nq2010.htm
 

 



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM N-Q
 
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
 
Investment Company Act file number:  811-22299
 
RENN GLOBAL ENTREPRENEURS FUND, INC.
(Exact name of registrant as specified in charter)





                                                                                                   8080 N. Central Expressway, Suite 210, Dallas, TX  75206
 
                                                                                                                              (Address of principal executive offices)                     
 




Russell Cleveland
8080 N. Central Expressway, Suite 210 LB 59
Dallas, TX 75206
(Name and address of agent for service)
 
Registrant’s telephone number, including area code: (214) 891-8294
 
Date of fiscal year end:  December 31
 
Date of reporting period:  March 31, 2010





 
 
 
 
RENN Global Entrepreneurs Fund, Inc.
Portfolio of Investments
First Quarter Report
March 31, 2010 (unaudited)


SCHEDULE OF INVESTMENTS
Unaffiliated Investments

 
Shares or Principal Amount
Company
  
                          Cost
    
       Market
      Value
  
   
CONVERTIBLE BONDS – 13.61% (8)
            
   
  Data Processing and Outsourced Services – 3.26%
            
$
   569,000
    Pipeline Data, Inc. 10% Maturity June 29, 2011
$
569,000
  
$
     569,000
  
                 
   
  Internet Software and Services – 2.00%
            
 
   500,000
    iLinc Communications, Inc. 12% Maturity March 29, 2012
  
500,000
    
350,000
  
                 
   
  Oil and Gas Exploration and Production  - 4.70%
            
 
            1,000,000
    PetroHunter Energy Corporation 8.5%  Maturity
            
   
    November 5, 2012
  
1,000,000
    
820,000
  
                 
   
  Semi-Conductor – 3.65%
            
 
            1,000,000
    Dynamic Green Energy Limited 7% Maturity June 10, 2011 (1)
  
1,000,000
    
   637,535
  
   
Total Unaffiliated Convertible Bonds
$
3,069,000
  
$
  2,376,535
  
                 
   
COMMON EQUITIES – 75.43% (4) (8)
            
   
  Advertising – 2.70%
            
 
 100,000
    SearchMedia Holdings Ltd  (4)(7)
  
780,994
    
471,000
  
                 
   
  Alternative Carriers - 0.58%
            
 
 462,448
    Geos Communications, Inc. (4)
  
760,952
    
101,739
  
                 
   
  Application Software – 4.17%
            
 
 228,647
    SinoHub, Inc. (4)( (7)
  
578,180
    
727,097
  
                 
   
  Biotechnology – 4.21%
            
 
           1,335,714
    Hemobiotech (4)
  
1,360,117
    
734,643
  
                 
   
  Business Process Outsourcing - 0.45%
            
 
   18,349
    Business Process Outsourcing, Ltd. (1) (4)
  
20,000
    
79,268
  
                 
   
  Communications Equipment – 8.01%
            
 
  200,000
    COGO Group, Inc. (4) (7)
  
836,019
    
1,398,000
  
                 
   
  Consumer Electronics – 0.91%
            
 
  166,667
    Aurasound, Inc. (4)
  
1,000,000
    
158,334
  
                 
   
  Consumer Finance – 5.02%
            
 
  953,333
    Global Axcess Corporation (4)
  
1,261,667
    
877,066
  
                 


2
 
 

 
 
 
 
RENN Global Entrepreneurs Fund, Inc.
Portfolio of Investments
First Quarter Report
March 31, 2010 (unaudited)


SCHEDULE OF INVESTMENTS
Unaffiliated Investments (continued)

 
Shares or Principal Amount
Company
  
                              Cost
    
          Market
            Value
  
   
COMMON EQUITIES (continued)
            
   
  Diversified Commercial and Professional Services – 7.70%
            
 
2,687,500
    Murdoch Security & Investigations, Inc. (1) (4)
$
1,250,000
  
$
1,343,750
  
                 
   
  Electronic Equipment and Instruments – 3.86%
            
 
     58,500
    Hollysys Automation Technologies Ltd (4) (7)
  
498,557
    
673,920
  
                 
   
