UNITED
      STATES
              SECURITIES
      AND EXCHANGE COMMISSION
              Washington,
      D.C. 20549Form
      10-K(Mark one)R
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended September 30, 2009£
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from _________ to __________Commission
      file number 000-24412MACC
      PRIVATE EQUITIES INC.(Exact
      name of registrant as specified in its charter)Delaware
            42-1421406(State
      or other jurisdiction of incorporation or organization)
            (I.R.S.
      Employer Identification No.)580
      Second Street; Suite 102, Encinitas, California
            92024(Address
      of principal executive offices)
            (Zip
      Code)Registrant’s
      telephone number (760)
      479-5080Securities
      registered under Section 12(b) of the Exchange Act:None.Securities
      registered under Section 12(g) of the Exchange Act:Common
      Stock, $0.01 par valueIndicate
      by check mark if the registrant is a well-known seasoned issuer, as
      defined in Rule 405 of the Securities Act. Yes£NoRIndicate by check mark if the
      registrant is not required to file reports pursuant to Section 13 or 15(d)
      of the Exchange Act.Yes £    No
      RIndicate
      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
      (the Exchange Act) 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
      R     No
      £Indicate
      by check mark whether the registrant has submitted electronically and
      posted on its corporate Website, if any, every Interactive Data File
      required to be submitted and posted pursuant to Rule 405 of Regulation S-T
      (§ 232.405 of this chapter) during the preceding 12 months (or for such
      shorter period that the registrant was required to submit and post such
      files).  Yes £     No
      £Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§ 229.405 of this chapter) is not contained herein, and
      will not be contained, to the best of registrant’s knowledge, in
      definitive proxy or information statements incorporated by reference in
      Part III of this Form 10-K or any amendment to this Form 10-K. £Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting
      company.  See the definitions of “large accelerated filer,”
      “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the
      Exchange Act.Large
      accelerated filer  £
            Accelerated
      filer  £Non-accelerated
      filer    R
            Smaller
      reporting Company  £(Do
      not check if a smaller reporting company)Indicate
      by check mark whether the registrant is a shell company (as defined in
      Rule 12b-2 of the Exchange Act). Yes £ No RAggregate
      market value of the voting stock held by non-affiliates of the registrant
      as of November 30, 2009, based upon the closing sale price reported by the
      Nasdaq Capital Market on that date: $1,700,588.Number
      of shares outstanding of the registrant's Common Stock as of November 30,
      2009: 2,464,621








DOCUMENTS
INCORPORATED BY REFERENCE





Portions
of the registrant’s Annual Report to Stockholders for the year ended September
30, 2009 are incorporated by reference into Part II of this Report on Form
10-K.








FORWARD-LOOKING
STATEMENTS





This
Annual Report on Form 10-K of MACC Private Equities Inc. (“MACC” or “we” or “us” or the “Company”) contains
forward-looking statements. All statements in this Annual Report on Form 10-K,
including those made by MACC’s management, other than statements of historical
fact, are forward-looking statements.  These forward-looking
statements are based on current management expectations that involve substantial
risks and uncertainties that could cause actual results to differ materially
from the results expressed in, or implied by, these forward-looking
statements.  Forward-looking statements relate to future events or our
future financial performance.  We generally identify forward-looking
statements by terminology such as “may,” “will,” “should,” “could,” “would,”
“expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,”
“intends,” “targets,” “potential,” and “continue,” or the negative of these
terms, or other similar words.  Examples of forward-looking statements
contained in this Annual Report on Form 10-K include statements regarding
MACC’s:





·
            future
      financial and operating results;


·
            business
      strategies, prospects, and prospects of its portfolio
      companies;


·
            ability
      to operate as a business development
company;


·
            regulatory
      structure;


·
            adequacy
      of cash resources and working
capital;


·
            projected
      costs;


·
            competitive
      positions;


·
            management’s
      plans and objectives for future operations;
and


·
            industry
      trends.





These
forward-looking statements are based on management’s estimates, projections and
assumptions as of the date hereof and include the assumptions that underlie such
statements.  Any expectations based on these forward-looking
statements are subject to risks and uncertainties and other important factors,
including those discussed below and in the section titled “Risk Factors.” Other
risks and uncertainties are disclosed in MACC’s prior Securities and Exchange
Commission (“SEC”) filings. These
and many other factors could affect MACC’s future financial condition and
operating results and could cause actual results to differ materially from
expectations based on forward-looking statements made in this document or
elsewhere by MACC or on its behalf.  MACC undertakes no obligation to
revise or update any forward-looking statements.  The forward-looking
statements contained in this Form 10-K are excluded from the safe harbor
protection provided by Section 27A of the Securities Act of 1933, as amended
(the “1933
Act”) and Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”).





The
following information should be read in conjunction with the financial
statements and the accompanying notes to financial statements included in the
2009 Annual Report (defined below) filed as an exhibit to this report on Form
10-K. All references to fiscal year apply to MACC’s fiscal years which end on
September 30 of each year.








FORM
10-K TABLE OF CONTENTS





Certain
information required to be included in this Form 10-K is incorporated by
reference to information contained in MACC’s Annual Report to Shareholders for
its fiscal year ending September 30, 2009 filed as an exhibit to this report on
Form 10-K (the “2009
Annual Report”).  The following cross-reference index shows the
page locations in the 2009 Annual Report of that information which is
incorporated by reference into this Form 10-K.  All other sections of
the 2009 Annual Report are not required to be included in this Form 10-K and
therefore should not be considered a part hereof.





Form
              10-K
              Page
            2009
              Annual
              Report
      PagePart
      IItem
      1
            Business
            1Item
      1A
            Risk
      Factors
            2Item
      2
            Properties
            14Item
      3
            Legal
      Proceedings
            14Item
      4
            Submission
      of Matters to a Vote of Security Holders
            14Part
      IIItem
      5
            Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
            14
            37Item
      6
            Selected
      Financial Data
            14
            6Item
      7
            Management’s
      Discussion and Analysis of Financial Conditions and Results of
      Operation
            14
            6Item
      7A
            Quantitative
      and Qualitative Disclosures About Market Risk
            14Item
      8
            Financial
      Statements and Supplementary Data
            15
            15Item
      9
            Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
            15Item
      9A(T)
            Controls
      and Procedures
            15Item
      9B
            Other
      Information
            16Part
      IIIItem
      10
            Directors,
      Executive Officers and Corporate Governance
            17Item
      11
            Executive
      Compensation
            21Item
      12
            Security
      Ownership of Certain Beneficial Owners and Management
            22Item
      13
            Certain
      Relationships and Related Transactions, and Director
      Independence
            24Item
      14
            Principal
      Accountant Fees and Services
            25Part
      IVItem
      15
            Exhibits
      and Financial Statement Schedules
            27








Part
I


Item
1.  Business.





General





MACC
Private Equities Inc. was formed as a Delaware corporation on March 3,
1994.  It has elected to be treated as a business development company
(“BDC”) under
the Investment Company Act of 1940, as amended (the “1940
Act”).  MACC has no employees, and all of its day to day
operations are carried out by its officers and the staff of its investment
adviser, Eudaimonia Asset Management, LLC (“EAM” or the “Adviser”) with the
assistance of its subadviser, InvestAmerica Investment Advisors, Inc. (“InvestAmerica” or the
“Subadviser”).  EAM
was engaged by MACC in April 2008 to manage any assets which are raised after
that date (the “New
Portfolio”), and InvestAmerica was engaged by MACC and EAM to assist EAM
in continuing to manage the assets which MACC held prior to April 2008 (the
“Existing
Portfolio”).  However, as of the date of this report, no new
assets have been raised to create the New Portfolio.  Prior to April,
2008, InvestAmerica served as investment adviser to MACC and MACC’s wholly-owned
subsidiary, MorAmerica Capital Corporation (“MorAmerica”).  Upon
approval by MACC’s shareholders at the 2008 Annual Meeting, MorAmerica was
merged into MACC.





MACC’s
Operation as a BDC





Under the
1940 Act, a BDC may not acquire any asset other than “Qualifying Assets” as
defined under Section 55(a) of the 1940 Act, unless, at the time the acquisition
is made, Qualifying Assets represent at least 70% of the value of the BDC’s
total assets.  The principal categories of Qualifying Assets relevant
to MACC’s business are the following:





(1)
            Securities
      purchased in transactions not involving any public offering from the
      issuer of such securities, which issuer is an eligible portfolio
      company.  An eligible portfolio company is defined in the 1940
      Act as any issuer that:





(a)
            is
      organized under the laws of, and has its principal place of business in,
      the United States;


(b)
            is
      not an investment company; and


(c)
            satisfies
      one of the following:





(i)
            it
      does not have any class of securities with respect to which a member of a
      national securities exchange, broker or dealer may extend or
      maintain  credit;


(ii)
            it
      is controlled by a BDC, either alone or as part of a group acting
      together,  and such BDC exercises control over the company and
      as a result of such control has an affiliated person who is a director of
      such BDC;


(iii)
            it
      has total assets of not more than $4,000,000, and capital and surplus
      (shareholders’ equity less retained earnings) of not less than
      $2,000,000;


(iv)
            it
      has a class of securities listed on a national securities exchange, with
      an aggregate market value of outstanding voting and non-voting equity of
      less than $250 million; or


(v)
            such
      other criteria prescribed by the SEC established as consistent with public
      interest, the protection of investors, and the purposes fairly intended by
      the policy and provisions of the 1940
Act.





(2)
            Cash,
      cash items, government securities, or high quality debt securities
      maturing in one year or less from the time of
  investment.


(3)
            Securities
      received in exchange for or distributed on or with respect to securities
      described in (1) above, or pursuant to the exercise of options, warrants
      or rights relating to such
securities.





In
addition, a BDC must have been organized (and have its principal place of
business) in the United States for the purpose of making investments in the
types of securities described in (1) above and, in order to count the securities
as Qualifying Assets for the purpose of the 70% test, the BDC must make
available to the issuers of the securities significant managerial
assistance.  Making available significant managerial assistance means,
among other things, any arrangement whereby the BDC, through its directors,
officers or employees offers to provide, and, if accepted, does so provide,
significant guidance and counsel concerning the management, operations or
business objectives and policies of a portfolio company.


-1-





Under the
1940 Act, once a company has elected to be regulated as a BDC, it may not change
the nature of its business so as to cease to be, or withdraw its election as, a
BDC unless authorized by vote of a majority, as defined in the 1940 Act, of the
company’s shares.





Investments
and Divestitures





During
the fiscal year 2009, MACC sold portfolio investments and collected on
installment sales resulting in a net realized loss of
$2,444,130.  MACC made two follow-on investments of Existing Portfolio
companies of $139,586 in order to protect its interests in those
positions.





Item
1A.  Risk Factors.





AN
INVESTMENT IN MACC’S COMMON STOCK IS SUBJECT TO A NUMBER OF RISKS AND SPECIAL
CONSIDERATIONS, INCLUDING THE FOLLOWING.  THE RISKS SET OUT BELOW ARE
THE PRINCIPAL RISK FACTORS ASSOCIATED WITH AN INVESTMENT IN MACC KNOWN TO US, AS
WELL AS THOSE FACTORS GENERALLY ASSOCIATED WITH AN INVESTMENT IN A COMPANY WITH
INVESTMENT OBJECTIVES, INVESTMENT POLICIES, CAPITAL STRUCTURE OR TRADING MARKETS
SIMILAR TO MACC'S.





