nq2011.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)
(Zip Code)




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, 2011





 
 
 
 
RENN Global Entrepreneurs Fund, Inc.
Portfolio of Investments
First Quarter Report
March 31, 2011 (unaudited)


SCHEDULE OF INVESTMENTS
Unaffiliated Investments

 
Shares or
Principal
Amount
Company
  
          Cost
    
        Market
        Value
  
   
CONVERTIBLE BONDS – 12.42% (6)
            
   
  Data Processing and Outsourced Services – 2.99%
            
$
   569,000
    Pipeline Data, Inc. 10% Maturity June 29, 2011
$
569,000
  
$
     369,850
  
                 
   
  Electrical Components and Equipment – 5.15%
            
$
1,000,000
    Dynamic Green Energy Limited 7% Maturity June 10, 2011 (1)
  
1,000,000
    
637,535
  
                 
   
  Internet Software and Services – 2.02%
            
$
  500,000
    iLinc Communications, Inc. 12% Maturity March 29, 2012
  
500,000
    
250,000
  
                 
   
  Oil and Gas Exploration and Production  –  2.26%
            
$
1,000,000
    PetroHunter Energy Corporation 8.5%  Maturity
  
1,000,000
    
280,000
  
   
    November 5, 2012
            
   
Total Unaffiliated Convertible Bonds
$
3,069,000
  
$
  1,537,385
  
                 
   
COMMON EQUITIES – 77.10% (3)(6)
            
   
  Advertising – 1.48%
            
 
  100,000
    SearchMedia Holdings Ltd  (3)(5)
  
780,994
    
183,000
  
                 
   
  Application Software – 6.55%
            
 
  428,647
    SinoHub, Inc. (3)(5)
  
1,038,180
    
810,143
  
                 
   
  Biotechnology – 1.08%
            
 
    1,335,714
    Hemobiotech (3)
  
1,360,117
    
133,571
  
                 
   
  Business Process Outsourcing  – 0.64%
            
 
    18,349
    Business Process Outsourcing, Ltd. (1)(3)
  
20,000
    
79,268
  
                 
   
  Communications Equipment – 13.05%
            
 
  200,000
    COGO Group, Inc. (3)(5)
  
836,019
    
1,614,000
  
                 
   
  Computer Programming Services – 1.67%
            
 
  100,000
     Kingtone Wirelessinfo Solution Holding (3)
  
400,000
    
206,000
  
                 
   
  Consumer Electronics – 1.40%
            
 
  166,667
    Aurasound, Inc. (3)
  
1,000,000
    
173,334
  
                 
   
  Consumer Finance – 3.42%
            
 
  953,333
    Global Axcess Corporation (3)
  
1,261,666
    
423,280
  
                 
   
  Diversified Commercial and Professional Services – 4.53%
            
 
    2,687,500
    Murdoch Security & Investigations, Inc. (1)(3)
  
1,250,000
    
559,896
  

 

 
 
 
 
RENN Global Entrepreneurs Fund, Inc.
Portfolio of Investments
First Quarter Report
March 31, 2011 (unaudited)

 
 
SCHEDULE OF INVESTMENTS
Unaffiliated Investments (continued)

 
   Shares or
   Principal
   Amount
Company
  
         Cost
    
         Market
         Value
  
   
COMMON EQUITIES (continued)
            
   
  Electronic Equipment and Instruments – 5.64%
            
 
  58,500
    Hollysys Automation Technologies Ltd (3)(5)
$
449,957
  
$
698,250
  
                 
   
  Healthcare Equipment – 12.59%
            
 
502,500
    Bovie Medical Corporation (3)(5)
  
972,922
    
1,557,750
  
                 
   
  Healthcare Facilities – 13.34%
            
 
625,000
    PHC, Inc. (3)(5)
  
642,500
    
1,650,000
  
                 
   
  Internet Software and Services  – 6.53%
            
 
  90,000
    Points International, Ltd.  (3)(5)
  
492,000
    
807,300
  
                 
   
  Oil and Gas Exploration and Production – 0.18%
            
 
808,445
    PetroHunter Energy Corporation (3)
  
101,056
    
22,636
  
                 
   
  Packaged Food and Meats – 1.77%
            
 
  49,650
    SkyPeople Fruit Juice Inc. New (3)(5)
  
148,950
    
218,957
  
                 
   
  Pharmaceutical  – 1.12%
            
 
  24,000
    Skystar Bio-Pharmaceutical Company (3)
  
     155,760
    
     138,000
  
                 
   
  Retail Drug Stores and Proprietary Stores – 2.11%
            
 
100,000
    China Jo-Jo Drugstores Inc. (3)
  
     500,000
    
     261,000
  
                 
   
Total Unaffiliated Common Equities
  
11,410,121
    
  9,536,385
  
                 
   
MISCELLANEOUS SECURITIES – 0.73% (3)(6)
            
   
Consumer Electronics – 0.73%
            
 
166,667
Aurasound Inc. warrant to buy (2)(3)(7)
  
0.00
    
      90,000
  
   
Total Unaffiliated Miscellaneous Securities
  
0.00
    
      90,000
  
                 
   