  Healthcare Equipment – 15.31%
            
 
   427,500
    Bovie Medical Corporation (4)(7)
  
780,172
    
2,671,875
  
                 
   
  Healthcare Facilities – 4.58%
            
 
   625,000
    PHC, Inc. (4)
  
642,500
    
800,000
  
                 
   
  Hotels, Resorts and Cruise Lines - 0.69%
            
 
   100,000
    Silverleaf Resorts, Inc. (4)
  
430,000
    
121,000
  
                 
   
  Industrial Machinery – 5.37%
            
 
     86,806
    Duoyuan Digital Printing Technology (formerly Asian Financial) (4)
  
333,333
    
937,505
  
                 
   
  Internet Software and Services  – 2.42%
            
 
   900,000
    Points International, Ltd.  (4)
  
492,000
    
423,000
  
                 
   
  Oil and Gas Exploration and Production  -0.16%
            
 
   808,445
    PetroHunter Energy Corporation (4)
  
101,056
    
27,346
  
                 
   
  Packaged Food and Meats – 1.82%
            
 
     53,125
    SkyPeople Fruit Juice Inc. New (4)
  
159,375
    
318,219
  
                 
   
  Paper Products – 5.87%
            
 
   125,000
    Orient Paper Inc. (3) (4)
  
300,000
    
1,024,748
  
                 
   
  Pharmaceutical   -1.60%
            
 
     24,000
    Skystar Bio-Pharmaceutical Company (4)
  
     155,760
    
     278,640
  
   
Total Unaffiliated Common Equities
$
11,740,682
  
$
13,167,150
  
                 
   
MISCELLANEOUS SECURITIES – 0.89% (4)(8)
            
   
  Industrial Machinery – 0.46%
            
 
    15,924
    Warrants Duoyuan Digital Printing Technology (formerly
            
   
    Asian Financial) (4) (9)
  
0.00
    
80,257
  
                 
   
  Consumer Electronics – 0.43%
            
 
   166,667
    Warrants Aurasound, Inc. (4)(10)
  
           0.00
    
     75,000
  
   
Total Unaffiliated Miscellaneous Securities
  
           0.00
    
     155,257
  
   
TOTAL UNAFFILIATED INVESTMENTS
$
14,809,682
  
$
15,698,942
  


3
 
 
 
RENN Global Entrepreneurs Fund, Inc.
Portfolio of Investments
First Quarter Report
March 31, 2010 (unaudited)



 

Based on cost for federal income tax purposes:

Aggregate Gross Unrealized Appreciation of all Unaffiliated Securities
$4,854,382
Aggregate Gross Unrealized Depreciation of all Unaffiliated Securities
($3,965,122)
Net Unrealized Appreciation/Depreciation of all Unaffiliated Securities
$889,260
Aggregate Cost of All Unaffiliated Securities for Income Tax Purposes
$14,809,682


SCHEDULE OF INVESTMENTS
Affiliated Investments

 
Shares or Principal Amount
Company
  
                           Cost
    
                       Market
Value 
  
   
OTHER SECURITIES – 0.70% (4)(8)
            
   
CONVERTIBLE PREFERRED EQUITIES
            
   
  Business Process Outsourcing – 0.69%
            
 
 1,685,887
    BPO Management Services, Inc. Preferred B (2)(4)
$
2,000,000
  
$
121,384
  
                 
   
  Security Systems - 0.005%
            
 
     93,750
    Integrated Security Systems, Inc. Preferred D (2)(4)(13)
  
       75,000
    
            938
  
   
Total Affiliated Other Securities
  
  2,075,000
    
     122,322
  
                 
   
COMMON EQUITIES – 8.78% (4)(8)
            
   
  Managed Healthcare – 2.24%
            
 
    369,436
    Access Plans Inc.  (2)(4)(5)
  
2,206,493
    
391,602
  
                 
   
  Security Systems – 6.32%
            
 
         110,341,991
    Integrated Security Systems, Inc.  (2) (4)(12)(13)
  
9,050,220
    
1,103,418
  
                 
   
