_______________________________________________________
Securities and Exchange Commission
Washington, DC 20549
________________________________________________________
FORM 10-K
MARK ONE:
[X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the Fiscal Year Ended December 31, 2000; or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission File No. 038593
___________________________
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
(Exact name of registrant as specified in its charter)
TEXAS 75-6590369
(State of incorporation or organization) (I.R.S. Employer Identification No.)
5646 Milton Street, Suite 900
Dallas, Texas 75206
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 378-9340
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
None None
Securities Registered Pursuant to Section 12(g) of the Act:
Trust Interests
(Title of class)
Indicate 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 during the preceding 12 months (or for 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 [X] No [ ]
Indicate by check mark if disclosure by delinquent filers pursuant to Item 405
of Regulation S-K 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:
[X]
State the aggregate market value of the voting stock held by non affiliates of
the registrant:
As of December 31, 2000, there were 43,254 Units of Liquidating Trust Interest
outstanding. A Unit is an initial offering Subscription of $1,000. There is
no market in the Units. Based on Unit values as reflected in the Registrant's
Financial Statements, the aggregate value of the Liquidating Trust Interests
held by non-affiliates as of December 31, 2000, was $31,684,820. Aggregate
value of the Liquidating Trust Interests held by affiliates as of December 31,
2000, was $22,723.
PART I
The discussion set forth herein contains certain forward looking statements
with respect to the financial condition, results of operations and business of
the Liquidating Trust. These forward looking statements are subject to
certain risks and uncertainties, not all of which can be predicted or
anticipated. Factors that may cause actual results to differ materially from
those contemplated by the forward looking statements herein include, but are
not limited to, changes in economic conditions; competitive conditions in the
markets in which portfolio companies conduct their operations, including
competition from companies with substantially greater resources than those of
the portfolio companies; and the results of litigation, which cannot be
predicted with certainty. Readers of this Discussion should not place undue
reliance on forward looking statements.
Item 1. BUSINESS
General Development of Business
Capital Partners II, Ltd. Liquidating Trust (referred to herein as the
"Trust") is the successor to Renaissance Capital Partners II, Ltd. (the
"Partnership"). On November 17, 2000, following a meeting of the limited
partners of the Partnership, the Partnership transferred substantially all of
its assets, including all of its investments, to the Trust. The only assets
remaining in the Partnership are certain claims in litigation and cash
anticipated to be required to operate the Partnership.
Thomas W. Pauken acts both as the Liquidation Trustee of the Partnership and
as the Liquidating Trustee of the Trust.
The Partnership, which was a Texas limited partnership formed in 1991, elected
to operate as a business development company under the Investment Company Act
of 1940. The investment objective of the Partnership was to provide investors
with current income and long-term capital appreciation by investing primarily
in private placement convertible debt securities (the "Debentures") of small
and medium size public companies ("Portfolio Companies").
On January 23, 1991, the Partnership filed a registration statement on Form N-
2 for the sale of up to 50,000 Limited Partnership Units at an offering price
of $1,000 per Unit. The Partnership continued the offering until March 31,
1993, at which time the offering was closed.
Renaissance Capital Group, Inc. ("Renaissance Group"), a Texas corporation,
served as the managing general partner (the "Managing General Partner") and as
investment adviser to the Partnership until September 30, 1998. In those
capacities, Renaissance Group was primarily responsible for the selection,
evaluation, structure, and administration of the Partnership's investment
portfolio. Those activities were subject to the supervision of two Independent
General Partners of the Partnership, who provided guidance with respect to the
operations of the Partnership (See Partnership's Form 10-K for year ended
December 31, 1999; Item 10. Directors and Executive Officers of the
Registrant).
Effective October 1, 1998, Renaissance Group withdrew as Managing General
Partner of the Partnership as part of an agreement to begin to wind up and
liquidate the Partnership. Mr. Thomas W. Pauken, who had served as an
Independent General Partner, agreed to become the Liquidation Trustee (the
"Trustee") pursuant to the Liquidation Trustee's Agreement which was filed as
an Exhibit to Form 10-Q for the period ending September 30, 1998. The Trustee
assumed all responsibilities, and has the authority, of the Managing General
Partner. From and after October 1, 1998, the Partnership limited its
activities to liquidating its assets and winding up its affairs. Since the
Date of Transfer, the Trust has continued the liquidation of the Partnership's
assets.
On November 17, 2000, at a special meeting of the limited partners, a
resolution calling for the Partnership to withdraw its election to be
regulated as a business development company was adopted, and the Partnership
filed a statement with the Securities and Exchange Commission withdrawing its
election. The second resolution adopted at this meeting called for an
amendment to the Partnership Agreement authorizing the Trustee to transfer the
Partnership's investment assets to a liquidating Trust. On November 17, 2000,
Capital Partners II, Ltd. Liquidating Trust (the "Trust") was created and the
investment assets of the Partnership were transferred to the Trust. Pursuant
to the Capital Partners II, Ltd. Liquidating Trust Agreement (the "Liquidating
Trust Agreement"), the Trust will terminate no later than November 17, 2002.
Narrative Description of the Business
The Partnership, as a business development company under the 1940 Act,
primarily made investments in convertible debentures of small and medium sized
public companies. The Trust does not intend to make any new investments in
additional companies.
Liquidation Policy
The investment objective of the Trustee is to wind up the Trust in an
expeditious manner while seeking to maximize the value of the remaining assets
and reduce the administrative and managerial costs to the Trust. Pursuant to
the Liquidating Trust Agreement the Trust will terminate no later than two
years after its formation date, November 17, 2000.
The Partnership distributed $1,000,000 Limited Partners in 1998 and has made
no further distributions except for the Units in the Trust.
Portfolio Investments
On November 17, 2000, the Partnership had investments in two (2) portfolio
companies with an aggregate cost of $10,312,729, and a fair value of
$35,176,143. These investments were transferred to the Trust at the close of
business on November 17, 2000.
Tutogen Medical, Inc. (formerly known as Biodynamics International, Inc.)
Tutogen Medical, Inc. ("Tutogen") processes bio implants for neurosurgical,
orthopedic, urological, reconstructive and general surgical indications,
utilizing its patented Tutoplast process of tissue preservation and viral
inactivation. Tutogen's products are distributed worldwide through operating
subsidiaries in the U.S. and Germany and through strategic alliances with such
companies as Mentor and I.O.P., Inc. Tutogen stock trades on the NASDAQ stock
market under the symbol TTGN. On March 29, 1993, the Partnership invested
$2,500,000 in a 11% convertible debenture issued by Tutogen. Subsequently,
the Partnership made follow-on investments in Tutogen.
Prior to the formation of the Trust, the following transactions involving
Tutogen occurred in 2000:
1. In the first quarter of 2000, the Partnership received a principal payment
in the amount of $9,950 on the $500,000 Debenture. The first quarter of
Tutogen's fiscal year 2000 reported earnings of $0.05 per share.
2. The Trustee was appointed Chairman of the Board of Tutogen Medical, Inc.
during the company's Annual Meeting held in late April, 2000, in New York. On
August 17, 2000, the common stock was listed for trading on the American Stock
Exchange with the symbol TTG.
