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.

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.

Third Quarter Ended June 30, 2009 Compared to Third Quarter Ended June 30, 2008

                                               For the three months ended
                                                        June 30,
                                                      2009                2008          Change

Total investment income                $                   152,445        281,861       (129,416)
Total operating expenses                                 (252,557)      (362,021)         109,464

Investment expense, net                                  (100,112)       (80,160)        (19,952)

Net realized gain (loss) on
investments                                            (1,240,803)        686,047     (1,926,850)
Net change in unrealized appreciation/
depreciation on investments and other
assets                                                     165,280       (34,322)         199,602
Net change in unrealized gain on other
assets                                                         ---       (40,628)          40,628

Net (loss) gain on investments                         (1,075,523)        611,097     (1,686,620)

Net change in net assets from          $               (1,175,635)        530,937     (1,706,572)
operations

Net asset value per share:
Beginning of period                    $                      3.75           4.18

End of period                          $                      3.27           4.39

Total Investment Income

During the current fiscal year third quarter, total investment income was $152,445, a decrease of $129,416, or 46%, from total investment income of $281,861 for the prior year third quarter. In the current year third quarter as compared to the prior year third quarter, interest income increased $14,998, or 13%, and dividend income decreased $144,414, or 88%. 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 one follow-on debt portfolio security investment, (iii) an increase due to one debt portfolio security has started paying interest, (iv) an increase due to one debt portfolio security which paid forbearance interest at the time it was paid off, and (v) a decrease in interest income on two debt portfolio securities which have been placed on non-accrual of interest status. In the current year third quarter, MACC received a dividend on one existing portfolio investment, as compared to dividend income received in the prior year third quarter from two existing portfolio investments. MACC anticipates that its dividend income will continue to decrease in future periods.

Net Operating Expenses

Net operating expenses for the third quarter of the current year were $252,557, a decrease of $109,464 or 30%, as compared to net operating expenses for the prior year third quarter of $362,021. Interest expense decreased $15,766, or 17%, in the current year third quarter due to 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 decreased $34,068, or 45%, in the current year third quarter due to the investment adviser, Eudaimonia Asset Management, LLC ("EAM"), having voluntarily waived its 1% portion of the management fee, effective in May, 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 $29,393, or 30%, in the current year third quarter as compared to the prior year third 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 $30,237, or 32%, in the current year third quarter as compared to the prior year third 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 third 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 third quarter, MACC recorded investment expense, net of $100,112, as compared to investment expense, net of $80,160 during the prior year third quarter, an increase of $19,952, or 25%. The increase in investment expense, net is primarily the result of the decrease in dividend income. This increase in investment expense, net would have been higher for the period had it not been offset by reduced interest expense, professional expense and other expenses as described above.

Net Realized Gain/(Loss) on Investments

During the current year third quarter, MACC realized a net loss of $1,240,803, as compared with the net realized gain of $686,047 in the prior year third quarter. The current period realized loss was the net result of a realized gain on the sale of one portfolio investment, a realized loss on the sale of one other portfolio investment and 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 $165,280 during the current year third quarter, as compared to ($34,322) during the prior year third quarter. This net change resulted from:

? Reversal of unrealized appreciation in the fair value of three portfolio companies totaling $495,520 during the current year third quarter, as compared to no reversal of unrealized appreciation during the prior year third quarter.

? Unrealized depreciation in the fair value of five portfolio companies totaling $926,905 during the current year third quarter, as compared to unrealized depreciation in the fair value of one portfolio company of $34,322 during the prior year third quarter.

? Reversal of unrealized depreciation of $1,587,705 in two portfolio companies during the current year third quarter, as compared to no reversals of unrealized depreciation in the prior year third quarter.

Net Change in Net Assets from Operations

We experienced a decrease of $1,175,635 in net assets for the third quarter of fiscal year 2009, and the resulting net asset value per share was $3.27 as of June 30, 2009, as compared to $3.75 as of March 31, 2009. The decrease in net asset value during the third quarter ended June 30, 2009 was primarily the result of the net change in realized loss and net unrealized depreciation on investments, as described above.

As of June 30, 2009, we had four 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 when we have capital available. 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 credit contraction, inflationary pressures, volatile commodity prices, recessional pressures, and a slowing economy.

We have initiated the process to raise 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.

  Nine Months Ended June 30, 2009 Compared to Nine Months Ended June 30, 2008

                                                   For the nine months ended
                                                            June 30,
                                                       2009                      2008           Change

Total investment income                $                          445,586         736,163       (290,577)
Net operating expense                                           (866,267)     (1,135,366)         269,099

Investment expense, net                                         (420,681)       (399,203)        (21,478)

Net realized (loss) gain on                                   (2,009,413)         691,540     (2,700,953)
investments
Net change in unrealized appreciation/
depreciation on investments and other
assets                                                             52,609       (955,652)       1,008,261
Net change in unrealized loss on other                                ---        (34,000)          34,000
assets

Net loss on investments                                       (1,956,804)       (298,112)     (1,658,692)

Net change in net assets from          $                      (2,377,485)       (697,315)     (1,680,170)
operations

Net asset value per share:
Beginning of period $ 4.23 4.67 End of period $ 3.27 4.39

Total Investment Income

During the current fiscal year nine-month period, total investment income was $445,586, a decrease of $290,577, or 39%, from total investment income of $736,163 for the prior year nine-month period. In the current year nine-month period as compared to the prior year nine-month period, interest income decreased $165,226, or 35%, and dividend income decreased $125,345 or 48%. 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, (iii) an increase due to one debt portfolio security has started paying interest, (iv) an increase due to one debt portfolio security which paid forbearance interest at the time it was paid off, and (v) a decrease in interest income on five debt portfolio securities which have been placed on non-accrual of interest status. In the current year nine-month period, MACC received dividends on two existing portfolio investments, as compared to dividend income received in the prior year nine-month period from three existing portfolio investments.

