<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998 Commission file number 000-23037
----------------- ---------
COMMUNITY INVESTMENT PARTNERS III L.P., LLLP
______________________________________________________________________________
(Exact name of registrant as specified in its charter)
MISSOURI 43-1790352
______________________________________________________________________________
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
12555 Manchester Road
St. Louis, Missouri 63131
______________________________________________________________________________
(Address and principal executive office) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
----------------
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge in definitive proxy or
information statements incorporated by reference in part III of this
Form 10-K or any amendment to this form 10-K. YES [ ] NO [ X ]
As of March 15, 1999, 48,440 units of limited partnership interest
(Units), representing net assets of $1,094,700 were held by non-
affiliates. There is no established public market for such Units.
<PAGE>
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated January 9,
1998, filed with the Securities and Exchange Commission are incorporated
by reference in Part I, Part II and Part III hereof.
<PAGE>
<PAGE>
<TABLE>
COMMUNITY INVESTMENT PARTNERS III L.P., LLLP
TABLE OF CONTENTS
<CAPTION>
PART I Page
----
<S> <C>
Item 1. Business 4
Item 2. Properties 5
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II
Item 5. Market for the Registrant's Common Equity and
Related Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 8. Index to Financial Statements and
Supplementary Financial Data 11
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 24
PART III
Item 10. Directors and Executive Officers of the Registrant 25
Item 11. Executive Compensation 26
Item 12. Security Ownership of Certain Beneficial
Owners and Management 27
Item 13 Certain Relationships and Related Transactions 27
Part IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 28
SIGNATURES 29
INDEX TO EXHIBITS 30
</TABLE>
<PAGE>
<PAGE>
PART I
ITEM 1. BUSINESS
Community Investment Partners III L.P., LLLP (the "Partnership")
was formed to seek long-term capital appreciation by making investments
in companies and other special investment situations. The Partnership
will not engage in any other business or activity. The Partnership will
dissolve on December 31, 2012, subject to the right of the Individual
General Partners to extend the term for up to two additional two-year
periods.
The Partnership 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 assets in qualifying investments as specified in the Investment
Company Act.
The Partnership was formed on July 23, 1997, under the Missouri
Uniform Partnership Law and the Missouri Revised Uniform Limited
Partnership Law. CIP Management, L.P., LLLP, the Managing General
Partner, is a Missouri limited liability limited partnership originally
formed on October 10, 1989 as a Missouri limited partnership and
registered as a limited liability limited partnership on July 23, 1997.
The general partner of CIP Management, L.P., LLLP is CIP Management,
Inc., an indirect subsidiary of Edward D. Jones & Co., L.P.
The Partnership participated in a public offering of its limited
partnership interests in the first quarter of 1998. The Partnership sold
54,340 Units of limited partnership interest and 549 Units of general
partnership interest for an aggregate price of $686,111. In the fourth
quarter, the Partnership executed a call to each partner for an
additional aggregate amount of $686,111. After offering expenses, the
Partnership received approximately $1,289,859 in proceeds available for
investment.
The Managing General Partner is required to have invested the net
proceeds of the Partnership's offering (excluding amounts held in
reserve) within two years of the date of the capital call.
The information set forth under the captions "Investment
Objectives and Policies" and "Regulation" in the Prospectus of the
Partnership dated January 9, 1998, filed with the Securities and
Exchange Commission pursuant to Rule 497(b) under the Securities Act of
1933, is incorporated herein by reference.
RISKS OF UNIT OWNERSHIP
The purchase and ownership of Units involve a number of
significant risks and other important factors. The portfolio company
investments of the Partnership involve a high degree of business and
financial risk that can result in substantial losses. Among these are
the risks associated with investment in companies with little operating
history, companies operating at a loss or with substantial variations in
operating results from period to period, companies with the need for
substantial additional capital to support expansion or achieve or
maintain a competitive position, companies which may be highly
leveraged, companies which may not be diversified and companies in which
the Partnership may be the sole or primary lender. The Partnership
intends to invest in only a few companies; therefore, a loss or other
problem with a single investment would have a material adverse effect on
the Partnership.