  Systems Software – 0.22%
            
 
38,884,143
    CMSF Corp. (formerly CaminoSoft Corp.) (2)(4)(6)(13)
  
  5,649,100
    
       37,681
  
   
Total Affiliated Common Equities
  
16,905,813
    
  1,532,701
  
                 
   
MISCELLANEOUS SECURITIES – 0.003% (4)(8)
            
   
  Managed Healthcare – 0.003 %
            
 
         2,334
    Options to buy @ $0.85 Access Plans Inc. (2)(4)(12)
  
                 0
    
             469
  
   
Total Affiliated Miscellaneous Securities
  
                 0
    
             469
  
                 
   
TOTAL AFFILIATED INVESTMENTS
  
18,980,813
    
  1,655,492
  
   
TOTAL UNAFFILIATED INVESTMENTS
  
14,809,682
    
15,698,942
  
   
TOTAL INVESTMENTS
$
33,790,495
    
17,354,434
  
   
OTHER ASSETS AND LIABILITIES
        
     102,511
  
   
TOTAL NET ASSETS
      
$
17,456,945
  




4 
 
 
 
RENN Global Entrepreneurs Fund, Inc.
First Quarter Report
March 31, 2010 (unaudited)(continued)



INFORMATION REGARDING AFFILIATED/RESTRICTED SECURITIES (2)

           
         
% of
 
Date(s)
Cost at
Cost at
Fair Value
Net
Affiliated /Restricted Security
Acquired
12/31/09
3/31/10
3/31/10
Assets
Access Plans Inc.  (2)(4)(5)
8/31/01
    
 
  
  Common Equity
to 3/31/10
$2,195,175
$  2,206,493
$391,602
2.24 %
  Options to buy @ $0.85 Access Plans Inc.  (2)(4)(11)
4/1/09
0
0
        469
.003
BPO Management Services, Inc.
6/12/07
        
  Preferred B Equity  (2)(4)
to 12/31/08
  2,000,000
    2,000,000
  121,384
0.70
Total Affiliated /Restricted Securities
  
$4,195,175
  $4,206,493
 $513,455
          2.94%

INFORMATION REGARDING CONTROLLED AFFILIATED/RESTRICTED SECURITIES (13)

         
% of
 
Date(s)
Cost at
Cost at
Fair Value
Net
Controlled Affiliated /Restricted Security (13)
Acquired
12/31/09
3/31/10
3/31/10
Assets
CMSF Corp. (2)(4)(6)(13)
9/23/94
        
  Common Equity
to 3/31/10
  $5,646,925
$5,649,100
$37,681
 0.22%
Integrated Security Systems, Inc. (2)(4)(13)
          
  Preferred D Equity
10/13/99
        75,000
       75,000
        938
       0.005
Integrated Security Systems, Inc. (2)(4)(12) (13)
12/31/96
        
  Common Equity
to 12/31/09
    9,050,220
   9,050,220
1,103,418
        6.32
Total Controlled Affiliated /Restricted Securities
  
