SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the Quarterly Period Ended March 31, 1999
Commission file number 0-15681
WESTMED VENTURE PARTNERS, L.P.
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(Exact name of registrant as specified in its charter)
Delaware 13-3443230
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(State of organization) (I.R.S. Employer Identification No.)
CIBC Oppenheimer Tower, World Financial Center
New York, New York 10281
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 667-7000
Not applicable
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Former name, former address and former fiscal year, if changed since last report
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
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets as of March 31, 1999 (Unaudited) and December 31, 1998
Schedule of Portfolio Investments as of March 31, 1999 (Unaudited)
Statements of Operations for the Three Months Ended March 31, 1999 and 1998
(Unaudited)
Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998
(Unaudited)
Statement of Changes in Partners' Capital for the Three Months Ended March 31,
1999 (Unaudited)
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
WESTMED VENTURE PARTNERS, L.P.
BALANCE SHEETS
<TABLE>
March 31,
1999 December 31,
(Unaudited) 1998
ASSETS
<S> <C>
Portfolio investments, at fair value (cost $688,578 as of
March 31, 1999 and $851,210 as of December 31, 1998) $ 698,965 $ 942,164
Cash and cash equivalents 432,446 3,467,031
Receivable from securities sold - 12,103
Prepaid insurance 35,845 42,382
Accrued interest receivable 286 1,420
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TOTAL ASSETS $ 1,167,542 $ 4,465,100
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LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Cash distribution payable $ - $ 3,042,227
Accounts payable and accrued expenses 53,727 58,120
Due to Managing General Partner 10,034 11,251
Due to Independent General Partners 2,500 10,000
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Total liabilities 66,261 3,121,598
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Partners' Capital:
Managing General Partner 11,015 13,438
Limited Partners (66,929 Units) 1,090,266 1,330,064
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Total Partners' Capital 1,101,281 1,343,502
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TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 1,167,542 $ 4,465,100
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</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
March 31, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Active Portfolio Investments:
Initial Investment
Company / Position Date Cost Fair Value
MNI Group Inc.(A) (B)
Health and beauty products
<C> <C> <C> <C>
201,973 shares of Common Stock Sept. 1987 430,159 0
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UroCor, Inc.(A)
Diagnostic urology labs providing early detection of
bladder, prostate, lung and intestinal cancer
145,977 shares of Common Stock May 1991 258,419 698,965
- -------------------------------------------------------------------------------------------------------------------------------
Totals From Active Portfolio Investments(C) $ 688,578 $ 698,965
===================================
SUPPLEMENTAL INFORMATION: LIQUIDATED PORTFOLIO INVESTMENTS(D)
Cost Realized Loss Return
Totals From Liquidated Portfolio Investments(E) $ 28,029,692 $ (8,653,499) $ 19,376,193
===============================================================
Combined Combined
Unrealized and Fair Value
Totals From Active and Liquidated Portfolio Cost Realized Net Loss and Return
--------------------------------------------------------------
Investments $ 28,718,270 $ (8,643,112) $ 20,075,158
===============================================================
</TABLE>
(A) Public company
(B) In March 1999, the Partnership sold 10,000 shares of MNI Group, Inc. common
stock for $346, realizing a loss of $20,952.
(C) All portfolio securities held as of March 31, 1999 are non-income producing.
As of March 31, 1999, using fair value as a percentage of net assets, the
Partnership's portfolio investments are classified as follows: Eastern
United States, 0%; Midwestern United States, 63.47; medical services,
63.47%; nutritional products, 0; and common stock 63.47%.
(D) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through March 31, 1999. See Note
6 of notes to financial statements for portfolio sales completed subsequent
to March 31, 1999.
(E) During the quarter ended March 31, 1999, the following additional portfolio
transactions were completed:
o In January 1999, the Partnership sold its remaining investment in Xenova
Group plc for $10,597, realizing a loss of $77,707.
o In February 1999, the Partnership sold its remaining investment in Cortex
Pharmaceuticals, Inc. for $3,373, realizing a loss of $49,657.
o Also in February 1999, the Partnership sold its remaining investment
in Pharmaction Holdings, Ltd. for $1,428, realizing a
gain of $1,428.
o In March 1999, the Partnership sold its remaining investment in
Oncodiagnostics, Inc., and investment that was previously written-off, for
$15,000.