<PAGE>
<PAGE>
Other risks include the Partnership's ability to find suitable
investments for its funds because of competition from other entities
having similar investment objectives. Risks may arise due to the
significant period of time that may elapse before the Partnership has
completed the selection of its portfolio company investments and the
significant period of time (typically four to seven years or longer)
which will elapse before portfolio company investments have reached a
state of maturity such that disposition can be considered. It is
unlikely that any significant distributions of the proceeds from the
disposition of investments will be made until the later years of the
term of the Partnership.
Portfolio companies may require additional funds. There can be no
assurance that the Partnership will have sufficient funds from reserves
or borrowing to make such follow-up investments which may have a
substantial negative impact on a portfolio company in need of additional
funds or may result in a missed opportunity to increase participation in
a successful operation.
All decisions with respect to the management of the Partnership,
including identifying and making portfolio investments, are made
exclusively by the General Partners. Limited Partners must rely on the
abilities of the General Partners. The key personnel of the Managing
General Partner have considerable prior experience in investment banking
and in structuring investments similar to those which the Partnership
intends to pursue. In addition, they have prior experience in the
operation of Community Investment Partners, L.P. and Community
Investment Partners II, L.P., both business development companies with
similar investment strategies.
Ownership of the Units also entails risk because Limited Partners
may not be able to liquidate their investment in the event of an
emergency or for any other reason due to the substantial restrictions on
transfers contained in the Partnership Agreement and the lack of a
market for the resale of Units.
The information set forth under the captions "Risk and Other
Important Factors" (including the subsections "Risks of Investment,"
"Size of Partnership," "Ability to Invest Funds," "Time Required to
Maturity of Investments; Illiquidity of Investments," "Need for Follow-
on Investments," "Use of Leverage," "Unspecified Investments," "Reliance
on Management," "New Business," "No Market for Units," "Distributions in
Kind" and "Federal Income Tax Considerations") on pages 13 through 17 of
the Prospectus of Partnership dated January 9, 1998, filed with the
Securities and Exchange Commission pursuant to Rule 497(b) under the
Securities Act of 1933 on January 9, 1998, is incorporated herein by
this reference. (This information has been restated herein pursuant to
section 64(b) of the Investment Company Act of 1940).
Partners should refer to the Partnership Agreement for more
detailed information.
EMPLOYEES
The Partnership has no employees. The Managing General Partner
performs management and administrative services for the operation of the
Partnership. The Managing General Partner is paid an annual management
fee of 1.5% of total assets. The Managing General Partner is reimbursed
by the Partnership for out of pocket expenses in connection with
finding, evaluating, structuring, approving, monitoring and liquidating
the Partnership's portfolio investments.
ITEM 2. PROPERTIES
The Partnership does not own or lease any physical properties.
<PAGE>
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not a party to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
period covered by this report.
<PAGE>
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Limited
Partnership interests. As of March 15, 1999, the total number of holders
of units is 111. The number of limited partnership units outstanding is
54,340. The number of general partnership units outstanding is 549 as of
March 15, 1999.
The information set forth under the captions "Partnership
Distributions and Allocations" and "Transferability of Units" in the
Prospectus of the Partnership dated January 9, 1998, filed with the
Securities and Exchange Commission pursuant to Rule 497(b) under the
Securities Act of 1933 is incorporated herein by reference.
<PAGE>
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA,
<TABLE>
STATEMENTS OF FINANCIAL CONDITION:
<CAPTION>
As of
December 31,
----------------------
1998 1997
---------- ------
<S> <C> <C>
Net Assets $1,240,442 $1,100
Portfolio Investments at Fair Value 512,003 -
<CAPTION>
STATEMENTS OF INCOME:
For the Years
Ended December 31,
----------------------
1998 1997
---------- ------
<S> <C> <C>
Net Loss before Realized Gains
(Losses) and Unrealized Gains (Losses) $ (131,780) -
Realized Gains (Losses) - -
Unrealized Gains (Losses) - -
Net Loss (131,780) -
Per Unit of
Partnership Interest:
Net Asset Value 22.60 -
Net Loss before Realized Gains
(Losses) and Unrealized Gains (Losses) (2.40) -
Realized Gains (Losses) - -
Unrealized Gains (Losses) - -
Net Loss (2.40) -
</TABLE>
<PAGE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
(FISCAL YEAR 1998 VERSUS 1997)
Net loss for the year ended December 31, 1998, was $131,780.