RISKS
RELATED TO OUR INVESTMENTS





Our
investments may be risky, and you could lose all or part of your
investment.





MACC is
designed for long-term investors.   Investors should not rely on
MACC for their short-term financial needs.  The value of the higher
risk securities in which MACC invests will be affected by general economic
conditions; the securities market; the markets for public offerings and
corporate acquisitions; specific industry conditions; and the management of the
individual portfolio companies.  Additionally, MACC may not achieve
its investment objectives.





The
Nasdaq Stock Market may delist our securities, which could limit investors’
ability to trade in our securities.





On
September 15, 2009, we received a notice (the “Notice”) from the
staff of the Nasdaq Stock Market (“Nasdaq”) indicating
that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) (the “Rule”) because our
common stock did not maintain a minimum bid price of $1.00 per share for the
preceding 30 consecutive business days. Under the Notice and Nasdaq Listing Rule
5810(c)(3)(A) we are provided with a 180 calendar day grace period, or until
March 15, 2010, to regain compliance.  If, at anytime before March 15,
2010, the bid price of our common stock closes at $1.00 per share or more for a
minimum of ten consecutive business days, the Nasdaq staff will provide written
notification that we complied with the Notice and the Rule.




In the
event we have not regained compliance by the end of this grace period we will
receive a written notification that our securities are subject to delisting, a
determination we can choose to appeal to Nasdaq’s Hearing Panel. We may be
eligible for an additional grace period if we meet the initial listing standards
of the Nasdaq, with the exception of bid price. If we meet the initial listing
criteria, the staff of Nasdaq will notify us that we have been granted an
additional 180 calendar day compliance period.




No
assurances can be given that we will be able to satisfy the above described
deficiency and that our common stock will not be delisted. Additionally, no
assurances can be given that we will qualify for any additional grace periods
offered by Nasdaq.




If our
common stock is delisted by Nasdaq, the trading market for our common stock
would likely be adversely affected, as price quotations may not be as readily
obtainable, which would likely have a material adverse effect on the market
price of our common stock.




-2-




An
investment strategy focused primarily on privately-held companies presents
certain challenges, including the lack of available information about these
companies, a dependence upon the talents and efforts of only a few key portfolio
company personnel and a greater vulnerability to economic
downturns.




As a BDC,
MACC invests a large portion of its assets in restricted securities issued by
small, private companies, some of which have operated at losses or have
experienced substantial fluctuations in operating
results.   There is generally little or no publicly available
information about such companies and MACC must rely on the diligence of its
Adviser and Subadviser to obtain the information necessary for its decision to
invest in these companies.  In order to maintain its status as a BDC,
MACC must have at least 70% of its total assets invested in Qualified
Assets.  Typically, for their success, such companies depend on the
management talents and efforts of one person or a small group of persons, so
that the death, disability or resignation of such person or persons could have a
materially adverse impact on them.  Moreover, smaller companies
frequently have narrower product lines and smaller market shares than larger
companies and, therefore, may be more vulnerable to competitors’ actions and
market conditions, as well as general economic downturns.  Such
companies may face intense competition, including competition from companies
with greater financial resources, more extensive research and development,
manufacturing, marketing and service capabilities, and a larger number of
qualified managerial and technical personnel.  Because these companies
will generally have highly leveraged capital structures, reduced cash flow
resulting from an adverse business development, shifts in customer preferences,
or an economic downturn or the inability to complete a public offering or other
financing may adversely affect the return on, or the recovery of, MACC’s
investment in them.  Investment in such companies therefore involves a
high degree of business and financial risk, which can result in substantial
losses and, accordingly, should be considered highly speculative.  No
assurance can be given that some of MACC’s investments will not result in
substantial or complete losses.





Because
our investments are and will continue to typically be privately-issued, they
will have limited liquidity, and thus their value is decreased.




All of
our Existing Portfolio investments consist of, and any New Portfolio investments
will generally consist of, securities acquired directly from their issuers in
private transactions.  They are usually subject to restrictions on
resale and are generally illiquid.  Usually there is no established
trading market for such securities into which they could be sold.  In
addition, most of the securities are not eligible for sale to the public without
registration under the 1933 Act, which would involve delay and
expense.  Restricted securities generally sell at a price lower than
similar securities that are not subject to restrictions on sale.




As
a BDC, we are subject to limitations on our ability to engage in certain
transactions with affiliates.




As a
result of our election to be regulated as a BDC, we are prohibited under the
1940 Act from knowingly participating in certain transactions with our
affiliates without the prior approval of our independent directors or the
SEC.  The 1940 Act defines “affiliates” broadly to include (i) any
person that owns, directly or indirectly, 5% or more of our outstanding voting
securities, (ii) any person of which we own 5% or more of their outstanding
securities, (iii) any person who directly or indirectly controls us, (iv) our
officers, directors and employees, and (v) our Adviser and Subadviser, among
others, and we are generally prohibited from buying or selling any security from
or to such affiliate, absent the prior approval of our independent
directors.  The 1940 Act also prohibits “joint” transactions with an
affiliate, which could include investments in the same portfolio company
(whether at the same or different times), without prior approval of our
independent directors.  If a person acquires more than 25% of our
voting securities, we will be prohibited from buying or selling any security
from or to such person, or entering into joint transactions with such person,
absent the prior approval of the SEC.




If
our investments are deemed not to be Qualifying Assets, we could lose our status
as a BDC or be precluded from investing according to our current business
plan.





As a
result of our election to be regulated as a BDC, we must not acquire any assets
other than Qualifying Assets unless, at the time of and after giving effect to
such acquisition, at least 70% of our total assets are Qualifying
Assets.  Qualifying Assets include “eligible portfolio
companies.”  “Eligible portfolio companies” are generally companies
which are organized in the United States, are not investment companies, and
which either: (i) do not have securities for which a broker may extend margin
credit, (ii) are controlled by a BDC or a group including a BDC, (iii) are
solvent and have assets under $4 million and capital and surplus of at least $2
million, or (iv) (A) do not have a class of securities


-3-


listed on
a national securities exchange, or (B) do have a class of securities listed on a
national securities exchange, but have a market capitalization below
$250,000,000.





If, for
example, we acquire debt or equity securities from an issuer that has
outstanding marginable securities at the time we make such an investment, or if
we acquire securities from an issuer which otherwise meets the definition of an
eligible portfolio company but we purchase the securities in a public offering,
these acquired assets cannot be treated as Qualifying Assets.  The
failure of an investment to meet the definition of a Qualifying Asset could
preclude us from otherwise taking advantage of an investment opportunity we find
attractive.  In addition, our failure to meet the BDC Qualifying Asset
requirements could result in the loss of BDC status, which would significantly
and adversely affect our business plan by, among other things, requiring us to
register as a closed-end investment company.





Our
use of leverage may create conflicts of interest and we are exposed to the risks
associated with leverage.




In
addition to our outstanding loans discussed below, we may borrow additional
money to increase our ability to make investments, though we do not anticipate
issuing preferred stock in the next twelve months.  Lenders from whom
we may borrow money or holders of our debt (or preferred, if issued) securities
will have fixed dollar claims on our assets that are superior to the claims of
our stockholders, and we may grant a security interest in our assets in
connection with our debt.  Current and potential lenders will not,
however, hold any veto or other power to change any of our
policies.  In the case of a liquidation event, those lenders or note
holders (in addition to holders of preferred stock if we issued such stock)
would receive proceeds before our stockholders.  Though we presently
have not plans to do so, if we incur additional debt, the costs associated with
such leverage, including commitment fees and interest (in the case of debt) or
issuance and dividend costs (in the case of preferred stock), would be borne
entirely by holders of our common stock.





Debt,
also known as leverage, magnifies the potential for gain or loss on amounts
invested and, therefore, increases the risks associated with investing in our
securities.  The increased potential of gain through the use of
leverage also creates a conflict of interest in that it can encourage our
Adviser to increase our assets through leverage in an effort to earn management
or incentive fees under the Investment Advisory Agreement between with EAM,
effective April 29, 2008 (the “Advisory Agreement”),
while our common stockholders would incur the costs of utilizing such leverage
and bear the risks associated with the debt.  Even though the Company,
and therefore its common stockholders, would bear the risks and expenses of
leverage, the incentive fees payable to the Adviser will not be directly reduced
by any interest expense associated with such leverage.





Leverage
is generally considered a speculative investment technique.  If the
value of our assets increases, then leveraging would cause the net asset value
attributable to our common stock to increase more than it otherwise would have
had we not leveraged.  Conversely, if the value of our assets
decreases, leveraging would cause the net asset value attributable to our common
stock to decline more than it otherwise would have had we not
leveraged.   If an asset purchased with leverage declines in
value, the fact that we incurred leverage to finance the purchase of such asset
will compound the decrease in our net assets attributable to our common stock
and could eliminate our equity in such investment.  Similarly, any
increase in our revenue in excess of interest expense on our borrowed funds
would cause our net income to increase more than it would without the
leverage.  Any decrease in our revenue would cause our net income to
decline more than it would have had we not borrowed funds and could negatively
affect our ability to make distributions on our common stock.  Our
ability to service any debt that we incur will depend largely on our financial
performance and the performance of our portfolio companies and will be subject
to prevailing economic conditions, competitive pressures and risks of
default.





MACC had
a principal of $4,618,659 on its term loan (the “Term Loan”) with
Cedar Rapids Bank & Trust (“CRB&T”), on
September 30, 2009.  The Term Loan has a stated maturity date of March
31, 2010 and is subject to a variable interest rate based on an independent
index.  The current interest rate applicable to the Term loan is
6.0%.




We
have lost money which impacts our ability to operate.




Due to a
number of factors, MACC’s assets have declined in the last several years, along
with its share price.  These results have negatively impacted our
ability to raise capital as part of our strategy to increase assets for the New
Portfolio in an effort to decrease our per-share expenses.  They have
also hindered our ability to undertake leverage to increase
assets and potential returns.  Furthermore, our past performance has
limited our liquidity and has caused our financial condition to
deteriorate.  There can be no assurance that our future performance
will improve.




-4-




Our
quarterly results may fluctuate.





We could
experience fluctuations in our quarterly operating results due to a number of
factors, including the interest rates payable on the debt investments or the
dividend rates on the equity investments we make, the default rates on such
investments, the level of our expenses, variations in and the timing of the
recognition of realized and unrealized gains or losses and the degree to which
we encounter competition in our markets and general economic
conditions.  As a result of these factors, results for any period
should not be relied upon as being indicative of performance in future
periods.




Our
portfolio may be concentrated in a limited number of portfolio
companies.




Our
Existing Portfolio consists of a limited number of portfolio companies, and if
we raise assets, our New Portfolio may be invested in a small number of
issuers.  One or two of our portfolio companies may constitute a
significant percentage of our total portfolio, especially in the months
following any equity offering we commence.  An inherent risk
associated with such investment concentration is that we may be adversely
affected if one or two of our investments perform poorly or if we need to write
down the value of any one investment. Financial difficulty on the part of any
single portfolio company will expose us to a greater risk of loss than would be
the case if we were a more “diversified” company holding numerous
investments.




When
we are a debt or minority equity investor in a portfolio company, we may not be
in a position to control that portfolio company.




When we
make minority equity investments or invest in debt, we will be subject to the
risk that a portfolio company may make business decisions with which we may
disagree, and that the stockholders and management of such company may take
risks or otherwise act in ways that do not serve our interests.  As a
result, a portfolio company may make decisions that could decrease the value of
our investments.




