This section of the Quarterly Report on Form 10-Q for MACC Private Equities Inc. ("MACC" or "we" or "us") contains forward-looking statements. All statements in this Quarterly Report on Form 10-Q, 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 Quarterly Report on Form 10-Q 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, as 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-Q 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"). All references to fiscal year apply to MACC's respective fiscal years which end on September 30 of each year.

Results of Operations

Our investment income includes income from interest, dividends and fees. Investment expense, net represents total investment income minus net operating expenses. The main objective of portfolio company investments is to achieve capital appreciation and realized gains in the portfolio. These gains and losses are not included in investment expense, net.

Second Quarter Ended March 31, 2009 Compared to Second Quarter Ended March 31,

2008

                                         For the three months ended
                                                  March 31,
                                                 2009             2008        Change

   Total investment income          $                 81,763      194,298    (112,535)
   Total operating expenses                        (320,312)    (465,782)      145,470

   Investment expense, net                         (238,549)    (271,484)       32,935

   Net realized gain (loss) on
   investments                                     (768,610)        5,493    (774,103)
   Net change in unrealized
   appreciation/
   depreciation on investments and
   other assets                                    (381,771)    (199,976)    (181,795)
   Net change in unrealized gain on
   other assets                                          ---        6,628      (6,628)

   Net loss gain on investments                  (1,150,381)    (187,855)    (962,526)

   Net change in net assets from    $            (1,388,930)    (459,339)    (929,591)
   operations

   Net asset value per share:
   Beginning of period              $                   4.32         4.36

   End of period                    $                   3.75         4.18

Total Investment Income

During the current fiscal year second quarter, total investment income was $81,763, a decrease of $112,535, or 58%, from total investment income of $194,298 for the prior year second quarter. In the current year second quarter as compared to the prior year second quarter, interest income decreased $107,237, or 59%, and dividend income decreased $5,292, or 41%. The decrease in interest income is the net result of (i) repayments of principal on debt portfolio securities issued to us by three portfolio companies, (ii) an increase in interest income due to one follow-on debt portfolio security investment, and
(iii) a decrease in interest income on four debt portfolio securities which have been placed on non-accrual of interest status. In both the current year second quarter and the prior year second quarter, MACC received a dividend on one existing portfolio investment, however the current year dividend was smaller. MACC does not anticipate that its dividend income will continue to decrease in future periods.

Net Operating Expenses

Net operating expenses for the second quarter of the current year were $320,312, a decrease of $145,470 or 31%, as compared to net operating expenses for the prior year second quarter of $465,782. Interest expense decreased $37,917, or 35%, in the current year second quarter due a combination of the decrease in the interest rate and principal balance of the Note Payable to Cedar Rapids Bank & Trust Company as discussed below under Financial Condition, Liquidity and Capital Resources.

Management fees increased $13,192, or 21%, in the current year second quarter due to the change of investment advisers and concurrent increase in the management fee from 1.5% to 2.0%. However, in order to reduce expenses, effective in May, our investment adviser, Eudaimonia Asset Management, LLC ("EAM"), has voluntarily waived its 1% portion of the management fee for an indefinite period. The remaining 1% of the management fee continues to be paid to our subadviser, InvestAmerica Investment Advisors, Inc. ("InvestAmerica"). Professional fees decreased $90,611, or 46%, in the current year second quarter as compared to the prior year second quarter. The decrease is primarily related to the absence of legal costs incurred in the prior year period due to changes in the investment advisory structure, the merger and exploration of capital raising options. Other expenses decreased $30,134, or 32%, in the current year second quarter as compared to the prior year second quarter. The decrease in other expenses is a result of (i) a decrease in expenses associated with compliance with the Investment Company Act of 1940, as amended (the "1940 Act"), and (ii) the elimination of fees paid in the prior second quarter for investor related services associated with our proposed rights offering and the preparation of a registration statement.

Investment Expense, Net

For the current year second quarter, MACC recorded investment expense, net of $238,549, as compared to investment expense, net of $271,484 during the prior year second quarter, a decrease of $32,935, or 12%. The decrease in investment expense, net is primarily the result of the decrease in interest income, professional and other expenses as described above.