Operating activities did not commence until 1998; only initial
contributions of $1,100 were made to establish the Partnership in 1997.
The net loss is attributable to $29,060 in professional fees incurred by
the Partnership and $19,813 in director and management fees. In
addition, $82,363 for organization costs were expensed during 1998.
The Partnership participated in a public offering of its limited
partnership interests in the first quarter of 1998. The Partnership
sold 54,340 Units of limited partnership interest and 549 Units of
general partnership interest for an aggregate price of $686,111. In the
fourth quarter, the Partnership executed a call to each partner for an
additional aggregate amount of $686,111. After offering expenses, the
Partnership received approximately $1,289,859 in proceeds available for
investment.
The Partnership has made several initial investments totaling
$512,003 in its first year of operations (Note 6). The Partnership made
no distributions during 1998. The future income or loss of the
Partnership is contingent upon the performance of the portfolio
investments.
<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Total capital for the Partnership as of December 31, 1998, was
$1,240,442. This consisted of $1,228,038 in Limited Partner capital and
$12,404 in General Partner capital.
Net loss of $131,780 for 1998 was allocated in the amount of
$130,462 to the Limited Partners and in the amount of $1,318 to the
General Partner.
The Partnership is actively reviewing potential portfolio
investments. Until the Partnership finishes investing 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. At December 31, 1998, the Partnership had $742,439
in cash and cash equivalents.
SUBSEQUENT EVENTS
None
YEAR 2000 ISSUE
Although the Partnership has no Year 2000 issues that would result
from its own information systems, the Partnership has investments in
publicly and privately placed securities and loans. The Partnership may
be exposed to credit risk to the extent that the related borrowers are
materially adversely impacted by the Year 2000 issue.
<PAGE>
<PAGE>
Item 8. INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY
FINANCIAL DATA
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants 12
Schedule of Portfolio Investments as of
December 31, 1998 and 1997 13
Statements of Financial Condition as of December 31, 1998 and 1997 16
Statements of Income for the Years Ended
December 31, 1998 and 1997. 17
Statements of Cash Flows for the Years Ended
December 31, 1998 and 1997. 18
Statements of Changes in Partnership Capital for the
Years Ended December 31, 1998 and 1997. 19
Notes to Financial Statements. 20
</TABLE>
Financial Statement Schedules:
All financial statement schedules are omitted because they are not
applicable or the required information is shown in the financial
statements or notes thereto.
<PAGE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Community Investment Partners III L.P., LLLP
In our opinion, the accompanying Statements of Financial Condition,
including the Schedule of Portfolio Investments, and the related
Statements of Income, of Cash Flows and of Changes in Partnership
Capital present fairly, in all material respects, the financial
position of Community Investment Partners III L.P., LLLP (the
"Partnership") at December 31, 1998 and 1997, and the results of
its operations, its cash flows and the changes in Partnership
Capital for each of the two years in the period ended December 31,
1998, in confomity with generally accepted accounting principles.
These financial statements are the responsibility of the
Partnership's management; our responsibility is to express an
opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we
plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits, which included
confirmation of portfolio investments owned at December 31, 1998,
provide a reasonable basis for the opinion expressed above.
As explained in Note 3, the financial statements include securities
valued at $512,003 (41 percent of net assets), whose values have
been estimated by the Managing General Partner in the absence of
readily ascertainable market values. Those estimated values may
differ significantly from the values that would have been used had
a ready market for the investments existed, and the differences
could be material.
PRICEWATERHOUSECOOPERS LLP
St. Louis, Missouri
March 12, 1999
<PAGE>
<PAGE>
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
SCHEDULE OF PORTFOLIO INVESTMENTS
As of December 31, 1998
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Company Nature of Business Fair Value
Investment Date Investment Cost (Note 3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
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
LIPOMED, INC. A diagnostic testing and
analytical company that is
pioneering new medical applications
of nuclear magnetic resonance
(NMR) spectroscopy.