3. On June 23, 2000, in a private transaction, the Partnership sold common
stock purchase warrants to purchase 250,000 shares at an exercise price of
$1.25 per share to Sulzer Medica USA Holding Co. The Partnership received
proceeds in the amount of $937,500 from the transfer of those warrants.
4. On June 28, 2000 the Partnership exercised its right to convert the
outstanding principal on the $500,000 Debenture, resulting in the issuance to
the Partnership of 363,000 shares of common stock of Tutogen. On the same
date the Partnership also exercised common stock purchase warrants to
purchase 1,103,957 shares, at an exercise price of $1.25 per share.
At the close of business on November 17, 2000, the Partnership transferred all
of its interest in Tutogen consisting of 7,202,408 shares of common stock and
700,000 shares of common stock purchase warrants, to the Trust. The
Partnership also exercised common stock options plan to purchase 2,500 shares,
at an exercise price of $2.22. Upon issue these shares of common stock were
transferred to the Trust.
The Trust exercised common stock purchase warrants to purchase 400,000 and
300,000 shares, at an exercise price of $1.25 and $1.50 per share,
respectively, on December 20, 2000. The Trust borrowed the funds required to
exercise the warrants ($950,000) from Sulzer Medica USA Holding Co. As of
December 31, 2000, the Trust was the beneficial owner of 7,905,908 shares
(which includes a common stock option agreement to purchase 1,000 shares at an
exercise price of $7.81), representing approximately 53.24% of the outstanding
shares of Tutogen (including, for this purpose shares issued in transactions
described above and shares issuable upon exercise of options; all of the
options are presently exercisable.)
Consolidated Health Care Associates, Inc.
Consolidated Health Care Associates, Inc. ("CHCA") operated physical therapy
rehabilitation centers until it was liquidated in 1998. On December 29, 1992,
the Partnership invested $2,500,000 in an 11% debenture issued by CHCA of
Franklin, Massachusetts. Subsequently, the Partnership made follow-on
investments in CHCA. Thereafter, in 1997 and 1998, the Partnership made
additional advances to CHCA in the form of various promissory notes.
Prior to the formation of the Trust, the following transactions involving CHCA
occurred in 2000:
In the first quarter of 2000, the Partnership received $69,826 in proceeds in
full settlement of a promissory note previously assigned to the Partnership.
The Partnership also extended a loan of $14,000 to CHCA to pay its operational
costs during a Chapter 11 bankruptcy proceeding initiated by CHCA in the first
quarter of 2000. The loan is evidenced by a promissory note bearing interest
at 10% per annum. In the fourth quarter, 2000, the Chapter 11 reorganization
proceeding was converted to a Chapter 7 liquidation. The Partnership has
filed a Request for Payment of Administrative Expense Claim with the Court to
recoup the principal and interest on this promissory note.
GDI Global Data, Inc.
GDI Global Data, Inc. ("GDI") provides end-to-end remote communications
solutions for commercial and industrial markets. In the second quarter of
2000, the Partnership received 166,666 shares of common stock of GDI in
exchange for its 8,333.33 shares of StarComm Products, Inc. ("StarComm") as a
result of a merger between GDI and StarComm. During the second quarter, the
Partnership received proceeds in the amount of $10,925 from the sale of 11,500
shares of common stock of GDI, a stock traded on the Toronto Stock Exchange.
At the close of business on November 17, 2000, the Partnership transferred all
of its interest in GDI consisting of 156,666 shares of common stock, to the
Trust.
Personnel
The Trust has no direct employees but instead has contracted with the Trustee
pursuant to the Liquidating Trust Agreement to provide all management and
operation activities. The Trustee currently employs one additional person to
assist him in performing the duties and functions required by the Trust.
Outside personnel are retained by the Trustee on an as needed basis. At the
present time, a substantial portion of the Trustee's staff time is devoted to
activities of the Trust and Partnership.
Financial Information about Foreign and Domestic Operations
A substantial amount of business of Tutogen arises out of the operations of
its German subsidiary. Since there are no additional investments planned by
the Trust, there will be no additional investments in foreign operations.
Item 2. PROPERTIES
The Trust's business activities are conducted from the leased offices of the
Trustee in an office building in Dallas. Certain office expenses relating to
the Trusts' activities are charged to the Partnership by the Trustee pursuant
to the Liquidation Trustee Agreement.
Item 3. LEGAL PROCEEDINGS
There are no legal proceedings pending with regard to the Trust, however the
following matters are pending with the Partnership:
The Trustee has filed a lawsuit on behalf of the Partnership against the
former directors of Coded Communications Corporation and others alleging
securities fraud, fraud, negligent misrepresentation and other claims to the
detriment of the Partnership. That lawsuit is pending in the United States
District Court for the Northern District of Texas, Dallas Division and is
styled "Thomas W. Pauken, Liquidation Trustee for Renaissance Capital Partners
II, Ltd. v. Hugo Camou, et al.; Civil Action No. 3-98-CV-2758-G". The Trustee
also filed certain actions on behalf of the Partnership in the Coded
Communications Chapter 7 bankruptcy styled "IN RE Coded Communications
Corporation, et al., Debtor; Bk. Case No. 98-2741 (MFW) through 98-2743
(MFW)". The bankruptcy action was resolved with a payment of $385,000 to the
Partnership in the third quarter of 1999. The lawsuit is still pending in
federal court. A portion of the cause of action has been referred to
arbitration in California. In 1999, the Partnership accrued expenses of
$50,000 to cover anticipated legal fees.
The Partnership also appealed a decision of a Pennsylvania court in a
adversial action against the controlling shareholder of U.S. Fax, a former
portfolio company, in a case styled "Renaissance Capital Partners II, Ltd v.
US Fax, Inc. et al." That appeal was successfully concluded in 1999. The
outcome of that litigation is not expected to have a material effect on the
Partnership. There are no other legal proceedings currently pending with
regard to the Partnership.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the Beneficiaries in 2000;
however, at a Special Meeting of Limited Partners of the Partnership held on
November 17, 2000, the Limited Partners approved the two proposals described
below, with the votes indicated:
Broker
Votes Votes Non-
For Against Abstentions Votes
___________________________________________
Withdraw Partnership's election to
be regulated as a business
development company 28,139 2 225 0
Amend Limited Partnership
Agreement to authorize transfer of
assets to Liquidating Trust 28,184 22 160 0
PART II
Item 5. MARKET FOR THE REGISTRANT'S SECURITIES
Upon formation of the Trust and transfer of the Partnership assets to the
Trust, holders of the 43,254 units of the Partnership outstanding on November
17, 2000, were deemed to become the holders of the number of Units in the
Trust equal to the number of Partnership units which they held.
Immediately following the formation of the Trust, the Trust entered into an
Agreement with Sulzer Medica USA Holding Co. ("Sulzer"), whereby Sulzer made a
tender offer (the "Offer") to the beneficiaries of the Trust to acquire up to
21,627 Trust Units (one half of all of the Units) at a purchase price in cash
of $1,387.12 for each unit. The Offer expired on December 26, 2000.
Beneficiaries tendered 32,886 units to Sulzer, of which 21,627 units were
accepted by Sulzer on a pro rata basis.