TOTAL UNAFFILIATED INVESTMENTS
$
14,479,121
  
$
11,163,770
  
                 
                 


Aggregate Gross Unrealized Appreciation of all Unaffiliated Securities
$3,192,2388
  
Aggregate Gross Unrealized Depreciation of all Unaffiliated Securities
($6,507,5888
)
Net Unrealized Appreciation/Depreciation of all Unaffiliated Securities
     ($3,315,3500
)
Aggregate Cost of All Unaffiliated Securities for Income Tax Purposes
$14,479,1211
  




 
 
 
 
RENN Global Entrepreneurs Fund, Inc.
Portfolio of Investments
First Quarter Report
March 31, 2011 (unaudited)

 

SCHEDULE OF INVESTMENTS
Affiliated Investments

 
  Shares or
   Principal
   Amount
Company
  
          Cost
    
         Market
          Value
  
   
OTHER SECURITIES – 0.008%  (2)(3)(6)
            
   
CONVERTIBLE PREFERRED EQUITIES
            
   
  Business Process Outsourcing – 0.00%
            
 
     1,685,887
    BPO Management Services, Inc. Preferred B (2)(3)
$
2,000,000
  
$
0
  
                 
   
  Electronic Equipment and Instruments –  0.008%
            
 
           3,750
    Integrated Security Systems, Inc. Preferred D (2)(3)(10)
  
       75,000
    
      937
  
                 
   
Total Affiliated Other Securities
  
  2,075,000
    
     937
  
                 
   
COMMON EQUITIES – 16.01% (2)(3)(6)
            
   
  Electronic Equipment and Instruments – 9.01%
            
 
     1,113,793
    Integrated Security Systems, Inc.  (2)(3)(10)
  
9,056,721
    
1,113,793
  
                 
 
        372,420
  Managed Healthcare – 6.62%
            
   
    Access Plans Inc.  (2)(3)
  
2,209,925
    
819,324
  
                 
   
  Systems Software – 0.38%
            
 
   43,659,545
    CMSF Corp. (formerly CaminoSoft Corp.) (2)(3)(4)(10)
  
  5,696,853
    
 47,412
  
   
Total Affiliated Common Equities
  
 
16,963,499
    
 1,980,529
  
                 
   
MISCELLANEOUS SECURITIES – 0.04% (2)(3)(6)
            
   
  Managed Healthcare – 0.04 %
            
 
      2,234
Access Plans Inc., options to buy (2)(3)(8)
  
0.00
    
3,016
  
 
      1,492
Access Plans Inc., options to buy (2)(3)(9)
  
0.00
    
1,895
  
   
Total Affiliated Miscellaneous Securities
  
 
0.00
    
             4,911
  
                 
   
TOTAL AFFILIATED INVESTMENTS
  
19,038,499
    
 1,986,377
  
   
TOTAL UNAFFILIATED INVESTMENTS
  
14,479,121
    
11,163,770
  
   
TOTAL INVESTMENTS
$
33,517,620
  
$
13,150,147
  
   
OTHER ASSETS AND LIABILITIES
        
     (779,279)
  
   
TOTAL NET ASSETS
      
$
12,370,868
  




 
 
 
 
RENN Global Entrepreneurs Fund, Inc.
First Quarter Report
March 31, 2011 (unaudited)


INFORMATION REGARDING AFFILIATED/RESTRICTED SECURITIES (2)(3)(6)

         
       % of
 
Date(s)
                        Cost at
                         Cost at
                   Fair Value
        Net
Affiliated /Restricted Security(2)(3)
Acquired
                       12/31/10
                        3/31/11
                       3/31/11
         Assets
Access Plans Inc.  (2)(3)
8/31/01
    
 
  
  Common Equity (3)
to 3/25/11
                    $2,206,493
                   $2,209,925
                      $819,324
               6.62%
  Options to buy @ $0.85 Access Plans Inc. (2)(3)(8)
4/1/09
                              0.00
                              0.00
                            3,016
               0.02
  Options to buy @ $0.93 Access Plans Inc. (2)(3)(9)
8/2/10
                              0.00
                              0.00
                            1,895
               0.02
BPO Management Services, Inc.
6/12/07
         
  Preferred B Equity (2)(3)
to 12/31/08
                     2,000,000
                     2,000,000
                              0.00
                0.00
Total Affiliated /Restricted Securities
  
                    $4,206,493
                    $4,209,925
 
                       $824,235
 
               6.66%

INFORMATION REGARDING CONTROLLED AFFILIATED/RESTRICTED SECURITIES (10)

         
         % of
 
Date(s)
                        Cost at
                        Cost at
                 Fair Value
          Net
Controlled Affiliated /Restricted Security (2)(3)(10)
Acquired
                    12/31/10
                         3/31/11
                      3/31/11
            Assets
CMSF Corp. (2)(3)(4)(10)
9/23/94 to
        
  Common Equity
3/31/11
                    $5,677,610
                    $5,696,853
                        $47,412
                0.38
Integrated Security Systems, Inc. (2)(3)(10)
          
