/30/99 600,000 10.67 600,000
Urethane Technologies, Inc. 3/16/01 1,636,520 13.50 1,697,100
Valdawn, LLC 4/13/00 2,399,974 13.50 2,400,000
Viking Moorings Acquisition, LLC 12/15/00 1,655,500 13.00 1,730,146
Virtual Resources Inc. 8/16/01 3,000,000 14.00 3,000,000
Vista Information Solutions, Inc. 4/30/01 2,032,157 13.50 2,086,736
WJ Holdings, Inc. 11/19/01 4,000,000 13.50 4,000,000
14
15
COUPON
INTEREST
LOANS MATURITY COST RATE FAIR VALUE
----- -------- ---- ---- ----------
WWR Technology, Inc. 11/1/97 $ 319,700 13.50% $ 324,184
Zahren Alternative Power Corp. 1/30/00 495,000 13.00 496,075
Zahren Alternative Power Corp. 11/27/99 1,980,000 13.00 1,989,663
------------ ------------
Total Loans $227,313,284 $221,487,385
============ ============
15
16
NUMBER OF COST OR
SHARES/PERCENTAGE CONTRIBUTED
EQUITY INTERESTS OWNERSHIP VALUE FAIR VALUE
- ---------------- --------- ----- ----------
PUBLICLY TRADED COMPANIES
National Vision Associates, Ltd. Common
Stock 208,698 $ 1,771,149 $ 802,180
Trans Global Services, Inc. Common
Stock -- restricted 28,088 5,300 37,685
Moovies, Inc. Common Stock -- restricted 156,110 1,561 566,874
Premiere Technologies, Inc. Common Stock 328,360 0 7,720,565
Cardiac Control Systems, Inc. Common
Stock -- restricted 50,000 250,000 52,500
Innotech, Inc. Common Stock 65,530 20,000 474,273
American Network Exchange Common
Stock -- restricted 139,651 21,879 197,839
Educational Medical, Inc. Common
Stock -- restricted 108,198 0 817,346
FCOA Acquisition Corp. Common Stock --
restricted 94,335 0 597,084
QuadraMed Corporation Common Stock --
restricted 25,700 0 180,275
QuadraMed Corporation Common Stock --
escrowed 2,856 0 0
PRIVATE COMPANIES
Skillsearch Corporation Common Stock 2,241 250,035 150,000
Potomac Group, Inc. Preferred Stock -- Series A 800,000 1,000,000 2,000,000
Potomac Group, Inc. Common Stock 479,115 289,779 1,299,038
Kentucky Kingdom, Inc. Common Stock 13,260 258,316 1,325,000
Golf Corporation of America, Inc. Common Stock 100,000 100,000 0
International Risk Control, Inc. Preferred
Stock -- Series A 200,000 50,000 50,000
DentalCare Partners, Inc. Preferred Stock --
Series E 90,978 800,000 800,000
Unique Electronics, Inc. Preferred Stock --
Series A 1,000,000 1,000,000 880,000
Pipeliner Systems, Inc. Preferred Stock --
Series D 5,000 1,000,000 900,000
Front Royal, Inc. Common Stock 110,000 275,000 275,000
NovaVision, Inc. Preferred Stock -- Series A 3,720,141 3,720,141 3,720,141
Fycon Technologies, Inc. Preferred Stock --
Series A 96,000 96,000 0
Virginia Gas Company Preferred Stock -- Series A 2,000 2,000,000 2,000,000
Johnston County Cable, L.P. Class A Interest
in L.P. 11.11% of L.P. 100,000 100,000
Dalcon International, Inc. Series B
Preferred Stock 850,000 850,000 750,000
Zahren Alternative Power Corporation Common Stock 700 210,000 210,000
Zahren Alternative Power Corporation Preferred
Stock 200 200,000 200,000
Electronic Merchant Services Series B
Preferred Stock 163 0 0
PRA International, Inc. Common Stock 31,279 190,000 190,000
Caldwell/VSR Inc. Preferred Stock 890 890,000 760,000
Precision Fixtures & Graphics, Inc.
Preferred Stock 1,500,000 1,500,000 0
Palco Telecom Service Common Stock 157,895 1,579 100,000
Studley Products Corp. Common Stock 2,204 220,400 0
Clearidge, Inc. Series A Preferred Stock 14,800,000 3,700,000 3,700,000
Gulfstream International Airlines, Inc. Series
A Preferred Stock 216 3,000,000 3,000,000
Home Link, Inc. Preferred Stock 1,000,000 1,000,000 1,000,000
Voice FX Corporation Common Stock 24,078 110,001 110,001
Total Equity Interests $24,881,140 $34,965,801
=========== ===========
16
17
COST OR
NUMBER OF PERCENTAGE CONTRIBUTED
STOCK WARRANTS SHARES OWNERSHIP VALUE FAIR VALUE
- -------------- ------ --------- ----- ----------
PUBLICLY TRADED COMPANIES
American Network Exchange 13,988 0.00% $ 0 $ 0
Cardiac Control Systems, Inc. 100,000 4.35 0 104,997
Consumat Systems, Inc. 250,000 20.00 0 229,688
Moovies, Inc. 20,000 0.20 0 0
Multicom Publishing, Inc. 163,791 2.80 800,000 138,540
Urethane Technologies, Inc. 484,640 4.66 363,480 42,406
Vista Information Solutions, Inc. 1,247,582 5.00 467,843 491,235
Virginia Gas Company 54,163 1.52 0 278,034
Virginia Gas Company 54,163 1.52 54 0
PRIVATE COMPANIES
AB Plastics Holding Corporation 200,000 20.00 0 0
Affinity Corporation 550 9.67 20,000 385,000
Alternative Home Care 163,695 13.00 0 0
Alvin Carter Holdings Corp 2% of Co. 2.00
American Corporate Literature 222,197 19.72 17,000 17,000
American Rockwool Acquisition Corp 1,100,000 11.00 0 0
Amscot Holdings, Inc. 1,534 26.47 0 0
Argenbright Holdings LLC 18 .50 750,000 375,000
Ashe Industries, Inc. 254 19.35 20,000 0
Associated Response Services, Inc. 370 35.20 14,000 1,000,000
Assured Power, Inc. 374 16.00 0 0
Auto Rental Systems, Inc. 144,869 7.00 0 0
Avionics Systems, Inc. 15% of Co. 15.00 0 0
B & N Company, Inc. 33 4.00 40,000 0
BankCard Services Corporation 149,261 28.00 3,000 0
BiTec Southeast, Inc. 1,480 15.00 21,000 0
Carter Kaplan Holdings, LLC 24% of LLC 24.00 6,100 0
C.J. Spirits, Inc. 180,000 10.00 7,500 0
Caldwell/VSR Inc. 159 15.93 0 0
Cartech Holdings, Inc. 210,527 20.00 0 0
Cedaron Medical, Inc. 173,981 4.25 0 0
CellCall, Inc. 398 1.50 10,000 125,000
CF Data Corp. 257 20.50 17,500 17,500
Champion Glove Manufacturing Co., Inc. 538,614 6.88 0 0
Clearidge, Inc. 442,164 1.78 0 0
CLS Corporation 126,997 4.22 0 0
Colonial Investments, Inc. 264 24.00 0 0
Continental Diamond Cutting Company 112 12.22 0 0
Corporate Flight Mgmt., Inc. 66,315 6.63 3,500 100,000
Corporate Link, Inc. 190 16.00 0 0
CreditCorp and affiliates 52 5.00 461,000 461,000
Dalcon Technologies, Inc. 250,000 20.00 0 0
Dalts, Inc. 125 25.00 0 0
Delaware Publishing Group, Inc. 8,534 47.67 15,000 200,000
DentalCare Partners, Inc. 666,022 4.98 10,000 290,000
Eastern Food Group LLC 17,647 15.00 0 0
Electronic Merchant Services 430 12.50 12,500 0
Encore Orthopedics, Inc. 577,300 5.21 711,335 1,205,000
Entek Scientific Corporation 185,480 3.75 0 0
Express Shipping Centers, Inc. 73,752 5.09 552,402 552,402
17
18
COST OR
NUMBER OF PERCENTAGE CONTRIBUTED
STOCK WARRANTS SHARES OWNERSHIP VALUE FAIR VALUE
- -------------- ------ --------- ----- ----------
Foodnet Holdings, LLC 8.00% 8.00% $ 0 $ 0
Fortrend Engineering Corp. 437,552 3.25 0 0
Front Royal, Inc. 240,458 1.85 0 480,000
Fycon Technologies, Inc. 58,677 15.00 0 0
Fypro, Inc. 255,882 15.00 0 0
Gardner Wallcovering, Inc. 2 2.00 15,000 15,000
General Materials Management Inc. 600,000 10.00 0 0
Generation 2 Worldwide LLC 30% of LLC 30.000 0 0
Global Finance & Leasing, Inc. 5,000 25.00 0 0
Global Marine 5,137 18.00 0 0
Gold Medal Products, Inc. 102,370 32.77 0 0
Golf Corporation of America, Inc. 350,000 28.27 0 0
Golf Video, Inc. 98 49.50 0 0
Good Food Fast Companies, The 174,779 17.00 0 0
Gulfstream International Airlines, Inc. 413 32.00 10,000 140,000
H & H Acquisition Corporation 3,600 22.50 0 0
Home Link Services, Inc. 166,667 20.00 0 0
Horizon Medical Products, Inc. 9,486 8.25 0 0
Hoveround Corporation 850 10.00 0 1,135,000
HPC America, Inc. 5 2.75 30,000 30,000
Hunt Incorporated 44 10.00 0 100,000
Hunt Leasing & Rental Corporation 265 10.00 0 100,000
HTR, Inc. 849,381 6.00 0 0
I. Schneid Holdings LLC 11% of LLC 11.00 0 0
ILD Communications 5,429 3.20 0 0
In Store Services, Inc. 429 12.50 12,000 12,000
Johnston County Cable L.P. 5% of L.P. 27.50 10,000 10,000
K.W.C. Management Corp. 794 24.40 0 0
Kentucky Kingdom, Inc. 6,132 2.00 0 610,000
Kryptonics, Inc. 1,255 6.40 0 400,000
Lane Acquisition Corporation 11,667 10.00 0 0
Leisure Clubs International, Inc. 144 10.00 15,000 15,000
Lovett's Buffet, Inc. 204,219 3.02 0 400,000
Mayo Hawaiian Corp. 81 7.50 0 0
MBA Marketing Corporation 11,100 4.29 18,000 18,000
McAuley's Incorporated 64 6.00 0 0
Metals Recycling Technologies Corp. 257,801 5.00 0 0
Money Transfer Systems, Inc. 94 8.50 10,000 10,000
Monogram Products, Inc. 1,276 6.00 84,000 84,000
Moore Diversified Products, Inc. 12 11.00 0 0
Multimedia Learning, Inc. 131,697 8.10 0 800,000
Multi-Media Data Systems, Inc. 259,072 20.00 0 0
NASC, Inc. 2,652 23.00 0 0