Trading
There is no trading in the Interests and no established market exists.
Interests are restricted from transfer except in the event of death or by
action of law or except with the prior approval of the Liquidating Trustee.
Number of Holders
As of December 31, 2000, there were approximately 1,845 beneficial holders of
Trust interests.
Item 6. SELECTED FINANCIAL DATA
The following selected financial data for the five year period ended December
31, 2000, should be read in conjunction with the Trust's and the Partnership's
Financial Statements and notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in Item 7
of this Annual Report on Form 10-K for the five years ended December 31, 2000.
LIQUIDATING TRUST
Period from Year Ended Year Ended Year Ended Year Ended
Nov 17, 2000 to Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Dec 31, 2000 1999 1998 1997 1996
$ $ $ $ $
Gross Income (Loss)
(including
realized losses) -0- -0- -0- -0- -0-
Net Unrealized
appreciation
(depreciation)
on investments (3,466,727) -0- -0- -0- -0-
Net Income (loss) (3,468,600) -0- -0- -0- -0-
Income (loss) per
Trust unit (80) -0- -0- -0- -0-
Total Assets 32,659,416 -0- -0- -0- -0-
Distributions to
beneficiaries -0- -0- -0- -0- -0-
Distributions per
Trust unit -0- -0- -0- -0- -0-
PARTNERSHIP
Year Ended Year Ended Year Ended Year Ended Year Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2000 1999 1998 1997 1996
$ $ $ $ $
Gross Income (Loss)
(including realized
losses) 990,260 401,197 66,373 243,921 (3,098,478)
Net Unrealized
appreciation
(depreciation)
on investments 18,245,037 8,841,095 (5,087,413) (10,630,309) 1,049,091
Net Income (loss) 18,904,111 8,864,368 (5,622,192) (11,106,609) (3,000,121)
Income (loss) per
Ltd Partnership unit 437 205 (130) (253) (68)
Total Assets 536,864 16,780,546 7,917,415 14,631,365 26,933,422
Distributions to
partners -0- -0- 1,000,000 1,000,000 -0-
Distributions
per Ltd Partnership
unit -0- -0- 23 23 -0-
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Substantially all of the value of the Trust's assets are represented by the
common stock in Tutogen held by the Trust. As a result, the market value of
Tutogen's common stock, and fluctuations in that value, have a significant
impact on estimates of the fair value of the Trust's assets. In that regard,
beneficiaries of the Trust and other readers of this Report on Form 10-K and
other documents relating to the fair value of the Trust's assets should
recognize that Tutogen has limited capitalization and trading volume, and the
market prices for its common stock at any given time do not necessarily
reflect the price or prices at which a substanital block of Tutogen common
stock could be bought or sold. Accordingly, beneficiaries and other readers
of this Report should recognize that estimated values stated in this Report or
in subsequent documents are necessarily imprecise, and that the apparent value
of Units in the Trust is subject to potentially abrupt and unpredictable
changes, including overall market conditions and changes in the market for
Tutogen's stock. Because of the inherent uncertainty of such valuations, the
estimated fair value as determined by the Trustee are likely to vary
significantly from the value that could actually be realized in one or more
transactions.
2000 Compared to 1999
During 2000, the Trust made no additional portfolio investments, but made a
follow-on investment to Tutogen Medical, Inc. of approximately $950,000, for
the exercise of the 700,000 warrants. As a result of prior investments and
these follow-on investments, the Trust incurred a net loss of $3,468,600
during the period November 17, 2000 to December 31, 2000, consisting of the
following: (i) interest expense of $1,873 and (ii) unrealized depreciation on
investments of $3,466,727.
During 2000, the Partnership made no additional portfolio investments, but
made follow-on investments to Tutogen Medical, Inc. of approximately
$1,385,946, for the exercise of 1,103,957 warrants and 2,500 options. The
Partnership realized net income of $18,904,111 in 2000, consisting of the
following: (i) interest income of $39,957; (ii) dividend income of $27,207;
(iii) other income of $50; (iv) total expenses of $331,185; (v) realized gains
on investments of $923,046 and (vi) unrealized appreciation on investments of
$18,245,037. As a result of the liquidation of Portfolio Companies,
conversion of debentures to equity investments, and the necessity of reserving
interest accruals, interest income significantly declined in 2000. Dividends
are down as they are dependent on the availability of Portfolio Companies'
earnings for distribution. The estimated value of Portfolio Investments, as
determined by the Trustee, indicates an increase of $18,254,037 in fair value
during 2000.
The only expense incurred by the Trust in 2000 was interest expense of $1,873.
Total expenses incurred by the Partnership were $331,185 in 2000, compared to
$377,924 in 1999.
The Partnership incurred obligations to the Trustee of $72,000 for 2000.
1999 Compared to 1998
During 1999, the Partnership made no additional portfolio investments, but
made a follow-on investment to Tutogen Medical, Inc. of approximately $300,000
as a part of an overall restructuring of its position in Tutogen. As a result
of prior investments and these follow-on investments, the Partnership incurred
net income of $8,864,368 in 1999, consisting of the following: (i) interest
income of $269,424; (ii) dividend income of $32,090; (iii)
management/director's fees of $1,107; (iv) total expenses of $377,924; (v)
realized gains on investments of $98,576 and (vi) unrealized appreciation on
investments of $8,841,095. As a result of the liquidation of Portfolio
Companies, conversion of debentures to equity investments, and the necessity
of reserving interest accruals, interest income significantly declined in
1999. Dividends are down as they are dependent on the availability of
Portfolio Companies' earnings for distribution. The estimated value of
Portfolio Investments, as determined by the Trustee, indicates an increase of
$8,841,095 in fair value during 1999.
The Trustee substantially lowered the expenses of the Partnership in 1999.
Total expenses incurred by the Partnership was $377,924 in 1999 compared to
$601,152 in 1998.
The Partnership incurred obligations to the Trustee of $72,000 for 1999.
In the third quarter of 1999, the Trustee accrued estimated legal fees of
$50,000 in anticipation of future legal activity related to the pending Coded
Communications matter. (see Item 3. Legal Proceedings)
Year 2000
The Trust experienced no material problems associated with Year 2000 issues.
Item 7(a). QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Trust is subject to financial market risks such as changes in marketable
equity security prices. The Trust does not use derivative financial
instruments to mitigate any of these risks. The return on the Trust's
investments is generally not affected by foreign currency fluctuations.
A portion of the Trust's portfolio consists of debt and equity investments in
a private company. The Trust would anticipate no impact on this investment
from modest changes in public market equity prices. However, should
significant changes in market prices occur, there could be a longer-term
effect on valuations of private companies which could affect the carrying
value and the amount and timing of proceeds realized on this investment.
A significant portion of the Trust's investment portfolio consists of common
stocks, and in one case options to purchase common stock, in publicly traded
companies. These investments are directly exposed to equity price risk, in
that a percentage change in the prices of these equities would result in a
similar percentage change in the fair value of the Trust's investment in those
securities.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
For the Index to Financial Statements; see "Index to Financial Statements" on
page F-1.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None. The Trust has engaged the accounting firm of Smith, Gray, Boyer and
Daniell, PLLC (formerly Smith, Jackson, Cooper and Daniell, PLLC), which is
the same firm the Partnership engaged to audit the financial statements in
1999. On April 22, 1999, the Partnership engaged the accounting firm of
Smith, Gray, Boyer and Daniell, PLLC ("Smith Gray") to audit the Partnership's
financial statements for the fiscal year ended December 31, 1999, to replace
the firm of KPMG LLP ("KPMG"), which was the principal independent accountant
for the Partnership's certified financial statements since 1991.