Changes
in laws or regulations or in the interpretations of laws or regulations could
significantly affect our operations and cost of doing business.




We are
subject to federal, state and local laws and regulations and are subject to
judicial and administrative decisions that affect our operations, including (i)
with respect to our Existing Portfolio, loan originations, maximum interest
rates, fees and other charges, disclosures to portfolio companies, the terms of
secured transactions, collection and foreclosure procedures and other trade
practices; and (ii) with respect to our New Portfolio, purchasing and selling
securities issued by small and micro-cap public and private
companies.  If these laws, regulations or decisions change, we may
have to incur significant expenses in order to comply, or we may have to
restrict our operations.  In addition, if we do not comply with
applicable laws, regulations and decisions, or fail to obtain licenses that may
become necessary for the conduct of our business, we may be subject to civil
fines and criminal penalties, any of which could have a material adverse effect
upon our business, results of operations or financial condition.




RISKS
RELATED TO OUR BUSINESS





We
operate in a highly competitive market for investment
opportunities.




While we
have not commenced investing with the New Portfolio and the Existing Portfolio
is static, we compete with public and private funds, commercial and investment
banks and commercial financing companies to make the types of investments that
we make.  Many of our competitors are substantially larger and have
considerably greater financial, technical and marketing resources than
us.  For example, some competitors may have a lower cost of funds and
access to funding sources that are not available to us.  In addition,
some of our competitors may have higher risk tolerances or different risk
assessments, allowing them to consider a wider variety of investments and
establish more relationships than us.  Furthermore, many of our
competitors are not subject to the regulatory restrictions that the 1940 Act
imposes on us as a result of our election to be regulated as a BDC.




Closed-end
investment companies’ shares usually trade below net asset value.
  Shares of
closed-end investment companies like MACC frequently trade at a discount from
net asset value and MACC’s shares have historically traded at a discount from
net asset value.  At September 30, 2009, MACC’s shares


-5-


traded at
a 75% discount to their net asset value.  This characteristic of
shares of closed-end investment companies is separate and distinct from the risk
that our per share net asset value will decline.  In addition, due to
the following reasons, MACC is not only different from other closed-end funds,
but is at greater risk than similar venture capital closed-end
funds.





·
            First,
      many closed-end funds generally are structured to produce annual dividends
      to shareholders.  MACC, however, has not paid dividends but,
      rather, retained all income after taxes and expenses to reduce debt or
      fund additional investments and thus create capital
      appreciation.  The return to holders of MACC’s common stock is
      thus anticipated to be long-term and capital in nature.  MACC’s
      Board of Directors (the “Board”) will,
      however, consider payment of dividends in the future and reserves the
      right to do so without shareholder
approval.





·
            Second,
      due to several factors, including the small size of MACC relative to fixed
      expenses, and the fact that much of the income of MACC arises through
      capital gains rather than ordinary income, MACC has lost money (that is,
      had net investment expense, rather than new investment income) in each of
      the last seven years.  Many similar funds are structured to earn
      sufficient current income to achieve operating income (investment income
      in excess of operating expenses) each
year.





We
may not be able to elect pass-through tax treatment in the future.




Currently,
MACC is a taxable entity (a “C corporation”) in
order to utilize net operating loss carryforwards generated from a predecessor
company as well as its operating losses.  In the future, MACC may
elect to qualify for pass-through tax treatment contained in Subchapter M of the
Internal Revenue Code of 1986, as amended (“Code”).  Subchapter
M treatment essentially means that certain income is taxed at the shareholder
level only with no tax at the corporate level, although MACC may be subject to a
corporate level tax on certain built-in gains in existence at the time MACC
would first become subject to Subchapter M.  It is possible that, for
a number of reasons, MACC may be unable to meet Subchapter M requirements, or
that it may also cease to qualify for pass-through treatment, or be subject to a
four percent excise tax, if it fails to make certain
distributions.  Under the 1940 Act, MACC is not permitted to make
distributions to shareholders unless it meets certain asset coverage
requirements with respect to money borrowed and any senior securities
issued.  Non-availability of pass-through tax treatment may
potentially have a materially adverse effect on the total return, if any,
obtainable from an investment in MACC’s shares, once net operating loss
carryforwards are no longer available and the Subchapter M election has become
advantageous.




We
are dependent upon our Adviser’s and Subadviser’s key personnel for our future
success.




We depend
on the diligence, expertise and business relationships of our Adviser and
Subadviser.  If we commence investing in the New Portfolio, the
Adviser will evaluate, negotiate, structure, monitor, and close our investments,
subject to supervision by the Board.  Our advisory agreements with EAM
and InvestAmerica are short-term in nature and subject to cancellation on sixty
days’ notice.  Our future success will depend on the continued service
of certain key individuals of the Adviser and Subadviser.  The
departure of one or more of these key individuals could have a material adverse
effect on our ability to achieve our investment objectives and on the value of
our common stock.  We will rely on certain employees of the Adviser
and Subadviser, who may devote significant amounts of their time to their
respective activities that are not related to MACC.  To the extent
those employees of the Adviser and Subadviser who are not committed exclusively
to us are unable to, or do not, devote sufficient amounts of their time and
energy to our affairs, our performance may suffer.




Potential
significant conflicts of interest may impact our investment
returns.




All of
our officers also serve in similar capacities with EAM, which serves as an
investment adviser to other accounts, and in the future may serve as investment
adviser to other investment funds.  In that case, our officers may
have obligations to investors in those entities, the fulfillment of which might
not be in the best interests of MACC or its stockholders or that may require
them to devote time to services for such other entities, which could interfere
with the time available to provide services to MACC.  Nonetheless, EAM
is of the opinion that any such efforts of its officers relative to MACC would
be synergistic with and beneficial to the affairs of both MACC and
EAM.  InvestAmerica and its affiliates also serve as investment
advisers to other funds.  It is possible that, through the course of
identifying and structuring potential New Portfolio investments, EAM may be
presented with investment opportunities which could benefit certain investors in
the portfolio company to the detriment of our stockholders.  For
example, if we overvalue a




-6-


portfolio
company investment, our investment could benefit a portfolio company investor by
providing capital to the company, and thus its investors, at below market
rates.




While EAM
intends to allocate investment opportunities in a fair and equitable manner
(i.e., pro-rata among its accounts) consistent with our investment objective and
strategies, and in accordance with its written allocation procedures so that we
will not be disadvantaged in relation to any other client, EAM’s services under
the Advisory Agreement are not exclusive.  Both EAM and InvestAmerica
are free to furnish the same or similar services to other entities, including
businesses that may directly or indirectly compete with us, provided they notify
us prior to agreeing to serve as investment adviser to another
entity.





As a
result of regulatory restrictions, we are not permitted to invest in any
portfolio company in which the Adviser, the Subadviser or any of their
respective affiliates currently has an investment.  However, under the
terms of an exemptive order granted by the SEC, under certain specified
circumstances, we may invest (and make follow on investments) in portfolio
companies at the same time and on the same terms as InvestAmerica’s
affiliates.  All such investments will be reviewed by our independent
directors to assure conformity to the exemptive order.




In the
course of our investing activities, we pay management and incentive fees to EAM
and InvestAmerica.  As a result, holders of our common stock invest on
a “gross” basis and receive distributions on a “net” basis after expenses,
resulting in, among other things, a lower rate of return than one might achieve
through direct investments in our portfolio companies.  Because of
this arrangement, there may be times when the management teams of either EAM or
InvestAmerica have interests which differ from those of our stockholders, giving
rise to a conflict.  For example, if we borrow money or issue debt
instruments and thereby increase our assets, which in turn increases the
management fee payable to our Adviser, we simultaneously increase our expenses
to service such debt and thereby reduce our stockholders’ return on their
investment in MACC.  Further, the use of leverage increases the
likelihood of gain (or loss) which amounts would be subject to the incentive fee
we pay to our Adviser.




The
incentive fee payable to our Adviser may create conflicting
incentives.




Our
Adviser will receive an incentive fee based, in part, upon net realized capital
gains on our investments.  As a result, our Adviser may have an
incentive to pursue investments that are likely to result in capital gains as
compared to income-producing securities.  Such a practice could result
in our investing in more speculative or long term securities than would
otherwise be the case, which could result in higher investment losses,
particularly during economic downturns or longer return cycles.











Our common stock price may be
volatile.




The
trading price of our common stock may fluctuate substantially. The price of the
common stock may be higher or lower than the price you pay for your shares,
depending on many factors, some of which are beyond our control and may not be
directly related to our operating performance. These factors include, but are
not limited to, the following:




●
      price and volume fluctuations in the overall stock market from time to
      time; ●
      significant volatility in the market price and trading volume of
      securities of BDCs or other financial services
  companies;


-7-








●
      changes in laws or regulatory policies or tax guidelines with respect to
      BDCs or regulated investment
companies;


●
      actual or anticipated changes in our earnings or fluctuations in our
      operating results or changes in the expectations of securities
      analysts;


●
      risks associated with possible disruption in our operations due to
      terrorism;


●
      general economic conditions and
trends;


●
      loss of a major funding source;


●
      departures of key personnel; or


●
      other risks and uncertainties as may be detailed from time to time in our
      public announcements and SEC
filings.





Risks
Related to the Existing Portfolio




Our
Existing Portfolio investments are recorded at fair value as determined in good
faith by our Board.  As a result, there is and will continue to be
uncertainty as to the value of our portfolio investments.




Pursuant
to the requirements of the 1940 Act, substantially all of our Existing Portfolio
investments are recorded at fair value as determined in good faith by our Board
on a quarterly basis, and, as a result, there is uncertainty regarding the value
of our portfolio investments.  At September 30, 2009, approximately
94% of our total assets represented investments recorded at fair
value.  Since there will typically be no readily ascertainable market
value for the investments in our Existing Portfolio, our Board will determine in
good faith the fair value of our investments pursuant to our valuation policy
and a consistently applied valuation process.




There is
no single standard for determining fair value in good faith. As a result,
determining fair value requires that judgment be applied to the specific facts
and circumstances of each portfolio investment while employing a consistently
applied valuation process for the types of investments we hold. Unlike banks, we
are not permitted to provide a general reserve for anticipated loan losses; we
are instead required by the 1940 Act to specifically value each individual
investment and record unrealized depreciation for an investment that we believe
has lost value, including where collection of a debt security or realization of
an equity security is doubtful. Conversely, we record unrealized appreciation if
we have an indication that the underlying portfolio company has appreciated in
value and, therefore, our security has also appreciated in value, where
appropriate.  Without a readily ascertainable market value and because
of the inherent uncertainty of valuation, fair value of our Existing Portfolio
investments determined in good faith by the Board may differ significantly from
the values that would have been used by another party or had a ready market
existed for the Existing Portfolio investments, and the differences could be
material.




We adjust
quarterly the valuation of our portfolio to reflect the Board’s determination of
the fair value of each Existing Portfolio investment.  Any changes in
fair value are recorded in our statement of operations as “Net change in
unrealized depreciation/appreciation on investments.”




An
investment strategy that focuses on privately-held companies presents certain
challenges, including the lack of available information about these companies, a
dependence upon the talents and efforts of only a few key portfolio company
personnel, a greater vulnerability to economic downturns and a greater inability
to liquidate our investments in an advantageous manner.