June 16, 1998 16,667 shares of Series B
Convertible Preferred Stock 100,002 100,002
OPTIMARK TECHNOLOGIES, INC. Developed and patented a
computer-based method for structuring
auction markets that significantly
improves liquidity and efficiency,
lowering transaction costs in the process.
September 23, 1998 10,000 shares of Series B
Convertible Participating
Preferred Stock 100,000 100,000
PROTEIN DELIVERY INC. Drug delivery company specializing
in 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
December 23, 1998 10% Bridge Note, due 4/1/99
and a Warrant to purchase
shares of Common Stock,
expiring 12/31/04 12,000 12,000
<PAGE>
<PAGE>
<CAPTION>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D.)
As of December 31, 1998
- -----------------------------------------------------------------------------------------------------
Company Nature of Business Fair Value
Investment Date Investment Cost (Note 3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
UNITED THERAPEUTICS Develops innovative pharmaceutical
CORPORATION and biotechnological therapies for
the treatment of life threatening
diseases.
March 31, 1998 100,000 shares of Common Stock 100,000 100,000
-------- --------
TOTAL INVESTMENTS $512,003 $512,003
======== ========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
SCHEDULE OF PORTFOLIO INVESTMENTS
As of December 31, 1997
<CAPTION>
- -----------------------------------------------------------------------------------------------------
Company Nature of Business Fair Value
Investment Date Investment Cost (Note 3)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
No investments were made in 1997
The accompanying notes are an integral part of these financial statements.
</TABLE> <PAGE>
<PAGE>
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
STATEMENTS OF FINANCIAL CONDITION
ASSETS
------
<CAPTION>
December 31,
----------------------------
1998 1997
---------- ------
<S> <C> <C>
Investments at Fair Value (Note 3)
(cost $512,003 and $0 respectively) $ 512,003 $ -
Cash and Cash Equivalents 742,439 1,100
Deferred Organizational Costs (Note 3) - 8,532
---------- ------
TOTAL ASSETS $1,254,442 $9,632
========== ======
<CAPTION>
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
December 31,
----------------------------
1998 1997
---------- ------
<S> <C> <C>
Liabilities:
Accounts Payable and Accrued Expenses $ 14,000 $ -
Payable to Affiliates (Note 5) - 8,532
---------- ------
TOTAL LIABILITIES 14,000 8,532
---------- ------
Partnership Capital:
Capital - Limited Partners 1,228,038 100
Capital - General Partners 12,404 1,000
---------- ------
TOTAL PARTNERSHIP CAPITAL 1,240,442 1,100
---------- ------
TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $1,254,442 $9,632
========== ======
The accompanying notes are an integral
part of these financial statements.
</TABLE> <PAGE>
<PAGE>
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
STATEMENTS OF INCOME
<CAPTION>
For the Years Ended
December 31,
---------------------------
1998 1997
--------- -----
<S> <C> <C>
INCOME
------
Interest Income $ 119 $ -
--------- -----
TOTAL INCOME 119 -
--------- -----
EXPENSES
--------
Management Fees (Note 5) 7,813 -
Organization Costs (Note 3) 82,363 -
Professional Fees 29,060 -
Independent General Partners' Fees 12,000 -
Other 663 -
--------- -----
TOTAL EXPENSES 131,899 -
--------- -----
Net Loss before Net Realized Gains
(Losses) and Unrealized Gains (Losses) (131,780) -
Net Realized Gains (Losses)
on Sales of Investments - -
Net Unrealized Gains (Losses)
on Investments - -
--------- -----
NET LOSS $(131,780) $ -
========= =====
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
STATEMENTS OF CASH FLOWS
<CAPTION>
For the Years Ended December 31,
---------------------------
1998 1997
--------- -------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss $(131,780) $ -
Adjustments to reconcile net loss
to net cash used by operating activities:
Decrease (increase) in deferred organization costs 8,532 (8,532)
Increase in accounts payable and accrued expenses 14,000 -
(Decrease) increase in payable to affiliates (8,532) 8,532
Purchase of portfolio investments (512,003) -
--------- -------
Net cash used in operating activities (629,783) -
--------- -------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Capital Contributions 1,371,122 1,100
--------- -------
Net cash provided by financing activities 1,371,122 1,100
--------- -------
Net increase in cash and cash equivalents 741,339 1,100
CASH AND CASH EQUIVALENTS:
Beginning of year 1,100 -
--------- -------
End of year $ 742,439 $ 1,100
========= =======
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP
STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL
For the Years Ended December 31, 1998 and 1997
<CAPTION>
-------------------------------------------
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
---------- -------- ----------
<S> <C> <C> <C>
Balance, December 31, 1997 $ 100 $ 1,000 $ 1,100
Contributions 1,358,400 12,722 1,371,122
Net Loss (130,462) (1,318) (131,780)
---------- ------- ----------
Balance, December 31, 1998 $1,228,038 $12,404 $1,240,442
========== ======= ==========
The accompanying notes are an integral
part of these financial statements.