In connection with the Partnership's audits fiscal year ended December 31,
1998, there were no disagreements with KPMG on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of KPMG
would have caused that firm to make reference to the subject matter of the
disagreement in connection with its reports.
On October 1, 1998, the Partnership was sent into liquidation. It is the goal
of the liquidation Trustee to minimize the expenses of the Partnership. In
order to lower the accounting fees incurred by the Partnership the Trustee
approved the engagement of the firm of Smith Gray.
KPMG's report on the financial statements of the Partnership for the past two
fiscal years contained no adverse opinion or disclaimer of opinion and was not
qualified as to uncertainty, audit scope or accounting principles.
The Partnership requested that KPMG furnish it with a letter addressed to the
Commission stating whether it agreed with the above statements. A copy of
KPMG's letter is filed as Exhibit 16.1 to this Report.
During fiscal 1998, prior to their appointment as certifying accountants, the
Partnership did not consult Smith Gray regarding any of the matters or events
set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(1) Information Regarding Liquidating Trustee
Thomas W. Pauken, age 57, has experience both as a corporate executive officer
and as the head of an independent federal agency. Professionally qualified as
an attorney, he currently is the President of TWP, Inc. From 1985 to 1991,
Mr. Pauken was Vice President and Corporate Counsel of Garvon, Inc., a Dallas-
based venture capital company. Mr. Pauken served on President Reagan's
transition team and on the White House legal counsel's staff. Later, he was
appointed by President Reagan as Director of ACTION, an independent federal
agency that encourages volunteerism, where he served from 1981 to 1985. He
also served as a White House staff assistant and as Associate Director of the
White House Fellowship program from 1970 to 1971. Mr. Pauken served from 1986
to 1991 as Director of 50-off Stores, Inc. He became a member of the Board of
Tutogen Medical, Inc. in January, 1999. He also is Chairman of the Board of
TOR Minerals International, Inc. He holds a BA in political science from
Georgetown University and a JD degree from Southern Methodist University
School of Law.
(2) Information Regarding Supervising Trustees
Pursuant to the Liquidating Trust Agreement the Board of Trusts consists of
the Liquidating Trustee and two Supervising Trustees, Robert Farone and Ken
Reimer. Robert Farone, age 58, has experience as a corporate executive
officer. He was President of Bag'n Baggage, Ltd., an 80-store retailer of
luggage and leather goods operating in eight states under the trade names
Bag'n Baggage, Biagio, Houston Trunk Factory, Malm and Roberto's, from June
1985until 2001. Mr. Farone also has served as a director of Caribbean Marine,
Inc. since June 1985, and has been on the board of directors of Tutogen since
April 1999. Ken Reimer, age 61, has experience as a corporate executive
officer. He is the Chairman and CEO of three small businesses, Baker Brothers
America Deli, IvyGlen Schools and FCB Food Corporation. He previously served
as Chief Executive Officer of Furr's Cafeteria and Roma Corporation and has
also been the Chief Operating Officer or Chief Financial Officer of companies
engaged in insurance, construction, manufacturing and real estate. He is also
a Limited Partner of the Partnership.
Item 11. EXECUTIVE COMPENSATION
Pursuant to the Liquidating Trust Agreement, the Trustee shall be compensated
on the same terms as the compensation received by the Trustee pursuant to the
Liquidation Trustee's Agreement. As of October 1, 1998, the Trustee was
entitled to be compensated at an amount of $6,000 per month for a total of
$18,000 for his services through December 31, 1998 and $72,000 annually for
his services in 1999 and 2000. The Trustee also is entitled to full
reimbursement of all reasonable expenses relative to his service on behalf of
the Trust; and he may be entitled to additional compensation for his services
subject to the improvement in the value of the assets of the Trust during the
liquidation period. Mr. Pauken is Chairman of the Board of Tutogen and, in
that capacity, he is compensated by Tutogen along with other directors through
the payment of director's fees and the grant of stock options.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of December 31, 2000, Thomas W. Pauken, Trustee, did not own any Units of
the Trust. The following table sets forth information concerning the number
of Units of the Trust beneficially owned as of December 31, 2000, by (i) the
persons who, to the knowledge of the Trustee, beneficially owned more than 5%
of the outstanding Units, (ii) each Supervising Trustee, and (iii) the
Supervising Trustees as a group:
Name and Address of Units Beneficially Percent of Total Units
Beneficial Owner Owned Outstanding
______________________________________________________________________________
Sulzer Medica USA Holding Co. 21,627 50%
3 E. Greenway Plaza
Houston, TX 77703
Thomas W. Pauken 0 *
Liquidation Trustee
5646 Milton St., Ste. 900
Dallas, Texas 75206
Kenneth Reimer 17 *
3712 McFarlin Blvd.
Dallas, TX 75205
Robert C. Farone 14 *
11067 Petal St.
Dallas, TX 75238
_______
*All directors and executive 31
officers as a group (3 persons).
_______
* Less than 1%. To the Trustee's knowledge, no other person beneficially
owned 5% or more of the outstanding Units.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
Documents filed as part of this Form 10-K
Financial Statements:
The financial statements filed as part of this report are listed in "Index to
Financial Statements" on page F-1 hereof.
Financial Statement Schedules:
Not applicable.
Reports on Form 8-K:
Registrant filed a report on Form 8-K with the Securities and Exchange
Commission on November 21, 2000.
Exhibits:
INDEX OF EXHIBITS
Exhibit Number Description
_____________________________________________________________________________
3.1 Renaissance Capital Partners II, Ltd. Amended and Restated Agreement and
Articles of Limited Partnership dated as of September 30, 1991
(incorporated by reference to Partnership's Form N-2 as filed with the
Securities and Exchange Commission on October 21, 1991 (Registration No.
33-38593)).
3.2 Liquidating Trust Agreement - Capital Partners II, Ltd. Liquidating
Trust Agreement as of November 17, 2000, as amended and restated
(incorporated by reference to Exhibit 3.1 to Registrant's Form 8-K filed
with the Securities and Exchange Commission on November 21, 2000).
10.1 Liquidation Trustee Agreement - Agreement for Engaging the Services of
Thomas W. Pauken as Liquidation Trustee of Renaissance Capital Partners
II, Ltd. (incorporated by reference to Exhibit 6.1 to Partnership's Form
10-Q for quarterly period ended September 30, 1998).
10.2 Agreement dated November 17, 2000, among Sulzer Medica USA Holding Co.
and Liquidating Trustee (incorporated by reference to Exhibit (d)(1) to
the Schedule TO filed by Sulzer Medica USA Holding Co. with respect to
the Trust on November 28, 2000).
