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 September 30, 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, Dallas 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, September 30,
2000 2001
___________ ___________
Cash $ -0- $ 844
Investments at fair value,
cost of $35,176,143 at December 31, 2000,
and September 30, 2001 32,659,416 18,996,295
Other Assets -0- 6,500
____________ ____________
Total Assets $ 32,659,416 $ 19,003,639
============ ============
Liabilities
Liabilities:
Accrued Interest expense $ 1,873 $ 44,485
Accrued Liabilities -0- 486
Note Payable (see note 5) 950,000 950,000
____________ ____________
Total liabilities 951,873 994,971
____________ ____________
Net Assets in Liquidation 31,707,543 18,008,668
____________ ____________
$ 32,659,416 $ 19,003,639
============ ============
Net Assets in Liquidation per Unit
of Beneficial Interest $733 $416
==== ====
Number of Units of Beneficial
Interest Outstanding 43,254.01 43,250.01
========= =========
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
STATEMENT OF OPERATIONS
(Unaudited)
Three months ended Nine months ended
September 30, 2001 September 30, 2001
__________________ __________________
Expenses -
Interest expense $ 14,360 $ 42,612
General and administrative 22,113 65,659
Trustee Fees 18,000 54,000
______________ ______________
Total Expenses 54,473 162,271
______________ ______________
Net operating loss (54,473) (162,271)
______________ ______________
Net unrealized appreciation
(depreciation) on investments (4,688,568) (13,663,121)
______________ ______________
Net decrease in net assets
from operations $ (4,743,041) $ (13,825,392)
============== ==============
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
(Unaudited)
Three months ended Nine months ended
September 30, 2001 September 30, 2001
__________________ __________________
Change in net assets resulting
from operations:
Net operating loss $ (54,473) $ (162,272)
Change in net unrealized appreciation
or depreciation of portfolio
investments (4,688,568) (13,663,121)
Change in net assets resulting from
transfer cash assets from Partnership 46,971 126,518
___________ ___________
Net increase (decrease) in net assets
for the period (4,696,070) (13,698,875)
Net assets in liquidation
at beginning of period 22,704,738 31,707,543
___________ ___________
Net assets in liquidation
at end of period $18,008,668 $18,008,668
=========== ===========
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
STATEMENT OF CASH FLOWS
(Unaudited)
Three months ended Nine months ended
September 30, 2001 September 30, 2001
__________________ _________________
Cash flows from operating activities
Net decrease in net assets
from operations $ (4,743,041) $ (13,825,393)
Adjustments to reconcile net assets
from operations to net cash used in
operating activities:
Net unrealized (appreciation)
depreciation on investments 4,688,568 13,663,121
Increase in accrued liabilities 14,846 43,098
Increase in other assets (6,500) (6,500)
___________ ___________
Net cash used in operating
activities (46,127) (125,674)
Cash flows from investing activities -0- -0-
Cash flows from financing activities
Transfer of cash assets
from Partnership 46,971 126,518
___________ ___________
Net increase (decrease) in cash 844 844
Cash at beginning of period -0- -0-
___________ ___________
Cash at end of period $ 844 $ 844
=========== ===========
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
Notes to Financial Statements
September 30, 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 September 30, 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 130,000 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 and
liabilities 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 $18,996,295 (100% of total assets) as of December 31, 2000,
and September 30, 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 September 30, 2001,
follows:
FAIR
COST VALUE
____________ ____________
Tutogen Medical, Inc.
Common Stock $ 35,176,143 $ 18,971,779
GDI Global Data, Inc.
Common Stock -0- 24,516
____________ ____________
$ 35,176,143 $ 18,996,295
============ ============
7. TRANSACTIONS WITH RENAISSANCE CAPITAL PARTNERS II, LTD.
The Partnership paid operating expenses of $46,971 on behalf of the Trust for
the three months ended September 30, 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 September 30, 2001, and as of September 30, 2001, follows:
Condensed Statement of Operations
Income $ 2,228
___________
2,228
___________
Expenses 7,609
___________
7,609
___________
Net loss $ (5,381)
===========
Condensed Statement of Assets and Liabilities
Cash and cash equivalents $ 251,322
Other assets 678
___________
252,000
___________
Accounts payable and
accrued expenses 71,766
___________
71,766
___________
Partners' equity $ 180,234
===========
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 third quarter ended September 30, 2001, total Beneficiaries' interest
decreased $4,743,041, due primarily to the decrease in the valuation of
common stock of Tutogen Medical, Inc. with a value of $2.40 per share as of
September 30, 2001.
The following portfolio transactions are noted for the quarter ended September
30, 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 September 30, 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 September 30, 2001, the closing price of the GDI stock was
$0.158 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 September 30, 2001, the Trust recorded net loss of
$4,743,041, which was primarily due to a decrease in the closing price of
Tutogen's common stock which was $2.99 as of June 30, 2001, and $2.40 on
September 30, 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: November 1, 2001 CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Registrant)
By: ____________/s/___________
Thomas W. Pauken
Liquidating Trustee