</TABLE>
<PAGE>
<PAGE>
COMMUNITY INVESTMENT PARTNERS III L.P., LLLP
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
Partnership Organization
------------------------
Community Investment Partners III L.P., LLLP (the
"Partnership") was formed on July 23, 1997, under the Missouri
Uniform Partnership Law and the Missouri Revised Uniform Limited
Partnership Law. CIP Management, L.P., LLLP, the Managing General
Partner, is a Missouri limited liability limited partnership
originally formed on October 10, 1989 as a Missouri limited
partnership and elected to register as a limited liability limited
partnership on July 23, 1997. The general partner of CIP
Management, L.P., LLLP is CIP Management, Inc., an indirect
subsidiary of Edward D. Jones & Co., L.P.
Business
--------
The Partnership 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 assets in qualifying investments as
specified in the Investment Company Act. The Managing General
Partner is responsible for making the Partnership's investment
decisions.
The Partnership will seek long-term capital appreciation by
making investments in companies and other special investment
situations. The Partnership is not permitted to engage in any
other business or activity. The Partnership will dissolve on
December 31, 2012, subject to the right of the Individual General
Partners to extend the term for up to two additional two-year
periods.
The Managing General Partner expects to invest the net
proceeds of the Partnership's offering (including amounts held in
reserve) within two years of the date of the commencement of the
offering.
Risk of Ownership
-----------------
The purchase and ownership of Partnership Units involve a
number of significant risks and other important factors. The
portfolio company investments of the Partnership involve a high
degree of business and financial risk that can result in
substantial losses. Among these are the risks associated with
investing in companies with little operating history, companies
operating at a loss or with substantial variations in operating
results from period to period, companies with the need for
substantial additional capital to support expansion or achieve or
maintain a competitive position, companies which may be highly
leveraged, companies which may not be diversified and companies in
which the Partnership may be the sole or primary lender. The
Partnership intends to invest in only a few companies; therefore,
a loss or other problem with a single investment would have a
material adverse effect on the Partnership.
<PAGE>
<PAGE>
2. ALLOCATION OF PARTNERSHIP PROFITS AND LOSSES
Generally, profits will be allocated 99% to the Limited
Partners and 1% to the General Partners until the Partners'
Capital Accounts equal their undistributed Capital Contributions.
Thereafter, profits will be allocated 90% to the Limited Partners
and 10% to the General Partners in an amount sufficient to cause
their Capital Accounts to equal an amount equal to (i) two times
their Capital Contributions less (ii) cumulative distributions
pursuant to paragraph 4.1 and paragraph 9.2.2 of the Partnership
Agreement, at which time profits will be allocated 80% to the
Limited Partners and 20% to the General Partners.
Generally, losses will be allocated 99% to the Limited
Partners and 1% to the General Partners; provided, however, that
losses will be allocated 80% to the Limited Partners and 20% to
the General Partners to the extent of any prior allocation of
profits which were made to the Partners on an 80%/20% basis. Next,
losses will be allocated 90% to the Limited Partners and 10% to
the General Partners to the extent any prior allocations of
profits were made to the Partners on an 90%/10% basis. Thereafter,
losses, if any, will be allocated to those Partners who bear the
economic risk of loss.
Partners should refer to the information set forth under the
caption "Partnership Distributions and Allocations" in the
Prospectus of the Partnership dated January 9, 1998, filed with
the Securities and Exchange Commission pursuant to Rule 497(b)
under the Securities Act of 1933, for more specific information.