10.3 Loan Agreement dated December 20, 2000, among Sulzer Medica USA Holding
Co. and Capital Partners II, Ltd. Liquidating Trust with respect to
Tutogen Medical, Inc. (incorporated by reference to Exhibit 99.3 to the
Schedule 13D/A (Amendment No. 2) filed by Sulzer Medica USA, Inc. on
January 5, 2001).
10.4 Pledge Agreement dated December 20, 2000, among Sulzer Medica USA
Holding Co. and Capital Partners II, Ltd. Liquidating Trust with respect
to Tutogen Medical, Inc. (incorporated by reference to Exhibit 99.4 to
the Schedule 13D/A (Amendment No. 2) filed by Sulzer Medica USA, Inc. on
January 5, 2001).
16.1 KPMG LLP letter dated March 9, 2000, addressed to the Commission
regarding changes in accountants (filed herewith).
21 List of subsidiaries (filed herewith).
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities Exchange
Act of 1934, the Registrant had duly caused this report to be signed on its
behalf by the undersigned, there unto duly authorized.
Date: March 30, 2001
RENAISSANCE CAPITAL PARTNERS II, LTD.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Registrant)
By: _________/S/______________
Thomas W. Pauken
Liquidating Trustee
EXHIBIT 16.1
KPMG LLP
March 9, 2000
Securities and Exchange Commission
Washington, DC 20549
Ladies and Gentlemen:
We were previously principal accountants for Renaissance Capital Partners II,
Ltd. and, under the date of February 12, 1999, we reported on the financial
statements of Renaissance Capital Partners II, Ltd. as of December 31, 1998
and for each of the years in the three-year period ended December 31, 1998.
On August 23, 1999 our appointment as principal accountants was terminated.
We have read Renaissance Capital Partners II, Ltd. statements included under
Item 9 of its December 31, 1999 Form 10-K, and we agree with such statements,
except that we are not in a position to agree or disagree with Renaissance
Capital Partners II, Ltd.'s statement that Smith, Jackson, Cooper and Daniell,
PLLC was not engaged regarding the application of accounting principles to a
specified transaction or the type of audit opinion that might be rendered on
Renaissance Capital Partners II, Ltd.'s financial statements nor are we in a
position to agree or disagree with Renaissance Capital Partners II, Ltd.'s
statements that the change was approved by the Trustee.
Very truly yours,
KPMG LLP
EXHIBIT 21
Name of Subsidiary Jurisdiction of Incorporation
__________________ _____________________________
Tutogen Medical, Inc. Florida
INDEX
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
Page
Independent Auditors' Report F-1.1
Statement of Assets and Liabilities -
December 31, 2000 F-1.2
Statement of Investments -
December 31, 2000 F-1.3
Statement of Operations -
For the period November 17, 2000 (inception)
to December 31, 2000 F-1.4
Statement of Changes in Net Assets in Liquidation -
For the period November 17, 2000 (inception)
to December 31, 2000 F-1.5
Statement of Cash Flows -
For the period November 17, 2000 (inception)
to December 31, 2000 F-1.6
Notes to Financial Statements F-1.7 through F-1.8
RENAISSANCE CAPITAL PARTNERS II, LTD.
Independent Auditors' Reports F-2.1 through F-2.2
Statements of Assets, Liabilities and Partners' Equity -
December 31, 2000 and 1999 F-2.3
Statement of Investments -
December 31, 1999 F-2.4 through F-2.5
Statements of Operations -
For Years ended December 31, 2000, 1999, and 1998 F-2.6
Statements of Partners' Equity -
For Years ended December 31, 2000, 1999, and 1998 F-2.7
Statements of Cash Flows -
For Years ended December 31, 2000, 1999, and 1998 F-2.8
Notes to Financial Statements F-2.9 through F-2.12
SMITH, GRAY, BOYER & DANIELL, P.L.L.C.
Independent Auditors' Report
The Board of Trustees
Capital Partners II, Ltd. Liquidating Trust
We have audited the accompanying statement of assets and liabilities of
Capital Partners II, Ltd. Liquidating Trust (a Texas Liquidating Trust), as of
December 31, 2000, including the statement of investments, as of December 31,
2000, and the related statements of operations, changes in net assets in
liquidation, and cash flows for the period from November 17, 2000 (inception)
to December 31, 2000. These financial statements are the responsibility of
the Trustees. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included verification and
confirmation of investments owned as of December 31, 2000, by examination of
securities held in safekeeping for the Trust and correspondence with the
custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Capital Partners II, Ltd.
Liquidating Trust as of December 31, 2000, and the results of its operations
and its cash flows for the period from November 17, 2000 (inception) to
December 31, 2000, in conformity with accounting principles generally accepted
in the United States of America.
SMITH, GRAY, BOYER & DANIELL
A Professional Limited Liability Company
Dallas, Texas
January 30, 2001
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(SUCCESSOR TO RENAISSANCE CAPITAL PARTNERS II, LTD.)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2000
Assets 2000
________
Investments at fair value,
cost of $35,176,143 $ 32,659,416
_____________
Total Assets $ 32,659,416
=============
Liabilities
Liabilities:
Accrued Expenses $ 1,873
Note Payable (Note 4) 950,000
_____________
Total Liabilities 951,873
_____________
Net Assets in Liquidation 31,707,543
_____________
$ 32,659,416
=============
Net Assets in Liquidation per Unit of
Beneficial Interest $ 733
=============
Number of Units of Beneficial
Interest Outstanding 43,254.01
=============
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(SUCCESSOR TO RENAISSANCE CAPITAL PARTNERS II, LTD.)
STATEMENT OF INVESTMENTS
DECEMBER 31, 2000
2000
________________________________________
Fair
Shares Cost Value
________________________________________
Eligible Portfolio Investments -
Common Stock (1)
Tutogen Medical, Inc. 7,904,908 $ 35,117,289 $ 32,607,746
GDI Global Data, Inc. 155,166 $ 58,854 $ 51,670
_____________ ____________
Total Investments (2) $ 35,176,143 $ 32,659,416
============= ============
(1) Valued at fair value as determined by the Trustee.
(2) All portfolio securities held are non-income producing.
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(SUCCESSOR TO RENAISSANCE CAPITAL PARTNERS II, LTD.)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM NOVEMBER 17, 2000 (INCEPTION) TO DECEMBER 31, 2000
2000
____________
Investment expenses -
Interest Expense $ 1,873
____________
Net operating loss (1,873)
____________
Net unrealized appreciation
(depreciation) on investments (3,466,727)
____________
Net decrease in net assets
from operations $ (3,468,600)
=============
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(SUCCESSOR TO RENAISSANCE CAPITAL PARTNERS II, LTD.)