Net Operating Expenses

Net operating expenses for the nine-month period of the current year were $866,267, a decrease of $269,099, or 24%, as compared to net operating expenses for the prior year nine-month period of $1,135,366. Interest expense decreased $101,157, or 31%, in the current year nine-month period due to the repayment of principal and reduced interest rate. Management fees decreased $12,897, or 6%, in the current year nine-month period due to the voluntary waiver by EAM of its 1% portion of the management fee, effective in May 2009, for an indefinite period. The remaining 1% of the management fee continues to be paid to our subadviser, InvestAmerica. We cannot provide assurance of the duration of EAM's waiver. Professional fees decreased $124,496, or 35%, in the current year nine-month period due to expenses incurred in the prior nine-month period related to changes in the investment advisory structure, the merger and exploration of capital raising options. Other expenses decreased $30,549, or 12%, in the current year nine-month period as compared to the prior year nine-month period. The decrease in other expenses is primarily the net result of
(i) an increase in directors' fees (ii) a decrease in directors and officers insurance expense and directors' travel reimbursement, (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 nine-month period, MACC recorded investment expense, net of $420,681, as compared to investment expense, net of $399,203 during the prior year nine-month period, an increase of $21,478 or 5%. The increase in investment expense, net is primarily the result of the decrease in investment income described above, partially offset by the decrease in investment expense described above.

Net Realized Gain/(Loss) on Investments

During the current year nine-month period, MACC realized a net loss of $2,009,413, as compared with net realized gain on investments of $691,540 during the prior year nine-month period. The current period realized loss was the net result of a realized gain on the sale of one portfolio investment, a realized loss on the sale of one other portfolio investment and the write-off of two portfolio investments 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 $52,609 during the current year nine-month period, as compared to ($955,652) during the prior year nine-month period. This net change resulted from:

? Reversal of unrealized appreciation in the fair value of four portfolio companies totaling $560,471 during the current year nine-month period, as compared to unrealized appreciation in the fair value of two portfolio companies totaling $743,338 during the prior year nine-month period.

? Unrealized depreciation in the fair value of six portfolio companies of $2,067,285 during the current year nine-month period, as compared to unrealized depreciation in the fair value of eight portfolio companies of $1,698,990 during the prior year nine-month period.

? Reversal of unrealized depreciation of $2,680,365 in four portfolio companies during the current year nine-month period, as compared to no reversals of unrealized depreciation in the prior year nine-month period.

The net change in unrealized gain on other assets was $34,000 during the prior nine-month period ending June 30, 2008. The other asset represents proceeds on a sale of an investment in June 2007 that were held in escrow until the settlement of certain future events. During the period the estimated proceeds, net of any related expenses, decreased from $84,000 to $50,000 and accordingly an unrealized loss was recorded to adjust the other asset to the expected settlement. There were no unrealized gains or losses on other assets during the nine-month period ending June 30, 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 under the 1940 Act, 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 June 30, 2009, our cash and money market accounts totaled $70,026. As previously reported, 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 $4,314,022 (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 June 30, 2009 had a principal balance of $330,000. The Note Payable has a stated maturity of August 28, 2009. The Line of Credit will terminate on August 29, 2009. As of the date this report on Form 10-Q is filed, we have received notice that CRB&T has approved modification of the terms of the Loans as follows: (i) we will draw the remaining $170,000 of our revolving credit line and execute a single new note in the principal amount of $4,814,022, (ii) the

amount payable will be due and payable March 31, 2010, and (iii) the interest rate on amounts owing will be increased to prime plus 2.0% (from prime plus 0.5%). Because the credit facility has a floor interest rate of 6%, this change does not result in an increase from the current effective rate. Such changes will not be effective until reflected in amendments to our loan documents, which we cannot be assured of, but which we expect to execute prior to August 31. If we fail to extend such terms we will not be able to meet our short term payment obligations. We will also need to obtain a further extension of our note payable or consider additional sources of financing or additional sales of our investments in order to meet our payment obligations in March, 2010.

Although we currently believe we will be able refinance the Note Payable and Line of Credit with CRB&T, 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 June 30, 2009, that our funds drawn under the Line of Credit, existing cash, money market accounts, and other anticipated cash flows will provide adequate funds for our anticipated cash requirements during the remaining portion of 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 June 30, 2009:

                                             Payments due by period

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

Note Payable                      $ 4,314,022        4,314,022             ---             ---               ---

Line of Credit                    $   330,000          330,000             ---             ---               ---

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 would commence our new investment strategy under the EAM Advisory Agreement only 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 . . .