As a BDC,
we have invested most of our assets in restricted securities issued by small,
private companies, some of which have operated at losses or have experienced
substantial fluctuations in operating results.  There is generally
little or no publicly available information about such companies and we must
rely on the diligence of our Investment Adviser and Subadviser to obtain the
information necessary to invest in these companies.  If our Adviser
and Subadviser are unable to obtain all material information about these
companies, including with respect to operational, regulatory, environmental,
litigation and managerial risks, our Adviser and Subadviser may not make a
fully-informed investment decision, and we may lose some or all of the money
invested in these companies.  In addition, our Adviser and Subadviser
may inappropriately value the prospects of an investment, causing us to overpay
for such investment and fail to receive an expected or projected return on its
investment.









-8-




with
greater financial resources, more extensive research and development,
manufacturing, marketing and service capabilities, and a larger number of
qualified managerial and technical personnel.  Because these companies
will generally have highly leveraged capital structures, reduced cash flow
resulting from an adverse business development, shifts in customer preferences,
or an economic downturn or the inability to complete a public offering or other
financing may adversely affect the return on, or the recovery of, our investment
in them.  Investment in such companies therefore involves a high
degree of business and financial risk, which can result in substantial losses
and, accordingly, should be considered highly speculative.  No
assurance can be given that some of our investments will not result in
substantial or complete losses.




Substantially
all of these securities will be subject to legal and other restrictions on
resale or will otherwise be less liquid than publicly-traded
securities.  The illiquidity of these investments may make it
difficult for us to sell such investments at advantageous times and prices or in
a timely manner.  In addition, if we are required to liquidate all or
a portion of our portfolio quickly, we may realize significantly less than the
value at which we previously have recorded our investments.  We also
may face other restrictions on our ability to liquidate an investment in a
portfolio company to the extent that we or one of our affiliates have material
non-public information regarding such portfolio company.




The
long-term character of our Existing Portfolio investments may negatively impact
their current return and capital gains.




Our
Existing Portfolio investments yield a current return for most of their lives,
but generally only produce a capital gain, if any, from an accompanying equity
feature (which typically consists of a warrant for the purchase of common equity
securities) after five to eight years.  Both the current yield and a
capital gain must be achieved on most investments in order to meet our
investment goals.  There can be no assurance that either a current
return or capital gain will actually be achieved on our
investments.




Our
portfolio companies may incur debt that ranks equally with, or senior to, our
investments in such companies.




Portfolio
companies in which we invest usually will have, or may be permitted to incur,
debt that ranks senior to, or equally with, our investments, including debt
investments.  As a result, payments on such securities may have to be
made before we receive any payments on our investments.  For example,
these debt instruments may provide that the holders are entitled to receive
payment of interest or principal on or before the dates on which we are entitled
to receive payments with respect to our investments. These debt instruments will
usually prohibit the portfolio companies from paying interest on or repaying our
investments in the event and during the continuance of a default under such
debt.  In the event of insolvency, liquidation, dissolution,
reorganization or bankruptcy of a portfolio company, holders of debt instruments
ranking senior to our investment in that portfolio company would typically be
entitled to receive payment in full before we receive any distribution in
respect of our investment.  After repaying its senior creditors, a
portfolio company may not have any remaining assets to use to repay its
obligation to us.  In the case of debt ranking equally with our
investments, we would have to share on an equal basis any distributions with
other creditors holding such debt in the event of an insolvency, liquidation,
dissolution, reorganization or bankruptcy of the relevant portfolio
company.




There
may be circumstances where our debt investments could be subordinated to claims
of other creditors or we could be subject to lender liability
claims.




If one of
our Existing Portfolio companies were to go bankrupt, even though we may have
structured our interest as senior debt, depending on the facts and
circumstances, including the extent to which we actually provided managerial
assistance to that portfolio company, a bankruptcy court might recharacterize
our debt holding and subordinate all or a portion of our claim to that of other
creditors.  In addition, lenders can be subject to lender liability
claims for actions taken by them where they become too involved in the
borrower’s business or exercise control over the borrower.  It is
possible
that we could become subject to a lender’s liability claim, including as a
result of actions taken if we actually render significant managerial
assistance.  We
expect our debt investments will generally be unsecured and even if we make a
secured loan, if the assets securing a loan we make decrease in value, we may
not have sufficient collateral to cover losses.











-9-




interest
in the available assets of a portfolio company, there is a risk that the
collateral securing our investment may decrease in value over time, may be
difficult to sell in a timely manner, may be difficult to appraise and may
fluctuate in value based upon the success of the business and market conditions,
including as a result of the inability of the portfolio company to raise
additional capital, and, in some circumstances, our lien could be subordinated
to claims of other creditors.  In addition, a deterioration in a
portfolio company’s financial condition and prospects, including its inability
to raise additional capital, may be accompanied by a deterioration in the value
of the collateral for the investment.  Moreover, we may not have a
first lien position on the collateral.  Consequently, the fact that
investment is secured does not guarantee that we will receive principal and
interest payments according to the investment’s terms or that we will be able to
collect on the investment should we be forced to enforce our
remedies.  In addition, a portion of the assets securing our
investment may be in the form of intellectual property, if any, inventory and
equipment and, to a lesser extent, cash and accounts
receivable.  Intellectual property, if any, that is securing our
investment could lose value if, among other things, the company’s rights to the
intellectual property are challenged or if the company’s license to the
intellectual property is revoked or expires. Inventory may not be adequate to
secure our investment if our valuation of the inventory at the time we made the
loan was not accurate or if there is a reduction in the demand for the
inventory. Similarly, any equipment securing our loan may not provide us with
the anticipated security if there are changes in technology or advances in new
equipment that render the particular equipment obsolete or of limited value or
if the company fails to adequately maintain or repair the
equipment.  Any one or more of the preceding factors could materially
impair our ability to recover principal in a foreclosure.




The
lack of liquidity in our Existing Portfolio investments may adversely affect our
business, and if we need to sell any of our investments, we may not be able to
do so at a favorable price.  As a result, we may suffer
losses.




The
Existing Portfolio generally consists of investments in debt securities with
terms of two to ten years, which we generally hold until maturity, and we do not
expect that our related holdings of equity securities in the Existing Portfolio
will provide us with liquidity opportunities in the near-term.  We
expect that a majority of the New Portfolio will consist of companies whose
securities are not publicly-traded, and whose securities will be subject to
legal and other restrictions on resale or will otherwise be less liquid than
publicly-traded securities.  The illiquidity of these investments may
make it difficult for us to sell these investments when desired.  In
addition, if we are required to liquidate all or a portion of our portfolio
quickly, we may realize significantly less than the value at which we had
previously recorded these investments.  As a result, we do not expect
to achieve liquidity in our investments in the near-term.  However, to
maintain our election to be regulated as a BDC, we may have to dispose of
investments if we do not satisfy one or more of the applicable criteria under
the 1940 Act.  Our investments are usually subject to contractual or
legal restrictions on resale or are otherwise illiquid because there is no
established trading market for such investments.  The illiquidity of a
majority of our investments may make it difficult for us to dispose of them at a
favorable price, and, as a result, we may suffer losses.




We
will be exposed to risks associated with changes in interest rates.




Generally,
when market interest rates rise, the values of debt securities decline, and vice
versa.  During periods of declining interest rates, the issuer of a
security may exercise its option to prepay principal earlier than scheduled,
forcing us to reinvest in lower yielding securities.  This is known as
call or prepayment risk.  Lower grade securities frequently have call
features that allow the issuer to repurchase the security prior to its stated
maturity.  An issuer may redeem a lower grade obligation if the issuer
can refinance the debt at a lower cost due to declining interest rates or an
improvement in the credit standing of the issuer.




To
protect or maintain our portfolio investments, we may need to increase our
investments in portfolio companies.




Following
our initial investment, we may make additional debt and equity investments in
portfolio companies (“follow-on investments”) to increase our investment in a
successful portfolio company, to exercise securities that were acquired in the
original financing, to preserve our proportionate ownership when a subsequent
financing is planned or to protect our initial investment when such portfolio
company’s performance does not meet expectations.




There is
no assurance that we will make, or will have sufficient funds to make, follow-on
investments.  Additionally, we are subject to limitations relating to
our BDC status which may limit our ability to make additional investments in
portfolio companies.  Any decisions not to make a follow-on investment
or any inability on our part to make such an investment may have a negative
impact on a portfolio company in need of such an investment, may result








-10-





in a
missed opportunity for us to increase our participation in a successful
operation, or may reduce the expected yield on the investment.





Risks
Related to the New Portfolio





As
discussed above, we have engaged EAM to manage our New Portfolio, however we
have not raised new assets for the New Portfolio.




When
we establish the New Portfolio we will be exposed to market risks associated
with investments in equity securities.




Upon
implementation of our new investment strategy, we will ordinarily have
substantial exposure to common stocks and other equity securities in pursuing
our investment objective and policies. The market price of equity securities,
including common and preferred stocks, may go up or down, sometimes rapidly or
unpredictably. Equity securities may decline in value due to factors affecting
equity securities markets generally, particular industries represented in those
markets or the issuer itself, including the historical and prospective earnings
of the issuer and the value of its assets. The values of equity securities may
decline due to general market conditions which are not specifically related to a
particular company, such as real or perceived adverse economic conditions,
changes in the general outlook for corporate earnings, changes in interest or
currency rates or adverse investor sentiment generally. They may also decline
due to factors which affect a particular industry or industries, such as labor
shortages or increased production costs and competitive conditions within an
industry. Equity securities, and particularly common stocks, generally have
greater price volatility than bonds and other debt securities.




Holders
of equity securities will have rights which are subordinate to portfolio
companies’ other investors or debt holders.




The New
Portfolio’s focus on equity securities will also expose us to risks as holders
of common stock.  For example, the interests of common stockholders
are subordinated to the interests of creditors or holders of
debt.  Under most borrowing arrangements, lenders will have superior
claims to a portfolio company’s assets, and in the case of liquidation,
creditors may receive first priority in the distribution of a portfolio
company’s assets.  Furthermore, the interests of holders of common
stock are often subordinated to the holders of any preferred
stock.  Holders of preferred stock may have superior voting rights
over holders of common stock, and they often have superior rights in the case of
portfolio company liquidation.  Our transition to a much higher
percentage of equity investments will expose us to these and other risks which
we previously were only minimally exposed to.




We
will be particularly sensitive to the risks associated with equity investments
in small-cap and micro-cap companies.




As
described above, our New Portfolio equity investments will be focused on common
stocks of small-cap and micro-cap companies. We will therefore be particularly
sensitive to the risks associated with small companies. The general risks
associated with equity securities are particularly pronounced for securities
issued by companies with small market capitalizations. Micro-cap and other small
capitalization companies may offer greater opportunities for capital
appreciation than larger companies, but may also involve certain special risks.
They are more likely than larger companies
to have limited product lines, markets or financial resources, or to depend on a
small, inexperienced management group. Securities of smaller companies may trade
less frequently and in lesser volume than more widely held securities and their
values may fluctuate more sharply than other securities. They may also trade in
the over-the-counter market or on a regional exchange, or may otherwise have
limited liquidity. These securities may therefore be more vulnerable to adverse
developments than securities of larger companies, and we may have difficulty
establishing or closing out our securities positions in smaller companies at
prevailing market prices. Also, there may be less publicly-available information
about smaller companies or less market interest in their securities as compared
to larger companies, and it may take longer for the prices of the securities to
reflect the full value of the issuers’ earnings potential or
assets.




We
may engage in short selling, which creates the risk of a theoretically unlimited
loss.