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended March 31,
<TABLE>
1999 1998
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INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C>
Interest from short-term investments $ 10,486 $ 20,594
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Expenses:
Management fee 5,534 29,040
Professional fees 15,950 22,984
Insurance expense 6,537 14,362
Mailing and printing 6,609 7,843
Independent General Partners' fees 2,500 2,500
Custodial fees 92 427
Other 3,030 -
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Total investment expenses 40,252 77,156
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NET INVESTMENT LOSS (29,766) (56,562)
Net realized loss from portfolio investments (131,888) -
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NET REALIZED LOSS FROM OPERATIONS (161,654) (56,562)
Change in unrealized depreciation of investments (80,567) 669,419
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NET (DECREASE) INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (242,221) $ 612,857
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</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF CASH FLOWS (Unaudited)
For the Three Months Ended March 31,
<TABLE>
1999 1998
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CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C>
Net investment loss $ (29,766) $ (56,562)
Adjustments to reconcile net investment loss to cash used for operating
activities:
Decrease in prepaid insurance and accrued interest receivable 7,671 13,389
Decrease in payables (13,110) (17,730)
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Cash used for operating activities (35,205) (60,903)
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CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES
Net proceeds from the sale of portfolio investments 42,847 30,107
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CASH FLOWS USED FOR FINANCING ACTIVITIES
Cash distribution paid to Partners (3,042,227) -
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Decrease in cash and cash equivalents (3,034,585) (30,796)
Cash and cash equivalents at beginning of period 3,467,031 1,725,666
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 432,446 $ 1,694,870
============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited)
For the Three Months Ended March 31, 1999
<TABLE>
Managing
General Limited
Partner Partners Total
<S> <C> <C> <C> <C> <C>
Balance as of December 31, 1998 $ 13,438 $ 1,330,064 $ 1,343,502
Net decrease in net assets resulting
from operations (2,423) (239,798) (242,221)
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Balance as of March 31, 1999 $ 11,015 $ 1,090,266 $ 1,101,281
============= =============== ================
</TABLE>
(A) The net asset value per unit of limited partnership interest, including
an allocation of net unrealized appreciation of investments, was $16 as
of March 31, 1999. Such per unit amount is based on average allocations
to all limited partners and does not reflect specific limited partner
allocations, which are determined by the original closing date associated
with the units of limited partnership interest held by each limited
partner. Cumulative cash distributions paid to Limited Partners total
$278 per Unit as of March 31, 1999.
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Organization and Purpose
WestMed Venture Partners, L.P. (the "Partnership") was formed under Delaware law
on February 5, 1987. The Partnership operates as a business development company
under the Investment Company Act of 1940, as amended. The Partnership is a
closed-end investment fund and accordingly its units of limited partnership
interest ("Units") are not redeemable. A total of 66,929 Units were sold to
limited partners (the "Limited Partners" and together with the Managing General
Partner (as hereinafter defined), the "Partners") at $500 per Unit.
The general partners of the Partnership include two individuals (the
"Independent General Partners") and the managing general partner, WestMed
Venture Management, L.P., a Delaware limited partnership (the "Managing General
Partner" and collectively with the Independent General Partners, the "General
Partners"). The general partner of the Managing General Partner is Medical
Venture Holdings, Inc., a Delaware corporation affiliated with CIBC Oppenheimer
Corp. ("Opco") (formerly Oppenheimer & Co., Inc.). Opco is the successor
corporation to Oppenheimer & Co., Inc., following the acquisition and subsequent
merger of Oppenheimer & Co., Inc. and CIBC Wood Gundy Corp. in November 1997.
Opco is a subsidiary of Canadian Imperial Bank of Commerce. The limited partners
of the Managing General Partner are Opco, MVP Holdings, Inc. and BSW, Inc., a
Delaware corporation owned by John A. Balkoski, Philippe L. Sommer and Howard S.
Wachtler. Alsacia Venture Management, Inc. (the "Sub-Manager"), a corporation
controlled by Philippe L. Sommer, serves as the sub-manager of the Partnership
pursuant to a sub-management agreement between the Managing General Partner and
the Sub-Manager. The Sub-Manager has been retained by the Managing General
Partner to assist the Managing General Partner in the performance of certain of
its duties to the Partnership.
