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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 SEPTEMBER 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
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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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1 <PAGE>
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COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
INDEX
Page
Number
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>
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
BALANCE SHEET
(UNAUDITED)
<CAPTION>
September 30, December 31,
1998 1997
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ASSETS
------
<S> <C> <C>
Investments at Fair Value
(cost $500,003 and $0, respectively) $500,003 $ --
Cash and Cash Equivalents 79,348 1,100
Deferred Organizational Costs, net 72,755 8,532
-------- ------
TOTAL ASSETS $652,106 $9,632
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<CAPTION>
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
<S> <C> <C>
Liabilities:
Accounts Payable and Accrued Expenses $ 10,495 $ --
Payable to Affiliates -- 8,532
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TOTAL LIABILITIES 10,495 8,532
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Partnership Capital:
Capital - Limited Partners 635,195 100
Capital - General Partners 6,416 1,000
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TOTAL PARTNERSHIP CAPITAL 641,611 1,100
-------- ------
TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $652,106 $9,632
======== ======
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The accompanying notes are an integral part of these financial statements.
</TABLE>
3<PAGE>
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
SCHEDULE OF PORTFOLIO INVESTMENTS
<CAPTION>
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Company Nature of Business Fair Value
Initial Investment Date Investment Cost September 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
OPTIMARK Developed and patented a computer-based
TECHNOLOGIES, INC. method for structuring auction markets
that significantly improves liquidity and
efficiency and lowers transaction costs.
September 23, 1998 10,000 shares of Series B Convertible
Participating Preferred Stock 100,000 100,000
-------- --------
$500,003 $500,003
======== ========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
4
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
INCOME STATEMENT
(UNAUDITED)
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, 1998 September 30, 1998
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INCOME
------
<S> <C> <C>
Dividend and Interest Income $ 120 $ 120
-------- --------
TOTAL INCOME 120 120
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<CAPTION>
EXPENSES
--------
<S> <C> <C>
Independent General Partners' Fees 3,000 9,000
Professional Fees 9,891 22,186
Amortization of Deferred Organizational Costs 4,118 9,609
Management Fee 2,206 3,162
Other 22 663
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TOTAL EXPENSES 19,237 44,620
-------- --------
NET LOSS $(19,117) $(44,500)
======== ========
Per Unit Information:
Net Loss (as of September 30, 1998) $ (.81)
========
Net Asset Value (as of September 30, 1998) $ 11.69
========
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>
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Nine Months
Ended
September 30, 1998
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<S> <C>
CASH FLOWS USED BY OPERATING ACTIVITIES:
Net Loss $ (44,500)
Adjustments to reconcile Net Loss to Net
Cash Used by Operating Activities -
Amortization of Deferred Organization Costs 9,609
Increase in Deferred Organization Costs (73,832)
Increase in Accounts Payable and Accrued Expenses 10,495
Decrease in Payable to Affiliates (8,532)
Purchase of Portfolio Investments (500,003)
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Total Cash Used by Operating Activities (606,763)
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Capital Contributions 685,011
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Total Cash Provided by Financing Activities 685,011
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Net Increase in Cash and Cash Equivalents 78,248
CASH AND EQUIVALENTS, beginning of period 1,100
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CASH AND EQUIVALENTS, end of period $ 79,348
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The accompanying notes are an integral part of these financial statements.
</TABLE>
6<PAGE>
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
(UNAUDITED)
<CAPTION>
Nine Months Ended September 30, 1998
Limited Partners General Partners Total
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<S> <C> <C> <C>
Balance, December 31, 1997 $ 100 $1,000 $ 1,100
Contributions 679,150 5,861 685,011
Net Loss (44,055) (445) (44,500)
-------- ------ --------
Balance, September 30, 1998 $635,195 $6,416 $641,611
======== ====== ========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
7<PAGE>
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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>
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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 September 30, 1998, was
$19,117. This loss is attributable to $9,891 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, and $2,206 of expense for
the management fee. The Partnership earned $120 of dividend and interest
income during the three months ended September 30, 1998.
Net loss for the nine months ended September 30, 1998, was $44,500.
This loss is attributable to professional fees, Independent General
Partners' fees, amortization of deferred organizational costs and the
management fee. The Partnership earned $120 of dividend and interest
income during the nine months ended September 30, 1998.
The Partnership made one portfolio investment during the third
quarter. On September 23, 1998, the Partnership invested $100,000 in
OptiMark Technologies, Inc. and received 10,000 shares of Series B
Convertible Participating Preferred Stock. OptiMark Technologies, Inc.
has developed and patented a computer-based method for structuring
auction markets that significantly improves liquidity and efficiency and
lowers transaction costs. The company expects its novel market
structuring technology to revolutionize auction markets for a wide
variety of goods and services.
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
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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 September 30, 1998.
<TABLE>
<CAPTION>
Type of Realized
Company Transaction Cost Proceeds Gain (Loss)
- ----------------------- ------------ -------- -------- ----------
<S> <C> <C> <C> <C>
Quarter 1 ended:
- ---------------
United Therapeutics Purchase of
Corporation Common Stock $100,000
--------
Quarter 2 ended:
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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
--------
Quarter 3 ended:
- ---------------
OptiMark Technologies, Inc. Purchase of Series B
Convertible Participating
Preferred Stock $100,000
--------
Total $500,003
========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, the partnership's total capital of $641,611
consisted of $635,195 in limited partner capital and $6,416 in general
partner capital. Net loss was allocated to the limited partners in the
amount of $44,055 and to the general partners in the amount of $445.
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
The Independent General Partners of the Partnership have notified the
investors of CIP III that they are required to make an additional
capital contribution to the Partnership on or before November 18, 1998.
The amount that the investors are required to pay is $12.50 for each
Partnership Unit held. This per Unit amount is equal to the initial
capital contribution, which could result in a two-fold increase in the
offering proceeds.
If any investor does not make the additional capital contribution,
they will be regarded as a defaulting partner. The defaulting partners
will have 20% of their capital contributions transferred to the non-
defaulting partners on a pro-rata basis. This will have the effect of
reducing the defaulting partners' interest and Units in the Partnership
by 60%. The portion of the defaulting partners' capital contribution
that transfers to the non-defaulting partners will be regarded as a
capital contribution by the non-defaulting partners, on a pro-rata
basis, and will increase the non-defaulting partners' interest and Units
in the Partnership.
11
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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 September 30,
1998.
12
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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 November 13, 1998
Daniel A. Burkhardt
/s/ Ray L. Robbins, Jr.
----------------------- Vice-President and Director November 13, 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 September 30, 1998 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 500,003
<INVESTMENTS-AT-VALUE> 500,003
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 652,106
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 10,495
<TOTAL-LIABILITIES> 10,495
<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> 641,611
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 120
<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> 44,620
<AVERAGE-NET-ASSETS> 321,356
<PER-SHARE-NAV-BEGIN> 12.50
<PER-SHARE-NII> (.81)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.69
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