Nationwide Engine Supply, Inc. 1,265,664 20.20 25,000 25,000
Novavision, Inc. 222,222 10.00 0 0
NRI Service and Supply, L.P. 7.5% of LP 27.50 25,000 25,000
Orchid Manufacturing, Inc. 1,219,047 2.61 40,000 600,000
P.A. Plymouth, Inc. 92,647 15.00 0 0
Paradigm Valve Services, Inc. 30,000 12.00 0 0
Patton Management Corporation 426 10.00 0 185,000
PaySys International, Inc. 30,000 2.68 10,000 10,000
18
19
COST OR
NUMBER OF PERCENTAGE CONTRIBUTED
STOCK WARRANTS SHARES OWNERSHIP VALUE FAIR VALUE
- -------------- ------ --------- ----- ----------
PFIC Corporation 5,917 6.00% 0 $ 0
PRA International, Inc. 117,298 3.63 20,000 685,000
Pipeliner Systems, Inc. 2,080,000 20.55 20,000 0
Precision Fixtures & Graphics, Inc. 2,602 51.00 0 0
Precision Panel Products, Inc. 122 8.25 15,000 15,000
Pritchard Glass, Inc. 12,500 25.00 0 0
Quest Group International, Inc. 88,840 17.52 275,000 275,000
Radiant Systems, Inc. 174,642 1.52 240,000 950,000
Radio Systems Corporation 162,167 8.13 0 1,000,000
Rynel Ltd., Inc. 390,517 15.00 0 0
Scandia Technologies, Inc. 282 22.00 0 0
Sheet Metal Specialties, Inc. 538 35.00 0 0
SkillSearch Corporation 2,381 7.59 254,000 150,000
Southern Specialty Brands, Inc. 10,000 10.00 17,500 17,500
Sqwincher Corporation 111 10.00 0 140,000
Suncoast Medical Group, Inc. 580,159 23.00 25,000 0
Suprex Corporation 1,058,179 3.45 0 0
Tower Environmental, Inc. 82 10.07 20,000 0
Trade Am International, Inc. 335,106 6.00 0 0
TRC Acquisition Corporation 375,000 12.50 0 0
UltraFab, Inc. 120,000 12.00 0 0
Unique Electronics, Inc. 20% of Co. 20.00 0 0
VanGard Communications Co., LLC 12% of LLC 12.00 0 0
VDI Acquisition Company, LLC 21% of LLC 21.00 26 26
Viking Moorings Acquisition, LLC 5% of LLC 6.50 344,500 344,500
Virtual Resources, Inc. 8 7.50 0 250,000
Voice FX Corporation 233,112 7.10 176,000 450,000
WJ Holdings, Inc. 250,000 25.00 0 0
Zahren Alternative Power Corporation 1,247 6.54 25,000 400,000
----------- ------------
Total Stock Warrants $ 6,059,240 $ 15,893,828
=========== ============
OTHER INVESTMENTS
Gates Communication, L.P. -- Anticipated
royalty payments upon sale of assets -- -- $ 1,389,628 $ 1,289,628
Hancock Company -- Royalty stream from sale
of Gitman brand name -- -- 1,900,000 600,000
HSA International, Inc. -- Anticipated
proceeds from litigation -- -- 1,150,000 1,000,000
Capitalized workout expenses -- -- 250,671 100,654
------------ ------------
Total Other Investments $ 4,690,299 $ 2,990,282
============ ============
Total Investments $262,943,963 $275,337,296
============ ============
19
20
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
LOANS
Maturity Cost Coupon Fair Value
-------- ---- ------ ---------
Action Sports Group, LLC 8/19/02 $1,750,000 13.00% $1,750,000
Aero Products Corporation 6/9/02 2,500,000 13.00 2,500,000
Affinity Fund, Inc. 6/29/98 1,485,000 12.50 1,500,182
Affinity Fund, Inc. 3/10/00 1,000,000 14.00 1,000,000
Affinity Fund, Inc. 12/28/98 495,000 12.50 496,826
American Consolidated Labs 4/25/02 1,575,000 13.50 1,575,000
American Consolidated Labs 12/18/01 520,000 13.00 520,000
American Corporate Literature, Inc. 9/29/01 1,683,000 14.00 1,686,679
American Corporate Literature, Inc. 1/1/98 250,000 14.00 250,000
American Network Exchange 11/30/98 990,000 13.00 997,849
American Network Exchange 1/18/99 990,000 13.00 997,515
Amscot Holdings, Inc. 5/26/00 800,000 14.00 800,000
Amscot Holdings, Inc. 9/20/00 200,000 14.00 200,000
Amscot Holdings, Inc. 6/28/01 500,000 14.00 500,000
Amscot Holdings, Inc. 12/27/01 250,000 14.00 250,000
Amscot Holdings, Inc. 7/30/02 1,000,000 14.00 1,000,000
Anton Airfood, Inc. 5/21/02 5,000,000 13.50 5,000,000
ARAC Holding Co., Inc. 9/27/01 3,000,000 13.50 3,000,000
Ashe Industries, Inc. 5/18/99 535,546 12.50 185,546
Associated Response Services, Inc. 6/20/99 1,386,000 12.50 1,395,320
Associated Response Services, Inc. 2/15/00 335,000 12.50 335,000
Associated Response Services, Inc. 1/6/00 300,000 12.50 300,000
Associated Response Services, Inc. 11/8/01 500,000 12.50 500,000
Associated Response Services, Inc. 3/27/02 3,000,000 12.50 3,000,000
Assured Power, Inc. 10/1/00 700,000 13.50 75,000
Atlantic Security Systems, Inc. and affiliates 1/29/02 2,000,000 13.25 2,000,000
Austin Innovations, Inc. 7/1/02 1,950,000 13.75 1,950,862
Avionics Systems, Inc. 7/19/01 3,000,000 13.50 3,000,000
B & N Company, Inc. 8/8/00 2,970,000 12.50 2,583,000
B & N Company, Inc. 3/28/01 990,000 13.00 993,006
BankCard Services Corporation 1/21/98 297,000 13.00 249,850
BiTec Southeast, Inc. 7/1/99 2,600,321 12.70 2,417,321
BiTec Southeast, Inc. 8/9/01 950,000 14.00 950,000
BiTec Southeast, Inc. 4/30/97 350,000 14.00 350,000
BiTec Southeast, Inc. demand 228,000 14.00 228,000
Bohdan Automation, Inc. 7/1/02 1,500,000 13.50 1,500,000
BroadNet, Inc. 6/9/02 2,500,000 14.00 2,500,000
Bug.Z, Inc. 9/23/02 2,500,000 15.00 2,500,000
C.J. Spirits, Inc. 6/1/97 750,171 13.50 105,796
Caldwell/VSR Inc. 2/28/01 1,500,000 12.00 1,500,000
Caldwell/VSR Inc. 9/27/01 53,508 14.00 53,508
Campus Voice, LLC 12/31/06 1,263,223 12.00 1,063,223
Campus Voice, LLC 12/31/06 300,000 12.00 300,000
Campus Voice, LLC 12/31/99 385,000 8.00 385,000
Cardiac Control Systems, Inc. 3/31/00 1,500,000 13.50 1,500,000
Cartech Holdings, Inc. 4/29/01 1,500,000 13.00 1,500,000
Carter Kaplan Holdings, LLC 6/22/00 594,000 14.00 94,800
Catalina Food Ingredients, Inc. 3/30/02 3,500,000 13.00 3,500,000
Cedaron Medical, Inc. 6/28/01 1,500,000 13.50 1,500,000
Cell Call, Inc. 11/4/97 990,000 12.75 999,852
CF Data Corp. 3/16/00 1,732,500 13.75 1,741,552
Champion Glove Manufacturing Co., Inc. 7/27/00 1,250,000 13.50 50,000
Check Into Cash, Inc. 11/7/01 3,039,000 14.00 3,115,830
CMHC Systems, Inc. 7/1/02 1,400,000 13.50 1,400,000
Colonial Investments, Inc. 10/16/00 800,000 13.75 800,000
20
21
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
LOANS
Maturity Cost Coupon Fair Value
-------- ---- ------ ----------
Colonial Investments, Inc. 4/1/98 $ 300,000 13.75% $ 300,000
Colonial Investments, Inc. 3/15/98 132,000 13.75 132,000
Columbus Medical 1/31/02 4,000,000 13.75 4,000,000
Consumat Systems, Inc. 11/1/00 500,000 14.00 500,000
Consumat Systems, Inc. 1/1/01 500,000 14.00 500,000
Consumat Systems, Inc. 3/11/01 500,000 14.00 500,000
Consumat Systems, Inc. 3/26/02 500,000 14.00 500,000
Consumat Systems, Inc. 7/15/98 500,000 14.00 500,000
Continental Diamond Cutting Co. 1/15/99 500,000 13.00 500,000
Continental Diamond Cutting Co. 11/16/99 200,000 13.00 200,000
Corporate Flight Mgmt, Inc. 12/4/97 346,500 12.50 349,863
Corporate Link, Inc. 12/13/01 600,000 14.00 600,000
Corporate Link, Inc. 10/13/97 300,000 14.00 300,000
Cort Investment Group D/B/A Contract Network 8/27/02 3,320,000 13.50 3,326,000
Creighton Shirtmakers demand 1,969,000 14.00 1,969,000
CSM, Inc. 12/31/01 1,400,000 14.00 1,400,000
Cybo Robotics, Inc. 9/29/02 1,050,000 13.25 1,050,000
Dalts, Inc. 4/28/01 2,000,000 13.50 2,000,000
Dartek Industries 11/20/01 3,800,000 13.50 3,800,000
Dartek Industries 6/1/99 453,915 13.50 453,916
DentalCare Partners, Inc. 1/11/01 2,206,023 12.50 2,212,536
DynaGen, Inc. 6/17/02 1,733,300 13.50 1,751,080
Dyntec, Inc. 7/7/02 2,500,000 14.00 2,500,000
Electronic Accessory Specialists Int'l, Inc. 6/23/02 1,600,000 13.50 1,600,000
Electronic Merchant Services 2/27/00 1,237,500 13.50 1,040,204
Electronic Merchant Services 2/29/96 34,572 14.00 34,572
Electronic Merchant Services 2/29/96 134,000 14.00 134,000
Electronic Merchant Services demand 68,659 12.00 68,659
Encor Technologies, Inc. 3/30/02 2,812,000 13.13 2,812,000
Endeavor Technologies, Inc. 8/1/02 4,000,000 13.50 4,000,000
Entek IRD International Corp. 5/22/02 1,090,000 13.00 1,100,848
Entek IRD International Corp. 6/28/01 2,500,000 13.00 2,500,000
Faxnet Corporation 6/17/02 1,400,000 13.00 1,406,668
FDL, Inc. 1/30/02 1,750,000 13.50 1,787,503
Film Technologies International, Inc. 2/27/02 1,500,000 14.00 1,500,000
FoodNet Holdings, LLC 7/22/01 1,500,000 13.50 1,500,000
Fortrend Engineering Corp. 8/30/01 1,500,000 12.99 1,500,000
Fypro, Inc. 12/17/01 3,117,480 12.50 3,117,480
Fypro, Inc. 12/17/01 592,000 4.00 152,000