The Partnership's objective is to achieve long-term capital appreciation from
its portfolio of venture capital investments, consisting of companies engaged in
the health care industry. The Partnership's originally scheduled termination
date was December 31, 1997, with provision for extension for two additional two
year periods. The General Partners have determined not to extend the
Partnership's termination date. However, pursuant to the Partnership Agreement
(as hereinafter defined) and Delaware Law, the Managing General Partner will
continue to manage the Partnership through its date of liquidation, which will
occur when it has satisfied all liabilities and obligations to creditors and has
sold, distributed or otherwise disposed of its investments in portfolio
companies.
2. Summary of Significant Accounting Policies
Valuation of Investments - Portfolio investments are carried at fair value as
determined quarterly by the Managing General Partner under the supervision of
the Independent General Partners. The fair value of publicly-held portfolio
securities is adjusted to the closing public market price for the last trading
day of the accounting period discounted for sales restrictions, if any. Factors
considered in the determination of an
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited) - continued
appropriate discount include underwriter lock-up or Rule 144 trading
restrictions, insider status where the Partnership either has a representative
serving on the board of directors of the portfolio company under consideration
or is greater than a 5% shareholder thereof, and other liquidity factors such as
the size of the Partnership's position in a given company compared to the
trading history of the public security. Privately-held portfolio securities are
carried at cost until significant developments affecting the portfolio company
provide a basis for change in valuation. The fair value of private securities is
adjusted (i) to reflect meaningful third-party transactions in the private
market and (ii) to reflect significant progress or slippage in the development
of the company's business such that cost no longer reflects fair value. As a
venture capital investment fund, the Partnership's portfolio investments involve
a high degree of business and financial risk that can result in substantial
losses. The Managing General Partner considers such risks in determining the
fair value of the Partnership's portfolio investments.
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 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.
Investment Transactions - Investment transactions are recorded on the accrual
method. For portfolio investments, transactions are recorded as of the date on
which the Partnership obtains an enforceable right to demand the securities or
payment thereof. Realized gains and losses on investments sold are computed on a
specific identification basis.
Statements of Cash Flows - Cash and cash equivalents include short-term
interest-bearing investments in commercial paper and other money market
investments. The Partnership also considers its interest-bearing cash account to
be cash equivalents.
Income Taxes - No provision for income taxes has been made since all income and
losses are allocable to the partners for inclusion in their respective tax
returns. The Partnership's net assets for financial reporting purposes differ
from its net assets for tax purposes. Net unrealized depreciation of $10,387 at
March 31, 1999, which was recorded for financial statement purposes, has not
been recognized for tax purposes. Additionally, from inception to March 31,
1999, other timing differences totaling $9.2 million, relating to net realized
losses, original sales commissions paid and other costs of selling the Units,
have been recorded on the Partnership's financial statements but have not yet
been deducted for tax purposes.
3. Allocations of Partnership Profits and Losses
Pursuant to the Partnership's agreement of limited partnership, as amended (the
"Partnership Agreement"), the Partnership's net income and net realized gains
from all sources are allocated to all Partners, in proportion to their capital
contributions, until all Partners have been allocated an amount equal to 6% per
annum, simple interest, on their total Adjusted Invested Capital; i.e., original
capital contributions reduced by previous
<PAGE>
WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS (Unaudited) - continued
distributions (the "Priority Return"). Thereafter, net income and net realized
gains from venture capital investments in excess of the amount used to cover the
Priority Return are allocated 20% to the Managing General Partner and 80% to all
Partners in proportion to their capital contributions. Any net income from
non-venture capital investments in excess of the amount used to cover the
Priority Return is allocated to all Partners in proportion to their capital
contributions. Realized losses are allocated to all Partners in proportion to
their capital contributions. However, if realized gains had been previously
allocated in the 80-20 ratio, then losses are allocated in the reverse order in
which profits were allocated. From its inception to March 31, 1999, the
Partnership had a net realized loss of $8.2 million from its venture capital
investments, including interest and other income from portfolio investments
totaling $493,000.
4. Related Party Transactions
Pursuant to the Partnership Agreement, the Managing General Partner is entitled
to receive a one-time venture capital fee equal to 5% of the gross proceeds from
the sale of Units. Such fee is incurred as portfolio investments are made in the
proportion to the cost of each portfolio investment to the net proceeds from the
sale of Units. Venture capital fees incurred are recorded as a cost of acquiring
the portfolio investments. There were no venture capital fees incurred for the
quarters ended March 31, 1999 and 1998. Cumulative venture capital fees incurred
from inception to March 31, 1999 totaled $1.6 million.
