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 June 30, 1996
Commission file number 33-21281
WESTMED VENTURE PARTNERS 2, L.P.
===============================================================================
(Exact name of registrant as specified in its charter)
Delaware 13-3473015
===============================================================================
(State of organization) (I.R.S. Employer Identification No.)
Oppenheimer Tower, World Financial Center
New York, New York 10281
===============================================================================
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 667-7000
Not applicable
===============================================================================
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 2, L.P.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets as of June 30, 1996 (Unaudited) and December 31, 1995
Schedule of Portfolio Investments as of June 30, 1996 (Unaudited)
Statements of Operations for the Three and Six Months Ended June 30, 1996 and
1995 (Unaudited)
Statements of Cash Flows for the Six Months Ended June 30, 1996 and 1995
(Unaudited)
Statement of Changes in Partners' Capital for the Six Months Ended June 30, 1996
(Unaudited)
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
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 2, L.P.
BALANCE SHEETS
<TABLE>
June 30, 1996 December 31,
(Unaudited) 1995
ASSETS
Portfolio investments, at fair value
(cost $9,091,959 at June 30, 1996 and $8,961,656
<S> <C> <C> <C> <C> <C> <C>
at December 31, 1995) - Notes 2 and 4 $ 5,669,229 $ 6,050,203
Cash and cash equivalents 6,056,102 6,226,065
Accrued interest receivable 23,602 12,331
Other assets 9,094 35,891
--------------- ----------------
TOTAL ASSETS $ 11,758,027 $ 12,324,490
=============== ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 94,072 $ 55,929
Due to Managing General Partner - Note 4 60,066 61,268
Due to Independent General Partners - Note 4 7,377 15,000
--------------- ----------------
Total liabilities 161,515 132,197
--------------- ----------------
Partners' Capital:
Managing General Partner 115,965 121,923
Limited Partners (38,727 Units) 11,480,547 12,070,370
--------------- ----------------
Total Partners' capital 11,596,512 12,192,293
--------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 11,758,027 $ 12,324,490
=============== ================
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED)
June 30, 1996
Active Portfolio Investments:
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Gliatech, Inc.(A)
<C> <C> <C> <C>
124,210 shares of Common Stock Feb. 1992 $ 962,009 $ 978,154
- - -------------------------------------------------------------------------------------------------------------------------------
Hepatix, Inc.*(B)
668,346 shares of Common Stock Jan. 1992 1,025,168 0
$491,986 10% Convertible Notes due 6/30/97 497,639 497,639
$29,572 10% Promissory Note due 8/23/96 31,364 31,364
Warrant to purchase 797,399 shares of Common Stock
at $.01 per share, expiring 10/2/00 0 0
Warrant to purchase 186,572 shares of Common Stock
at $.01 per share, expiring 3/1/01 0 0
-------------- ---------------
1,554,171 529,003
- - -------------------------------------------------------------------------------------------------------------------------------
Integramed America, Inc.(A)(C)
211,672 shares of Common Stock Mar. 1989 2,322,426 545,796
Warrant to purchase 18,340 shares of Common Stock
at $10.34 per share, expiring 7/31/96 0 0
- - -------------------------------------------------------------------------------------------------------------------------------
KeraVision, Inc.(A)
68,728 shares of Common Stock Nov. 1992 530,300 805,406
- - -------------------------------------------------------------------------------------------------------------------------------
La Jolla Pharmaceutical Company(A)
100,383 shares of Common Stock Nov. 1991 678,579 414,080
25,076 warrants to purchase 12,538 shares of Common
Stock at $6 per share, expiring 6/3/99 0 18,807
Warrant to purchase 5,015 shares of Common Stock
at $5 per share, expiring 6/3/99 0 0
-------------- ---------------
678,579 432,887
- - -------------------------------------------------------------------------------------------------------------------------------
Sennes Drug Innovations, Inc.*
2,750,000 shares of Preferred Stock June 1993 1,175,579 587,790
412,500 shares of Common Stock 4,375 2,187
-------------- ---------------
1,179,954 589,977
- - -------------------------------------------------------------------------------------------------------------------------------
Synaptic Pharmaceutical Corporation(A)
96,395 shares of Common Stock June 1991 797,167 985,036
- - -------------------------------------------------------------------------------------------------------------------------------
Targeted Genetics, Inc.(A)
225,395 shares of Common Stock June 1992 1,067,353 802,970
Warrant to purchase 16,666 shares of Common Stock
at $4.68 per share, expiring 7/31/97 0 0
- - -------------------------------------------------------------------------------------------------------------------------------
Totals from Active Portfolio Investments $ 9,091,959 $ 5,669,229
==================================
</TABLE>
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (UNAUDITED) - continued
June 30, 1996
SUPPLEMENTAL INFORMATION: LIQUIDATED PORTFOLIO INVESTMENTS(D)
<TABLE>
Cost Realized Loss Return
<S> <C> <C> <C>
Total from Liquidated Portfolio Investments $ 5,240,515 $ (3,000,553) $ 2,239,962
==========================================================
Combined Combined
Unrealized and Fair Value
Cost Realized Loss and Return
Totals from Active and Liquidated Portfolio
Investments $ 14,332,474 $ (6,423,283) $ 7,909,191
==========================================================
</TABLE>
(A) Public company
(B) On June 26, 1996, the Partnership made a $29,572 follow-on investment in
Hepatix, Inc., acquiring a 10% promissory note. The Partnership paid a
$1,792 venture capital fee relating to this investment.