$14,772,145
$14,774,320
$1,142,037
 6.54%


(1)
Securities in a privately owned company.
(2)
Affiliated securities due to the Fund’s having a director on issuer’s board and/or number of shares owned by the Fund.
(3)
Orient Paper is exempt from registration under Rule 144A of the Securities Act of 1933.  Such securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. The purchase date, the date the price was agreed on and the right to acquire the securities for a cost of $300,000 was 10-6-2009, on which date the carrying value was 29.1%.  At March 31, 2010 Orient Paper was the only unaffiliated restricted security.  At March 31, 2010 these securities were carried at 100% of the fair value which was $1,024,748, representing 5.87% of net assets.
(4)
Non-Income-Producing.
(5)
Purchased 10,000 shares of Access Plans Inc. common in the open market at a cost of $11,318.
(6)
Purchased 217,464 shares of CMSF common at a cost of $2,175.  Security exempt from registration under Rule 144A of the Securities Act of 1933.  Such securities may be sold in transactions exempt from registration, normally to qualified institutional buyers.  At March 31, 2010 the aggregate value of the restricted securities was $2,954, representing 0.22% of net assets.  These shares were purchased in numerous transactions between April 10, 2009 and March 10, 2010.  These shares have discounts ranging from 0% to 16.3%.
(7)
These securities or a portion of these securities are pledged as collateral against margin loan.
(8)
Percentage is calculated as a percentage of net assets.
(9)
These warrants represent the ability to purchase 15,924 shares of common stock of Duoyuan Digital Printing Technology at $5.76 per share.  These warrants expire on 6/30/2013.
(10)
These warrants represent the ability to purchase 166,667 shares of common stock of Aurasound, Inc. at $0.50 per share.  These warrants expire on 6/7/2014.
                (11)
These options represent the ability to purchase 2,234 shares of common stock of Access Plans Inc. at $0.85 per shares.  These options were issued as compensation to Russell Cleveland for service as a Director of Access Plans Inc., Mr. Cleveland has assigned the options to RENN Global Entrepreneurs Fund, Inc. and disclaims any beneficial ownership.  These options expire 3 months after Mr. Cleveland’s resignation from the Board of Directors of Access Plans Inc.
                (12)
Integrated Security Systems, Inc. issued 150,000 shares of common stock as payment in kind for compensation of $3,375 to Russell Cleveland for service as a Director of Integrated Security Systems, Inc. Mr. Cleveland has assigned the shares to RENN Global Entrepreneurs Fund, Inc. and disclaims any beneficial ownership.  These securities are exempt from registration under Rule 144A of the Securities Act of 1933.  Such securities may be sold in transactions exempt from registration, normally to qualified institutional buyers.  At March 31, 2010 the aggregate value of these restricted securities was $1,500, representing 0.008% of net assets.
                (13)
Controlled due to the number of shares owned by the Fund.


FINANCIAL ACCOUNTING STANDARDS NO. 157

March 31, 2010 (unaudited)

Fair Value Measurements

The Fund adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“FAS 157”), effective  August 1, 2008.  In accordance with FAS 157, fair value is defined as the price that the Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date.  FAS 157 also established a framework for measuring fair value, and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an assets or liability.  Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability.  Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Fund.  Unobservable inputs reflect the Fund’s own assumptions about the assumptions that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.  Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation.  The three-tier hierarchy of inputs is summarized below.

Level 1
-quoted prices in active markets for identical investments
Level 2
-other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3
-significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The following table shows a summary of investments measured at fair value on a recurring basis classified under the appropriate level of fair value hierarchy as of March 31, 2010:

 
March 31, 2010
  
Quoted Prices in Active Markets for
    
Identical Assets (Level 1)
                 $           11,083,639
  
     
Significant Other Observable Inputs (Level 2)
                 $             3,931,411
  
     
Significant Unobservable Inputs (Level 3)
                 $             2,339,384
  
     
Total Investments
                 $           17,354,434
  
 
 

5 
 
 
 

The following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:

Level 3
    
Beginning balance – December 31, 2009
$             1,872,007
  
Market Action/Additional Purchase
$                467,377
  
Ending Balance – March 31, 2010
$             2,339,384
  

ITEM 2.  CONTROLS AND PROCEDURES.

(a)  The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30-13(c) under the Investment Company Act of 1940, as amended) are effective at the reasonable assurance level based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this document.

(b)  There were no significant changes in the registrant’s internal control over financial reporting that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

ITEM 3.  EXHIBITS.

The following exhibits are attached to this Form N-Q:

EXHIBIT NO.
  
DESCRIPTION OF EXHIBIT
1 (a) (1)
  
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
1 (a) (2)
  
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant):  RENN Global Entrepreneurs Fund, Inc.


By:
/s/ Russell  Cleveland
  
 
Russell Cleveland
  
 
Chief Executive Officer and President
  
Date:
May 20, 2010
  

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:
/s/ Russell Cleveland
  
 
Russell Cleveland
  
 
Chief Executive Officer and President
  
Date:
May 20, 2010
  
     
     
     
By:
/s/ Barbe Butschek
  
 
Barbe Butschek
  
 
Chief Financial Officer
  
Date:
May 20, 2010
  



  6