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION
FOR THE PERIOD FROM NOVEMBER 17, 2000 (INCEPTION) TO DECEMBER 31, 2000
2000
____________
Change in net assets resulting from operations:
Net operating loss $ (1,873)
Change in net unrealized appreciation or depreciation
of portfolio investments (3,466,727)
____________
Net decrease in net assets
resulting from operations (3,468,600)
Change in net assets from transfer of investments
from Partnership 35,176,143
____________
Net increase in net assets for the period 31,707,543
Net assets in liquidation at beginning of period -
____________
Net assets in liquidation at end of period $ 31,707,543
============
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(SUCCESSOR TO RENAISSANCE CAPITAL PARTNERS II, LTD.)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM NOVEMBER 17, 2000 (INCEPTION) TO DECEMBER 31, 2000
2000
_____________
Cash flows from operating activities
Net decrease in net assets from operations $ (3,468,600)
Adjustments to reconcile net assets from operations
to net cash used in operating activities:
Net unrealized (appreciation)
depreciation on investments 3,466,727
Increase in accrued liabilities 1,873
_____________
Net cash used in operating activities -
Cash flows from investing activities -
Cash flows from financing activities -
_____________
Net increase (decrease) in cash and cash equivalents -
Cash and cash equivalents at beginning of period -
_____________
Cash and cash equivalents at end of period $ -
=============
Supplemental disclosure of noncash investing transactions:
On December 20, 2000, the Trust purchased 700,000 shares of common stock of
Tutogen Medical, Inc. in the amount of $950,000 through the exercise of
warrants and was funded by a note payable to Sulzer Medica USA Holding Co.
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
Notes to Financial Statements
December 31, 2000
1. Organization and Purpose
Capital Partners II, Ltd. Liquidating Trust (the "Trust"), a liquidating trust
established under the laws of the State of Texas on November 17, 2000, is the
successor entity to Renaissance Capital Partners II, Ltd. (the "Partnership").
The Partnership, which was a Texas limited partnership formed in 1991, was a
diversified, closed-end management investment partnership and operated as
business development company under the Investment Act of 1940. The
Partnership's investment objective was to achieve current income and capital
appreciation potential by investing primarily in private placement convertible
debt investments of small and medium size companies which the Managing General
Partner believed offered the opportunity for growth. On October 1, 1998 the
Managing General Partner and the Independent General Partners agreed to
commence liquidation of the Partnership. The Managing General Partner
withdrew from the Partnership and the Partnership appointed an independent
general partner as Liquidation Trustee (the "Trustee"). The Trustee, pursuant
to a Liquidation Trustee Agreement, assumed all responsibilities and has the
authority of the Managing General Partner.
The proposal to amend the Partnership Agreement and authorize the Trustee to
transfer the investment assets of the Partnership to a liquidating Trust was
approved at a special meeting of the limited partners on November 17, 2000.
The Partnership transferred portfolio investments at fair value in the amount
of $35,176,143 to the Trust effective as of the close of business on November
17, 2000.
Also effective as of the close of business on November 17, 2000, the 43,254.01
limited partnership units of the Partnership, outstanding on such date, were
automatically deemed to represent 43,254.01 units of beneficial interest in
the Trust ("Units"). As a result, each limited partner of the Partnership
received one Unit of the Trust for each unit of the Partnership held on such
date.
2. Significant Accounting Policies
(a) Valuation of Investments
Portfolio investments are carried at fair value as determined quarterly by the
Trustee. The fair value of each publicly-held portfolio security is adjusted
to the closing public market price on the last day of the calendar quarter.
Most securities held by the Trust are thinly traded and their value does not
necessarily represent the amounts that may be realized from their immediate
sale or disposition.
(b) Federal Income Taxes
The Trust is a complete pass-through entity for federal income tax purposes
and, accordingly, is not subject to income tax. Instead, each beneficiary of
the Trust is required to take into account, in accordance with such
beneficiary's method of accounting, such beneficiary's pro rata share of the
Trust's income, gain, loss, deduction or expense, regardless of the amount or
timing of distributions to beneficiaries.
(c) Management Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. Trust and Management Fees
In 1998, the Partnership entered into an agreement with the Trustee, whereby
the Trustee provided management services to the Partnership in connection with
its liquidation and has continued to provide such services to the Trust during
its liquidation. For services rendered under the agreement, the Trustee
receives $6,000 per month plus $4,000 per month for reimbursement of
administrative personnel. Such fees have been paid in 2000 by the Partnership
on behalf of the Trust.
The Trustee serves as Chairman of the Board of Directors of Tutogen Medical,
Inc., a portfolio investment of the Trust, and the Trustee is beneficial owner
of 178,040 shares of common stock of Tutogen Medical, Inc. with stock options
to purchase an additional 70,000 shares of common stock.
4. Tender Offer and Note Payable
Sulzer Medica USA Holding Co. (the "Purchaser") entered into a tender offer
agreement (the "Tender Offer") on November 17, 2000, with the Trust to
purchase up to 21,627 units at a price of $1,387 per trust unit. Upon final
closing of the tender offer on December 26, 2000, the Purchaser acquired
21,627 trust units (representing 50% of the trust units outstanding at
December 31, 2000) from the beneficial owners.
In connection with the tender offer, the Trust purchased 700,000 shares of
common stock of Tutogen Medical, Inc. for $950,000 through the exercise of
warrants on December 20, 2000. The purchase of common stock was funded
through a loan agreement (the "loan") with Sulzer Medica USA Holding Co. The
loan is due on November 17, 2002 with accrued interest at the rate of one-year
LIBOR as reported in the Wall Street Journal on the date of the funding
(5.997% at December 20, 2000) and thereafter on the anniversary date of
funding. The loan is secured by 700,000 shares of common stock of Tutogen
Medical, Inc.
SMITH, GRAY, BOYER & DANIELL, P.L.L.C.
Independent Auditors' Report
The Partners
Renaissance Capital Partners II, Ltd.:
We have audited the accompanying statements of assets, liabilities and
partners' equity of Renaissance Capital Partners II, Ltd. (a Texas Limited
Partnership) as of December 31, 2000 and 1999, including the statement of
investments, as of December 31, 1999, and the related statements of operations,
partners' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of Renaissance Capital Partners II, Ltd.
for the year ended December 31, 1998, were audited by other auditors whose
report dated February 12, 1999, expressed an unqualified opinion on those
statements.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included verification and confirmation of investments owned as of
December 31, 1999, by examination of securities held in safekeeping for the
Partnership and correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Renaissance Capital Partners
II, Ltd. as of December 31, 2000 and 1999, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.
SMITH, GRAY, BOYER & DANIELL
A Professional Limited Liability Company
Dallas, Texas
January 30, 2001
KPMG LLP
Independent Auditors' Report
The Partners
Renaissance Capital Partners II, Ltd.:
We have audited the accompanying statements of operations, partners' equity,
and cash flows of Renaissance Capital Partners II, Ltd. (a Texas Limited
Partnership) for the year ended December 31, 1998. These financial statements
are the responsibility of the Partnership's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the result of operations and cash flows of Renaissance
Capital Partners II, Ltd. for the year ended December 31, 1998, in conformity
with generally accepted accounting principles.
KPMG LLP
Dallas, Texas
February 12, 1999
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENT OF ASSETS, LIABILITIES, AND PARTNERS' EQUITY
DECEMBER 31, 2000 AND 1999
Assets 2000 1999
____________ ___________
Cash and cash equivalents $ 519,145 $ 1,012,358
Short term investments - 100,000
Investments at fair value, cost of
$8,066,598 in 1999 (note 4) - 15,634,975
Interest receivable - 2,315
Other assets 17,719 30,898
____________ ___________
$ 536,864 $16,780,546
============ ===========
Liabilities and Partners' Equity
Liabilities:
Accounts payable $ 56,296 $ 27,946
Accrued liabilities 50,000 50,000
____________ ___________
Total liabilities 106,296 77,946
____________ ___________
Partners' equity (note 5):
Limited partners (outstanding units of
43,254.01 in 2000 and 1999) 430,568 16,702,600
____________ ___________
Total partners' equity 430,568 16,702,600
Commitments and contingencies
(notes 3 and 4)
____________ ___________
$ 536,864 $16,780,546
============ ===========
Limited partners' equity per
limited partnership unit $ 10 $ 386
============ ===========
See accompanying notes to financial statements.