(C) During the quarter, IVF America, Inc. changed its name to Integramed
America, Inc.
(D) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through June 30, 1996.
* May be deemed an affiliated person of the Partnership as defined in the
Investment Company Act of 1940.
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
--------------- ------------ -------------- -------
INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C> <C> <C>
Interest from short-term investments $ 74,541 $ 98,100 $ 147,313 $ 197,950
Interest and dividend income from portfolio
investments - 213 10,771 213
--------------- ------------ -------------- ------------
Totals 74,541 98,313 158,084 198,163
--------------- ------------ -------------- ------------
Expenses:
Management fee - Note 4 58,298 67,204 125,413 134,720
Professional fees 31,967 8,500 56,300 24,074
Mailing and printing 5,122 2,122 11,881 11,374
Insurance expense 16,905 14,304 36,173 31,083
Custodial fees 1,037 1,500 2,230 3,440
Independent General Partners' fees - Note 4 3,627 3,750 7,377 7,500
Miscellaneous 1,212 803 3,214 1,053
--------------- ------------ -------------- ------------
Totals 118,168 98,183 242,588 213,244
--------------- ------------ -------------- ------------
NET INVESTMENT INCOME (LOSS) (43,627) 130 (84,504) (15,081)
Net change in unrealized appreciation or depreciation
of investments (1,715,801) (62,099) (511,277) 243,407
--------------- ------------ -------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS
(allocable to Partners) - Note 3 $ (1,759,428) $ (61,969) $ (595,781) $ 228,326
=============== ============ ============== ============
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended June 30,
<TABLE>
1996 1995
-------------- ---------
CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C>
Net investment loss $ (84,504) $ (15,081)
Adjustments to reconcile net investment loss to cash used for operating
activities:
Decrease in accrued interest receivable and other assets 15,526 18,496
Increase (decrease) in payables 29,318 (12,689)
-------------- ---------------
Cash used for operating activities (39,660) (9,274)
-------------- ---------------
CASH FLOWS USED FOR INVESTING ACTIVITIES
Purchase of portfolio investments (130,303) (53,275)
-------------- ---------------
Decrease in cash and cash equivalents (169,963) (62,549)
Cash and cash equivalents at beginning of period 6,226,065 6,969,849
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 6,056,102 $ 6,907,300
============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (UNAUDITED)
For the Six Months Ended June 30, 1996
<TABLE>
Managing
General Limited
Partner Partners Total
<S> <C> <C> <C>
Balance at beginning of period $ 121,923 $ 12,070,370 $ 12,192,293
Net decrease in net assets resulting
from operations - Note 3 (5,958) (589,823) (595,781)
------------- --------------- ----------------
Balance at end of period $ 115,965 $ 11,480,547 $ 11,596,512
============= =============== ================
</TABLE>
(A) The net asset value per unit of limited partnership interest, including an
assumed allocation of net unrealized depreciation of investments, was $296
at June 30, 1996. 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.
See notes to financial statements.
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. Organization and Purpose
WestMed Venture Partners 2, L.P. (the "Partnership") was formed under Delaware
law in April 1988. The Partnership operates as a business development company
under the Investment Company Act of 1940, as amended. The Partnership is a
closed-end partnership and accordingly its units of limited partnership interest
("Units") are not redeemable by the Partnership. A total of 38,727 Units were
sold to limited partners ("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 2, 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
Oppenheimer & Co., Inc. ("Opco"). The limited partners of the Managing General
Partner are Oppenheimer Holdings, Inc., 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, is the sub-manager of the Partnership pursuant
to a sub-management agreement among the Partnership, 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 its
duties to the Partnership.