Fypro, Inc. 12/17/01 460,000 14.00 235,000
Gardner Wallcovering, Inc. 3/28/01 235,000 13.50 239,750
General Materials Management, Inc. 7/29/01 2,500,000 13.50 2,500,000
Generation 2 Worldwide LLC 10/31/00 2,000,000 14.00 2,000,000
Global Marine Electronics, Inc. 5/1/01 1,350,000 13.00 1,350,000
Gloves Inc. 5/1/02 1,500,000 13.00 1,500,000
Gold Medal Products, Inc. 11/19/00 123,895 13.50 48,895
Good Food Fast Companies, The 12/10/01 2,500,000 13.50 2,500,000
Gulfstream International Airlines, Inc. 7/29/99 1,490,000 13.00 1,498,016
Gulfstream International Airlines, Inc. 9/25/00 1,000,000 14.00 1,000,000
Gulfstream International Airlines, Inc. 3/19/02 1,500,000 14.00 1,500,000
Gulfstream International Airlines, Inc. 12/1/99 2,200,000 14.00 2,200,000
H & H Acq. Corp. 8/30/01 1,500,000 14.00 1,500,000
Home Link Services, Inc. 12/30/01 275,000 14.00 275,000
HPC America, Inc. 8/15/01 2,970,000 13.50 2,977,000
HTR, Inc. 10/30/01 3,000,000 13.50 3,000,000
21
22
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
LOANS
Maturity Cost Coupon Fair Value
-------- ---- ------ ----------
Hunt Incorporated 3/31/00 $3,250,000 14.00% $3,250,000
HydroFuser Industries Inc. and affiliates 7/30/02 621,643 13.00 645,127
I.Schneid Acquisition, LLC 4/1/01 2,000,000 14.00 2,000,000
IJL Holdings, Inc. 9/12/02 1,250,000 13.50 1,250,000
ILD Communications 5/10/01 1,500,000 13.50 1,500,000
In-Store Services, Inc. 4/19/00 1,188,000 14.00 1,194,000
International Displays, Inc. 5/12/02 3,965,000 14.00 3,215,000
International Displays, Inc. 2/1/01 415,500 14.00 415,500
International Displays, Inc. demand 30,000 14.00 30,000
International Displays, Inc. demand 263,000 14.00 263,000
Johnston County Cable, L.P. 8/31/00 1,990,000 14.00 1,994,175
Karawia Industries, Inc. 3/27/02 2,500,000 14.00 2,500,000
Kentucky Kingdom, Inc. 4/4/99 250,000 8.50 250,000
Kentucky Kingdom, Inc. 1/5/98 1,980,000 12.50 1,998,982
Kentucky Kingdom, Inc. 9/26/99 1,200,000 10.50 1,200,000
Kentucky Kingdom, Inc. 3/1/00 835,000 14.00 835,000
Kentucky Kingdom, Inc. 11/6/00 1,500,000 12.50 1,500,000
Kentucky Kingdom, Inc. 3/30/98 2,000,000 14.00 2,000,000
Kryptonics, Inc. 12/14/00 2,500,000 12.90 2,500,000
Kryptonics, Inc. 2/28/98 750,000 14.00 750,000
KWC Management Co., LLC 4/25/01 500,000 14.00 50,000
Lane Acquisition Corporation 11/21/01 4,000,000 13.75 4,000,000
Leisure Clubs International, Inc. 4/1/01 1,485,000 14.00 1,489,500
Leisure Clubs International, Inc. 3/27/02 125,000 14.00 125,000
M & M Industries, Inc. 2/26/02 2,250,000 14.00 2,250,000
Master Graphics, Inc. 5/31/02 4,300,000 13.25 4,300,000
Mayo Hawaiian Corp. 6/27/01 2,200,000 14.00 2,200,000
MBA Marketing Corporation 2/4/99 1,782,000 12.50 1,795,200
McAuley's Incorporated 7/31/01 3,000,000 13.00 3,000,000
Mead Higgs Co. 5/19/02 1,400,000 14.00 1,400,000
Merge Technologies, Inc. 6/30/02 2,000,000 13.50 2,000,000
Mesa International, Inc. 1/23/02 3,000,000 14.00 3,000,000
Metals Recycling Technologies Corp. 10/31/01 2,000,000 14.00 2,000,000
MetroLease, Inc. 7/29/02 2,495,000 13.50 2,495,249
Money Transfer Systems, Inc. 7/24/00 247,500 14.00 248,634
Money Transfer Systems, Inc. 12/20/00 148,500 14.00 149,050
Money Transfer Systems, Inc. 3/1/01 148,500 14.00 148,975
Money Transfer Systems, Inc. 5/2/01 148,500 14.00 148,875
Money Transfer Systems, Inc. 7/8/01 148,500 14.00 148,875
Money Transfer Systems, Inc. 10/1/01 148,500 14.00 148,800
Money Transfer Systems, Inc. 1/5/02 245,000 14.00 245,747
Money Transfer Systems, Inc. 3/6/02 250,000 14.00 250,000
Money Transfer Systems, Inc. 7/15/02 250,000 14.00 250,000
Moore Diversified Products, Inc. 6/16/00 800,000 13.50 800,000
Moore Diversified Products, Inc. 3/27/02 1,000,000 13.50 1,000,000
Multicom Publishing, Inc. 3/29/01 1,025,000 13.00 1,278,328
Multicom Publishing, Inc. demand 60,000 14.00 60,000
Multi-Media Data Systems, Inc. 11/20/01 1,997,409 14.00 1,997,409
Multimedia Learning, Inc. 5/8/00 1,500,000 14.00 1,500,000
Multimedia Learning, Inc. 4/18/01 500,000 13.50 500,000
Multimedia Learning, Inc. 9/12/01 750,000 13.50 750,000
22
23
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
LOANS
Maturity Cost Coupon Fair Value
-------- ---- ------ ----------
Mytech Corporation 9/25/02 $1,400,000 13.50% $1,400,000
NASC, Inc. 6/26/01 1,500,000 13.50 1,500,000
NASC, Inc. 12/13/98 500,000 13.50 500,000
National Health Systems 9/1/99 420,000 12.50 377,000
Nationwide Engine Supply, Inc. 1/12/99 2,475,000 12.00 2,493,765
Nationwide Engine Supply, Inc. 9/26/01 1,000,000 13.50 1,000,000
NRI Service and Supply L.P. 2/13/00 2,225,000 14.00 2,238,344
Omni Home Medical, Inc. 3/30/02 2,000,000 14.00 2,000,000
One Call Comprehensive Care, Inc. 12/19/01 1,500,000 14.00 1,500,000
One Call Comprehensive Care, Inc. 3/31/02 500,000 14.00 500,000
One Call Comprehensive Care, Inc. 12/30/97 300,000 14.00 300,000
One Call Comprehensive Care, Inc. 12/30/97 175,000 14.00 175,000
Orchid Manufacturing Group, Inc. 9/14/00 2,960,000 13.00 2,974,674
Orchid Manufacturing Group, Inc. 12/28/00 1,000,000 13.50 1,000,000
Package Net, Inc. 9/22/00 1,697,598 13.25 1,927,773
Package Net, Inc. 5/1/02 250,000 13.25 250,000
Palco Telecom Service, Inc. 11/22/99 1,300,000 12.00 1,300,000
Paradigm Valve Services, Inc. 11/12/01 1,600,000 13.50 1,600,000
Patton Management Corporation 5/26/00 1,900,000 13.50 1,900,000
PaySys International, Inc. 9/26/02 3,725,158 13.50 3,729,739
Pipeliner Systems, Inc. 9/30/98 980,000 10.00 996,317
Plymouth, Inc. 9/28/00 1,000,000 13.00 1,000,000
PRA International, Inc. 8/10/00 1,980,000 13.50 1,988,658
Precision Panel Products, Inc. 1/11/00 2,022,781 12.75 2,031,031
Precision Panel Products, Inc. 8/1/00 532,000 14.00 532,000
Precision Panel Products, Inc. 2/1/01 250,000 14.00 250,000
Precision Panel Products, Inc. demand 526,525 14.00 526,525
Precision Panel Products, Inc. demand 62,000 14.00 62,000
Pritchard Paint & Glass Co. 2/14/01 567,431 14.00 567,431
Pritchard Paint & Glass Co. 2/10/01 200,000 14.00 200,000
Proamics Corporation 7/31/02 1,000,000 13.00 1,000,000
Professional Training Services, Inc. 9/30/02 3,400,000 13.25 3,400,000
Protect America, Inc. 1/30/02 2,905,000 13.50 2,919,247
Quest Group International, Inc. 11/15/00 1,125,000 13.25 1,172,909
Quest Group International, Inc. 9/3/01 1,350,000 13.25 1,382,500
Quest Group International, Inc. 9/3/01 123,601 14.00 123,601
R & R International, Inc. 6/30/02 2,000,000 13.25 2,000,000
Recompute Corporation 2/21/02 1,900,000 13.50 1,940,000
Reef Chemical Company, Inc. 9/23/02 2,700,000 13.75 2,705,000
Rocky Mountain Radio Company LLC 11/10/01 3,000,000 13.50 3,000,000
Rynel Ltd., Inc. 10/1/01 1,250,000 14.00 1,250,000
Saraventures Fixtures Inc. 5/23/02 1,550,000 14.00 1,550,000
Saraventures Fixtures Inc. 2/1/02 425,000 14.00 425,000
Saraventures Fixtures Inc. demand 20,000 14.00 20,000
Saraventures Fixtures Inc. demand 70,000 14.00 70,000
Scandia Technologies, Inc. 4/9/01 1,825,000 14.00 1,400,000
Scandia Technologies, Inc. 4/7/98 400,000 14.00 400,000
Sheet Metal Specialties, Inc. 6/20/01 250,000 14.00 250,000
Sheet Metal Specialties, Inc. 12/4/01 211,750 12.00 211,750
Sheet Metal Specialties, Inc. 1/24/02 38,250 12.00 38,250
SkillMaster, Inc. 3/30/02 2,475,000 13.75 2,477,919
SkillSearch Corportion 2/5/98 496,000 13.00 499,952
Solutioneering, Inc. 3/31/02 2,000,000 13.75 2,000,000
Southern Specialty Brands, Inc. 6/30/01 1,732,500 14.00 1,738,632
Southern Therapy, Inc. 4/24/02 1,000,000 13.50 1,000,000
Southern Therapy, Inc. 4/24/02 500,000 13.50 500,000
Stratford Safety Products, Inc. 3/1/02 1,775,000 13.50 1,785,000
Studley Products Corp. 11/18/99 207,000 12.00 7,000
23
24
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
LOANS
Maturity Cost Coupon Fair Value
-------- ---- ------ ----------
Studley Products Corp. 12/1/99 $ 440,800 8.00% $ 115,800
Summit Publishing Group, Ltd. 3/17/99 1,485,000 12.00 1,495,750
Summit Publishing Group, Ltd. 7/26/01 625,000 14.00 625,000
Summit Publishing Group, Ltd. 12/15/97 100,000 14.00 100,000
Summit Publishing Group, Ltd. 1/16/98 150,000 14.00 150,000
Suncoast Medical Group, Inc. 9/14/99 485,000 13.50 191,998
