<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998 Commission file number 000-23037
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
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(Exact name of registrant as specified in its charter)
MISSOURI 43-1790352
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12555 Manchester Road
St. Louis, Missouri 63131
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
---------------------
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
--- ---
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COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
<TABLE>
INDEX
<CAPTION>
Page
Number
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet 3
Schedule of Portfolio Investments 4
Income Statement 5
Statement of Cash Flows 6
Statement of Changes in Partnership Capital 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. OTHER INFORMATION<F*>
Item 1. Legal Proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
<FN>
<F*> Items 2,3,4 and 5 are omitted as they are not applicable
2
<PAGE> 3
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
</TABLE>
<TABLE>
BALANCE SHEET
(UNAUDITED)
<CAPTION>
June 30, December 31,
1998 1997
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ASSETS
------
<S> <C> <C>
Investments at Fair Value
(cost $400,003 and $0, respectively) $400,003 $ --
Cash and Cash Equivalents 189,299 1,100
Deferred Organizational Costs, net 76,873 8,532
-------- ------
TOTAL ASSETS $666,175 $9,632
======== ======
<CAPTION>
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
<S> <C> <C>
Liabilities:
Accounts Payable and Accrued Expenses $ 5,448 $ --
Payable to Affiliates -- 8,532
-------- ------
TOTAL LIABILITIES 5,448 8,532
-------- ------
Partnership Capital:
Capital - Limited Partners 654,120 100
Capital - General Partners 6,607 1,000
-------- ------
TOTAL PARTNERSHIP CAPITAL 660,727 1,100
-------- ------
TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $666,175 $9,632
======== ======
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The accompanying notes are an integral part of these financial statements.
</TABLE>
3
<PAGE> 4
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
<TABLE>
SCHEDULE OF PORTFOLIO INVESTMENTS
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<CAPTION>
Company Nature of Business Fair Value
Initial Investment Date Investment Cost June 30, 1998
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<S> <C> <C> <C>
UNITED THERAPEUTICS Develops innovative pharmaceutical
CORPORATION and biotechnological therapies for the
treatment of life threatening diseases.
June 30, 1998 100,000 shares of Common Stock $100,000 $100,000
IMPLEMED, INC. Develops polymers that are used to
coat medical and other devices where
infection is a serious problem.
April 6, 1998 10,000 shares of Series D Convertible
Preferred Stock 100,000 100,000
PROTEIN DELIVERY INC. Specializes in the development of
proprietary polymer-based systems for
the delivery and stabilization of protein
and peptide drugs.
April 6, 1998 44,445 shares of Series D
Preferred Stock 100,001 100,001
LIPOMED, INC. Diagnostic testing and analytical
company that is pioneering new
medical applications of nuclear
magnetic resonance spectroscopy.
June 16, 1998 16,667 shares of Series B Convertible
Preferred Stock 100,002 100,002
-------- --------
$400,003 $400,003
======== ========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
4
<PAGE> 5
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
INCOME STATEMENT
(UNAUDITED)
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1998 June 30, 1998
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INCOME
------
<S> <C> <C>
Dividend and Interest Income $ 0 $ 0
---------- ----------
TOTAL INCOME 0 0
---------- ----------
EXPENSES
--------
Independent General Partners' Fees 3,000 6,000
Professional Fees 9,795 12,295
Amortization of Deferred Organizational Costs 4,118 5,491
Management Fee 956 956
Other 642 642
---------- ----------
TOTAL EXPENSES 18,511 25,384
---------- ----------
NET LOSS $ (18,511) $ (25,384)
========== ==========
Per Unit Information:
Net Loss (as of June 30, 1998) $ (.46)
==========
Net Asset Value (as of June 30, 1998) $ 12.04
==========
Units Outstanding:
Limited Partners 54,340
General Partners 549
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The accompanying notes are an integral part of these financial statements.