  Preferred D Equity
10/13/99
                           75,000
                           75,000
                               937
                   .01
Integrated Security Systems, Inc. (2)(3)(10)
12/31/96
         
  Common Equity
to 12/31/10
                      9,056,721
                      9,056,721
                      1,113,791
                 9.01
Total Controlled Affiliated /Restricted Securities
  
 
                  $14,809,331
 
                  $14,828,574
 
                   $1,162,140
 
                 9.40%
 
 
(1)
Securities in a privately owned company.
(2)
Affiliated securities due to the Fund having a director on issuer’s board and/or number of shares owned by the Fund.
(3)
Non-Income-Producing.
(4)
The Fund purchased 1,924,493 shares of CMSF common at a cost of $19,243 in the three months ended March 31, 2011.  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, 2011 the aggregate value of the restricted securities was $45,873 representing 0.037% of net assets.  These shares were purchased in numerous transactions between April 10, 2009 and March 31, 2011.  These shares have discounts ranging from 0% to 14.7%.  The Fund owns 153,986 shares of CMSF Corporation which are not restricted.  At December 31, 2010 the aggregate value of the unrestricted securities was $1,507 representing 0.02% of net assets.
(5)
These securities or a portion of these securities are pledged as collateral against the due-to-broker balance (margin loan).
(6)
Percentage is calculated as a percentage of net assets.
(7)
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 6/12/2014.
(8)
These options represent the ability to purchase 2,234 shares of common stock of Access Plans Inc. at $0.85 per share.  These options were issued as compensation to Russell Cleveland for service as a Director of Access Plans Inc.  Mr. Cleveland disclaims any beneficial ownership.  These options will expire 3 months after he ceases to be on the Board of Directors.
(9)
These options represent the ability to purchase 1,492 shares of common stock of Access Plans, Inc. at $0.93 per share.  These options were issued as compensation for the services to Russell Cleveland as a Director of Access Plans Inc.  Mr. Cleveland disclaims any beneficial ownership.  These options expire 8/2/2015.
(10)
Controlled due to the number of shares owned by the Fund (and/or affiliated funds).

 
 
 
 
RENN Global Entrepreneurs Fund, Inc.
First Quarter Report
March 31, 2011 (unaudited)




Fair Value Measurements

Investments are carried in the statements of assets and liabilities at fair value, as determined in good faith by the RENN Capital Group, Inc., subject to the approval of the Fund’s Board of Directors.  The convertible debt securities held by the Fund generally have maturities between five and seven years and are convertible (at the discretion of the Fund) into the common stock of the issuer at a set conversion price.  The common stock underlying these securities is generally unregistered and thinly-to-moderately traded.  Generally, the Fund negotiates registration rights at the time of purchase and the portfolio companies are required to register the shares within a designated period, and the cost of registration is borne by the portfolio company.  Interest on the convertible securities is generally payable quarterly.  The convertible debt securities generally contain embedded call options giving the issuer the right to call the underlying issue.  In these instances, the Fund has the right of redemption or conversion.  The embedded call option will generally not vest until certain conditions are achieved by the issuer.  Such conditions may require that minimum thresholds be met relating to the market price of underlying common stock, liquidity, and other factors.

The Fund follows the provisions of Accounting Standards Codification ASC 820, Fair Value Measurements, under which, the Fund has established a fair value hierarchy that prioritizes the sources (“inputs”) used to measure fair value into three broad levels: inputs based on quoted market prices in active markets (Level 1 inputs); observable inputs based on corroboration with available market data (Level 2 inputs); and unobservable inputs based on uncorroborated market data or a reporting entity’s own assumptions (Level 3 inputs).

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, 2011:

 
 
                                   Level 1
                                Level 2
                         Level 3
                           Total
         
      Convertible Bonds
                               $                0
                               $   369,850
$1,167,535
$1,537,385
      Convertible Preferred Equities
                                                 0
                                           937
0
937
      Common stock
                                   9,543,211
                                 1,752,957
220,746
11,516,914
      Miscellaneous Securities
                                                0
                                        4,911
       90,000
    94,911
      Total Investments
                               $  9,543,211
                               $2,128,655
$1,478,281
$13,150,147

The Fund classifies all assets in Level 1, 2 and 3 and makes the appropriate changes at the end of each period.  The Following is a reconciliation of assets in which significant unobservable inputs (Level 3) were used in determining fair value:


Level 3
  
 Beginning Balance – January 1, 2011
$       1,887,332
Purchase of Securities
                       0
Transfers into  Level 3
            637,535
Transfers out of Level 3
       (1,137,366)
Changes in unrealized gain or loss
              90,780                                                      
Ending Balance – March 31, 2011
 $      1,478,281

The Fund has adopted a policy of recording any transfers of investment securities between the different levels in the fair value hierarchy as of the end of the year.  The transfers into Level 3 and out of Level 3 identified above were due to changes in the observability of the inputs used by the Fund to estimate the fair value of certain securities.
 


 
 
 
 
 

 

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 31, 2011
  

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 31, 2011
  
     
     
     
By:
/s/ Barbe Butschek
  
 
Barbe Butschek
  
 
Chief Financial Officer
  
Date:
May 31, 2011