Net Realized gain/(loss) on Investments

During the current year second quarter, MACC realized a net loss of $768,610 on one portfolio investment, as compared with the net realized gain of $5,493 in the prior year second quarter. The current period realized loss was the write-off of a portfolio investment which had been previously written down to $1 through unrealized losses. Management does not attempt to maintain a comparable level of realized gains quarter to quarter but instead attempts to maximize total investment portfolio appreciation through realizing gains in the disposition of securities. Under the Investment Advisory Agreements between us and our prior sole investment adviser, InvestAmerica, and between a subsidiary at the time, MorAmerica Capital Corporation, ("MorAm") and InvestAmerica (together, the "InvestAmerica Advisory Agreements"), both of which were in effect prior to their termination during the third quarter of fiscal 2008, InvestAmerica earned an incentive fee calculated as a percentage of the excess of our realized gains in a particular period, over the sum of net realized losses and unrealized depreciation during the same period. As a result, the timing of realized gains, realized losses and unrealized depreciation can have an effect on the amount of the incentive fee payable to InvestAmerica under the InvestAmerica Advisory Agreements.

Effective April 29, 2008, the InvestAmerica Advisory Agreements were terminated and we entered into an Investment Advisory Agreement (the "EAM Advisory Agreement") with EAM. Under the EAM Advisory Agreement, EAM earns an incentive fee which is calculated as percentage of the excess of our realized gains in a particular period, over the sum of net realized losses and unrealized depreciation during the same period. As a result, the timing of realized gains, realized losses and unrealized depreciation can have an effect on the amount of the incentive fee payable to EAM under the EAM Advisory Agreement.

Also Effective April, 29, 2008, we entered into an Investment Subadvisory Agreement (the "Subadvisory Agreement") with EAM and InvestAmerica, pursuant to which InvestAmerica continues to manage our portfolio of investment which existed on the effective date of the Subadvisory Agreement (the "Existing Portfolio"). Under the terms of the Subadvisory Agreement, EAM pays InvestAmerica an incentive fee based on a portion of the incentive fees paid to EAM by us under the EAM Advisory Agreement attributable to the Existing Portfolio.

Net Change in Unrealized Appreciation/Depreciation of Investments and Other Assets

Net change in unrealized appreciation/depreciation on investments represents the change for the period in the unrealized appreciation, net of unrealized depreciation, on our total investment portfolio based on the valuation method described under "Critical Accounting Policy".

We recorded a net change in unrealized appreciation/depreciation on investments of ($381,771) during the current year second quarter, as compared to ($199,976) during the prior year second quarter. This net change resulted from:

? No unrealized appreciation during the current year second quarter, as compared to unrealized appreciation in the fair value of two portfolio companies totaling $567,469 during the prior year second quarter.

? Unrealized depreciation in the fair value of two portfolio companies totaling $1,150,381 during the current year second quarter, as compared to unrealized depreciation in the fair value of six portfolio companies of $767,445 during the prior year second quarter.

? Reversal of unrealized depreciation of $768,610 in one portfolio company during the current year second quarter, as compared to no reversals of unrealized depreciation in the prior year second quarter.

Net Change in Net Assets from Operations

We experienced a decrease of $1,388,930 in net assets for the second quarter of fiscal year 2009, and the resulting net asset value per share was $3.75 as of March 31, 2009, as compared to $4.31 as of December 31, 2008. The decrease in net asset value during the second quarter ended March 31, 2009 was primarily the result of the net change in realized loss and net unrealized depreciation on investments, as described above.

As of March 31, 2009, we had seven portfolio investments valued at cost, had recorded unrealized appreciation on five portfolio investments, and have recorded unrealized depreciation on six portfolio investments. Quarterly valuations can be affected by a portfolio company's short term performance that results in increases or decreases in unrealized depreciation and unrealized appreciation for the quarter. Changes in the fair value of a portfolio security may or may not be indicative of the long term performance of the portfolio company.

Although we are not currently making investments in new portfolio companies (but may periodically make follow-on investments in Existing Portfolio companies), as previously announced, our investment strategy under the EAM Advisory Agreement going forward is to make new equity investments in small-cap and micro-cap companies which qualify for investment by business development companies ("BDCs") under the 1940 Act. Under the Subadvisory Agreement, InvestAmerica will continue to oversee the Existing Portfolio. We will continue to prudently sell Existing Portfolio investments and use the resulting proceeds to pay down the Note Payable, as further described below. The ability to exit the Existing Portfolio investments is affected by company performance and external factors unrelated to the portfolio companies. These factors include subprime lending, credit contraction, inflationary pressures, high commodity prices, recessional pressures, and a slowing economy.

We have initiated the process of raising additional capital by filing a registration statement to effect a rights offering, which was approved by shareholder vote on April 28, 2008, but which we would not anticipate effecting until our stock price increases sufficiently enough to yield at least $1 million in new capital. We further believe that future capital raises will be necessary and that they should be done at prices that are not excessively dilutive to current shareholders.