Suncoast Medical Group, Inc. 6/7/00 495,000 14.00 420,913
Suncoast Medical Group, Inc. 2/23/01 522,000 14.00 447,747
Suncoast Medical Group, Inc. 2/23/01 71,700 14.00 21,700
Suncoast Medical Group, Inc. 12/31/98 625,000 13.50 0
TAC Systems, Inc. 3/27/02 1,012,000 14.00 1,012,000
TAC Systems, Inc. 1/31/98 500,000 14.00 500,000
TCOM Systems, Inc. 2/5/98 413,671 0.00 413,671
TeleCommunication Systems, Inc. 8/20/02 3,000,000 14.00 3,000,000
Telecontrol Systems, Inc. 9/30/02 2,500,000 14.00 2,500,000
Temps & Co. 5/12/02 3,000,000 13.25 3,000,000
The Moorings, LLC 12/31/01 1,655,500 13.00 1,781,824
Thomas Holding Co., D/B/A Sport & Social Clubs 5/21/02 1,500,000 13.50 1,500,000
Trade Am International, Inc. 9/30/00 4,000,000 12.75 4,000,000
TRC Acquisition Corporation 10/21/01 2,000,000 13.50 2,000,000
UltraFab, Inc. 6/27/01 1,500,000 14.00 1,500,000
Umbrellas Unlimited, LLC 8/21/02 264,691 14.00 264,691
Unicoil, Inc. 9/28/02 1,300,000 13.50 1,300,000
Unique Electronics, Inc. 11/30/99 600,000 10.67 600,000
Valdawn Watch Company 4/13/00 3,301,406 14.00 2,841,432
Wearever Health Products, LLC 3/31/02 1,500,000 13.50 1,500,000
Wolfgang Puck Food Company 5/20/02 5,000,000 12.50 5,000,000
Zahren Alternative Power Corp. 1/30/00 495,000 13.00 496,822
Zahren Alternative Power Corp. 11/27/99 1,980,000 13.00 1,992,632
------------ ------------
Subtotals $336,080,028 $328,447,929
------------ ------------
TANDEM CAPITAL LOANS
Altris Software, Inc. 6/27/02 $ 2,415,000 11.50 $ 2,424,750
Cover-All Technologies, Inc. 3/31/02 3,000,000 12.50 3,000,000
(Convertible at $1.25/share)
Digital Transmission Systems, Inc. 9/25/02 4,000,000 11.50 4,000,000
(Convertible at $10.25/share)
Environmental Tectonics Corporation 3/27/04 3,500,770 12.00 3,509,091
Smartchoice Automotive Group 3/12/99 3,500,000 12.00 3,500,000
(Convertible at $6/share)
SmartChoice Automotive Group 5/13/02 4,000,000 12.00 4,000,000
(Convertible at $6/share)
Teltronics, Inc. 2/13/02 4,250,000 11.00 4,250,000
(Convertible at $4/share)
Universal Automotive Industries, Inc. 7/11/02 4,500,000 12.25 4,500,000
------------ ------------
Subtotals $ 29,165,770 $ 29,183,841
------------ ------------
24
25
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
LOANS
Maturity Cost Coupon Fair Value
-------- ---- ------ ----------
SCC CANADA LOANS
Century Pacific Greenhouses Ltd.* 4/14/02 $ 1,002,794 13.00% $ 1,002,794
Eagle Quest Golf Center Inc. 6/20/02 1,600,000 13.50 1,600,000
Executrain* 10/1/02 217,105 13.00 217,105
Graphic Workshop Studios, Inc.* 9/30/02 202,752 12.50 202,752
Newfoundland Career Academy Ltd.* 8/8/02 578,244 13.50 578,244
Quadravision Communications Ltd.* 4/11/02 437,956 13.00 437,956
SFG Technologies Inc.* 7/30/02 724,218 13.00 724,218
Supplements Plus Natural Vitamins & Cosmetics, Ltd.* 10/3/03 144,823 16.50 144,823
Systech Group, Inc.* 3/31/02 874,636 13.00 874,636
------------ ------------
Subtotals 5,782,527 5,782,527
------------ ------------
Total loans $371,028,325 $363,414,296
============ ============
* Loan denominated in Canadian dollars.
25
26
] SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
Cost or
Number of Contributed
EQUITY INTERESTS Shares Value Fair Value
- ---------------- ---------- ----------- ----------
PUBLICLY TRADED COMPANIES
National Vision Associates, Ltd. Common Stock 208,698 $1,771,149 $ 946,967
Trans Global Services, Inc. Common Stock 28,088 0 113,756
Moovies, Inc. Common Stock 156,110 1,561 339,539
Premiere Technologies, Inc. Common Stock 50,000 0 1,499,063
Cardiac Control Systems, Inc. Common Stock 50,000 250,000 36,563
American Network Exchange Common Stock 76,222 21,879 154,350
American Network Exchange Common Stock 63,429 0 0
Educational Medical, Inc. Common Stock 33,198 0 242,573
Encore Medical Common Stock 232,291 0 684,291
FCOA Acquisition Corp. Common Stock 25,000 0 189,375
QuadraMed Corporation Common Stock 28,556 0 339,816
Radiant Systems Common Stock 25,000 0 358,750
American Consolidated Labs Common Stock 1,000,000 1,000,000 175,000
Vista Information Solutions, Inc. Common Stock 1,200,000 0 3,195,000
Vista Information Solutions, Inc. Common Stock 143,032 0 310,625
Compass Plastics & Technologies Inc. Common Stock 523,250 2,000 3,296,475
Integrated Health Services Common Stock 7,047 0 164,841
Medical Resources Inc. Common Stock 55,549 1,000,000 747,713
NON-TRADED EQUITY INVESTMENTS IN
PUBLIC COMPANIES
Altris Software, Inc. Preferred Stock - convertible at $6.00 3,000 3,000,000 3,000,000
American Consolidated Labs Preferred Stock - Series A 2,720,141 2,720,141 2,375,000
Environmental Tectonics Corporation Preferred Stock - Series A; convertible at $7.50 25,000 2,500,000 2,500,000
Multicom Publishing, Inc. Preferred Stock - Series A 235,000 1,175,000 0
Vista Information Solutions, Inc. Preferred Stock - Series E; convertible at $2.75 2,500 2,500,000 2,500,000
Vista Information Solutions, Inc. Preferred Stock - Series F 2,500 2,500,000 2,500,000
PRIVATE COMPANIES
Skillsearch Corporation Common Stock 4,548 550,035 450,000
Potomac Group, Inc. Preferred Stock - Series A 800,000 1,000,000 2,000,000
Potomac Group, Inc. Common Stock 479,115 289,779 1,299,038
Kentucky Kingdom, Inc. Common Stock 14,849 258,316 750,000
Kentucky Kingdom, Inc. Preferred Stock 6,000 600,000 600,000
Dentalcare Partners, Inc. Preferred Stock - Series E 510,617 819,639 819,639
Unique Electronics, Inc. Preferred Stock - Series A 1,000,000 1,000,000 630,000
Pipeliner Systems, Inc. Preferred Stock - Series D 5,000 1,000,000 800,000
Front Royal, Inc. Common Stock 110,000 275,000 400,000
Fycon Technologies, Inc. Preferred Stock - Series A 96,000 96,000 0
Zahren Alternative Power Corporation Common Stock 700 210,000 210,000
Zahren Alternative Power Corporation Preferred Stock 200 200,000 200,000
Electronic Merchant Services Preferred Stock - Series B 163 0 0
PRA International, Inc. Common Stock 31,279 190,000 430,000
PRA International, Inc. Common Stock 117,298 21,173 1,616,173
Caldwell/VSR Inc. Preferred Stock 890 890,000 760,000
International Displays Inc. Preferred Stock 1,500,000 1,659,469 0
Palco Telecom Service Common Stock 157,895 1,579 100,000
Studley Products Corp. Common Stock 2,204 220,400 0
Clearidge, Inc. Preferred Stock - Series A 10,800,000 2,700,000 2,700,000
Clearidge, Inc. Common Stock 4,000,000 1,000,000 1,000,000
Gulfstream International Airlines, Inc. Preferred Stock - Series A 216 3,000,000 3,000,000
Home Link, Inc. Preferred Stock 1,000,000 1,000,000 750,000
Voice FX Corporation Common Stock 24,078 110,001 50,000
Recompute Corporation Common Stock 125,000 250,000 125,000
CSM, Inc. Class A Common Stock 99,673 100,000 100,000
Relevant Knowledge, Inc. Preferred Stock - Series B 312,500 500,000 500,000
Valdawn Watch Co. Preferred Stock 240 240,000 0
MultiMedia Data Systems Common Stock 259,072 2,591 500,000
Paysys International Common Stock 30,000 300 600,000
----------- -----------
TOTAL EQUITY INTERESTS $36,626,012 $46,059,547
=========== ===========
26
27
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
Cost or
STOCK WARRANTS Number of Percentage Contributed
- -------------- Shares Ownership Value Fair Value
------ --------- ----- ----------
PUBLICLY TRADED COMPANIES
American Consolidated Labs 720,000 6.69% $ 0 $ 126,000
American Network Exchange 13,988 0.00 0 0
Cardiac Control Systems, Inc. 100,000 4.35 0 73,125
Cardiac Control Systems, Inc. 50,000 2.15 0 0
Consumat Systems, Inc. 250,000 20.00 0 360,600
DynaGen, Inc. 266,700 0.01 266,700 105,013
Encore Medical 69,841 0.01 0 0
HydroFuser Industries, Inc. 662,245 5.00 469,684 1,274,822
Moovies, Inc. 20,000 0.20 0 0
Multicom Publishing, Inc. 162,525 2.80 800,000 100,562
Urethane Technologies, Inc. 525,435 5.01 363,480 0
Vista Information Solutions, Inc. 47,582 5.61 0 126,687
Vista Information Solutions, Inc. 10,000 0.63 0 20,708
TANDEM CAPITAL
WARRANTS & OPTIONS IN PUBLICLY TRADED COMPANIES
Altris Software, Inc. 300,000 3.00 585,000 585,000
Environmental Tectonics Corporation 166,410 5.00 499,230 900,000
Smartchoice Automotive Group 300,000 2.50 0 300,000