Opco, a member firm of the New York Stock Exchange, the National Association of
Securities Dealers, Inc., and all principal United States securities exchanges,
is a diversified investment banking and securities firm and registered
investment advisor, providing a broad range of services to individual,
corporate, and institutional clients. Opco operates in the capacity of broker
and dealer for its customers, as well as trader for its own account. The
services provided by Opco and its subsidiaries, and the activities in which it
is engaged, include securities brokerage, securities research, customer
financing, securities trading, corporate finance, mergers and acquisitions,
underwriting and investment advisory services.
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 is scheduled to terminate on December
31, 1998. However, the General Partners can extend the term for up to two
additional two-year periods, if they determine that such extensions are in the
best interest of the Partnership.
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. Factors
considered in the determination of an appropriate
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 is no longer reflective of 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 on the date 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 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 $3.4
million at June 30, 1996, which was recorded for financial statement purposes,
was not recognized for tax purposes. Additionally, from inception to June 30,
1996, other timing differences totaling $2.3 million, primarily relating to
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.
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 (the "Priority
Return") equal to 6% per annum, simple interest, on their total Adjusted
Invested Capital; i.e., original capital contributions reduced by previous
distributions. 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 June 30, 1996, the Partnership had a $2.7
million net loss from its venture capital investments, including $259,000 of
cumulative interest and other income from portfolio investments.
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 of 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 investment. The Partnership incurred venture capital fees of
$1,792 for the three months ended June 30, 1996. Cumulative venture capital fees
incurred from inception to June 30, 1996 totaled $821,000.
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.
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.
<PAGE>
WESTMED VENTURE PARTNERS 2, L.P.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
5. Classification of Investments
As of June 30, 1996, the Partnership's investments were categorized as follows:
<TABLE>
Type of Investments Cost Fair Value % of Net Assets*
- - ------------------- --------------- -------------- ----------------
<S> <C> <C> <C>
Common Stock $ 7,387,377 $ 4,552,436 39.26%
Preferred Stock 1,175,579 587,790 5.07%
Debt Securities 529,003 529,003 4.56%
--------------- -------------- ----------
$ 9,091,959 $ 5,669,229 48.89%
=============== ============== ==========
Country/Geographic Region
United States $ 9,091,959 $ 5,669,229 48.89%
=============== ============== ==========
Industry
Biotechnology $ 9,091,959 $ 5,669,229 48.89%
=============== ============== ==========
</TABLE>
* Percentage of net assets is based on fair value.
6. Interim Financial Statements
In the opinion of the Managing General Partner, the unaudited financial
statements as of June 30 1996, and for the three and six month periods then
ended, reflect all adjustments necessary for the fair presentation of the
results of the interim period.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
In June 1996 the Partnership made a $31,000 follow-on investment (including
venture capital fees of $1,800) in Hepatix, Inc., an existing portfolio company.
From its inception through June 30, 1996, the Partnership had invested an
aggregate of $14.3 million in ten portfolio companies (including acquisition
costs and venture capital fees totaling $920,000) representing approximately 83%
of the original $17.3 million of net proceeds to the Partnership. From its
inception to June 30, 1996, the Partnership had liquidated two investments with
an aggregate cost basis of $5.2 million. These liquidated investments returned
$2.2 million to the Partnership, resulting in a $3 million cumulative net
realized loss. At June 30, 1996, the Partnership's remaining eight portfolio
investments had an aggregate cost basis of $9.1 million and a fair value of $5.7
million.
At June 30, 1996, the Partnership held $6.1 million in cash and cash
equivalents: $5.7 million in short-term securities with maturities of less than
one year and $342,000 in an interest-bearing cash account. Such investments
provide the Partnership with the liquidity necessary to make new investments in
venture situations, as opportunities arise, and to make follow-on investments in
existing portfolio companies when required. The Partnership earned $75,000 and
$147,000 of interest from its short-term investments for the three and six
months ended June 30, 1996, respectively. 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 in such securities.
It is anticipated that funds needed to cover the Partnership's future
investments and operating expenses will be obtained from existing cash reserves,
interest from short-term investments and proceeds realized from the sale of
portfolio investments.