</TABLE>
5
<PAGE> 6
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
<TABLE>
STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months
Ended
June 30, 1998
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<S> <C>
CASH FLOWS USED BY OPERATING ACTIVITIES:
Net Loss $ (25,384)
Adjustments to reconcile Net Loss to Net
Cash Used by Operating Activities -
Amortization of Deferred Organization Costs 5,491
Increase in Deferred Organization Costs (73,832)
Increase in Accounts Payable and Accrued Expenses 5,448
Decrease in Payable to Affiliates (8,532)
Purchase of Portfolio Investments (400,003)
---------
Total Cash Used by Operating Activities (496,812)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Capital Contributions 685,011
---------
Total Cash Provided by Financing Activities 685,011
---------
Net Increase in Cash and Cash Equivalents 188,199
CASH AND EQUIVALENTS, beginning of period 1,100
---------
CASH AND EQUIVALENTS, end of period $ 189,299
=========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
6
<PAGE> 7
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
<TABLE>
STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
(UNAUDITED)
<CAPTION>
Six Months Ended June 30, 1998
Limited Partners General Partners Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1997 $ 100 $1,000 $ 1,100
Contributions 679,150 5,861 685,011
Net Loss (25,130) (254) (25,384)
-------- ------ --------
Balance, June 30, 1998 $654,120 $6,607 $660,727
======== ====== ========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
7
<PAGE> 8
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
Community Investment Partners III, L.P., LLLP (CIP III) is a limited
liability limited partnership which has elected to be a business development
company under the Investment Company Act of 1940, as amended. As a business
development company, the partnership is required to invest at least 70% of
its total assets in qualifying investments as specified in the Investment
Company Act. CIP Management, L.P., LLLP (Management), a limited liability
limited partnership, is the Managing General Partner of CIP III. Management
is responsible for making all decisions regarding CIP III's investment
portfolio.
CIP III was formed July 23, 1997. CIP III participated in a public
offering of its limited partnership interests ("Units") during the first
quarter of 1998. The partnership sold 54,340 Units of limited partnership
interest for an aggregate price of $679,250. The sole general partner of CIP
III is the Managing General Partner which owns 1% of the aggregate capital
contributions of all partners, and contributed $6,861 of general partner
capital. The aggregate capital contributions of both the limited partner and
general partner capital were $686,111.
The Partnership may request an additional capital contribution from
each partner, in an amount up to the initial capital contribution, which
could result in a two-fold increase in the offering proceeds. The
contributions would be less if contributions are not made at the Capital Call
Date. CIP III's potential profitability could be affected by the amount of
funds at its disposal.
All portfolio investments are carried at cost until significant
developments affecting an investment provide a basis for revaluation.
Thereafter, portfolio investments will be carried at fair value as obtained
from outside sources or at a value determined quarterly by the Managing
General Partner under the supervision of the Independent General Partners.
Due to the inherent uncertainty of valuation, those estimated values for
portfolio investments carried at cost may differ significantly from the
values that would have been used had a ready market for the investment
existed, and the differences could be material to the financial statements.
Investments in securities traded on a national securities exchange will be
valued at the latest reported sales price on the last business day of the
period. If no sale has taken place, the securities will be valued at the
last bid price. If no bid price has been reported, or if no exchange
quotation is available, the securities will be valued at the quotation
obtained from an outside broker. Investment transactions are recorded on a
trade date basis. Income is recorded on an accrual basis.
8
<PAGE> 9
Part. 1. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
MANAGEMENT'S FINANCIAL DISCUSSION
RESULTS OF OPERATIONS
Since the Partnership's registration became effective with the
Securities and Exchange Commission on January 9, 1998, there is a lack of
prior information to compare with the current quarter's results of
operations. The loss for the three months ended June 30, 1998, was $18,511.
This loss is attributable to $9,795 of expenses for legal, accounting and
trustee fees (professional fees), the $3,000 quarterly fee paid to the
Independent General Partners, $4,118 incurred for amortization of deferred
organizational costs, $956 of expense for the management fee and other
expenses of $642. There was no income during the three months ended June 30,
1998.
Net loss for the six months ended June 30, 1998, was $25,384. This loss
is attributable to professional fees, Independent General Partners fees,
amortization of deferred organizational costs and management fees. There was
no income during the first quarter of 1998.
The Partnership made three portfolio investments during the second
quarter. On April 6, 1998, the Partnership invested $100,000 in Implemed,
Inc. and received 10,000 shares of Series D Convertible Preferred Stock.