Universal Automotive Industries, Inc. 450,000 6.00 0 225,000
PRIVATE COMPANIES
Action Sports Group, LLC 3,350 10.00 0 0
Aero Products Corporation 14 12.50 0 0
Affinity Corporation 550 9.67 20,000 20,000
American Corporate Literature 222,197 19.72 17,000 17,000
American Rockwool Acquisition Corp. 1,100,000 11.00 0 400,000
Amscot Holdings, Inc. 2,269 17.00 0 0
Anton Airfoods 124 11.00 0 0
Associated Response Services, Inc. 530 30.77 14,000 1,000,000
Assured Power, Inc. 280 12.00 0 0
Atlantic Security Systems, Inc. 99 9.00 0 0
Austin Innovations, Inc. 35,146 3.00 50,000 50,000
Auto Rental Systems, Inc. 144,869 8.00 0 0
Aviation Holdings Ltd. (Newfoundland affiliate) 1,570 3.60 0 0
Avionics Systems, Inc. 15% of Co. 15.00 0 0
B & N Company, Inc. 33 4.00 40,000 0
BankCard Services Corporation 149,261 32.00 3,000 0
BiTec Southeast, Inc. 1,480 15.00 21,000 0
Bohdan Automation, Inc. 404,564 3.00 0 0
BroadNet, Inc. 265,568 15.00 0 0
Bug.Z, Inc. and Subsidiaries 821,121 12.50 0 0
Carter Kaplan Holdings, LLC 24% of LLC 24.00 6,100 0
C.J. Spirits, Inc. 180,000 10.00 7,500 0
Caldwell/VSR Inc. 159 15.93 0 0
Cartech 280,702 25.00 0 0
Catalina Food Ingredients, Inc. 10 9.25 0 0
Cedaron Medical, Inc. 173,981 4.25 0 0
27
28
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
Cost or
STOCK WARRANTS Number of Percentage Contributed
- -------------- Shares Ownership Value Fair Value
------ --------- ----- ----------
CellCall, Inc. 358 1.35% $ 10,000 $ 10,000
Century Pacific Greenhouses 177,418 6.30 0 0
CF Data Corp. 257 20.50 17,500 150,000
Champion Glove Manufacturing Co., Inc. 538,614 6.88 0 0
Check Into Cash, Inc. 63,789 5.00 461,000 461,000
Clearidge, Inc. 442,164 1.30 0 0
CLS Corporation 126,997 4.22 0 0
CMHC Systems, Inc. 3,231 4.20 0 0
Colonial Investments, Inc. 360 32.00 0 0
Columbus Medical Holdings, LLC 17,455 12.00 0 0
Continental Diamond Cutting Company 160 12.22 0 0
Corporate Flight Mgmt., Inc. 66,315 6.63 3,500 3,500
Corporate Link, Inc. 190 16.00 0 0
Cort Investment Group D/B/A Contract Network 90,000 9.00 180,000 180,000
Creighton Inc. 30,250 30.25 0 0
CSM, Inc. 130,000 13.00 0 0
Cybo Robotics, Inc. 1,700,000 8.68 0 0
Dalt's, Inc. 140 28.00 0 0
Delaware Publishing Group, Inc. 8,534 47.67 15,000 15,000
Dentalcare Partners, Inc. 666,022 4.98 10,000 10,000
Dyntec, Inc. 126,667 15.00 0 0
Eagle Quest Golf Centers, Inc. 407,135 1.40
Electronic Accessory Specialists Int'l, Inc. 162,536 3.00 0 250,000
Electronic Merchant Services 430 12.50 12,500 0
Encor Technologies, Inc. 7 6.84 0 0
Endeavor Technologies, Inc. 557,490 5.00 0 0
Entek IRD 75,230 1.50 160,000 160,000
Entek IRD 185,480 3.75 0 0
FaxNet Corporation 190,321 2.50 100,000 100,000
FDL, Inc. 548 16.00 250,000 250,000
Film Technologies International, Inc. 8 7.50 0 0
Foodnet Holdings, LLC 12% of LLC 12.00 0 0
Fortrend Engineering Corp. 437,552 3.25 0 0
Front Royal, Inc. 240,458 1.85 0 875,000
Fycon Technologies, Inc. 58,677 15.00 0 0
Fypro, Inc. 255,882 15.00 0 0
Gardner Wallcovering, Inc. 2 2.00 15,000 15,000
General Materials Management Inc. 600,000 10.00 0 0
Generation 2 Worldwide LLC 28% of LLC 28.00 0 0
Global Marine 5,137 18.00 0 0
Gloves Inc. 5,000 5.00 0 0
Gold Medal Products, Inc. 102,370 32.77 0 0
Good Food Fast Companies, The 174,779 17.00 0 0
Gulfstream International Airlines, Inc. 271 21.00 10,000 140,000
H & H Acqu. Corp. 3,600 22.50 0 160,000
Home Link Services, Inc. 166,667 20.00 0 0
Hoveround Corporation 850 10.00 0 1,135,000
HPC America, Inc. 5 2.75 30,000 30,000
HTR, Inc. 849,381 6.00 0 475,000
Hunt Incorporated 344 22.00 0 250,000
I. Schneid Holdings LLC 21% of LLC 21.00 0 0
IJL Holdings, Inc. 99 9.00 0 0
ILD Communications 5,429 3.20 0 300,000
In Store Services, Inc. 429 12.50 12,000 12,000
28
29
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
Cost or
STOCK WARRANTS Number of Percentage Contributed
- -------------- Shares Ownership Value Fair Value
------ --------- ----- ----------
International Displays, Inc. 1,250 20.00% $ 0 $ 0
Isthmus (Proamics affiliate) 38 3.50 0 0
Johnston County Cable L.P. 27.5% of LP 27.50 10,000 240,000
Johnston County Cable L.P. 4.44% of LP 4.44 100,000 90,000
Karawia Industries, Inc. 1,391 12.00 0 0
K.W.C. Management Corp. 794 24.40 0 0
Kentucky Kingdom, Inc. 7,704 2.50 0 375,000
Kryptonics, Inc. 1,630 8.89 0 400,000
Lane Acquisition Corporation 11,667 10.00 0 0
Leisure Clubs International, Inc. 433 25.00 15,000 0
Lovett's Buffet, Inc. 540,424 8.00 0 400,000
M & M Industries, Inc. 1,659,113 15.00 0 0
Master Graphics, Inc. 5 6.00 0 0
Mayo Hawaiian Corp. 105 9.50 0 0
MBA Marketing Corporation 11,785 4.50 18,000 18,000
McAuley's Incorporated 64 6.00 0 0
Mead-Higgs, Inc. 2,500 10.00 0 0
Merge Technologies, Inc. 21,449 3.25 0 0
Mesa International, Inc. 13 11.00 0 750,000
Metals Recycling Technologies Corp. 257,801 5.00 0 0
MetroLease, Inc. 26,471 20.00 5,000 5,000
Miller Group 208 4.00 0 0
Money Transfer Systems, Inc. 137 12.00 15,000 15,000
Moore Diversified Products, Inc. 17 15.00 0 0
Multimedia Learning, Inc. 183,968 10.82 0 650,000
Mytech Corporation 172,098 3.50 0 0
NASC, Inc. 2,652 23.00 0 0
Nationwide Engine Supply, Inc. 1,337,379 21.34 25,000 25,000
Newfoundland Career Academy Ltd. 6,278 3.60 0 0
NRI Service and Supply, L.P. 27.5% of LP 27.50 25,000 25,000
Omni Home Medical, Inc. 2,672 15.00 0 0
One Call Comprehensive Care, Inc. 279,481 23.00 0 0
Orchid International Group, Inc. 1,219,047 2.61 40,000 600,000
P.A. Plymouth, Inc. 92,647 15.00 0 0
Package Net, Inc. 84,752 5.80 552,402 262,386
Paradigm Valve Services, Inc. 30,000 12.00 0 0
Patton Management Corporation 511 12.00 0 185,000
PaySys International, Inc. 7,532 0.40 274,842 150,000
Pipeliner Systems, Inc. 2,400,000 23.34 20,000 0
Precision Panel Products, Inc. 122 8.25 15,000 15,000
Proamics Corporation 382,299 3.50 0 0
Professional Training Services, Inc. 255,600 2.40 0 0
Protect America, Inc. 12,200 10.00 95,000 95,000
Pritchard Glass, Inc. 12,500 25.00 0 0
Quadravision 10 1.00 0 0
Quest Group International, Inc. 125,807 22.90 275,000 275,000
R & R International, Inc. 67,021 6.00 0 0
Recompute Corporation 611,144 8.00 300,000 600,000
Reef Chemical Company, Inc. 183,215 3.00 300,000 300,000
Relevant Knowledge, Inc. 75,000 3.25 0 0
Rynel Ltd., Inc. 390,517 15.00 0 0
Saraventures Fixtures, Inc. 25 20.00 0 0
Scandia Technologies, Inc. 327 25.50 0 0
SFG Technologies Inc. 29,814 1.38 0 0
Sheet Metal Specialties, Inc. 538 35.00 0 0
SkillMaster, Inc. 117 5.50 25,000 25,000
29
30
SIRROM CAPITAL CORPORATION & SUBSIDIARIES
CONSOLIDATED PORTFOLIO OF INVESTMENTS
AS OF SEPTEMBER 30, 1997
Cost or
STOCK WARRANTS Number of Percentage Contributed
- -------------- Shares Ownership Value Fair Value
------ --------- ---------- ----------
SkillSearch Corporation 2,381 7.59% $ 254,000 $ 150,000
Solutioneering, Inc. 13,135 7.50 0 0
Southern Specialty Brands, Inc. 10,000 10.00 17,500 17,500
Southern Therapy 333 10.00 0 0
Stratford Safety Products, Inc. 184 16.75 75,000 75,000
Suncoast Medical Group, Inc. 580,159 24.00 25,000 0
Superior Pharmaceutical Co.(Dynagen affiliate) 10% of Co. 10.00 0 0
Supplements Plus Natural Vitamins & Cosmetics, Ltd. 1.3125 1.68 0 0
Suprex Corporation 1,058,179 3.45 0 0
Systech Group, Inc. 34,330 2.10 0 0
TAC Systems, Inc. 315,838 3.60 0 0
TeleCommunication Systems, Inc. 96,774 6.00 0 0
Telecontrol Systems, Inc. 530,303 17.50 0 0
Temps & Co. 53 5.00 0 0
Thomas Holdings, Inc. d/b/a Sport & Social Clubs 11 10.00 0 0
Trade Am International, Inc. 335,106 6.00 0 0
TRC Acquisition Corporation 375,000 12.50 0 0
UltraFab, Inc. 120,000 12.00 0 0
Unicoil, Inc. 132,616 8.50 0 0
Unique Electronics, Inc. 20% of Co. 20.00 0 0
Valdawn Watch Co. 375 60.00 0 0
Valdawn Watch Co. 25 20.00 0 0
VanGard Communications Co., LLC 14.4% Of LLC 14.40 0 0
The Moorings, LLC 3,510 6.50 344,500 200,000
Voice FX Corporation 233,112 8.00 0 400,000
Wearever Healthcare Products, LLC 222,375 9.00 0 0
Wearever Healthcare Products, LLC 100,000 3.89 250,000 250,000
WJ Holdings, Inc. 250,000 25.00 0 0
Wolfgang Puck Food Company 80,065 1.35 0 0
Zahren Alternative Power Corporation 1,168 6.54 25,000 400,000