  Six Months Ended March 31, 2009 Compared to Six Months Ended March 31, 2008

                                          For the six months ended
                                                 March 31,
                                              2009                 2008         Change

Total investment income          $                   293,141        454,302    (161,161)
Net operating expense                              (613,710)      (773,345)    (159,635)

Investment expense, net                            (320,569)      (319,043)      (1,526)

Net realized (loss) gain on                        (768,610)          5,493    (774,103)
investments
Net change in unrealized
appreciation/
depreciation on investments and
other assets                                       (112,671)      (921,330)      808,658
Net change in unrealized loss on                         ---          6,628      (6,628)
other assets

Net gain (loss) on investments                     (881,281)      (909,209)       27,928

Net change in net assets from    $               (1,201,850)    (1,228,252)       26,402
operations
Net asset value per share:
Beginning of period              $                      4.23           4.67
End of period                    $                      3.75           4.18

During the current fiscal year six-month period, total investment income was $293,141, a decrease of $161,161, or 35%, from total investment income of $454,302 for the prior year six-month period. In the current year six-month period as compared to the prior year six-month period, interest income decreased $180,224, or 51%, and dividend income increased $19,069 or 19%. The decrease in interest income is the net result of (i) repayments of principal on debt portfolio securities issued to us by four portfolio companies, (ii) an increase in interest income due to the timing of receipt of payments, and (iii) a decrease in interest income on four debt portfolio securities which have been placed on non-accrual of interest status. In both the current year six-month period and the prior year six-month period, MACC received dividends on two existing portfolio investments, however the current year dividends were larger.

Net Operating Expenses

Net operating expenses for the six-month period of the current year were $613,710, a decrease of $159,635, or 21%, as compared to net operating expenses for the prior year six-month period of $773,345. Interest expense decreased $93,525, or 39%, in the current year six-month period due to the repayment of principal and reduced interest rate. Management fees increased $21,171, or 16%, in the current year six-month period due to the increase in the management fee rate from 1.5% to 2.0% under the EAM Advisory Agreement and partially offset by the decrease in capital under management. Professional fees decreased $80,103, or 31%, in the current year six-month period due to expenses incurred in the prior six-month period related to changes in the investment advisory structure, the merger and exploration of capital raising options. Other expenses decreased $7,178, or 5%, in the current year six-month period as compared to the prior year six-month period. The decrease in other expenses is primarily the net result of (i) the increase in directors' fees and travel reimbursements, (ii) a decrease in directors and officers insurance expense, (iii) the elimination of fees paid in the prior period for investor-related services associated with our proposed rights offering and the preparation of a registration statement, and
(iv) a decrease in expenses associated with compliance with the 1940 Act.

Investment Expense, Net

For the current year six-month period, MACC recorded investment expense, net of $320,569, as compared to investment expense, net of $319,043 during the prior year six-month period, an increase of $1,526, or less than 1%. The decrease in investment expense, net is the result of the decrease in investment income described above, partially offset by the decrease in investment expense described above.

Net Realized Gain on Investments

During the current year six-month period, MACC realized a net loss of $768,610 on one portfolio investment, as compared with net realized gain on investments of $5,493 during the prior year six-month period. The current period realized loss was the result of a write-off of a portfolio investment which had been previously written down to $1 through unrealized losses. Management does not attempt to maintain a comparable level of realized gains quarter to quarter but instead attempts to maximize total investment portfolio appreciation through realizing gains in the disposition of securities.

Net Change in Unrealized Appreciation/Depreciation of Investments and Other Assets

Net change in unrealized appreciation/depreciation on investments represents the change for the period in the unrealized appreciation, net of unrealized depreciation, on MACC's total investment portfolio based on the valuation method described under "Critical Accounting Policy".

MACC recorded net change in unrealized appreciation/depreciation on investments of ($112,671) during the current year six-month period, as compared to ($921,330) during the prior year six-month period. This net change resulted from:

? Unrealized appreciation in the fair value of two portfolio companies totaling $334,051 during the current year six-month period, as compared to unrealized appreciation in the fair value of two portfolio companies totaling $743,338 during the prior year six-month period.

? Unrealized depreciation in the fair value of four portfolio companies of $1,215,332 during the current year six-month period, as compared to unrealized depreciation in the fair value of eight portfolio companies of $1,664,668 during the prior year six-month period.

? Reversal of unrealized depreciation of $768,610 in one portfolio company during the current year six-month period, as compared to no reversals of unrealized depreciation in the prior year six-month period.

The net change in unrealized gain on other assets of $6,628 during the prior six-month period ending March 31, 2008 was recorded with respect to other portfolio securities which are classified as other assets. There were no unrealized gains or losses on other assets during the six-month period ending March 31, 2009.