Implemed, Inc. develops polymers that are used to coat medical and other
devices where infection is a serious problem. Also on April 6, 1998, the
Partnership invested $100,001 in Protein Delivery Inc. and received 44,445
shares of Series D Preferred Stock. Protein Delivery Inc. specializes in the
development of proprietary polymer-based systems for the delivery and
stabilization of protein and peptide drugs. On June 16, 1998, the Partnership
invested $100,002 in LipoMed, Inc. and received 16,667 shares of Series B
Convertible Preferred Stock. LipoMed, Inc. is a diagnostic testing and
analytical company that is pioneering new medical applications of nuclear
magnetic resonance spectroscopy.
CIP III is responsible for paying organizational and offering expenses
up to 6% of the maximum gross offering proceeds, or $82,363. For purposes of
determining the amount of the offering and organizational expenses payable by
the Partnership, gross offering proceeds include the proceeds from an
additional Capital Contribution of $12.50 per Unit. To date, the Partnership
has paid offering and organizational expenses of 6% of the maximum gross
offering proceeds, or $82,363.
Since total offering and organizational costs incurred by the
Partnership have been greater than 6% of the maximum gross offering proceeds,
the Managing General Partner or one of its affiliates was responsible for
paying the additional offering and organizational expenses totaling $130,189,
at the end of the second quarter. In addition, the Managing General Partner
or one of its affiliates will be responsible for paying any future
organizational and offering expenses of the Partnership. The Partnership's
share of total deferred organizational costs of $82,363 are being amortized
over a sixty-month period, which began March 1, 1998.
The future income or loss of the Partnership is contingent upon the
performance of the portfolio investments and the ability to find suitable
investment alternatives.
9
<PAGE> 10
Part. 1. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INVESTMENT TRANSACTIONS
Following is a summary of portfolio investment transactions during the period
ended June 30, 1998.
<TABLE>
<CAPTION>
Type of Realized
Company Transaction Cost Proceeds Gain (Loss)
- ----------------------- ------------ ---------- ---------- -----------
<S> <C> <C>
Quarter 1 ended:
- ----------------
United Therapeutics Purchase of
Corporation Common Stock $100,000
--------
Quarter 2 ended:
- ----------------
Implemed, Inc. Purchase of
Series D Convertible
Preferred Stock 100,000
Protein Delivery Inc. Purchase of
Series D
Preferred Stock 100,001
LipoMed, Inc. Purchase of
Series B Convertible
Preferred Stock 100,002
--------
Total $400,003
========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the partnership's total capital of $660,727,
consisted of $654,120 in limited partner capital and $6,607 in general
partner capital. Net loss was allocated to the limited partners in the
amount of $25,130 and to the general partners in the amount of $254.
The Partnership is actively reviewing potential portfolio investments.
Until the Partnership invests in portfolio investments, it intends to invest
its cash balances in a money market account. Due to their short term nature,
such investments provide the Partnership with the liquidity necessary for
investments as opportunities arise.
10
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Part. 1. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
SUBSEQUENT EVENTS
There were no subsequent events.
11
<PAGE> 12
Part. II. OTHER INFORMATION
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
Item 1: Legal Proceedings
The partnership is not a party to any material pending legal
proceedings.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ended June 30, 1998.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
By: CIP Management, L.P., LLLP, its Managing General Partner
By: CIP Management, Inc., its Managing General Partner
<TABLE>
<S> <C> <C>
/s/ Daniel A. Burkhardt
----------------------- President, Treasurer and Director August 14, 1998
Daniel A. Burkhardt
/s/ Ray L. Robbins, Jr.
----------------------- Vice-President and Director August 14, 1998
Ray L. Robbins, Jr.
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for Community Investment Partners III L.P., LLLP for
the quarter ended June 30, 1998 and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<INVESTMENTS-AT-COST> 400,003
<INVESTMENTS-AT-VALUE> 400,003
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 666,175
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,448
<TOTAL-LIABILITIES> 5,448
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 54,889
<SHARES-COMMON-PRIOR> 54,889
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 660,727
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 25,384
<AVERAGE-NET-ASSETS> 330,914
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> (.46)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.04
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