Pursuant to a management agreement between the Partnership and the Managing
General Partner, the Managing General Partner is responsible for the management,
administrative and certain investment advisory services necessary for the
operation of the Partnership. For such services, the Managing General Partner
receives a management fee at the annual rate of 2% of the lesser of the net
assets of the Partnership or the net contributed capital of the Partnership;
i.e., gross capital contributions to the Partnership (net of selling commissions
and organizational expenses) reduced by capital distributed. Such fee is
determined and payable quarterly. The compensation of the Sub-Manager is paid
directly by the Managing General Partner.
The Managing General Partner also provides certain shareholder services and
database management support for the Limited Partners of the Partnership. For
such services, the Managing General Partner charges the Partnership $4,500 per
quarter. This amount is paid to the Managing General Partner in addition to the
regular management fee discussed above.
For services rendered to the Partnership, each of the two Independent General
Partners receives a $5,000 annual fee and reimbursement for all out-of-pocket
expenses relating to attendance at meetings of the General Partners.
5. Subsequent Events
Subsequent to the end of the quarter, in April 1999, the Partnership sold its
remaining investment of 201,973 shares of MNI Group Inc. common stock for
$6,353, realizing a loss of $423,806.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
As of March 31, 1999, the Partnership held $432,446 in cash and short-term
investments, including $297,482 in short-term securities with maturities of less
than one year and $134,964 in interest-bearing cash accounts. For the three
months ended March 31, 1999, the Partnership earned $10,486 of interest from
such investments. Interest earned from short-term investments in future periods
is subject to fluctuations in short-term interest rates and changes in funds
available for investment.
During the quarter ended March 31, 1999, the Partnership continued the
liquidation of its portfolio investments. As discussed below, during the three
month period, the Partnership sold certain investments for net proceeds totaling
$30,744.
The General Partners have elected not to extend the Partnership's originally
scheduled termination date of December 31, 1997. The Managing General Partner is
working toward the ultimate termination of the Partnership and will continue to
manage the Partnership, with continued focus on achieving long-term capital
appreciation from the Partnership's remaining investment portfolio through the
date of termination, which will occur when all liabilities and obligations to
creditors have been satisfied and all investments in portfolio companies have
been sold, distributed or otherwise disposed.
It is anticipated that funds needed to cover the Partnership's future operating
expenses will be obtained from existing cash reserves, interest from short-term
investments and proceeds received from the sale of portfolio investments.
Results of Operations
For the three months ended March 31, 1999 and 1998, the Partnership had a net
realized loss from operations of $161,654 and $56,562, respectively. Net
realized gain or loss from operations is comprised of (i) net realized gain or
loss from portfolio investments and (ii) net investment income or loss (interest
and dividend income less operating expenses).
Realized Gains and Losses from Portfolio Investments - For the three months
ended March 31, 1999, the Partnership had a net realized loss of $131,888 from
the sale of certain portfolio investments. During the quarter the Partnership
sold its remaining investments in the following portfolio companies: 20,000
ordinary shares of Xenova Group plc for $10,597, realizing a loss of $77,707;
7,359 common shares Cortex Pharmaceuticals, Inc. for $3,373, realizing a loss of
$49,657; and 18,434 ordinary shares and options to purchase 18,434 ordinary
shares of Pharmaction Holdings, Ltd. for $1,428, realizing a gain for the entire
amount. The Partnership also sold its holdings of Oncodiagnostics, Inc., an
investment that was previously written-off, for $15,000, realizing a gain for
the entire amount. Additionally in March 1999, the Partnership sold 10,000
common shares of MNI Group Inc. for $346, realizing a loss of $20,952.
The Partnership had no realized gains or losses from portfolio investments for
the three months ended March 31, 1998.
Investment Income and Expenses - Net investment loss for the three months ended
March 31, 1999 and 1998 was $29,766 and $56,562, respectively. The $26,796
favorable change in net investment loss for the 1999 period compared to the 1998
period, consisted of a $36,904 decrease in operating expenses partially offset
by a $10,108 decrease in investment income for the period. The reduction in
operating expenses included a $23,506 decrease in the management fee, as
discussed below, and a $7,034 decrease in professional fees, primarily due to
reduced legal expenses resulting from the reduced level of activity of
Partnership transactions during its liquidation period. The reduced operating
expenses also included a $7,825 reduction in insurance expense due to reduced
liability insurance premiums. The decrease in investment income resulted from a
decrease in interest income from short-term investments, primarily related to
the reduced amount of funds available for such investments during the 1999
period as compared to the same period in 1998.
