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, 2002
[ ] 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 TX 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,
2001 2002
___________ ___________
<s> <c> <c>
Cash $ 19,641 $ 118
Investments at fair value,
cost of $35,176,143 at
December 31, 2001, and
March 31, 2002 24,149,847 39,425,715
Other Assets -0- 6,459
___________ ____________
Total Assets $ 24,169,488 $ 39,432,292
=========== ============
Liabilities
Liabilities:
Accounts Payable and Accrued Expenses $ 20,436 $ 485
Note Payable (see note 5) 800,000 680,744
___________ ____________
Total liabilities 820,436 681,229
___________ ____________
Net Assets in Liquidation 23,349,052 38,751,063
___________ ____________
$ 24,169,488 $ 39,432,292
=========== ============
Net Assets in Liquidation per Unit
of Beneficial Interest $540 $895
=========== ============
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.)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
2001 2002
_________ _________
<s> <c> <c>
Expenses -
Interest expense $ 14,048 $ 4,318
General and administrative 19,056 30,976
Trustee Fees 18,000 18,000
____________ ___________
Total Expenses 51,104 53,294
____________ ___________
Net operating loss (51,104) (53,294)
____________ ___________
Net unrealized appreciation
(depreciation) on investments (9,667,841) 15,275,868
____________ ___________
Net increase (decrease) in
net assets from operations $(9,718,945) $15,222,574
============ ===========
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION
(Unaudited)
Three Months Ended March 31,
2001 2002
________ ________
<s> <c> <c>
Change in net assets resulting from
operations:
Net operating loss $ (51,104) $ (53,294)
Change in net unrealized appreciation or
depreciation of portfolio investments (9,667,841) 15,275,868
Change in net assets resulting from
contributions to corpus 37,056 179,437
____________ ____________
Net increase (decrease) in net assets
for the period (9,681,889) 15,402,011
Net assets in liquidation at
beginning of period 31,707,543 23,349,052
____________ ____________
Net assets in liquidation at end
of period $ 22,025,654 $ 38,751,063
============ ============
See accompanying notes to financial statements.
CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Successor to Renaissance Capital Partners II, Ltd.)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
2001 2002
________ ________
<s> <c> <c>
Cash flows from operating activities
Net increase (decrease) in net assets
from operations $ (9,718,945) $ 15,222,574
Adjustments to reconcile net assets
from operations to net cash used in
operating activities:
Net unrealized (appreciation)
depreciation on investments 9,667,841 (15,275,868)
Increase (decrease) in accounts payable
and accrued liabilities 14,048 (9,673)
Decrease (increase) in assets -0- (6,459)
____________ ____________
Net cash used in operating activities (37,056) (69,426)
Cash flows from financing activities
Contributions to corpus 37,056 49,903
____________ ____________
Net cash provided from
financing activities 37,056 49,903
____________ ____________
Net increase (decrease) in cash and
cash equivalents -0- (19,523)
Cash and cash equivalents at
beginning of period -0- 19,641
____________ ____________
Cash and cash equivalents at
end of period $ -0- $ 118
============ ============
Supplemental disclosure of noncash transactions:
Note payable and accrued interest
contributed to corpus $ -0- $ 129,533
============ ============
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, 2002
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").
Pursuant to the Liquidating Trust Agreement, the Trust will terminate no later
than November 17, 2002. The Partnership, which was a Texas limited partnership
formed in 1991, was organized as a diversified, closed-end management
investment partnership and operated as a 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.
On November 17, 2000, the limited partners of the Partnership authorized the
Trustee to transfer the investment assets of the Partnership to the Trust.
Upon formation of the Trust and transfer of investment assets to the Trust,
holders of the 43,254 limited partnership units of the Partnership,
outstanding on November 17, 2000, were deemed to become holders of 43,254
units of beneficial interest in the Trust ("Units").
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 accounting
principles generally accepted in the United States of America, 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 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 up to $4,000 per month for reimbursement of
administrative personnel. Fees paid to the Trustee during the three months
ended March 31, 2002, 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 "Sulzer") 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, Sulzer 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. 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 (2.3988% at December 20, 2001) and thereafter on the anniversary
date of funding. The loan is secured by 700,000 shares of common stock of
Tutogen Medical, Inc.
During the first quarter of 2002, Sulzer reimbursed the Trust $129,534 to
cover 50% of all administrative expenses and trustee fees incurred by the
Trust since its inception. In lieu of a cash payment, the reimbursement was
offset against the principal and interest accrued on the loan to Sulzer and
recorded as a contribution to corpus in the accompanying financial statements.
During 2001, principal and interest in the amount of $200,728 was paid on this
loan. As of March 31, 2002, the remaining principal outstanding under this
loan after giving effect for the 2002 contribution offset and 2001 payment was
$680,743.
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 $23,349,052 (100% of
total assets) and $38,751,063 (100% of total assets) as of December 31,
2001, and March 31, 2002, 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, 2002, follows:
FAIR
COST VALUE
____________ ____________
Tutogen Medical, Inc.
Common Stock $35,176,143 $39,366,442
GDI Global Data, Inc.
Common Stock -0- 59,273
____________ ____________
$35,176,143 $39,425,715
============ ============
7. Transactions with Renaissance Capital Partners II, Ltd.
The Partnership paid operating expenses of $49,903 on behalf of the Trust for
the three months ended March 31, 2002. These cash payments have been recorded
as a contribution to corpus in the accompanying financial statements.
Summarized financial information for the Partnership for the three months
ended March 31, 2002, and as of March 31, 2002, follows:
Condensed Statement of Operations
Income $ 1,929
____________
1,929
____________
Expenses 5,354
____________
5,354
____________
Net loss $ (3,425)
============
Condensed Statement of Assets and Liabilities
Cash and cash
equivalents $ 429,508
____________
429,508
____________
Accounts payable and
accrued expenses 20,385
____________
20,385
____________
Partners' equity $ 409,123
============
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, 2002, total Beneficiaries' interest
increased $15,402,011, due primarily to the increase in the valuation of
common stock of Tutogen Medical, Inc. with a value of $4.98 per share as of
March 31, 2002.
The following portfolio transactions are noted for the quarter ended March
31, 2002 (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
March 31, 2002, the Trust was the beneficial owner of 7,904,908 shares
representing approximately 52.26% of the outstanding shares of Tutogen.
The Trustee serves as Chairman of the Board of Directors of Tutogen and,
during the quarter ended March 31, 2002, 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.
Subsequent to the first quarter of 2002, the Trustee was re-appointed
Chairman of the Board of Tutogen during the company's Annual Meeting held in
April, 2002, in New York.
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, 2002, the closing price of the GDI stock was $0.382
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, 2002, the Trust recorded net gain of
$15,222,574, which was primarily due to a increase in the closing price of
Tutogen's common stock which was $3.05 as of December 31, 2001, and $4.98 on
March 31, 2002. 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: April 25, 2002 CAPITAL PARTNERS II, LTD. LIQUIDATING TRUST
(Registrant)
By: ____/s/_____________
Thomas W. Pauken
Liquidating Trustee