If we
commence the New Portfolio strategy, we may engage in short
selling.  Short selling involves selling securities which may or may
not be owned and borrowing the same securities for delivery to the purchaser,
with an








-11-





obligation
to replace the borrowed securities at a later date.  Short selling
allows the investor to profit from declines in securities.  A short
sale creates the risk of a theoretically unlimited loss, in that the price of
the underlying security could theoretically increase without limit, thus
increasing the cost of buying those securities to cover the short position.
There can be no assurance that the security necessary to cover a short position
will be available for purchase.  Purchasing securities to close out
the short position can itself cause the price of the securities to rise further,
thereby exacerbating the loss.




Small-
and micro-cap companies may rely on inexperienced management.




Small-
and micro-cap companies may be young companies with inexperienced
management.  The lack of an experienced management team may prevent
such companies from meeting its goals, which may reduce the expected yield on
our investment.




Small
and micro-cap companies may rely on a small number of key employees, and if such
employees leave the company, the company’s performance may suffer.




The
success of small- and micro-cap companies may depend on a small number of key
employees.  Such companies’ ability to retain its key employees will
be important to successful operation of such companies. The unexpected loss of
services of key employees, or the inability to recruit and retain qualified
personnel in the future, may have an adverse effect on a companies business and
financial results, which could devalue our investment.




Small-
and micro-cap companies may operate in areas where rapid technology developments
may render their business obsolete.




New
technologies or improvements to old technologies may render the product lines of
small- and micro-cap companies obsolete.  Because such companies may
not have diverse product lines, any technological development that renders a
product line obsolete may resulting a company having no product to market, which
will severely devalue such company’s securities.  Such technological
developments may prevent us from meeting our expected return on investment and
may result in a complete loss of our investment.




Small-
and micro-cap companies may have relatively limited product lines, markets or
financial resources.




Small-
and micro-cap companies may have relatively limited product lines, markets
and/or financial resources.  Therefore, such companies may be more
vulnerable to competitors’ actions and market conditions.  Any action
by competitors or downturn in market conditions may directly impact a company’s
business and financial results.  Such companies may face intense
competition, including competition from companies with greater financial
resources, more extensive research and development, manufacturing, marketing and
service capabilities.  Such a decline in performance, may result in us
not meeting our expected return on investment, and may result in a complete loss
of investment.




The
securities of small- and micro-cap companies may be more volatile than other
securities.




Historically,
small- and micro-cap companies have been more volatile in price than larger
capitalized companies.  Among the reasons for the greater price
volatility of these securities are the lower degree of liquidity in the markets
for such
stocks, and the potentially greater sensitivity of such small- and micro-cap
companies to changes in or failure of management and in many other changes in
competitive, business, industry and economic conditions, including risks
associated with limited product lines, markets, management depth, or financial
resources.  Such price volatility may result in us not meeting our
expected return on investment.




Small
and micro-cap companies may be unable to obtain the financing required to fund
necessary growth.




Small-
and micro- cap companies may require additional financing before such company
can develop a product line to a point of profitability.  Companies
requiring additional capital may be unable to obtain such capital and as a
result may not achieve profitability, which may result in us not meeting our
expected return on investment and may result in a complete loss of
investment.




There is limited liquidity in small
and micro-cap companies.




-12-


The
liquidity of securities in small- and micro-cap companies may be more limited
than that of other companies.  The lack of liquidity may result in us
not being able to dispose of the securities when we desire, which may result in
us not being able to achieve our expected return on investment and may result in
a complete loss of investment.




The
value of securities in small- and micro-cap companies may not follow the value
of larger companies or general economic conditions.




The value
of securities in small- and micro-cap companies may not follow the value of
larger companies or general economic conditions for a variety of reasons,
including, but not limited to, such companies having limited product lines
available, key employees misguiding the company or the company may not be able
to obtain needed financing.  This may result in a small- or micro-cap
company’s performance suffering when the overall stock market is providing
favorable returns or when overall economic conditions are
favorable.  As a result, our investment may not achieve our expected
return on value and we may suffer a complete loss of investment during favorable
economic conditions.




-13-


Item
2.  Properties.





MACC does
not own or lease any properties or other tangible assets.  Its
business premises and equipment are furnished by EAM.  EAM is
compensated for its provision of the business premises and equipment to MACC
through the management fees paid by MACC to EAM.





Item
3.  Legal Proceedings.





There are
no items to report.





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





On July
14, 2009, MACC held its annual meeting of shareholders (the “Annual
Meeting”).  At the Annual Meeting, the shareholders re-elected
current directors Michael W. Dunn, James W. Eiler, Gordon J. Roth, and Geoffrey
T. Woolley to serve another one year term on the Board.  Director Dunn
was elected by a vote of 1,633,424 shares for and 208,035 shares were
withheld.  Director Eiler was elected by a vote of 891,276 shares for
and 950,183 shares were withheld.  Director Roth was elected by a vote
of 1,697,951 shares for and 143,868 shares were withheld.  Director
Woolley was elected by a vote of 1,695,982 shares for and 145,477 shares were
withheld.  Additionally, KPMG LLP was ratified as the Company’s
independent auditor for fiscal year 2009 by a vote of 1,650,474 shares for,
187,473 shares against, and   3,512 shares
abstained.





PART
II





Item
5.  Market for Registrant’s Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities.





Information
in response to this Item is incorporated by reference to the “Shareholder
Information” section of the 2009 Annual Report.





Item
6.  Selected Financial Data.





Information
in response to this Item is incorporated by reference to the “Selected Financial
Data” section of the 2009 Annual Report.





Item
7.  Management’s Discussion and Analysis of Financial Condition and
Results of


Operation.





Information
in response to this Item is incorporated by reference to the “Management’s
Discussion and Analysis of Financial Condition and Results of Operation” section
of the 2009 Annual Report.





Item
7A.  Quantitative and Qualitative Disclosures About Market
Risk





MACC is
subject to market risk from changes in market prices of publicly-traded equity
securities held from time to time in the MACC investment
portfolio.  At September 30, 2009, MACC had no publicly-traded equity
securities in the MACC investment portfolio.




MACC is
also subject to financial market risks from changes in market interest
rates.  MACC currently has an outstanding note payable with a variable
interest rate that is based on an independent index.  Although this
independent index is subject to changes, the maximum increase or decrease in the
interest rate at any one time will not exceed 1%. General interest rate
fluctuations may therefore have a material adverse effect on MACC’s net
investment income.









-14-




Portfolio Risks




Pursuant
to Section 64(b)(1) of the 1940 Act, a BDC is required to describe the risk
factors involved in an investment in the securities of such company due to the
nature of MACC’s investment portfolio.   Please refer to Item 1A above for a
description of those risks.




Operations
Risks




MACC has
generally relied on portfolio investment divestitures and liquidity events, as
well as increases in fair value of portfolio investments, to provide for
increases in net asset value in any period.  MACC typically relies on
the sale of portfolio companies in negotiated transactions and on the initial
public offering of portfolio company securities to provide for portfolio
investment divestitures and liquidity events.  Accordingly, a general
contraction in the markets for corporate acquisitions and/or initial public
offerings could adversely affect MACC’s ability to realize capital gains, if
any, from the sale of its Existing Portfolio company securities.  The
SEC guidelines under which MACC operates permit the Board to determine increases
in fair value of unliquidated Existing Portfolio investments based upon a number
of factors, including subsequent financings provided to Existing Portfolio
companies.  Accordingly, decreases in the supply of additional capital
to MACC’s Existing Portfolio companies could adversely affect MACC’s ability to
achieve increases, if any, in fair value of its Existing Portfolio
investments.




Interest
Rate Risks




MACC
faces risks in relation to changes in prevailing market interest
rates.  First, at September 30, 2009, MACC had outstanding $4,618,659
in principal under the Term Loan, which matures in March of
2010.  This note has a variable rate of interest, and accordingly,
changes in market interest rates will have an effect on the amount of interest
paid by MACC with respect to the note.  The interest rate on the Term
Loan was 6.0% as of September 30, 2009.




Second,
MACC’s Existing Portfolio companies have or may issue debt senior to MACC’s
investment.  The payment of principal and interest due on MACC’s
investment, therefore, will generally be subordinate to payments due on any such
senior debt.  Moreover, senior debt typically bears interest at a
floating rate, whereas MACC’s investments generally do not.  Any
increase in market interest rates may put significant economic pressure on those
Existing Portfolio companies that have issued senior debt which bears interest
at a floating rate.  Accordingly, MACC’s ability to achieve net
operating income and generally to realize gains from its Existing Portfolio
investments may be adversely affected by an increase in market interest
rates.




Item
8.  Financial Statements and Supplementary Data.





Information
in response to this Item is incorporated by reference to the financial
statements, notes thereto and report thereon contained in the 2009 Annual
Report.





Item
9.  Changes in and Disagreements with Accountants on Accounting and
Financial


Disclosure.





There are
no items to report.





Item
9A(T).  Controls and Procedures.





In
accordance with Item 307 of Regulation S-K promulgated under the 1933 Act, the
Chief Executive Officer and Chief Financial Officer of the Company (the “Certifying Officers”)
have conducted evaluations of the Company’s disclosure controls and
procedures.  As defined under Sections 13a-15(e) and 15d-15(e) of the
Exchange Act, the term “disclosure controls and procedures” means controls and
other procedures of an issuer that are designed to ensure that information
required to be disclosed by the issuer in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and reported, within
the time periods specified in the Commission’s rules and
forms.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by an issuer in the reports that it files or submits under the
Exchange Act is accumulated and communicated to the issuer’s management,
including its principal executive officer or officers and principal financial
officer or officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.  The Certifying
Officers have reviewed the Company’s disclosure controls and


-15-


procedures
and have concluded that those disclosure controls and procedures are effective
as of the date of this Annual Report on Form 10-K.  In compliance with
Section 302 of the Sarbanes-Oxley Act of 2002, each of the Certifying Officers
executed an Officer’s Certification included in this Annual Report on Form
10-K.





As of the
date of this Annual Report on Form 10-K, there have not been any significant
changes in the Company’s internal controls or other factors 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.





Internal
Control Over Financial Reporting


In
accordance with Item 308T of Regulation S-K promulgated under the 1933 Act, the
management of MACC is responsible for establishing and maintaining adequate
internal control over financial reporting.  MACC’s internal control
system is a process designed to provide reasonable assurance to MACC’s
management and board of directors regarding the preparation and fair
presentation of published financial statements.








MACC’s
internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect transactions and dispositions of assets; provide reasonable
assurances that transactions are recorded as necessary to permit preparation of
financial statements in accordance with U.S. generally accepted accounting
principles and that receipts and expenditures are being made only in accordance
with authorizations of management and the directors of MACC; and provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the MACC’s assets that could have a material
effect on our financial statements.





All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.





Management
assessed the effectiveness of MACC’s internal control over financial reporting
as of September 30, 2009.  In making this assessment, management used
the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission in Internal Control-Integrated Framework.  Based
on our assessment management believes that, as of September 30, 2009, the MACC’s
internal control over financial reporting is effective based on those
criteria.





This
annual report does not include an attestation report of the MACC’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the SEC that permit the
company to provide only management’s report in this annual
report.





Changes
in Internal Control over Financial Reporting


There
have been no significant changes in our internal control or in other factors
that could significantly affect those controls subsequent to our evaluation,
including any corrective actions with regard to significant deficiencies and
material weaknesses.








Item
9B.  Other Information.





