UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934:
For quarterly period ended March 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934:
For the transition period from ___________ to _______________
Commission File Number: 038593
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor in interest to Renaissance Capital Partners II, Ltd.)
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
Texas 75-6590369
______________________________________________________________________________
(State or other jurisdiction (IRS Employer ID No.)
of incorporation or organization)
5646 Milton Street, Suite 900 75206
______________________________________________________________________________
(Address of principal executive offices) (Zip code)
(214) 378-9340
______________________________________________________________________________
(Registrant's telephone number, including area code)
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 such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [ ]
PART I. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
STATEMENTS OF ASSETS AND LIABILITIES
(Unaudited)
Assets
December 31, March 31,
2000 2001
____________ ____________
Investments at fair value,
cost of $35,176,143 at
December 31, 2000,
and March 31, 2001 $ 32,659,416 $ 22,991,575
____________ ____________
Total Assets $ 32,659,416 $ 22,991,575
============ ============
Liabilities
Liabilities:
Accrued Interest expense $ 1,873 $ 15,921
Note Payable (see note 5) 950,000 950,000
____________ ____________
Total liabilities 951,873 965,921
____________ ____________
Net Assets in Liquidation 31,707,543 22,025,654
____________ ____________
$ 32,659,416 $ 22,991,575
============ ============
Net Assets in Liquidation per Unit
of Beneficial Interest $733 $509
============ ============
Number of Units of Beneficial
Interest Outstanding 43,254.01 43,254.01
============ ============
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001
(Unaudited)
Expenses -
Interest expense $ 14,048
General and administrative 19,056
Trustee Fees 18,000
___________
Total Expenses 51,104
___________
Net operating loss (51,104)
___________
Net unrealized appreciation
(depreciation) on investments (9,667,841)
___________
Net decrease in net assets
from operations $(9,718,945)
===========
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
THREE MONTHS ENDED MARCH 31, 2001
(Unaudited)
Change in net assets resulting from operations:
Net operating loss $ (51,104)
Change in net unrealized appreciation or
depreciation of portfolio investments (9,667,841)
Change in net assets resulting from transfer cash assets
from Partnership 37,056
___________
Net increase (decrease) in net assets for the period (9,681,889)
Net assets in liquidation at beginning of period 31,707,543
___________
Net assets in liquidation at end of period $22,025,654
===========
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001
(Unaudited)
Cash flows from operating activities
Net decrease in net assets from operations $ (9,718,945)
Adjustments to reconcile net assets from operations
to net cash used in operating activities:
Net unrealized (appreciation) depreciation
on investments 9,667,841
Increase in accrued liabilities 14,048
___________
Net cash used in operating activities (37,056)
Cash flows from investing activities -0-
Cash flows from financing activities
Transfer of cash assets from Partnership 37,056
___________
Net increase (decrease) in cash and cash equivalents -0-
Cash and cash equivalents at beginning of period -0-
___________
Cash and cash equivalents at end of period $ -0-
===========
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
Notes to Financial Statements
March 31, 2001
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 is a Texas limited partnership formed in 1991, was
organized as 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 as of a
particular date does not necessarily represent the amounts that may be
realized from their immediate sale or disposition.
(b) FEDERAL INCOME TAXES
The Trust is a 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. BASIS OF PRESENTATION
The accompanying financial statements have been prepared without audit, in
accordance with the rules and regulations of the Securities and Exchange
Commission and include all disclosures normally required by generally accepted
accounting principles, but do not include all disclosures normally made in
annual reports on Form 10-K. All material adjustments, consisting only of
those of a normal recurring nature, which, in the opinion of management, were
necessary for a fair presentation of the results for the interim period have
been made.
4. TRUSTEE 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. Fees paid to the Trustee during the three months
ended March 31, 2001, was $18,000.
The Trustee serves as Chairman of the Board of Tutogen Medical, Inc., a
portfolio investment of the Trust, and the Trustee is the beneficial owner of
178,040 shares of common stock of Tutogen Medical, Inc. with stock options to
purchase an additional 80,000 shares of common stock.