---------- ------------
Total Warrants $7,550,438 $17,658,904
========== ===========
Cost or
Contributed
OTHER INVESTMENTS Value Fair Value
- ----------------- ---------- -----------
SWS3, Inc. (expected proceeds from collection of accounts
receivable and a contract claim) $ 825,794 $ 675,794
Hancock Company (royalty stream to be collected
from sale of Gitman brand name) 1,700,000 400,000
HSA International, Inc. (anticipated proceeds from
litigation) 1,150,000 1,000,000
Capitalized workout expenses 268,975 218,975
------------ ------------
Total Other Investments $ 3,944,769 $ 2,294,769
============ ============
------------ ------------
Total Investments $419,149,544 $429,427,515
============ ============
30
31
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's principal investment objectives are to achieve a high
level of income from the collection of interest and processing and financial
advisory fees and long-term growth in its shareholders' equity through the
appreciation in value of equity interests in its portfolio companies. The
Company makes loans that are typically in the form of secured debt with
relatively high fixed interest rates accompanied by warrants to purchase equity
securities of the borrower. In addition to interest on investments, the Company
generally collects an up-front processing fee on each loan it originates. Harris
Williams & Co. ("Harris Williams"), a wholly-owned subsidiary of the Company,
typically obtains a monthly retainer fee in each transaction for which it is
retained and, in addition, a success fee when the transaction is consummated.
RESULTS OF OPERATIONS
The Company's financial performance in the Consolidated Statements of
Operations is composed of four primary elements. The first is "net operating
income," which is the difference between the Company's income from interest,
dividends, fees and Harris Williams' pretax income, and its total operating
expenses, including interest expense. The second element is "realized gain
(loss) on investments," which is the difference between the proceeds received
from the disposition of portfolio assets and their stated costs. The third
element is the "change in unrealized appreciation (depreciation) of
investments," which is the net change in the fair values of the Company's
portfolio assets compared with their fair values at the beginning of the period
or their stated costs, as appropriate. Generally, "realized gain (loss) on
investments" and "change in unrealized appreciation (depreciation) of
investments" are inversely related in that when an appreciated asset is sold to
realize a gain, a decrease in unrealized appreciation occurs since the gain
associated with the asset is transferred from the "unrealized" category to the
"realized" category. Conversely, when a loss is realized on a depreciated
portfolio asset, the reclassification of the loss from "unrealized" to
"realized" causes an increase in unrealized appreciation and an increase in
realized loss. The fourth element is "provision for income taxes," which
primarily consists of excise taxes owed on undistributed net investment income
and realized gains and taxes on the pretax income of Harris Williams.
Net Operating Income. During the quarter ended September 30, 1997, the
Company earned interest on investments of $11.0 million, a 72% increase over the
$6.4 million earned in the same quarter of 1996. For the nine month period ended
September 30, 1997, interest on investments was $28.6 million, a 70% increase
over the $16.8 million earned in the same period of 1996. In addition to
interest on investments, the Company also collects an up-front processing fee
for each loan it originates. During the third quarter of 1997, the Company
earned $1.9 million in processing fees, a 138% increase over the $797,000 earned
in the third quarter of 1996. During the first nine months of 1997, the Company
earned $4.9 million in processing fees, an 104% increase over the $2.4 million
earned in the first nine months of 1996. These increases in interest income and
processing fees are a result of increases in the dollar amount of loans
outstanding and originated during the applicable periods. The Company's loan
portfolio increased to $363.0 million at September 30, 1997, an increase of 65%
over the $220.0 million loan portfolio balance at September 30, 1996. The $73.6
million of loans originated during the third quarter of 1997 was a 76% increase
over the $41.9 million of loans originated during the third quarter of 1996. The
$202.3 million of loans originated in the first nine months of 1997 was a 97%
increase over the $102.9 million of loans originated in the first nine months of
1996. The increase in the amount of loans originated in 1997 versus 1996 is the
result of an increase in the number of portfolio managers employed by the
Company and the result of originations from new lines of business. Of the
loans originated this quarter and the first nine months, $8.5 million and
$30.3 million, respectively, were made to public companies with a market
capitalization of less than $100.0 million, through the Company's newly formed
business line, Tandem Capital. In addition, the weighted average interest rate
charged on the loan portfolio at September 30, 1997 was 13.3%, as compared to
13.1% at September 30, 1996.
The Company's interest expense increased to $2.4 million in the third
quarter of 1997, a 14% increase from the $2.1 million paid in the third quarter
of 1996. Interest expense was $6.4 million in the first nine months of 1997, a
7% increase over the $6.0 million of such expenses in the first nine months of
1996. The modest
31
32
increase in interest expense is due to increased borrowings under the Company's
revolving credit facilities.
Overhead expenses, plus amortization of borrowing costs totaled $2.4
million in the third quarter of 1997, a 71% increase over the $1.4 million of
such expenses in the third quarter of 1996 and $6.1 million in nine months of
1997, a 52% increase over the $4.0 million of such expenses in nine months of
1996. These increases can be largely attributed to the increase in the number of
employees to 41 in September 1997 from 19 in September 1996. Although the dollar
amount of these expenses increased between the periods, annualized overhead
expenses as a percentage of average assets remained fairly constant at 2.1% for
the third quarter of 1997 versus 1.8% for the third quarter of 1996 and
decreased to 2.0% for nine months of 1997 compared to 2.1% for nine months of
1996. The 1996 expenses were increased by the Company's prior practice of
expensing bonuses when paid in the first quarter. In June 1996, the Company
modified its practice to begin current accrual of bonuses.
During the third quarter of 1997, Harris Williams had revenues of $2.0
million, a 17% decrease from $2.4 million in the third quarter of 1996. For nine
months of 1997, Harris Williams had revenues of $5.7 million, a 12% increase
over the $5.1 million for nine months of 1996. During the third quarter of 1997,
Harris Williams had pretax income of $915,000, a 17% decrease from $1.1 million
in pretax income in the third quarter of 1996 and during nine months of 1997,
had pretax income of $2.2 million, a 15% decrease over the $2.6 million for nine
months of 1996. The Company anticipates that revenues generated by Harris
Williams will vary from quarter to quarter because the amount of revenues
generated in a quarter is dependent upon the timing of the closing of
transactions and the size of the transactions. In addition, the pretax income
results for 1997 reflect a $312,000 overhead allocation that was not charged to
Harris Williams in 1996, because it had not been owned by the Company for the
first eight (8) months of 1996. Income taxes of $228,842 were accrued on Harris
Williams' pretax income during the third quarter of 1997 and $444,197 during
nine months of 1997. No taxes were accrued on Harris Williams' pretax income in
the third quarter of 1996 or nine months of 1996, as Harris Williams was a
partnership during that time.