On August
14, 2009, MACC entered into an amendment to our business loan agreement and
security agreement (the “Second Amendment”)
with CRB&T.  Under the Second Amendment, MACC extended the
maturity of its August 30, 2007 business loan agreement with CRB&T to a
stated maturity of March 31, 2010.  MACC had an outstanding principal
balance of $4,618,659 under the Term Loan on September 30, 2009.  The
Term Loan has a stated maturity date of March 31, 2010 and is subject to a
variable interest rate based on an independent index.  The current
interest rate applicable to the Term Loan is 6.0%.




-16-


PART
III





Item
10.  Directors, Executive Officers and Corporate
Governance







Directors
and Executive Officers




Our
business and affairs are managed under the direction of our
Board.  Accordingly, our Board provides broad supervision over our
affairs, including supervision of the duties performed by our Adviser and
Subadviser.  Certain employees of our Adviser are responsible for our
day-to-day operations.  The names, ages and addresses of our Directors
and specified executive officers, together with their principal occupations and
other affiliations during the past five years, are set forth
below.  Each Director and officer will hold office for a one year term
to which he or she is elected and until his successor is duly elected and
qualifies, or until he resigns or is removed in the manner provided by
law.  Our Board consists of a majority of Independent
Directors.  The Director who is an “interested person” (as defined in
the 1940 Act) is referred to as an “Interested Director.”  The address
for all officers and Directors is 580 2nd Street, Suite 102, Encinitas,
California 92024.  None of our Directors or officers serve as a
director for any other company which (i) has a class of securities registered
under section 12 of the Exchange Act, (ii) is subject to section 15(d) of the
Exchange Act, or (iii) is registered as an investment company under the 1940
Act; and MACC only has one investment portfolio.




DIRECTORS:




Name
              and
      Age
            
            Position(s)
              Held
      with
              the
              Company
            
            Term
      of Office
              and
      Length of
              Time
      Served
            
            Principal
      Occupation(s)
              During
      Past 5 YearsGordon
      J. Roth, 55†
            
            Director
            
            Since
      2000
            
            CFO
      and Chief Operating Officer, Roth Capital Partners, LLC (independent
      investment banking firm specializing in small-cap companies),
      2000-present; Chairman, Roth & Company, P.C. (public accounting firm
      located in Des Moines, Iowa), 1990-2000. Prior to that, Mr. Roth was a
      partner at Deloitte & Touche, a public accounting firm, in Des
      Moines.Geoffrey
      T. Woolley, 50
            
            Director
            
            Director
      from  2003 to December 8, 2009; Chairman from
              April
      2004 to
              December
      8, 2009
            
            Executive
      Chairman, Kreos Capital Limited (founded in 1997 by Mr. Woolley to
      introduce “venture leasing,” an asset-backed debt instrument with equity
      participation to the European and Israeli markets); Founding Partner,
      Dominion Ventures, Inc.; Managing Member, Hild Partners, LLC;
      Director:  BH Thermal Corp, University Opportunity Fund and Utah
      Capital Investment Corporation; Chairman of the Board: MorAmerica (2004 –
      2008), University Venture Fund, Hild Assets, Ltd. and Unitus Equity Fund;
      Adviser:  Polaris Ventures and Von Braun & Schreiber Private
      Equity.  Mr. Woolley holds an M.B.A. from the University of
      Utah and a B.S. in Business Management with a Minor in Economics from
      Brigham Young University.James
      W. Eiler, 58
            
            Director
            
            Since
      January, 2008
            
            Principal,
      Eiler Capital Advisors (Investment Banking), since 2007; Managing
      Director, First National Investment Bank (Investment Banking), 2007;
      Managing Partner, Cybus Capital Markets (Investment banking), 2004-2007;
      Senior Vice President, John Deere Credit (Agricultural Financial
      Services), 1999-2004.  Mr. Eiler holds an M.S. in Ag Economics
      and a B.S. in Ag Business from Iowa State University.Michael
      W. Dunn, 60
            
            Director
            
            Since
      1994
            
            Director,
      MorAmerica (1994 – 2008); C.E.O. (since 1980), President and CEO and
      Director (since 1983), Farmers & Merchants Savings Bank of Manchester,
      Iowa.


†  As
      a member of the Board of Managers of EAM, Mr. Roth is an “interested
      person” of MACC, as that term is defined in Section 2(a)(19) of the 1940
      Act.


-17-





Officers:





Name
              and
      Age
            
            Position(s)
              Held
      with
              the
              Company
            
            Term
      of
              Office
      and Length of
              Time
              Served
            
            Principal
      Occupation(s)
              During
      Past 5 YearsTravis
      T. Prentice, 34
            
            President
      and CEO
            
            Since
      April, 2008
            
            President
      and Chief Investment Officer of EAM, a firm he co-founded in
      2007.  In addition, he serves as portfolio manager for the
      firm’s Micro Cap Growth and Ultra Micro Cap Growth investment strategies.
      Prior to founding EAM, Mr. Prentice was a Partner, Managing Director and
      Portfolio Manager with Nicholas-Applegate Capital Management where he had
      lead portfolio management responsibilities for their Micro and Ultra Micro
      Cap investment strategies and a senior role in the firm’s US
      Micro/Emerging Growth team.  He brings ten years of
      institutional investment experience from Nicholas Applegate where he
      originally joined in 1997. He holds a Masters in Business Administration
      from San Diego State University and a Bachelor of Arts in Economics and a
      Bachelor of Arts in Psychology from the University of
Arizona.Derek
      J. Gaertner, 38
            
            Chief
      Financial Officer and CCO
            
            Since
      April, 2008
            
            Vice
      President and Chief Operating/ Compliance Officer of EAM.  Prior
      to joining EAM in 2007, Mr. Gaertner was the Chief Financial Officer of
      Torrey Pines Capital Management, a global long/short equity hedge fund
      located in San Diego, California.  He was also responsible for
      overseeing the firm’s regulatory compliance and operations
      functions.  Prior to joining Torrey Pines Capital Management in
      2004, Mr. Gaertner was a Tax Manager with PricewaterhouseCoopers
      LLP.  He has over 8 years of public accounting experience in
      both the audit and tax departments.  Mr. Gaertner is a
      Certified Public Accountant and has a Bachelors of Science in Accounting
      from the University of Southern California and Masters of Science in
      Taxation from Golden Gate University, San Francisco.Montie
      L. Weisenberger
              41
            
            Treasurer
      and Secretary
            
            Since
      April, 2008
            
            Senior
      Vice President and Portfolio Manager of EAM, a firm he co-founded in
      2007.  Mr. Weisenberger has primary portfolio management
      responsibilities for the firm’s Small Cap Growth investment
      strategy.  Prior to founding EAM, Mr. Weisenberger was a Senior
      Vice President and Portfolio Manager at Nicholas Applegate Capital
      Management where he had lead portfolio management responsibilities for the
      firm’s Traditional Small-to-Mid Cap Growth strategy and was a senior
      member of the firm’s US Micro / Emerging Growth team since
      2001.  Prior to joining Nicholas Applegate Capital Management,
      Montie was a research analyst at Adams, Harkness & Hill, now Cannacord
      Adams, an emerging growth investment bank located in Boston, MA. Mr.
      Weisenberger also spent more than five years as a finance and strategic
      management consultant, most recently as a manager with KPMG,
      LLP.  Mr. Weisenberger brings more than twelve years of combined
      investment management and financial analysis experience to Eudaimonia
      Asset Management.  He holds a Masters in Business Administration
      and a Masters in Health Administration from Georgia State University and a
      Bachelor of Arts in Business Administration from Flagler
      College.





-18-


Common
Stock Ownership of Directors





The
following table represents, as of November 30, 2009 and based upon the closing
price as reported by Nasdaq on November 30, 2009, the dollar range value of
equity securities beneficially owned (as that term is defined in Rule
16a-1(a)(2) of the Exchange Act) by each Director of MACC.  In the
table, “Interested Director” indicates Directors who do not meet the definition
of “independent director” provided in the rules applicable to companies listed
on the Nasdaq Capital Market.  In contrast, “Independent Directors” do
meet such qualification.




Name
      of
              Independent
      Director
            Dollar
      Range of Equity
              Securities
      in MACC
            Aggregate
      Dollar Range
              of
      Equity Securities in all Funds
              in
      Fund Complex†Michael
      W. Dunn
            $10,001
      - $50,000
            $10,001
      - $50,000James
      W. Eiler
            $1-
      $10,000
            $1-
      $10,000Geoffrey
      T. Woolley*
            Over
      $100,000
            Over
      $100,000Name
      of
              Interested
      Director
            Dollar
      Range of Equity
              Securities
      in MACC
            Aggregate
      Dollar Range
              of
      Equity Securities in all Funds
              in
      Fund Complex†Gordon
      J. Roth
            $10,001-
      $50,000
            $10,001-
      $50,000







† MACC
consists of only one investment portfolio.




*
Director Woolley resigned from the Board of Directors of MACC effective December
8, 2009.




Audit
Committee




The Board
has a standing Audit Committee which makes recommendations to the Board
regarding the engagement of the independent registered public accounting firm
for audit and non-audit services; evaluates the independence of the auditors and
reviews with the independent auditors the fee, scope and timing of audit and
non-audit services.  The Audit Committee also is charged with
monitoring our Policy Against Insider Trading and Prohibited Transactions and
our Code of Conduct.  The Audit Committee presently consists of
Michael W. Dunn (Chair) and James W. Eiler.  Each member of the
Audit Committee is considered “independent” under applicable Nasdaq listing
standards.  The Board has determined that James W. Eiler is an Audit
Committee financial expert.  The Audit Committee held five meetings in
Fiscal Year 2009.




Investment
and Valuation Committee




The
Investment and Valuation Committee assists the Board with the periodic valuation
of our investment securities and with oversight of our investment portfolio and
evaluates any proposed revisions to our investment policy. The Investment and
Valuation Committee also assures compliance with our valuation policy and
policies regarding investments made in participation with other funds managed by
InvestAmerica, with entities controlling, controlled by or under common control
with InvestAmerica, and with other affiliates.  The voting members of
the Investment and Valuation Committee presently include Michael W. Dunn, James
W. Eiler and Gordon J. Roth (Chair).  Mr. Dunn and Mr. Eiler are
independent under Nasdaq listing standards.  The Investment and
Valuation Committee held six meetings in Fiscal Year 2009.




Corporate
Governance / Nominating Committee




The
Corporate Governance/Nominating Committee was appointed by the Board to identify
and recommend approval of all Director nominees to be voted on at the Annual
Stockholders’ Meetings, to recommend corporate governance guidelines for the
Company, to lead the Board in its annual review of the Board’s performance, and
to recommend to the Board nominees for each committee of the
Board.  The Corporate Governance/Nominating Committee may seek input
from other Directors or senior management in identifying
candidates.  Under our Third




-19-


Amended
and Restated Bylaws, stockholders desiring to nominate persons for election as
Directors or to propose other business for consideration at an annual meeting
must notify the Secretary of MACC in writing not less than 60 days, nor more
than 90 days, prior to the date on which MACC first mailed its proxy materials
for the prior year’s annual meeting.




The
qualifications used in evaluating Director candidates include but are not
limited to: independence, time commitments, attendance, business judgment,
management, accounting, finance, industry and technology knowledge, as well as,
personal and professional ethics, integrity and values. In addition, as set
forth in its Charter, the Corporate Governance/Nominating Committee believes
that having directors with relevant experience in business and industry,
government, finance and other areas is beneficial to the Board as a
whole.  The Corporate Governance/Nominating Committee further reviews
the qualifications of any candidate in the context of the current composition of
the Board and the needs of MACC. The same identifying and evaluating procedures
apply to all candidates for director nomination, whether nominated by
stockholders or by the Corporate Governance/Nominating Committee.