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
1999
Interest Due Fair
rate date Cost Value
_____________________________________________
Eligible Portfolio Investments -
Convertible Debentures and
Notes Receivable (1)
Central PA Rehabilitation
Services, Inc. - physical
therapy rehabilitation
centers:
Note receivable 9.00 Varies $ 79,415 $ 79,415
Tutogen Medical, Inc.
(formerly Biodynamics
International, Inc.) -
specialty surgical products:
Convertible debenture 9.00 11/11/02 $ 500,000 $ 500,000
__________ __________
579,415 579,415
__________ __________
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
1999
Fair
Shares Cost Value
__________________________________________
Eligible Portfolio Investments -
Common and Preferred Stock and
Warrants (1)
Tutogen Medical, Inc.
(formerly Biodynamics
International, Inc.) -
specialty surgical products:
Common 5,735,451 $ 7,487,183 $15,055,560
Warrants to purchase
547,560 shares
of Tutogen Medical, Inc. 547,560 - -
Warrants to purchase
806,396 shares
of Tutogen Medical, Inc. 806,396 - -
Warrants to purchase
400,000 shares
of Tutogen Medical, Inc. 400,000 - -
Warrants to purchase
300,000 shares
of Tutogen Medical, Inc. 300,000 - -
__________ __________
7,487,183 15,055,560
__________ __________
$ 8,066,598 $15,634,975
========== ==========
(1) Valued at fair value as determined by the Trustee (note 4).
See accompanying notes to financial statements.
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
2000 1999 1998
____________ ___________ ____________
Income:
Interest $ 39,957 $ 269,424 $ 354,888
Dividends 27,207 32,090 16,217
Other Income 50 - -
Commitment, closing
and management fees - 1,107 6,102
____________ ___________ ____________
67,214 302,621 377,207
____________ ___________ ____________
Expenses (note 3):
General and administrative 259,185 305,924 331,953
Trustee Fees 72,000 72,000 18,000
Management fees - - 251,199
____________ ___________ ____________
331,185 377,924 601,152
____________ ___________ ____________
Operating (loss) income (263,971) (75,303) (223,945)
____________ ___________ ____________
Investment loss:
Net unrealized appreciation
(depreciation) on
investments (note 4) 18,245,037 8,841,095 (5,087,413)
Net realized gain (loss)
on investments 923,046 98,576 (310,834)
____________ ___________ ____________
Investment gain (loss) 19,168,083 8,939,671 (5,398,247)
____________ ___________ ____________
Net income (loss) $18,904,111 $8,864,368 $(5,622,192)
============ =========== ============
Limited Partners' share of
net income (loss) $437.04,
$204.94 and $(129.94) per unit
for 2000, 1999 and 1998,
respectively $18,904,111 $8,864,368 $(5,622,192)
General Partner's share of
net loss - - -
____________ ___________ ____________
Net income (loss) $18,904,111 $8,864,368 $(5,622,192)
============ =========== ============
See accompanying notes to financial statements.
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
General Limited
Partner Partners Total
____________ ___________ ___________
Balance, December 31, 1997 $ (197,969) $14,684,837 $14,486,868
Redemption of 50 limited
partnership units - (26,444) (26,444)
Net loss - (5,622,192) (5,622,192)
Distributions (note 5) - (1,000,000) (1,000,000)
Dissolution adjustment (note 5) 197,969 (197,969) -
____________ ___________ ___________
Balance, December 31, 1998 - 7,838,232 7,838,232
Net income - 8,864,368 8,864,368
____________ ___________ ___________
Balance, December 31, 1999 - 16,702,600 16,702,600
Net income - 18,904,111 18,904,111
Distribution to Liquidating Trust
(note 5) - (35,176,143) (35,176,143)
____________ ___________ ___________
Balance, December 31, 2000 $ - $ 430,568 $ 430,568
============ =========== ===========
See accompanying notes to financial statements.
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF CASH FLOWS
YEARS ENDED 2000, 1999, AND 1998
2000 1999 1998
___________ ___________ ___________
Cash flows from operating
activities:
Net income (loss) $18,904,111 $8,864,368 $(5,622,192)
Adjustments to reconcile
net income (loss) to net cash
used in operating activities:
Net unrealized (appreciation)
depreciation on investments (18,245,037) (8,841,095) 5,087,413
Net realized gain (loss)
on investments (923,046) (98,576) 310,834
(Increase) decrease in
other assets 13,179 (24,502) (6,396)
Increase (decrease) in
interest receivable 2,315 (173,975) (176,793)
Increase (decrease) in
accounts payable 28,350 (13,641) 17,644
Decrease in accounts payable
- affiliate - (37,596) (82,958)
Increase in accrued liabilities - 50,000 -
___________ ___________ ___________
Net cash used in operating
activities (220,128) (275,017) (472,448)
___________ ___________ ___________
Cash flows from investing activities:
Purchase of investments (1,400,110) (300,000) (718,386)
Proceeds from sale of
investments 948,425 110,979 1,708,138
Repayment of principal on
investments 78,600 337,381 -
Investments in short term
investments, net 100,000 (100,000) 992,400
___________ ___________ ___________
Net cash provided by
(used in) investing
activities (273,085) 48,360 1,982,152
___________ ___________ ___________
Cash flows from financing activities:
Redemption of limited partnership units - - (26,444)
Distributions to limited partners - - (1,000,000)
___________ ___________ ___________
Net cash used in
financing activities - - (1,026,444)
___________ ___________ ___________
Net increase (decrease) in cash and
cash equivalents (493,213) (226,657) 483,260
Cash and cash equivalents at
beginning of the year 1,012,358 1,239,015 755,755
___________ ___________ ___________
Cash and cash equivalents at
end of the year $ 519,145 $1,012,358 $1,239,015
=========== =========== ===========
Noncash investing transactions:
During 2000, the Partnership transferred the investment portfolio at fair
value of $35,176,143 to the Trust.
During 2000 and 1999, the Partnership exercised its right to convert
debentures in the principal amounts of $490,050 and $2,074,081 to 363,000 and
4,600,507 shares of common stock of Tutogen Medical, Inc., respectively.
During 2000 and 1999, investment costs of $14,000 and $13,765,899 were
permanently written-down against valuation reserves, respectively.
During 1999 and 1998, $274,682 and $127,911,respectively, of interest
receivable was capitalized to convertible debentures, notes receivable or
common stock.
See accompanying notes to financial statements.
RENAISSANCE CAPITAL PARTNERS II, LTD.