<PAGE>
<PAGE>
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
-------------------------
All short-term investments with original maturities of three
months or less are considered to be cash equivalents.
Investment Transactions
-----------------------
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.
Use of 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 as of 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.
Organizational Costs
--------------------
Total organizational and offering expenses for the
Partnership totaled $213,052, of which, $130,689 were paid by an
affiliate. The remaining $82,363 of organization costs were
expensed in accordance with AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-up Activities."
Income Taxes
------------
Income taxes have not been provided for as the Partnership
is a limited partnership and each partner is liable for its own
tax payments. Allocation of Partnership profits and losses for tax
purposes is based upon taxable income which may differ from net
income for financial reporting primarily due to differences
between book and tax accounting for portfolio investments.
Distributions
-------------
When excess cash, if any, becomes available, it is the
Partnership's intent to make distributions on an annual basis. It
is not anticipated that any investments will be sold until the
later years of the Partnership. Accordingly, it is unlikely that
any significant distributions of the proceeds from the disposition
of investments will be made until the later years of the
Partnership. No distributions were made for 1998 and distributions
are unlikely during 1999.
<PAGE>
<PAGE>
4. PER UNIT INFORMATION
There is no market for the Limited Partnership interests.
Per Unit Information is as follows:
<TABLE>
<CAPTION>
For the Year Ended December 31, 1998
------------------------------------
<S> <C>
Number of unit holders 111
=======
Limited partnership units 54,340
General partnership units 549
-------
Total units outstanding 54,889
=======
Net asset value per unit $ 22.60
=======
Net loss per unit $ (2.40)
=======
</TABLE>
5. RELATED PARTY TRANSACTIONS
The Partnership is furnished with certain non-reimbursed
management and accounting services by affiliates, which are not
reflected in the accompanying financial statements.
The Managing General Partner performs management and
administrative services for the operation of the Partnership. The
Managing General Partner is paid an annual management fee of 1.5%
of total assets, this fee for 1998 was $7,813. The Managing
General Partner is also reimbursed by the Partnership for out of
pocket expenses in connection with finding, evaluating,
structuring, approving, monitoring and liquidating the
Partnership's portfolio investments.
Total offering expenses for the Partnership amounted to
$213,052, of which, $130,689 were paid by an affiliate.
The Partnership may place its General Partners on Boards of
Directors of portfolio companies.
The Managing General Partner of the Partnership is also the
managing general partner of Community Investment Partners, L.P.
and Community Investment Partners II, L.P., both business
development companies.
<PAGE>
<PAGE>
6. INVESTMENT TRANSACTIONS
Following is a summary of portfolio investment transactions
for the year ended December 31, 1998.
<TABLE>
<CAPTION>
Type of Realized
Company Investment Cost Proceeds Gain (Loss)
- ------- ---------- ---- -------- -----------
<S> <C> <C> <C> <C>
PURCHASES:
United Therapeutics
Corporation Common Stock $100,000
Implemed, Inc. Series D Convertible
Preferred Stock 100,000
Protein Delivery Inc. Series D Preferred Stock 100,001
10% Bridge Note, due
4/1/99 and One Warrant 12,000
LipoMed, Inc. Series B Convertible
Preferred stock 100,002
OptiMark
Technologies, Inc. Series B Convertible
Participating Preferred stock 100,000
--------
TOTAL PURCHASES $512,003
========
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES
None
<PAGE>
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There are two Independent General Partners and one Managing
General Partner of the Partnership. These Independent General Partners
and the Managing General Partner are responsible for the management and
administration of the Partnership. The General Partners are "interested
persons" of the Partnership as defined by the Investment Company Act,
but the Partnership has obtained an exemptive order from the Securities
and Exchange Commission permitting them to be considered disinterested
persons. The Independent General Partners provide overall guidance and
supervision with respect to the operation of the Partnership and perform
the various duties imposed on the directors of a business development
company by the Investment Company Act. In addition to general fiduciary
duties, the Independent General Partners supervise the management and
underwriting arrangement of the Partnership, the custody arrangement
with respect to portfolio securities, the selection of accountants,
fidelity bonding and transactions with affiliates.