The
Corporate Governance/Nominating Committee also: (i) oversees the formulation of,
and recommends for adoption to the Board, a set of corporate governance
guidelines;  (ii) periodically reviews and reassesses the corporate
governance guidelines and recommends appropriate changes to the Board for
approval; (iii) reviews and approves annually the MACC’s compensation program
for service on the Board or any of its committees; (iv) performs an annual
assessment of the Board’s performance and periodically reports its Board
assessments to the Board; (v) annually reviews and assesses its Charter and
makes recommendations of appropriate changes to the Board; (vi) performs
periodic reviews of all Board committee structure and governance charters; (vii)
recommends appropriate changes to Board committee composition and responsibility
to the Board; and (viii) reviews any conflicts of interest.




The
Corporate Governance/Nominating Committee consists of James W. Eiler and Michael
Dunn.  All members of the Corporate Governance/Nominating Committee
are considered “independent” under applicable Nasdaq listing
standards.  The Corporate Governance/Nominating Committee held [•]
meetings in Fiscal Year 2009.




Code
of Ethics




The
Company, the Adviser and the Subadviser have each adopted a code of ethics under
Rule 17j-1 of the 1940 Act, which is applicable to the officers, Directors and
designated employees of the Company, the Adviser and the Subadviser
(collectively, the “Codes of
Ethics”).  Subject to certain limitations, the Codes of Ethics
permit those officers, Directors and designated employees of the Company, the
Adviser and the Subadviser (the “Covered Persons”) to
invest in securities, including securities that may be purchased or held by the
Company.  The Codes of Ethics contain provisions and requirements
designed to identify and address certain conflicts of interest between personal
investment activities of Covered Persons and the interests of the investment
advisory clients of the Adviser and the Subadviser such as the
Company.  Among other things, the Codes of Ethics prohibit certain
types of transactions absent prior approval, impose time periods during which
personal transactions may not be made in certain securities, and requires
submission of duplicate broker confirmations and statements and quarterly
reporting of securities transactions.  Exceptions to these and other
provisions of the Codes of Ethics may be granted in particular circumstances
after review by appropriate personnel.




The Codes
of Ethics can be reviewed and copied at the SEC’s Public Reference Room in
Washington, D.C. Information on the operation of the Public Reference Room may
be obtained by calling the SEC at (202) 942-8090.  The Codes of Ethics
are also available on the EDGAR database on the SEC’s internet site at
www.sec.gov, and, upon payment of a duplicating fee, by electronic request at
the following e-mail address: publicinfo@sec.gov or by writing the SEC’s Public
Reference Section, Washington, D.C. 20549-0102.




Section
16(a) Beneficial Ownership Reporting Compliance





Pursuant
to Section 16(a) of the Exchange Act, officers and directors of the Company and
persons beneficially owning 10% or more of the Company’s common stock
(collectively, “reporting persons”) must file reports on Forms 3, 4 and 5
regarding changes in their holdings of the Company’s equity securities with the
SEC.  Based solely upon a review of copies of these reports sent to
the Secretary of the Company and/or written representations from reporting
persons that no Form 5 was required to be filed with respect to Fiscal Year
2009, the Company believes that all Forms 3, 4, and 5 required to be filed by
all reporting persons have been properly and timely filed with the
SEC.


-20-


Item
11.  Executive Compensation.





Compensation
of Directors




The
compensation of our Directors is governed by a compensation policy adopted via
resolution of the Board on February 24, 2004 and amended on July 18, 2006 (the
“Compensation
Policy”).  The Compensation Policy provides that: (i) Directors
of MACC who are also officers or directors of our investment adviser receive no
compensation for serving on the Board; (ii) the Chairman of the Board receives
an annual retainer of $24,000; (iii) all other outside Directors receive an
annual retainer of $8,000; (iv) all outside Directors other than the Chairman of
the Board receive $1,000 for each Board meeting attended (whether such
attendance is in person or by telephone) if the meeting is scheduled as an
in-person meeting and $500 for each Board meeting attended by telephone if the
meeting is scheduled to be held by teleconference; (v) all Directors other than
the Chairman of the Board receive $250 for each committee meeting attended
(whether such attendance is in person or by telephone) if the committee meeting
is scheduled as an in-person meeting and $250 for each committee meeting
attended by telephone if the meeting is scheduled to be held by teleconference;
and (vi) we reimburse all reasonable expenses of the Directors and the Chairman
of the Board in attending Board and committee meetings.  Directors’
meetings are normally held on a quarterly basis, with additional meetings held
as needed.  All Director compensation is payable quarterly, in
arrears.




The
following table sets forth the details of the compensation paid to Directors
during Fiscal Year 2009.  MACC presently maintains no pension , equity
participation or retirement plans for its Directors.





Name and Position
            Aggregate
      Compensation
              From MACC(1)Geoffrey
      T.Woolley*
            $31,500Michael
      W. Dunn
            $16,750Gordon
      J. Roth
            $15,500James
      W. Eiler
            $16,750




(1)  Consists
      only of directors’ fees and does not include reimbursed
      expenses.


*
      Resigned from the Board of Directors effective December 8,
      2009.





Compensation
of Executive Officers Discussion and Analysis




The
Company has no employees and does not pay any compensation to any of its
officers.  The Company has not compensated its executive officers in
any of the last three fiscal years.  The Company does not provide any
of bonus, stock options, stock appreciation rights, non-equity incentive plans,
non-qualified deferred compensation or pension benefits to its executive
officers.  Further, the Company has no agreements with any officer
pertaining to change in control payments.  All of the Company’s
officers and staff are employed by the Adviser, which pays all of their cash
compensation.





Compensation
Committee Interlocks and Insider Participation





The
Company does not have a separate compensation committee utilized to determine
the appropriate compensation payable to the Company’s executive officers and
Directors due to the size of the Company.  The Corporate
Governance/Nominating Committee, however, is responsible for, among other
things, annually reviewing and approving the Company’s compensation policies for
Directors.  The members of the Corporate Governance/Nominating
Committee for Fiscal Year 2009 were Geoffrey T. Woolley (Chair), James W. Eiler
and Michael W. Dunn.  All members of the Corporate
Governance/Nominating Committee are considered “independent” under applicable
Nasdaq listing standards.  No members of the Committee have ever
served as officers or employees of the Company.  No executive officers
of the Company served, during Fiscal Year 2009: (i) on a compensation committee
of another entity which had an executive officer serving on the Corporate
Governance/Nominating Committee; (ii) as a




-21-


director
of another entity which had an executive officer serving on the Corporate
Governance/Nominating Committee; or (iii) as a member of a compensation
committee of another entity which had an executive officer who served as a
Director of the Company.




Compensation
Committee Report




The
Corporate Governance/Nominating Committee has not reviewed or discussed with the
Company’s management the Compensation of Executive Officers Discussion and
Analysis set forth above because the Company’s standing policy is to not
compensate executive officers.  The Corporate Governance/Nominating
Committee did recommend to the Board of Directors that the Compensation of
Executive Officers Discussion and Analysis be included in this report on Form
10-K.




CORPORATE
GOVERNANCE /


NOMINATING
COMMITTEE:


Michael
W. Dunn


James W.
Eiler





Item
      12.
            Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.





Common
Stock Ownership





As of
November 30, 2009, there were 2,464,621shares of common stock issued and
outstanding.  Because they serve as our investment advisers, EAM, a
California limited liability company located at 580 Second Street, Suite 102,
Encinitas, California 92024, and InvestAmerica, a Delaware corporation located
at 101 Second Street S.E., Suite 800, Cedar Rapids IA 52401, are deemed to
control us, within the meaning of the 1940 Act.  Additionally, Atlas
Management Partners, LLC (“Atlas”), Bridgewater
International Group, LLC (“BIG”), Mr. Benjamin
Jiaravanon (a former Director of the Company) and Mr. Timothy Bridgewater
control the Company through either direct or beneficial ownership of 804,689 of
the Company’s shares, which as of November 30, 2009 comprised 32.65% of the
Company’s issued and outstanding stock.  Atlas and BIG are organized
under the laws of the State of Utah.




Our
officers and directors, eight in number as a group, beneficially own 242,099
Shares together, equal to 9.82% of our outstanding common stock.  The
following table sets forth certain information as of November 30, 2009, with
respect to the common stock ownership of: (i) those persons or groups (as that
term is used in Section 13(d)(3) of the Exchange Act who beneficially own more
than 5% of the common stock, and (ii) each Director of the
Company.  Unless otherwise indicated, the addresses for the persons
listed in the table is 580 Second Street, Suite 102, Encinitas, California
92024.




-22-




Name
      and Address
              of  Beneficial
      Owner
            Amount
      and Nature of
              Beneficial
      Ownership
            Percent
      of Class of
              Voting
      Common StockAtlas
      Management Partners, LLC(1)
              One
      South Main Street, Suite 1660,
              Salt
      Lake City, Utah 84133
            804,689
            32.65%Bridgewater
      International Group, LLC(1)
              10500
      South 1300 West,
              South
      Jordan, Utah 84095
            804,689
            32.65%Timothy
      A. Bridgewater(1)
              10500
      South 1300 West
              South
      Jordan, Utah 84095
            817,789
            33.18%Benjamin
      Jiaravanon(1)
              Ancol
      Barat, J1 Ancol VIII, No.1
              Jakarta
      14430 Indonesia
            804,689
            32.65%Geoffrey
      T. Woolley
            151,314
            6.14%Gordon
      J. Roth(2)
            34,201
            1.38%Michael
      W. Dunn
            46,584
            1.89%James
      W. Eiler
            10,000
            0.04%All
      Officers and Directors as a Group
            242,099
            9.82%







-23-







(1)
            The
      foregoing information with respect to Atlas, BIG, Mr. Jiaravanon and Mr.
      Bridgewater is based upon Amendment No. 1 to Schedule 13D, dated September
      30, 2003, as subsequently amended February 13, 2004, April 28, 2005 and
      April 30, 2005, filed by Atlas, BIG and others with the SEC (collectively,
      the “Atlas Group
      13D”).  The Atlas Group 13D disclosed control over
      804,689 shares of Common Stock owned by BIG (the “BIG Shares”) is
      governed by a Shareholder and Voting Agreement dated September 29, 2003
      among Atlas, BIG and Kent Madsen (the “Shareholder
      Agreement”).  The term of the Shareholder Agreement
      extends to March 1, 2010 and may be extended in certain circumstances;
      however, the Shareholder Agreement may also be terminated at any time by
      any party.  Under the Shareholder Agreement, BIG appointed Atlas
      as its limited proxy to vote the BIG Shares, but BIG retains all other
      incidents of ownership of the stock, including beneficial ownership and
      dispositive power.  The Shareholder Agreement also provides
      Atlas with certain rights of first refusal respecting the BIG Shares and
      limits BIG’s ability to otherwise dispose of the BIG
      Shares.  Pursuant to a Mutual Release and Waiver of Claims and
      Termination of Shareholder and Voting Agreements among Atlas, BIG and the
      former managers of Atlas dated April 28, 2005 and filed as part of the
      Atlas Group 13D, certain former managers of Atlas, including Geoffrey
      Woolley (the former Chairman of MACC’s Board) and Kent Madsen, no longer
      have any interests in Atlas and have no voting rights respecting the BIG
      Shares.