Notes to Financial Statements
December 31, 2000, 1999, and 1998
1. Organization and Business Purpose
Renaissance Capital Partners II, Ltd. (the "Partnership"), a Texas limited
partnership, was formed in 1991, and operated as a business development company
under the Investment Company Act of 1940. The Partnership's investment
objective was to achieve current income and capital appreciation potential by
investing primarily in private placement convertible debt investments of small
and medium size companies, while the Managing General Partner believed offered
the opportunity for growth.
On January 23, 1991, the Partnership filed a registration statement for the
sale of up to 50,000 limited partnership units at an offering price of $1,000
per unit. Upon final closing of the offering on March 31, 1993, the
Partnership received net contributions of $39,064,847.
On October 1, 1998 the Managing General Partner and the Independent General
Partners agreed to commence liquidation of the Partnership. The Managing
General Partner withdrew from the Partnership and the Partnership appointed an
independent general partner as Liquidation Trustee (the "Trustee"). The
Trustee, pursuant to a Liquidation Trustee Agreement, assumed all
responsibilities and has the authority of the Managing General Partner.
On November 17, 2000, the limited partners approved an amendment to the
partnership agreement authorizing the Trustee to transfer the Partnership's
investment portfolio to Capital Partners II, Ltd. Liquidating Trust (the
"Trust"), and withdrawing its election to be regulated as a business
development company.
2. Summary of Significant Accounting Policies
(a) Valuation of Investments
Portfolio investments are carried at fair value as determined by the Trustee
quarterly (note 4). Most securities held by the Partnership are thinly traded
and their value does not necessarily represent the amounts that may be realized
from their immediate sale or disposition.
(b) Statements of Cash Flows
The Partnership considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
(c) Net Income (Loss) per Limited Partnership Unit
Net income (loss) per limited partnership unit is based on the weighted average
number of limited partnership Units outstanding during the year. The weighted
average limited partnership Units outstanding were 43,254.01 during 2000, 1999,
and 1998.
(d) Federal Income Taxes
In accordance with Federal income tax regulations, no income taxes are levied
in a partnership, but rather on the individual partners. Consequently, no
Federal income taxes have been reflected in the accompanying financial
statements.
(e) Short Term Investments
Short term investments represent a bank certificate of deposit with a maturity
date of 6 months. Such investment was valued at cost, which approximates
market.
(f) Commitment, Closing and Management Fees
Commitment, closing and management fees represent amounts charged to Eligible
Portfolio Companies for commitments to fund additional amounts under
convertible debenture agreements, closing of convertible debenture agreements
and management services provided by the Managing General Partner to Eligible
Portfolio Companies. Such fees are recognized as income based on the terms of
the underlying convertible debenture agreements and management agreements.
(g) Management Estimates
Management of the Partnership has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial settlements in
conformity with generally accepted accounting principles. Actual results could
differ from these estimates.
(h) Reclassifications
Certain reclassifications have been made to the 1998 Financial Statements to
conform to the 1999 presentation.
3. Trustee and Management Fees
Renaissance Capital Group, Inc. (the "Managing General Partner"), served as the
investment adviser to the Partnership from its inception to September 30, 1998.
In those capacities, the Managing General Partner was primarily responsible for
the selection, evaluation, structure, and administration of the Partnership's
investment portfolio. The Managing General Partner received management fees of
$251,199 in 1998. In addition, the Managing General Partner was reimbursed by
the Partnership for administrative expenses incurred by the Managing General
Partner on behalf of the Partnership. Such reimbursements were $99,055, for
the year ended December 31, 1998, and are included in general and
administrative expenses in the accompanying statements of operations.
Furthermore, each of the Independent General Partners received a quarterly fee
and reimbursement of expenses incurred on behalf of the Partnership. Such
amounts totaled $49,283 in 1998 and are included in general and administrative
expenses in the accompanying statements of operations.
In October 1998, the Partnership entered into an agreement with the Trustee to
provide management services to the Partnership in connection with the
liquidation. The Trustee receives a monthly fee of $6,000 for services
rendered under the liquidation. Such fees totaled $72,000, $72,000 and
$18,000, respectively, for the years ended December 31, 2000, 1999 and 1998.
In addition, the Trustee receives a monthly fee of $4,000 for reimbursement for
administrative personnel, and such reimbursements are included in general and
administrative expenses in the accompanying statements of operations.
4. Investments
The Partnership has invested in convertible debentures and other securities of
companies that qualified as Eligible Portfolio Companies as defined in Section
2(a)(46) of the 1940 Act or in securities that otherwise qualify for investment
as permitted in Section 55(a)(1) through (5) of the 1940 Act. Investments of
the Partnership are carried in the statements of assets, liabilities, and
partners' equity at fair value, as determined in good faith by the Trustee
quarterly.
The debentures held by the Partnership have been converted into the common
stock of the issuer at a set conversion price. The common stock acquired upon
exercise of the conversion feature has been generally registered, but thinly
traded. Interest is generally payable monthly, and all debentures had sinking
fund provisions beginning three to four years from issue date. The debentures
generally had call options, usually commencing three years subsequent to
issuance, at prices specified in the debenture agreements.
In accordance with the Partnership Agreement and the original offering
document, the Trustee will, on a quarterly basis, prepare a valuation of the
Partnership assets, including the investment portfolio and any other
investments. For securities that are publicly traded and for which quotations
are available, the Partnership will value the investments based on the closing
sale as of the last day of the fiscal quarter, or in the event of an interim
valuation, as of the date of the valuation. If no sale is reported on such
date, the securities will be valued at the average of the closing bid and asked
prices.
On November 17, 2000, the Partnership had investments in 2 portfolio companies
with an aggregate cost of $10,312,729, and a fair value of $35,176,143.
Pursuant to the limited partners' approval, these investments were transferred
to the Trust at fair value on November 17, 2000.
As of December 31, 1999, the Partnership held Eligible Portfolio Investments
with a fair value, as determined in good faith by the Trustee, of $15,634,975.
As of December 31, 1999, the net unrealized appreciation associated with
investments held by the Partnership was $7,568,377. Because of the inherent
uncertainty of valuation, those estimated values may differ significantly from
the values that would have been used had a ready market for the securities
existed, and the differences could be material.
5. Partners' Equity
Upon commencement of liquidation and withdraw of the Managing General Partner
in 1998, all items of income, gain, loss and deduction of the Partnership,
including any Capital Transaction, as defined in the Partnership Agreement, are
allocated to the limited partners. Additionally, the Managing General
Partners' deficit balance was reallocated in 1998 to the limited partners
pursuant to the terms of the Partnership Agreement.
Distributions to the limited partners are made at the discretion of the
Trustee. The Partnership made a cash distribution of $1,000,000 to the limited
partners in 1998.
The transfer of the portfolio investments at fair value in the amount of
$35,176,143 from the Partnership to the Trust in 2000 is considered a
liquidating distribution of the Partnership for federal income tax purposes.
Therefore, each holder of limited partnership units of the Partnership will
recognize gain or loss equal to the difference between the net fair value of
the liquidating distribution deemed received in respect of such units and
holder's adjusted tax basis in such units. Such gain or loss is a capital gain
or loss if such units were held as a capital asset, and such gain or loss is
long-term if such units are held for more than one year as of November 17,
2000, the date the liquidating distribution was deemed to have been made.