Specific Information regarding the Independent General Partners:
Thomas A. Hughes, 55, is the Assistant Vice President, Associate
General Counsel and Manager-Legal of The Detroit Edison Company, the
utility subsidiary of DTE Energy Company. He also serves as the
Associate General Counsel of DTE Energy Company. Headquartered in
Detroit, Michigan, Detroit Edison is Michigan's largest electric utility
serving two million customers in Southeastern Michigan. Prior to joining
Detroit Edison in 1978, Mr. Hughes served as General Counsel of the
Missouri Public Service Commission. Mr. Hughes has served as a Trustee
of the Detroit Metropolitan Bar Association Foundation, and as a member
of the Michigan State Bar Association Administrative Law Section Council
and is currently serving as a member of the Board of Directors of the
Michigan Chapter of the American Corporate Counsel Association. Mr.
Hughes does not own any units.
Ralph G. Kelly, 42, joined Charter Communications, Inc. in 1993 as
Vice President -- Finance, a position he held until early 1994, when he
became Chief Financial Officer of CableMaxx, Inc., a wireless cable
television operator. Mr. Kelly returned as Senior Vice President --
Treasurer of Charter Communications, Inc. in February 1996, and has
responsibility for treasury operations, investor relations and financial
reporting. Mr. Kelly has worked in the cable industry since 1984 when he
joined Cencom Cable Associates, Inc. as Controller. Mr. Kelly was
promoted to Treasurer of Cencom Cable Associates, Inc. in 1989 and was
responsible for treasury management, loan compliance, budget
administration, supervision of internal audit and SEC reporting. Mr.
Kelly is a Certified Public Accountant and was in the audit division of
Arthur Andersen LLC from 1979 to 1984. Mr. Kelly owns 100 Units.
CIP Management, L.P., LLLP (the "Managing General Partner") is the
Managing General Partner of Community Investment Partners III L.P.,
LLLP. The Managing General Partner is also managing general partner of
Community Investment Partners, L.P. and Community Investment Partners
II, L.P., both business development companies. The General Partners of
the Managing General Partner are CIP Management, Inc., a Missouri
corporation and a wholly-owned subsidiary of Edward D. Jones & Co.,
L.P., and Daniel A. Burkhardt.
<PAGE>
<PAGE>
The Directors and Officers of CIP Management's, Inc. are as follows:
Daniel A. Burkhardt, 51, President, Treasurer and Director of CIP
Management, Inc. since October, 1989 and general partner of CIP
Management, L.P., LLLP since February 1990. He is a general partner of
The Jones Financial Companies, L.L.L.P., the parent company of Edward D.
Jones & Co., L.P., where he has specialized in investment banking and
structuring investments since 1980. He is also a director of St. Joseph
Light & Power Co. and SEMCO Energy, Inc. Mr. Burkhardt currently owns
2,000 Units.
Ray A. Robbins, Jr., 54, Vice President and Director of CIP
Management, Inc. since October 1989. He is a general partner of The
Jones Financial Companies, L.L.L.P., the parent company of Edward D.
Jones & Co., L.P., where he has specialized in securities analysis since
1984, and where he was responsible for municipal bond transactions from
1975 to 1983. Mr. Robbins is Co-Chairman of the Edward D. Jones & Co.,
L.P. Investment Policy Committee. Mr. Robbins currently owns 1,000
Units.
Marilyn A. Gaffney, 40, Secretary of CIP Management, Inc. since
October, 1989. She is a Limited Partner of The Jones Financial
Companies, L.L.L.P., the parent company of Edward D. Jones & Co., L.P.,
where she has been a senior investment adviser in investment banking
since 1980. Ms. Gaffney currently owns 100 Units.
ITEM 11. EXECUTIVE COMPENSATION
Each Independent General Partner will receive an annual fee of
$6,000 from the Partnership once the Partnership commences business
operations, a fee of $1,000 for each meeting attended, and all out-of-
pocket expenses relating to attendance at meetings of the Individual
General Partners. Independent General Partner fees totaled $12,000
during 1998.
The information set forth under the caption "Partnership
Distributions and Allocations" in the Prospectus of the Partnership
dated January 9, 1998, filed with the Securities and Exchange Commission
pursuant to Rule 497(b) under the Securities Act of 1933, is
incorporated herein by reference.