As voting
Managing Director of Atlas, Mr. Bridgewater has shared control over the voting
power granted to Atlas under the Shareholder Agreement respecting the BIG
Shares, subject to the parties’ rights under the Shareholder
Agreement.  Mr. Bridgewater is also Managing Director of BIG and in
that capacity has shared control over the voting power granted to Atlas under
the Shareholder Agreement respecting the BIG Shares, subject to the parties’
rights under the Shareholder Agreement.  Mr. Bridgewater also
individually owns 13,100 shares of Common Stock, according to reports Mr.
Bridgewater has filed with the SEC pursuant to Section 16(a) of the Exchange
Act.  As the sole Managing Member of BIG, Mr. Jiaravanon has shared
control over the voting power granted to Atlas under the Shareholder Agreement
respecting the BIG Shares, subject to the parties’ rights under the Shareholder
Agreement.  BIG is a wholly owned subsidiary of Aleksin, a corporation
organized under the laws of the British Virgin Islands.  Aleksin is a
wholly-owned subsidiary of Maze Industrial Ltd. (“Maze”), a corporation
organized under the laws of the British Virgin Islands.  Maze is 100%
owned by Sumet Jiaravanon, an individual.




(2)   Mr.
Gordon Roth individually owns 5,151 shares of common stock.  Roth
Capital Partners, LLC, in which Mr.


Roth
has shared control of voting power, owns 29,050 shares of common
stock.





Item
13.  Certain Relationships and Related Transactions, and Director
Independence.





Investment
Adviser and Certain Business Relationships




MACC
entered into the Advisory Agreement with EAM on April 29, 2008.  EAM
is registered as an investment adviser under the Investment Advisers Act of
1940, as amended, and is subject to the reporting and other requirements
thereof.  EAM’s address is 580 Second Street, Suite 102, Encinitas,
California 92024.




The
Advisory Agreement provides that EAM is entitled to receive a Management Fee
equal to an annual rate of 2.0% of Assets Under Management (as defined in the
Advisory Agreement).  In April, EAM elected to reduce their fee to
1.5% and additionally in May to reduce their fee to 1.0% until further
notice.  In addition to the Management Fee, EAM is entitled to receive
the Incentive Fee in an amount equal to (i) 20.0% of the net capital gains,
before taxes, attributable to MACC’s New Portfolio (which would include any
follow-on investments made to the Existing Portfolio) and (ii) 13.4% of the Net
Capital Gains, before taxes, attributable to MACC’s Existing Portfolio (as
defined in the Advisory Agreement).The amount of the
Incentive Fee and all incentive compensation in any fiscal year, may not exceed
the limit prescribed by Section 205(b)(3) of the Investment Advisers Act of
1940.  Total Management Fees under the Advisory Agreement paid to EAM
for the year ended September 30, 2009 were $81,525.  There were no
incentive fees accrued or paid under the Advisory Agreement to EAM in the fiscal
year ended September 30, 2009.




MACC, EAM
and InvestAmerica are also parties to a Subadvisory Agreement dated April 29,
2008 (“Subadvisory
Agreement”) and approved by MACC shareholders at the 2008 Annual
Shareholders Meeting.  The address of the Subadviser is 101 Second
Street S.E., Suite 800, Cedar Rapids, Iowa 52401.  From MACC’s
inception in 1995 through 2004, and then from July 2005 through April 29, 2008,
InvestAmerica was the investment adviser to
MACC.  Pursuant




-24-


to the
Subadvisory Agreement, InvestAmerica has been retained to monitor and manage the
Existing Portfolio, including exits, preparation of valuations, follow-on
investment analysis and recommendations and other portfolio management
matters.  InvestAmerica also currently provides certain accounting and
financial services for MACC.  The management fee (as defined in the
Subadvisory Agreement) is equal to 50% of the management fee actually paid by
MACC to EAM attributable to Existing Portfolio Companies, payable in
arrears.  EAM elected to reduce their fees however InvestAmerica
continues to receive a management fee equal to 50% of the original agreement or
an annual rate of 1% of Assets Under Management attributable to Existing
Portfolio Companies.  The amount of the incentive fee payable by EAM
to InvestAmerica under the Subadvisory Agreement is 100% of the incentive fee
received by EAM under the Advisory Agreement attributable to the Existing
Portfolio.  The Subadvisory Agreement does not result in any
additional expense to MACC.  Total Management Fees under the
Subadvisory Agreement paid to InvestAmerica for the year that ended September
30, 2009 were $142,279.  There were no incentive fees accrued or paid
under the Subadvisory Agreement to InvestAmerica in the fiscal year ended
September 30, 2009.




Mr.
Travis T. Prentice, President and CEO of MACC is a founder and President of
EAM.  Mr. Montie L. Weisenberger, Treasurer and Secretary of MACC is a
founder and Senior Vice President of EAM.  Mr. Derek J. Gaertner Chief
Financial Officer and Chief Compliance Officer of MACC is Vice President of
EAM.





Independent
Directors





The
following Directors of the Company meet the definition of “independent director”
provided in the independence standards applicable to companies listed on the
Nasdaq Capital Market (the “Independence
Standards”): Michael W. Dunn, James W. Eiler and former Director Geoffrey
T. Woolley.





Item
14.  Principal Accounting Fees and Services.





The
following table presents fees paid for professional services rendered by KPMG
LLP (“KPMG”),
the Company’s independent registered public accounting firm, for fiscal Year
2008 and for the fiscal year ending September 30, 2009:




Fee
      Category
            
            Fiscal
      Year 2009 Fees
            
            Fiscal
      Year 2008 FeesAudit
      Fees
            
            $79,940
            
            $75,500Audit-Related
      Fees
            
            7,000
            
            -0-Tax
      Fees
            
            $15,000
            
            $14,900All
      Other Fees
            
            -0-
            
            -0-Total
      Fees
            
            $101,940
            
            $90,400





Audit Feeswere for
professional services rendered for the audit of the Company’s financial
statements and review of the interim financial statements included in quarterly
reports and services that are normally provided by KPMG in connection with
statutory and regulatory filings or engagements and include quarterly reviews
and security counts.





Audit-Related Feeswere for
assurance and related services that are reasonably related to the performance of
the audit or review of the Company’s financial statements and are not reported
under “Audit Fees.” These services include accounting consultations in
connection with acquisitions, consultations concerning financial accounting and
reporting standards.





Tax Fees were for
professional services for federal, state and international tax compliance, tax
advice and tax planning and include preparation of federal and state income tax
returns, and other tax research, consultation, correspondence and
advice.





All Other Feesare for
services other than the services reported above.  The Company did not
pay any fees for such other services in fiscal year 2009 or fiscal year
2008.


-25-





The Audit
Committee has concluded the provision of the non-audit services listed above is
compatible with maintaining the independence of KPMG.  KPMG did not
bill the Company’s investment adviser, EAM, for any non-audit services in either
fiscal year 2009 or fiscal year 2008.





Policy
on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Registered Public Accounting Firm





The Audit
Committee pre-approves all audit and permissible non-audit services provided by
the independent registered public accounting firm. These services may include
audit services, audit-related services, tax services and other services.
Pre-approval is generally provided for up to one year and any pre-approval is
detailed as to the particular service or category of services and is generally
subject to a specific budget. The independent auditors and management are
required to periodically report to the Audit Committee regarding the extent of
services provided by the independent auditors in accordance with this
pre-approval, and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a case-by-case
basis.





-26-


PART
IV





Item
15.  Exhibits and Financial Statement Schedules.





(a)
            Documents
      filed as part of this Report:





(1)
            Balance
      Sheet at September 30, 2009, 2008 and
2007


Statement
of Operations for the years ended September 30, 2009, 2008 and 2007


Statements
of Changes in Net Assets for the years ended September 30, 2009 and September
30, 2008


Statement
of Cash Flows for the years ended September 30, 2009 and 2008


Notes to
Financial Statements


Schedule
of Investments as of September 30, 2009 and 2008


Notes to
the Schedule of Investments


The
Report of the Independent Registered Public Accounting Firm with respect to the
financial statements listed above.





(2)
            No
      financial statement schedules of the Company are filed herewith because
      (i) such schedules are not required or (ii) the information required has
      been presented in the aforementioned financial statements and schedule of
      investments.





(3)
            The
      following exhibits are filed herewith or incorporated by reference as set
      forth below:





3(i).11
            Certificate
      of Incorporation of the Company.




3(i).22
            Articles
      of Amendment to the Certificate of Incorporation of the
      Company.




3(ii)3
            Third
      Amended and Restated By-Laws of the
Company.




10.14
            Investment
      Advisory Agreement between MACC Private Equities Inc. and Eudaimonia Asset
      Management, LLC dated April 29,
2008.




10.24
            Investment
      Subadvisory Agreement among the Company, Eudaimonia Asset Management, LLC
      and InvestAmerica Investment Advisors, Inc. dated April 29,
      2008




10.35
            Term
      Loan and Line of Credit Agreement by and among MACC Private Equities Inc.
      successor in interest to MorAmerica Capital Corporation and Cedar Rapids
      Bank and Trust Company dated August 30,
2007.




10.4
            Second
      Amendment to Business Loan Agreement and Security Agreements by and among
      MACC Private Equities Inc. successor in interest to MorAmerica Capital
      Corporation and Cedar Rapids Bank and Trust Company dated August 14,
      2009.




13
            2009
      Annual Report to Stockholders.




146
            Code
      of Business Conduct and Ethics




31.1
            Section
      302 Certification of Travis T. Prentice
  (President).




31.2
            Section
      302 Certification of Derek J. Gaertner
(CFO).




32.1
            Section
      906 Certification of Travis T. Prentice
  (President).




32.2
            Section
      906 Certification of Derek J. Gaertner
(CFO).






1
            Incorporated
      by reference to the Quarterly Report on Form 10-Q for the quarterly period
      ended March 31, 1997, as filed with the SEC on May 14,
    1997.2
            Incorporated
      by reference to the Quarterly Report on Form 10-Q for the quarterly period
      ended June 30, 2005, as filed with the SEC on August 15,
    2005.


3
            Incorporated
      by reference to the Current Report on Form 8-K, as filed with the SEC on
      October 14, 2008.


4
            Incorporated
      by reference to the Current Report on Form 8-K, as filed with the SEC on
      May 1, 2008.


5
            Incorporated
      by reference to the Current Report on Form 8-K, as filed with the SEC on
      September 6, 2007.


6
            Incorporated
      by reference to Exhibit 99.1 to the Current Report on Form 8-K, as filed
      with the SEC on October 14,
2008.


-27-





(b)
            Exhibits





See
(a)(3) above.





(c)
            Financial
      Statement Schedules





See
(a)(1) and (a)(2) above.





-28-


SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) 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 on December 28, 2009.





/s/ Travis T.
Prentice


Travis T.
Prentice


President
and CEO








/s/ Derek J.
Gaertner


Derek J.
Gaertner


Chief
Financial Officer and Chief Compliance Officer







Pursuant
to the requirements of the Securities Exchange Act of 1934, this Report has been
signed below by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.




Signature
            Date/s/ Michael W. Dunn
            December
      28, 2009Michael
      W. Dunn, Director/s/James W.
    Eiler
            December
      28, 2009James
      W. Eiler, Director/s/ Gordon J. Roth
            December
      28, 2009Gordon
      J. Roth, Director