Realized Gain (Loss) on Investments. The Company's net realized gain on
investments was $2.2 million during the third quarter of 1997 and $9.7 million
during nine months of 1997, as compared to $1.2 million and $7.2 million for the
third quarter and first nine months of 1996, respectively.
The following table sets forth the details of realized gains and losses
that occurred during the quarters and nine months ended September 30, 1996 and
September 30, 1997.
32
33
Realized Gains and (Losses) for the quarters and nine months ended
September 30, 1996 and September 30, 1997.
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(in thousands) (in thousands)
1996 1997 1996 1997
(3 mos.) (3 mos.) (9 mos.) (9 mos.)
---------------- ---------------- ---------------- ----------------
Alpha West Partners I, LP Other Investments $ (250) $ 0 $ (250) $ 0
American Remedial Technologies, Inc. Warrant 450
Argenbright Holdings Ltd. Warrant 750
Ashe Industries, Inc. Loan (1) (2,609)
Compass Plastics and Technologies, Inc. Stock 1,948 1,948
Eastern Food Group LLC Loan (1,265)
Educational Medical Inc. Stock 560 560
Emerald Pointe Waterpark, L.P. Warrant 200
Encore Medical Corporation Stock 947 947
Factory Card Outlet Corp. Stock 534 534
Global Finance & Leasing, Inc. Warrant 409
Gold Medal Products, Inc. Loan (835)
Golf Corporation of America, Inc. Loan (1,240) (1,240)
Golf Video, Inc. Loan (500)
Horizon Medical Products, Inc. Warrant 400 400
Hoveround Corporation Warrant 1,500 1,500
Innotech, Inc. Common Stock 901
Medical Associates of America Inc. Loan (1,100)
Monogram Products Inc. Warrant 200 200
Osco, Inc. Warrant 27
Premiere Technologies, Inc. Common Stock 6,279 7,170
Radiant Systems, Inc. Common Stock 1,544 2,260
Radio Systems Corporation Warrant 1,800
Sqwincher Corporation Warrant 320
SWS3 (f/k/a Urethane Technologies) Other Investments (700) (700)
Tower Environmental, Inc. Loan (2,609) (2,609)
Union Planters, Inc. Common Stock 170
Virginia Gas Company Stock 475 475
Virginia Gas Company Warrant 160 160
Virtual Resources, Inc. Warrant 432
WXMT, Channel 30 TV Warrant 100
Other 21 5
--------------- --------------- --------------- ---------------
$1,250 $2,239 $7,206 $9,683
=============== =============== =============== ===============
Management does not attempt to maintain a comparable level of realized gains
from year to year, but instead attempts to maximize total investment portfolio
appreciation.
Change in Unrealized Appreciation (Depreciation) of Investments. For
the quarter ended September 30, 1997, the Company recorded net increase in
unrealized appreciation of investments of $1.1 million, compared to a net
increase in unrealized depreciation of $1.7 million for the quarter ended
September 30, 1996. For the nine month periods ended September 30, 1997 and
1996, the Company recorded a net increase in unrealized depreciation of
investments of $2.1 million and a net increase in unrealized appreciation of
investments of $2.8 million, respectively. These changes are the result of the
Company's quarterly revaluation of its portfolio in accordance with its
valuation policy to reflect the fair value of each of its portfolio assets.
The following table sets forth information regarding significant
changes in unrealized appreciation (depreciation) of assets in the Company's
portfolio made during the third quarter of 1996 and 1997 and the nine months
ended September 30, 1996 and September 30, 1997.
33
34
Schedule of significant unrealized appreciation (depreciation) for the
quarters and nine months ending September 30, 1996 and September 30, 1997.
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1997 1996 1997
---- ---- ---- ----
(IN THOUSANDS) (IN THOUSANDS)
LOANS:
Argenbright Holdings, Ltd. $ $ $ $ (750)
Ashe Industries, Inc. (150) (2,050) 2,300
Assured Power, Inc. (625) (625)
B&N Company, Inc. (400) (400)
BiTec Southeast, Inc. (200) (200)
C.J. Spirits, Inc. 50 (350)
Campus Voice LLC (100)
Carter-Kaplan Holdings, LLC (450) (25) (450)
Champion Glove Manufacturing Co., Inc. (200) (1,200)
Cougar Power Products, Inc. (775)
Eastern Food Group LLC 1,265
Fypro, Inc. (225) (225)
Gitman Shirt Company (1,200) (1,300)
Golf Corporation of America 1,100 475
Golf Video, Inc. 450
H.S.A. International (400) (500)
International Displays Inc. (750) (750)
National Health Systems (50) 1,100 (50)
Scandia Technologies, Inc. (425) (425)
Studley Products Corp. (525) (525)
Suncoast Medical Group, Inc. (925) (975)
SWS3, Inc. 200 (150)
Tower Environmental, Inc. 2,560 850
Valdawn, LLC (60) (460)
Other 476 95 679 107
PRIVATE COMPANY WARRANTS AND
EQUITY SECURITIES:
AB Plastics Holding Corporation 2,875
Affinity Corporation (215) (365)
Alvin Carter Holdings Corp. (500) (500)
American Remedial Technologies, Inc. (230)
American Rockwool Acquisition Corp. 400 400
Argenbright Holdings Ltd. 375
Associated Response Services, Inc. 600
Capital Network System, Inc. 250
CF Data Corp. 133 133
DentalCare Partners, Inc. (280)
Delaware Publishing (185)
Electronic Accessory Specialists Inc. 250 250
Eastern Food Group, LLC (654)
Educational Medical, Inc. 500 900
Emerald Pointe Waterpark L.P. (244)
Express Shipping Centers, Inc. (290)
Front Royal, Inc. 520 520
Fycon Technologies, Inc. (500)
Golf Corporation of America 100 (100) 100
HomeLink Services, Inc. (250)
Horizon Medical Products, Inc. (200)
Hoveround Corporation (750) 425
HTR, Inc. 475 475
H & H Acquisition Corp. 160 160
ILD Communications 300 300
International Displays, Inc. (159)
Johnston County Cable L.P. 230 220
Kentucky Kingdom, Inc. (810) 110 (810)
Kryptonics, Inc. 400 400
Lovetts Buffet Inc. 400 400
MESA International, Inc. 750 750
Monogram Products, Inc. (116)
Multicom Publishing, Inc. (non-traded) (950) (1,175)
Multimedia Data Systems, Inc. 497 497
Multimedia Learning Inc. 800 800 (150)
Paysys International Inc. 475 475
Pharmaceutical Research Assoc., Inc. 665 665
Potomac Group, Inc. 956
PRA International, Inc. 1,170
Radio Systems Corporation 270 (1,000)
Recompute Corporation 175 175
The Moorings, LLC (145) (145)
Unique Electronics, Inc. (250) (250)
Valdawn Watch Co., Inc. (240) (240)
Virtual Resources, Inc. (250)
Other 164 70 98 (306)
PUBLIC COMPANY WARRANTS AND
EQUITY SECURITIES:
American Consolidated Laboratories, Inc. (602) (1,044)
Compass Plastics 419 419
Consumat Systems, Inc. (385) (146) 184 131
Educational Medical, Inc. (557) (575)
Encore Medical, Inc. (926) 191
Environmental Tectonics (399) 401
Factory Card Outlet of America (306) (408)
Hydrofuser, Inc. 805 805
Innotech, Inc. 99 235 (454)
Integrated Health Services, Inc. 165 165
Medical Resources Inc. (152) (152)
Moovies, Inc. (232) (471) (760) (291)
National Vision Associates (67) 43 187 145
Premiere Technologies, Inc. 290 341 3,080 (6,222)
QuadraMed Corporation 218 159
Radiant Systems (1,056) (351)
SmartChoice Automotive, Inc. 300 300
Universal Automotive 225 225
Virginia Gas Company (541) (278)
Vista Information Solutions, Inc. (892) 2,313 369 3,629
Other (469) (13) (636) (192)
----------- ---------- ---------- ----------
Total $ (1,701) $ 1,079 $ 2,794 $ (2,115)
=========== ========== ========== ==========
Provision for Income Taxes. Beginning in February 1995, the Company
elected to be taxed as a regulated investment company ("RIC") under Subchapter M
of the Internal Revenue Code. If the Company, as a RIC, satisfies certain
requirements relating to the source of its income, the diversification of its
assets and the distribution of its net income, the Company is generally taxed as
a pass through entity that acts as a partial conduit of income to its
shareholders. In order to maintain its RIC status, the Company must in general
derive at least 90% of its gross income from dividends, interest and gains from
the sale or disposition of securities; derive less than 30% of its gross income
from the sale or disposition of securities held for less than three months; meet
investment diversification requirements defined by the Code; and distribute to
shareholders 90% of its net income (other than long-term capital gains). The
Company presently intends to meet the RIC qualifications in 1997. However, no
assurance can be given that the Company will continue to elect or qualify for
such treatment after 1997.
During the third quarter of 1997, the Company paid dividends of $6.5
million compared to the $3.0 million paid in the third quarter of 1996. Of these
dividends, $6.5 million and $3.0 million were derived from net operating income
for the third quarter of 1997 and 1996, respectively, and $0 and $0 were derived
from realized long-term capital gains for the third quarter of 1997 and 1996,
respectively.
The Company has adopted a new dividend policy that modifies its
treatment of long-term capital gains. The Company intends to continue to
distribute to shareholders on a quarterly basis at least 90% of its net
investment income and net short-term gains. In addition, the Company also
intends to distribute substantially all of its long-term capital gains in a
special annual dividend that it anticipates declaring each December, beginning
December 1997, and paying each January, beginning January 1998. In conjunction
with the dividend policy change, the Company intends to amend its Dividend
Reinvestment Plan to provide that reinvested dividends, including the long-term
capital gains dividend, be used to purchase new shares of common stock that will
be issued by the Company at a discount.