<PAGE>
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The information concerning the security ownership of the General
Partner, Independent General Partners and the Officers and Directors of
CIP Management, Inc., described in Part I, Item 1 and Part III, Item 10,
is herein incorporated by reference.
The Managing General Partner has a 1% General Partner (549 units)
interest and a 4.97% (2,700 units) Limited Partner interest.
As of March 15, 1999, no parties are known by the Partnership to
be the beneficial owners of more than 5% of the Units.
The Partnership is not aware of any arrangement which may, at a
subsequent date, result in a change of control of the Partnership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain relationships and related transactions, described in Part
III, Items 10 and 12, are herein incorporated by reference.
<PAGE>
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
a. The following documents are filed as part of this report:
1. Financial Statements:
---------------------
See Index to Financial Statements and Supplementary
Data contained in Item 8 of this Form 10-K.
2. Financial Statement Schedules:
------------------------------
All financial statement schedules are omitted because
they are not applicable, or the required information
is included in the balance sheet or notes thereto.
3. Exhibits:
---------
(3) Amended and Restated Agreement of Limited
Partnership dated as of July 23, 1997. <F**>
(4) Form of Unit Certificate. <F*>
(10) Management Agreement dated January 9, 1998,
between the Partnership and CIP Management,
L.P., LLLP.<F**>
(28) Prospectus of the Partnership dated January 9,
1998, filed with the Securities and Exchange
Commission in connection with Registration
Statement No. 333-34363 on Form N-2 under the
Securities Act of 1933. <F**>
[FN]
<F*> Incorporated by reference to Exhibit A of the
Prospectus of the Partnership dated January 9,
1998 filed with the Securities and Exchange
Commission pursuant to Rule 497(b) under the
Securities Act of 1933.
<F**>Incorporated by reference to the Partnership's
Registration Statement No. 333-34363 on Form N-2
under the Securities Act of 1933.
b. No reports on Form 8-K were filed during the quarter ended
December 31, 1998.
c. Exhibits filed as part of this report are included in Item
(14) (a)(3) above.
d. All financial statement schedules are omitted because they
are not applicable, or the required information is included
in the balance sheet or notes thereto.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on this 22nd day of March, 1999.
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
/s/ Daniel A. Burkhardt, President
--------------------------------------
By: Daniel A. Burkhardt, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated.
/s/ Daniel A. Burkhardt
- ----------------------------- General Partner of CIP Management
Daniel A. Burkhardt L.P., LLLP, President, Treasurer and
Director of CIP Management, Inc.
/s/ Ray L. Robbins
- ----------------------------- Vice President and Director of CIP
Ray L. Robbins Management, Inc.
/s/ Thomas A. Hughes
- ----------------------------- Individual General Partner,
Thomas A. Hughes Community Investment Partners III L.P.,
LLLP
/s/ Ralph G. Kelly
- ----------------------------- Individual General Partner,
Ralph G. Kelly Community Investment Partners III L.P.,
LLLP
<PAGE>
<PAGE>
<TABLE>
INDEX TO EXHIBITS
<CAPTION>
Exhibit
Number Description of Exhibit Page
- ------ ---------------------- ----
<C> <S> <C>
(3) Amended and Restated Certificate and Agreement
of Limited Liability Limited Partnership dated
as of January 9, 1998 <F*>
(4) Form of Unit Certificate <F*>
(10) Management Agreement dated January 9, 1998,
between the Partnership and CIP Management,
L.P., LLLP <F*>
(28) Prospectus of the Partnership dated January 9, 1998,
filed with the Securities and Exchange Commission
in connection with Registration Statement
No. 333-34363 on Form N-2 under the Securities Act
of 1933 <F*>
<FN>
______________________
<F*>Incorporated by reference
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for Community Investment Partners III, L.P., L.L.L.P.
for the year ended December 31, 1998 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 512,003
<INVESTMENTS-AT-VALUE> 512,003
<RECEIVABLES> 0
<ASSETS-OTHER> 742,439
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,254,442
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 14,000
<TOTAL-LIABILITIES> 14,000
<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> 1,240,442
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 119
<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> 131,899
<AVERAGE-NET-ASSETS> 620,771
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> (2.40)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 22.60
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