5. 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.
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.
6. INVESTMENTS
Investments of the Trust are carried in the statements of assets, liabilities
and partners' equity at quoted market or fair value, as determined in good
faith by the Liquidation Trustee.
For securities that are publicly traded and for which quotations are
available, the Trust 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.
The financial statements include investments valued at $32,659,416 (100% of
total assets) and $22,991,575 (100% of total assets) as of December 31, 2000,
and March 31, 2001, respectively, whose values have been estimated by the
Liquidation Trustee. Because of the limited trading market, the estimate
values may differ significantly from the values that would have been used had
a ready market for the investments existed and the difference could be
material. Summarized valuation of investments as of March 31, 2001, follows:
FAIR
COST VALUE
Tutogen Medical, Inc.
Common Stock $ 35,176,143 $ 22,924,233
GDI Global Data, Inc.
Common Stock -0- 67,342
_____________ _____________
$ 35,176,143 $ 22,991,575
============= =============
7. TRANSACTIONS WITH RENAISSANCE CAPITAL PARTNERS II, LTD.
The Partnership paid operating expenses of $37,056 on behalf of the Trust for
the three months ended March 31, 2001. These cash payments have been recorded
as a transfer of cash assets from the Partnership in the accompanying
financial statements.
Summarized financial information for the Partnership for the three months
ended March 31, 2001, and as of March 31, 2001, follows:
CONDENSED STATEMENT OF OPERATIONS
Income $ 4,775
___________
4,775
___________
Expenses 87,305
___________
87,305
___________
Net loss $ (82,530)
===========
CONDENSED STATEMENT OF ASSETS AND LIABILITIES
Cash and cash equivalents $ 358,122
Other assets 21,471
___________
379,593
___________
Accounts payable and accrued expenses 68,611
___________
68,611
___________
Partners' equity $ 310,982
===========
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The discussion set forth herein contains certain forward looking statements
with respect to the financial condition, results of operations and business of
the 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.
1. MATERIAL CHANGES IN FINANCIAL CONDITION
For the first quarter ended March 31, 2001, total Beneficiaries' interest
decreased $9,718,945, due primarily to the decrease in the valuation of common
stock of Tutogen Medical, Inc. with a value of $2.90 per share as of March 31,
2001.
The following portfolio transactions are noted for the quarter ended March 31,
2001 (portfolio companies are herein referred to as the "Company"):
TUTOGEN MEDICAL, INC.
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.)
The Trustee serves as Chairman of the Board of Directors of Tutogen and,
during the quarter ended March 31, 2001, he continued to assist Tutogen's
efforts to develop new products and markets and to increase its profitability.
The value of the Trust units will ultimately be determined primarily by the
value of the Trust's interest in Tutogen and, accordingly, the Trustee expects
to participate actively in providing guidance and support to Tutogen's
management.
GDI GLOBAL DATA, INC.
At the close of business on November 17, 2000, the Partnership transferred all
of its interest in GDI consisting of 155,166 shares of common stock to the
Trust. On the March 31, 2001, the closing price of the GDI stock was $0.434
per share.
2. MATERIAL CHANGES IN OPERATIONS
The Trust currently is under liquidation and not actively considering
additional Portfolio Investments. Therefore, no significant further amount of
income from closing fees and commitment fees is anticipated.
For the quarter ended March 31, 2001, the Trust recorded net loss of
$9,681,889, which was primarily due to a decrease in the closing price of
Tutogen's common stock which was $4.125 as of December 31, 2000, and $2.90 on
March 31, 2001. This valuation may fluctuate significantly due to the limited
trading market for Tutogen stock. The Trust receives no income from the
investments.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None other than what has been previously disclosed.
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: May 15, 2001
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Registrant)
By: _______/s/____________
Thomas W. Pauken
Liquidating Trustee