For the quarter ended September 30, 1996 the Company provided for
federal income tax at a 35% rate and excise taxes at a 4% rate on taxable net
investment income, as defined by the Code, and realized gains not distributed to
shareholders. This tax provision for the quarter ended September 30, 1996 was
$560,000. As a result of the modification to the Company's long-term capital
gains dividend policy discussed above, the Company recognized a $4,291,000 tax
benefit during the quarter ended September 30, 1997, resulting from the
reversal of taxes previously provided for against gains realized during the
first half of 1997. Excise taxes of 4% were also provided for during the
quarter ended September 30, 1997, to the extent the Company had taxable net
investment income and undistributed gains as defined by the Code. For the
quarter ended September 30, 1997, the Company also provided for taxes of
$229,000 on Harris Williams' pre-tax income.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had $1.8 million in cash and cash
equivalents. At September 30, 1997, the Company's investment portfolio included
investments in stocks and warrants of publicly-traded companies that had an
ascertainable market value and were being carried at a fair value of
approximately $15.0 million and represent an additional source of liquidity.
However, the Company's ability to realize such values on a short-term basis is
limited by market conditions and various securities law restrictions.
Traditionally, the Company's principal sources of capital to fund its
portfolio growth have been borrowings through the SBA-sponsored SBIC debenture
program, sales of the Company's equity securities, both privately and publicly,
and funds borrowed from banking institutions. In February 1995, the Company
consummated its initial public offering and has completed three additional
public offerings
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since that time which have generated net proceeds of $216.9 million in the
aggregate. The Company has used the proceeds of these offerings to temporarily
repay debt and to originate new loans.
At September 30, 1997, total SBA borrowings were $90.0 million, the
maximum amount of SBA loans available to an SBIC. Each borrowing from the SBA
has a term of ten years, is secured by the assets of SII, is guaranteed by the
Company and can be prepaid without penalty after five years. The average
interest rate on these borrowings was 7.02% as of September 30, 1997, and none
of these borrowings mature prior to 2002.
As of September 30, 1997, SII had $10.9 million outstanding under its
$50.0 million revolving credit facility with First Union National Bank and a
syndicate of other banks (the "Revolving Credit Facility"), which is secured by
a lien on all of SII's assets and a pledge of SII's stock and guaranteed by the
Company. On October 9, 1997, SII consummated a $75.0 million increase in its
Revolving Credit Facility, which also involved the addition of seven
additional banks to the syndicate. In order to manage the interest rate risk
associated with the variable interest rate provided for under the Revolving
Credit Facility, SII has entered into various hedging arrangements. The
Revolving Credit Facility matures on May 31, 2000. The Revolving Credit Facility
requires that SII obtain the lenders' consent prior to, among other things,
encumbering its assets, merging or consolidating with another entity and making
investments other than those permitted by the SBA. In addition, the Revolving
Credit Facility provides that the repayment of any amounts outstanding can be
accelerated if either George M. Miller, II or David M. Resha ceases to be
employed by the Company.
To support the Company's future loan origination activities outside of
SII, the Company has also established a $100.0 million five-year revolving
credit facility (the "ING Credit Facility") with Holland Limited Securitization,
Inc., a multi-seller commercial paper conduit sponsored by ING Baring (U.S.)
Capital Markets, Inc. (collectively "ING"). Sirrom Funding Corporation ("SFC"),
a wholly-owned special purpose, bankruptcy remote subsidiary of the Company, is
the borrower under the ING Credit Facility. SFC purchases loans originated by
the Company and the related warrants and uses these loans and warrants as
collateral to secure borrowings from ING. SFC is generally able to borrow up to
70% of the principal amount of conforming loans collateralizing the ING Credit
Facility. As of January 15, 1997, the Company made an initial capital
contribution to SFC of approximately $25.0 million of loans, which will
serve as initial collateral for the ING Credit Facility. At September 30, 1997,
$50.0 million was outstanding under the ING Credit Facility and $81,150,000 and
$82,243,222 of loans and warrants at cost and fair value, respectively, had
been contributed to or sold to SFC by SCC and were collateralizing the ING
Credit Facility. In order to manage interest rate risk associated with the
variable interest rate provided for under the ING Credit Facility the Company
has entered into various hedging arrangements. The ING Credit Facility matures
on December 31, 2001. The ING Credit Facility is not guaranteed by the Company.
However, certain actions by the Company can trigger an event of default under
the ING Credit Facility, which will result in termination of further funding and
the application of the collateral pledged for repayment of the amounts
outstanding thereunder. In addition, the ING Credit Facility provides that an
event of default is triggered if any two of George M. Miller, II, David M. Resha
and Carl W. Stratton are no longer employed by the Company.
The Company believes that anticipated borrowings under the Revolving
Credit Facility the ING Credit Facility, together with cash on hand, loan
repayments and cash flow from operations (after distributions to shareholders),
will be adequate to fund the continuing growth of the Company's investment
portfolio through the first or second quarter of 1998. In order to provide the
funds necessary for the Company to continue its growth strategy beyond that
period, the Company expects to incur, from time to time, additional short and
long-term borrowings from other sources, and to issue, in public or private
transactions, its equity and debt securities. The availability and terms of any
such borrowings will depend upon interest rate, market and other conditions.
There can be no assurances that such additional funding will be available on
terms acceptable to the Company.
IMPACT OF INFLATION
The Company does not believe that its business is materially affected
by inflation, other than the impact which inflation may have on the securities
markets, the valuations of business enterprises and the relationship of such
valuations to underlying earnings, all of which will influence the value of the
Company's investments.
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RISKS
The significant risks inherent in the Company's business, which
primarily consists of making loans to small businesses, are set forth in part in
the Company's Registration Statement on Form N-2 (Registration No. 333-19493)
and should be kept in mind when evaluating the Company's financial performance.
PORTFOLIO TURNOVER AND CREDIT QUALITY
During the quarter ended September 30, 1997, the Company made loans to
60 companies totaling approximately $73.6 million and experienced 17 repayments
(either partial or full) aggregating $15.7 million. During the quarter ended
September 30, 1996, the Company made loans to 35 companies totaling
approximately $42.0 million and experienced 11 repayments (either partial or
full) aggregating approximately $6.1 million. The Company cannot control all
changes in its portfolio of investments, as borrowers have the right to prepay
loans made by the Company without penalty.
The Company has implemented a system by which it grades all loans on a
scale of 1 to 6. The system was intended to reflect the performance of the
borrower's business, as well as the collateral coverage of the loans and other
factors considered revelant. To monitor and manage the risk in the overall
portfolio, management tracks the weighted average portfolio grade. The weighted
average grade was 3.09 and 3.04 at September 30, 1997 and 1996, respectively.
The Company believes that weighted average grades between 2.75 and 3.25
represent the current normal range for the portfolio.
Loans graded 4 typically involve a borrower that is performing
marginally below expectations and the existence of short term negative trends or
negative events that have created some concern. Loans in this category
require a proactive action plan to be executed by the borrower's management and
monitored by the responsible Company officer. A grade 4 is typically
a temporary rating that is followed by an upgrade or downgrade within six months
as the borrower's business improves or declines. As of September 30, 1997 and
1996, the Company's portfolio consisted of 21 and 10 loans, respectively, graded
4. The aggregate principal balance of loans graded 4 at September 30, 1997 and
1996, respectively was $49.0 million and $18.3 million, which represented 13.0%
and 7.9%, respectively, of the total portfolio balance at such dates. Since
late 1995 when the Company redefined the loan grading system to reflect
management's additional experience in monitoring its growing portfolio, the
percentage of the principal balance of loans graded 4 to the total portfolio
balance has typically ranged between 10% and 15%, with an occasional decrease to
as low as 7%. The Company believes the current percentage to be within the
normal range of variability and expects significant variability in the future in
the absolute dollar amount of loans graded 4 and in the ratio of loans graded 4
to the total portfolio balance.
Loans graded 5 or 6 are placed on the Company's Credit Watch List and
are serviced by a member of the Company's workout group. Loans with a grade 5
are generally in default, and interest is generally not being accrued, but the
Company's management believes the borrower's management is capable of executing
a plan to return the borrower to an acceptable risk level. Loans with a grade 6
involve an unacceptable level of risk with substantial probability of loss.
These loans are on non-accrual and the Company has charged off or expects to
charge off some part of the loan. At September 30, 1997 and 1996, the Company
had loans to 16 companies with an aggregate principal balance of $19.2 million,
and 12 companies with an aggregate principal balance of $17.1 million,
respectively, that were graded a 5 or 6 and that were not accruing interest,
which represented 5.1% and 7.3%, respectively, of the total portfolio balance.
The Company believes that the current normal range for loans graded 5 and 6 is
6% to 10% of the total portfolio balance. Given the nature of the Company's
portfolio, the Company expects some variability in the absolute dollar amount of
loans graded 5 and 6 and in the ratio of loans graded 5 and 6 to the total
portfolio balance.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit 3.1 Amended and Restated Charter of the Company (incorporated by
reference to Exhibit 3.1 to the Registrant's Quarterly Report
on Form 10-Q for the period ending September 30, 1996, filed
with the Commission on November 14, 1996)
Exhibit 3.2 Bylaws of the Company (incorporated by reference to exhibit b.
contained in the Registrant's Registration Statement on Form
N-2, as amended (File No. 33-86680), filed with the Commission
on November 23, 1994)
Exhibit 4.1 Instruments defining rights of holders of securities: See
Paragraph 6 of the Company's Amended and Restated Charter
(incorporated by reference to Exhibit 3.1 to the Registrant's
Quarterly Report on Form 10-Q for the period ending September
30, 1996, filed with the Commission on November 14, 1996)
Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SIRROM CAPITAL CORPORATION
Date: November 6, 1997 By: /s/ CARL W. STRATTON
Carl W. Stratton
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
Exhibit 3.1 Amended and Restated Charter of the Company (incorporated by
reference to Exhibit 3.1 to the Registrant's Quarterly Report on
Form 10-Q for the period ending September 30, 1996, filed with the
Commission on November 14, 1996)
Exhibit 3.2 Bylaws of the Company (incorporated by reference to exhibit b.
contained in the Registrant's Registration Statement on Form N-2, as
amended (File No. 33-86680), filed with the Commission on November
23, 1994)
Exhibit 4.1 Instruments defining rights of holders of securities: See Paragraph
6 of the Company's Amended and Restated Charter (incorporated by
reference to Exhibit 3.1 to the Registrant's Quarterly Report on
Form 10-Q for the period ending September 30, 1996, filed with the
Commission on November 14, 1996)
Exhibit 11 Computation of Earnings Per Share
Exhibit 27 Financial Data Schedule (for SEC use only)
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