Going Concern Uncertainty, Financial Condition, Liquidity and Capital Resources

Global capital markets entered into a period of significant disruption in 2008, as evidenced by a lack of liquidity in debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk and the failure of major financial institutions. Despite actions of the United States federal government and foreign governments, these events have contributed to worsening general economic conditions that are materially and adversely impacting the broader financial and credit markets and have significantly reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. These conditions could continue for a prolonged period of time or worsen in the future. While these conditions persist, we and other companies in the financial services sector may need, or may choose to access alternative markets for debt and equity capital which may only be available at a higher cost, and or on less favorable terms and conditions. In addition, equity capital may be difficult to raise because, subject to some limited exceptions, we are not generally able to issue and sell our common stock at a price below net asset value per share. Conversely, our portfolio companies may not be able to service or refinance their debt which could materially and adversely affect our financial condition as we would experience reduced income or even losses. The inability to raise capital and the risk of portfolio company defaults may have a negative effect on our business, financial condition and results of operations.

As of March 31, 2009, our cash and money market accounts totaled $7,729. As reported elsewhere, MorAm had entered into (i) a term loan to refinance the outstanding debt under the Small Business Administration debenture program ("SBA Debentures"), which was assumed by us on April 30, 2008 as a result of the merger, and which now has a balance of $4,655,965 (the "Note Payable"), and (ii) a revolving loan permitting MorAm (now us) to borrow up to $500,000 ("Line of Credit"), with Cedar Rapids Bank & Trust Company ("CRB&T") which as of March 31, 2009 has a principal balance of $220,000. The Note Payable has a stated maturity of August 28, 2009. The Line of Credit will terminate on August 29, 2009. We have begun negotiations to refinance the Note Payable or line of Credit with CRB&T. We are also exploring other sources for bank financing. In the event that we are not able extend the terms of the Note Payable and obtain additional cash resources, we will not be able to meet immediate cash payment requirements.

Although we currently believe we will be able refinance the Note Payable and Line of Credit with CRB&T during the year, failure to do so or find alternative financing could pose significant financial risks to MACC given the relatively illiquid nature of the Existing Portfolio. Assuming the successful refinancing of the Note Payable and the Line of Credit with CRB&T, we believe, as of March 31, 2009, that our existing cash, money market accounts, and other anticipated cash flows will provide adequate funds for our anticipated cash requirements during fiscal year 2009.

The following table shows our significant contractual obligations for the repayment of the Note Payable, Line of Credit and other contractual obligations as of March 31, 2009:

                                  Payments due by period

       Contractual Obligations
                                             Less than    1-3     3-5    More than
                                   Total      1 Year     Years   Years    5 Years

       Note Payable            $ 4,655,965   4,655,965     ---     ---         ---

       Line of Credit          $   220,000     220,000     ---     ---         ---

       Incentive Fees Payable  $    16,361      16,361     ---     ---         ---

With respect to the Existing Portfolio, we are not making new investments, are prudently disposing of Existing Portfolio assets and are using the resulting proceeds to pay down the Note Payable and Line of Credit.

With respect to our investment strategy under the EAM Advisory Agreement, our Board of Directors sought and received approval by the shareholders for a proposal to issue rights to acquire shares of our Common Stock as a means by which we may raise additional equity capital. We anticipate commencing our new investment strategy under the EAM Advisory Agreement if and when we raise additional capital. In light of challenging market conditions as previously discussed however, the Board of Directors is continuing to review alternatives, including seeking shareholder approval to liquidate should additional capital raising prospects prove unlikely or inadequate to effectively execute on the new strategy.

Portfolio Activity

With respect to the Existing Portfolio, we have invested in and lended to businesses through investments in subordinated debt (generally with detachable equity warrants), preferred stock and common stock. We, however, are not currently making investments in new portfolio companies. As of March 31, 2009, certain debt investments have or were near expiration. Since the quarter end, we have either restructured or continue to work toward restructuring these investments. The total portfolio value of our investments illiquid securities was $13,606,009 at March 31, 2009 and $14,732,690 at December 31, 2008. During the three months ended March 31, 2009, we made follow-on investments in the amount of $65,751 in two existing portfolio companies. These follow-on investments also represented a co-investment with other funds managed by InvestAmerica.

With respect to the Existing Portfolio, we have frequently co-invested with other funds managed by InvestAmerica. All of the $65,751 invested during the current quarter ended March 31, 2009 represented co-investments with another fund managed by InvestAmerica. When we make any co-investment with these related funds, we follow certain procedures consistent with orders of the SEC for related party co-investments to mitigate conflict of interest issues.

Critical Accounting Policy

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". This statement defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective as of the beginning of the first fiscal year that begins after November 15, 2007. MACC adopted SFAS No. 157 effective October 1, 2008.

Investments in securities that are traded in the over-the-counter market or on a stock exchange are valued by taking the average of the close (or bid price in . . .