EXCELSIOR VENTURE PARTNERS III LLC - 10-Q Quarterly Report

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended April 30, 2005

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission file number 000-29665

EXCELSIOR VENTURE PARTNERS III, LLC

(Exact Name of Registrant as Specified in Its Charter)


DELAWARE		13-4102528
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

225 High Ridge Road, Stamford, CT		06905
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code (203) 352-4400

114 West 47th Street, New York, NY 10036-1532

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 by check mark whether the Registrant is an accelerated filer (as defined by Rule 12b-2 of the Act). Yes ¨ No x

EXCELSIOR VENTURE PARTNERS III, LLC

This Quarterly Report on Form 10-Q contains historical information and forward-looking statements. Statements looking forward in time are included in this Form 10-Q pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. They involve known and unknown risks and uncertainties that may cause Excelsior Venture Partners III, LLC’s (the “Company’s”) actual results to differ from future performance suggested herein.


	INDEX	PAGE NO.

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Portfolios of Investments as of April 30, 2005 and October 31, 2004	2

	Statements of Assets and Liabilities at April 30, 2005 and October 31, 2004	9

	Statements of Operations for the six-month periods ended April 30, 2005 and April 30, 2004	10

	Statements of Operations for the three-month periods ended April 30, 2005 and April 30, 2004	11

	Statements of Changes in Net Assets for the six-month periods ended April 30, 2005 and April 30, 2004	12

	Statements of Cash Flows for the six-month periods ended April 30, 2005 and April 30, 2004	13

	Financial Highlights for the six-month periods ended April 30, 2005 and April 30, 2004	14

	Notes to Financial Statements	15

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23

Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	24

Item 2.	Changes in Securities and Use of Proceeds	24

Item 3.	Defaults Upon Senior Securities	24

Item 4.	Submission of Matters to a Vote of Security Holders	24

Item 5.	Other Information	24

Item 6.	Exhibits and Reports on Form 8-K	24

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements.

Excelsior Venture Partners III, LLC

Portfolio of Investments (Unaudited)


	April 30, 2005
	Value		Percent of Net Assets
PORTFOLIO STRUCTURE
SHORT-TERM INVESTMENTS:
MONEY MARKET INSTRUMENTS	$	29,989,072	28.62	%
INVESTMENT COMPANIES		1,808,874	1.73	%
PRIVATE COMPANIES		58,850,495	56.17	%
PUBLIC COMPANIES		6,196,003	5.91	%
PRIVATE INVESTMENT FUNDS		7,244,592	6.91	%

TOTAL INVESTMENTS		104,089,036	99.34	%
OTHER ASSETS & LIABILITIES (NET)		689,601	0.66	%

NET ASSETS	$	104,778,637	100.00	%

Excelsior Venture Partners III, LLC

Portfolio of Investments


	October 31, 2004
	Value		Percent of Net Assets
PORTFOLIO STRUCTURE
SHORT-TERM INVESTMENTS:
MONEY MARKET INSTRUMENTS	$	44,139,985	38.03	%
INVESTMENT COMPANIES		1,386,211	1.19	%
PRIVATE COMPANIES		60,065,508	51.75	%
PUBLIC COMPANIES		4,682,927	4.03	%
PRIVATE INVESTMENT FUNDS		5,456,505	4.70	%

TOTAL INVESTMENTS		115,731,136	99.70	%
OTHER ASSETS & LIABILITIES (NET)		348,297	0.30	%

NET ASSETS	$	116,079,433	100.00	%

Notes to Financial Statements are an integral part of these Financial Statements.

Excelsior Venture Partners III, LLC

Portfolio of Investments April 30, 2005 (Unaudited)


Principal Amount/Shares			Acquisition Date ##	Value (Note 1)
	TOTAL MONEY MARKET INSTRUMENTS — 28.62%
$	5,000,000	Royal Bank of Scotland Commercial Paper, 2.75%, 5/2/05 (Cost $4,999,236)		$	4,999,236
	10,000,000	Federal Farm Credit Bureau Discount Note, 2.65%, 5/3/05 (Cost $9,997,634)			9,997,634
	5,000,000	Du Pont Commercial Paper, 2.75%, 5/5/05 (Cost $4,998,091)			4,998,091
	5,000,000	Morgan Stanley Commercial Paper, 2.80%, 5/5/05 (Cost $4,998,056)			4,998,056
	5,000,000	UBS Financial Commercial Paper, 2.84%, 5/10/05 (Cost $4,996,055)			4,996,055

		TOTAL MONEY MARKET INSTRUMENTS (COST $29,989,072)			29,989,072


	PUBLIC COMPANIES — 5.91%
	Common Stocks — 5.91%
	Life Sciences — 5.91%
	485,961	Adeza Biomedical Corp.	09/01		6,196,003

		(Nasdaq: ADZA)
		TOTAL COMMON STOCKS (Cost $3,000,000)			6,196,003


	PRIVATE COMPANIES , #, @ — 56.17%**
	Common Stocks — 0.00%
	Capital Equipment — 0.00%
	157,396	MIDAS Vision Systems, Inc.	03/03		—

	Life Sciences — 0.00%
	46,860	Genoptix, Inc.	07/03		—

		TOTAL COMMON STOCKS (Cost $4,000,000)			—

	Preferred Stocks — 50.42%
	Capital Equipment — 0.00%
	933,593	MIDAS Vision Systems, Inc., Series A-1	03/03		—