Pursuant to a management agreement between the Partnership and the Managing
General Partner, the Managing General Partner is responsible for the management,
administrative and certain investment advisory services necessary for the
operation of the Partnership. For such services, the Managing General Partner
receives a management fee at the annual rate of 2% of the lesser of the net
assets of the Partnership or the net contributed capital of the Partnership;
i.e., gross capital contributions of the Partnership, net of selling commissions
and organizational expenses, reduced by capital distributed. Such fee is
determined and payable quarterly. The compensation of the Sub-Manager is paid
directly by the Managing General Partner. For the three months ended March 31,
1999 and 1998, the management fee was $5,534 and $29,040, respectively. The
reduced management fee for the 1999 period compared to the same period in 1998,
reflects the reduced net asset value of the Partnership, primarily resulting
from the liquidation of certain portfolio investments and subsequent cash
distribution in January 1999. The management fee is expected to continue to
decline as the Partnership's remaining portfolio investments are liquidated and
subsequent distributions are paid to Partners. To the extent possible, the
management fee and other operating expenses are paid with funds provided from
operations. Funds provided from operations are obtained from interest received
from short-term investments, interest and dividend income from portfolio
investments and proceeds received from the sale of portfolio investments.
Unrealized Gains and Losses and Changes in Unrealized Appreciation or
Depreciation of Portfolio Investments - For the three months ended March 31,
1999, the Partnership had an $80,567 unfavorable net change in unrealized
appreciation of investments, primarily resulting from a $225,796 net downward
revaluation of the Partnership's remaining portfolio investments for the
quarter. This downward revaluation was partially offset by the net transfer of
$145,229 from unrealized loss to realized loss in connection with the portfolio
investments liquidated during the quarter, as discussed above.
For the three months ended March 31, 1998, the Partnership had a $669,419
favorable net change in unrealized depreciation of investments resulting from
the net upward revaluation of its publicly-held portfolio investments for the
quarter.
Net Assets - Changes to net assets resulting from operations are comprised of
(i) net realized gain or loss from operations and (ii) changes to net unrealized
appreciation or depreciation of portfolio investments.
As of March 31, 1999, the Partnership's net assets were $1,101,281, reflecting a
decrease of $242,221 from net assets of $1,343,502 as of December 31, 1998. This
increase was comprised of the $161,654 net realized loss from operations and the
$80,567 unfavorable change in net unrealized depreciation of investments for the
three months ended March 31, 1999.
As of March 31, 1998, the Partnership's net assets were $5,778,907, reflecting
an increase of $612,857 from net assets of $5,166,050 as of December 31, 1997.
This increase was comprised of the $669,419 favorable change in net unrealized
depreciation of investments partially offset by the $56,562 net realized loss
from operations for the three month period.
As of March 31, 1999 and December 31, 1998, the net asset value per $500 Unit,
including an allocation of net unrealized appreciation or depreciation of
portfolio investments, was $16 and $20, respectively. Such per Unit amounts are
based on average allocations to all Limited Partners and do not reflect specific
Limited Partner allocations, which are determined by the original closing date
associated with the Units held by each Limited Partner.
Year 2000 Issue - The Year 2000 ("Y2K") concern arose because many existing
computer programs use only the last two digits to refer to a year. Therefore,
these computer programs do not properly recognize a year that begins with "20"
instead of "19". If not corrected, many computer applications could fail or
create erroneous results. The impact of the Y2K concern on the Partnership's
operations is currently being assessed.
The Managing General Partner is responsible to provide or arrange for the
provision of administrative services necessary to support the Partnership's
operations. The Managing General Partner has arranged for Palmeri Fund
Administrators, Inc. (the "Administrator") to provide certain administrative and
accounting services for the Partnership, including maintenance of the books and
records of the Partnership, maintenance of the Limited Partner database,
issuance of financial reports and tax information to Limited Partners and
processing distribution payments to Limited Partners. Fees charged by the
Administrator are paid directly by the Managing General Partner.