	Enterprise Software — 11.36%
	19,995,000	***Datanautics, Inc. Series A Preferred	01/04		4,000,000
	8,532,883	LogicLibrary, Inc., Series A	01/02, 08/03, 05/04, 12/04, 2/05		3,901,408
	20,000,000	***Pilot Software Inc., Series A	05/02 & 04/03		4,000,000

					11,901,408

	Information Services — 0.00%
	4,425	Cenquest, Inc., Series 2	7/01		—

	Life Sciences — 4.20%
	1,999,999	Archemix Corporation, Inc., Series A	08/02, 01/03, 11/03		1,999,999
	466,666	Archemix Corporation, Inc., Series B	03/04 & 09/04		466,666
	942,481	Genoptix, Inc., Series B-1	12/01		501,400
	1,403,696	Genoptix, Inc., Series B-2	07/03, 09/03, 12/03		877,450
	620,580	Genoptix, Inc., Series C	08/04 & 01/05		554,178

					4,399,693

	Medical Technology — 6.13%
	4,166,667	Tensys Medical, Inc., Series C	03/02		5,000,000
	1,187,500	Tensys Medical, Inc., Series D	05/04		1,425,000

					6,425,000

	Optical — 13.08%
	4,330,504	LightConnect, Inc., Series B	07/01		5,000,000
	12,292,441	LightConnect, Inc., Series C	12/02		992,000
	956,234	NanoOpto Corporation, Series A-1	10/01& 03/02		—
	3,023,399	NanoOpto Corporation, Series B	09/03, 11/03, 01/04, 07/04		1,655,119

Excelsior Venture Partners III, LLC

Portfolio of Investments April 30, 2005 (Unaudited) — (continued)


Principal Amount/Shares/ Percent Owned				Acquisition Date ##	Value (Note 1)
	5,333,333		OpVista, Inc., Series B	07/01	$	—
	12,671,059		OpVista, Inc., Series C	09/03		5,000,000
	102,040		OpVista, Inc., Series D	11/04		1,058,000

						13,705,119
	Semiconductor — 9.30%
	7,000,000		Chips & Systems, Inc., Series A	03/04		—
	2,211,898		Silverback Systems, Inc., Series B-1	02/02		450,052
	34,364,257		Silverback Systems, Inc., Series C	03/03, 09/03, 04/04		4,298,896
	3,096,551		Virtual Silicon Technology, Inc., Series C	12/01		5,000,000

						9.748,948
	Wireless — 6.35%
	4,433,333		Ethertronics, Inc., Series B	06/01, 09/02, 07/03, 05/04		6,650,001

			TOTAL PREFERRED STOCKS (Cost $65,128,657)			52,830,169

	Notes — 5.75%

	Enterprise Software — 3.28%
$	1,433,178		***Datanautics, Inc., Bridge Note	12/04, 01/05, 02/05, 03/05, 04/05		1,433,178
	2,000,000		***Pilot Software, Inc., Bridge Note	08/04, 09/04, 10/04, 11/04, 12/04		2,000,000

	Semiconductor—1.54 %
	281,580		Virtual Silicon Technology, Inc., Bridge Note	10/04, 12/04, 02/05		281,580
	1,441,133		Chips & Systems, Inc., Bridge Note	11/04, 01/05, 02/05		—
	1,333,400		Silverback Systems, Inc., Bridge Note	01/05, 04/05		1,333,400

	Wireless— 0.24 %
	250,000		Ethertronics, Inc., Bridge Note	01/05		250,000

	Optical— 0.69 %
	722,101		NanoOpto Corp., Bridge Note	12/04		722,101

			TOTAL NOTES (Cost $7,461,392)			6,020,259

	Warrants — 0.00%
	Semiconductor — 0.00%
	67		Silverback Systems, Inc., Warrant	04/05		67

	Wireless — 0.00%
	100,000		Ethertronics, Inc.	09/02		—
	115,000		Ethertronics, Inc.	07/03		—
	66,667		Ethertronics, Inc.	08/03		—

			TOTAL WARRANTS (Cost $67)			67

			TOTAL — PRIVATE COMPANIES (Cost $76,590,116)			58,850,495

	PRIVATE INVESTMENT FUNDS , # — 6.91%**
	0.39	%	Advanced Technology Ventures VII, LP	08/01-04/05		845,375
	1.21	%	Burrill Life Sciences Capital Fund	12/02-12/04		1,014,860
	1.35	%	CHL Medical Partners II, LP	01/02-11/04		581,496
	4.94	%	CMEA Ventures Partners, LP	12/03-01/05		257,781
	0.36	%	Morgenthaler Partners VII, LP	07/01-01/05		1,341,285
	0.59	%	Prospect Venture Partners II, LP	06/01-03/05		1,393,042
	0.90	%	Sevin Rosen Fund VI, LP	10/04-01/05		282,093
	2.36	%	Tallwood II, LP	12/02-04/05		977,028

Excelsior Venture Partners III, LLC

Portfolio of Investments April 30, 2005 (Unaudited) — (continued)


Principal Amount/Shares/ Percent Owned			Acquisition Date ##	Value (Note 1)
1.75	%	Valhalla Partners II, LP	10/03-03/05	$	551,632

		TOTAL — PRIVATE INVESTMENT FUNDS (Cost $8,564,582)			7,244,592


INVESTMENT COMPANIES — 1.73%
1,808,874		Dreyfus Government Cash Management Fund Institutional Shares (Cost $1,808,874)			1,808,874


TOTAL INVESTMENTS (Cost $119,952,644) — 99.34%					104,089,036

OTHER ASSETS & LIABILITIES (NET) — 0.66%					689,601