The Administrator has assessed its computer hardware and software systems,
specifically as they relate to the operations of the Partnership. As part of
this investigation of potential Y2K concerns, the Administrator contracted with
an outside computer service provider to examine all of the Administrator's
computer hardware and software applications. This review and evaluation has been
completed and certain Y2K concerns have been identified. The Administrator is in
the process of purchasing, installing and testing the necessary software patches
and new computer hardware required to ensure that all of its computer systems
are Y2K compliant. This correction phase is expected to be completed by
September 1999.
Additionally, the Administrator has contacted the outside service providers used
to assist the Administrator or the Managing General Partner with the
administration of the Partnership's operations to ascertain whether these
entities are addressing the Y2K issue within their own operation. There can be
no guarantee that the Administrator's systems or that systems of other companies
providing services to the Partnership will be corrected in a timely manner. The
estimated costs to the Partnership, relating to the investigation or correction
of Y2K problems affecting the Partnership's operations, are expected to be
nominal.
Finally, the Y2K issue is a global concern that may affect all business
entities, including the Partnership's portfolio companies. The Managing General
Partner is continuing to assess the impact of Y2K concerns affecting its
portfolio companies. However, the extent to which any potential Y2K problems
could affect the valuations of these companies is presently unknown.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
The Partnership is subject to market risk arising from changes in the value of
its portfolio investments and interest-bearing cash equivalents, including
short-term securities, which may result from fluctuations in interest rates and
equity prices. The Partnership has calculated its market risk related to its
holdings of these investments based on changes in interest rates and equity
prices utilizing a sensitivity analysis. The sensitivity analysis estimates the
hypothetical change in fair values, cash flows and earnings based on an assumed
10% change (increase or decrease) in interest rates and equity prices. To
perform the sensitivity analysis, the assumed 10% change is applied to market
rates and prices on investments held by the Partnership as of the end of the
accounting period.
The Partnership's portfolio investments had an aggregate fair value of $698,965
as of March 31, 1999. An assumed 10% decline from this March 31, 1999 fair
value, including an assumed 10% decline of the per share market prices of the
Partnership's publicly-traded securities, would result in a reduction to the
fair value of such investments and a corresponding unrealized loss of $69,897.
As of March 31, 1999, the Partnership held one short-term investment in a
discounted commercial paper instrument with a remaining maturity of 91 days.
This short-term investment was carried at an aggregate amortized cost of
$297,482 as of March 31, 1999. An assumed 10% increase in the market interest
rate of such short-term investment held by the Partnership as of March 31, 1999,
would result in a reduction to the fair value of such investment and an
unrealized loss in an amount which is considered to be immaterial.
Market risk relating to the Partnership's other interest-bearing cash
equivalents held as of March 31, 1999 is also considered to be immaterial.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Partnership is not a party to any material pending legal proceedings.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period covered
by this report.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
<PAGE>
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.
WESTMED VENTURE PARTNERS, L.P.
By: WestMed Venture Management, L.P.
The Managing General Partner
By: MEDICAL VENTURE HOLDINGS, INC.
General Partner
By: /s/ Gerald A. Rothstein
Gerald A. Rothstein
President and Principal Executive Officer
By: /s/ Ann Oliveri Fusco
Ann Oliveri Fusco
Vice President and Principal Financial
and Accounting Officer
Date: May 17, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESTMED
VENTURE PARTNERS, L.P.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 688,578
<INVESTMENTS-AT-VALUE> 698,965
<RECEIVABLES> 286
<ASSETS-OTHER> 35,845
<OTHER-ITEMS-ASSETS> 432,446
<TOTAL-ASSETS> 1,167,542
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66,261
<TOTAL-LIABILITIES> 66,261
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 66,929
<SHARES-COMMON-PRIOR> 66,929
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10,387
<NET-ASSETS> 1,101,281
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10,486
<OTHER-INCOME> 0
<EXPENSES-NET> 40,252
<NET-INVESTMENT-INCOME> (29,766)
<REALIZED-GAINS-CURRENT> (131,888)
<APPREC-INCREASE-CURRENT> (80,567)
<NET-CHANGE-FROM-OPS> (242,221)
<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> (242,221)
<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> 0
<AVERAGE-NET-ASSETS> 1,222,392
<PER-SHARE-NAV-BEGIN> 19.87
<PER-SHARE-NII> (0.44)
<PER-SHARE-GAIN-APPREC> (3.14)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.29
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