Results of Operations
Investment Income and Expenses - For the three months ended June 30, 1996 and
1995, the Partnership had a net investment loss (investment income less
operating expenses) of $44,000 and net investment income of $130, respectively.
The increase in net investment loss for the 1996 period compared to the same
period in 1995, primarily resulted from a $24,000 decrease in interest earned
from short-term investments and a $23,000 increase in professional fees. The
decrease in interest earned from short-term investments primarily resulted from
reduced interest rates during the 1996 period and a decrease in funds available
for investment in such securities. The decline in funds available for investment
in short-term securities, primarily was due to follow-on investments made in
existing portfolio companies during the third and fourth quarter of 1995. The
increase in professional fees for the 1996 period primarily resulted from an
increase in legal fees relating to the preparation of a proxy statement in
connection with the Special Meeting of Limited Partners held on June 21, 1996.
Net investment loss for the six months ended June 30, 1996 and 1995 was $85,000
and $15,000, respectively. The increase in net investment loss for the 1996
period includes a $51,000 decrease in interest from short-term investments,
primarily resulting from reduced interest rates and a decrease in funds
available for investment in such securities during the 1996 period. Also
contributing to the increase in net investment loss for the six months ended
June 30, 1996 compared to the same period in 1995 was a $32,000 increase in
professional fees. This increase reflects an increase in legal fees relating to
the preparation of a proxy statement in connection with the Special Meeting of
Limited Partners held on June 21, 1996 and an adjustment to accrued outside
accounting and tax fees for the six months ended June 30, 1996.
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 (1) the net
assets of the Partnership or (2) 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 paid quarterly. The compensation of the Sub-Manager is paid
directly by the Managing General Partner. The management fee for the three
months ended June 30, 1996 and 1995 was $58,000 and $67,000, respectively. For
the six months ended June 30, 1996 and 1995, the management fee was $125,000 and
$135,000 respectively. The decrease in the management fee for the 1996 periods
compared to the same periods in 1995, was due to a decrease in the net asset
value of the Partnership for the respective 1996 periods compared to the 1995
periods. 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 earned 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 six months ended June 30, 1996,
the Partnership had a $511,000 net unrealized loss resulting from the net
downward revaluation of its publicly-traded securities. As a result, net
unrealized depreciation of investments increased by $511,000 for the six-month
period.
For the six months ended June 30, 1995, the Partnership had a $243,000 net
unrealized gain resulting from the net upward revaluation of its publicly-traded
securities. As a result, net unrealized appreciation of investments increased by
$306,000 for the six-month period.
Net Assets - At June 30, 1996, the Partnership's net assets were $11.6 million,
a decrease of $596,000 from $12.2 million at December 31, 1995. This decrease
resulted from the $511,000 unrealized loss from investments and the $85,000 net
investment loss for the six-month period.
At June 30, 1995, the Partnership's net assets were $13.4 million, an increase
of $228,000 from $13.1 million at December 31, 1994. This increase resulted from
the $243,000 unrealized gain from investments partially offset by the $15,000
net investment loss for the six-month period.
The net asset value per $500 Unit, including an allocation of net unrealized
depreciation of investments, at June 30, 1996 and December 31, 1995 was $296 and
$312, 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.
<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.
A Special Meeting of Limited Partners was held on June 21, 1996 with respect to
1) a proposal to allow the Managing General Partner to retain the services of a
Sub-Manager to assist the Managing General Partner in the performance of its
duties to the Partnership and 2) a proposal to amend the Partnership Agreement
to reduce the minimum number of Individual General Partners from three to two.
At the meeting, both such proposals were approved.
<TABLE>
Affirmative Negative
Votes Votes Abstentions
<S> <C> <C> <C> <C>
Proposal 1 15,331 1,652 2,499
Proposal 2 16,046 1,236 2,200
</TABLE>
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 2, L.P.
By: WestMed Venture Management 2, L.P.
The Managing General Partner
By: MEDICAL VENTURE HOLDINGS, INC.
General Partner
By: /s/ Stephen McGrath
Stephen McGrath
Executive Vice President
By: /s/ Ann Oliveri Fusco
Ann Oliveri Fusco
Vice President and Principal Financial
and Accounting Officer
Date: August 13, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESTMED
VENTURE PARTNERS 2, L.P.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED
JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 9,091,959
<INVESTMENTS-AT-VALUE> 5,669,229
<RECEIVABLES> 23,602
<ASSETS-OTHER> 9,094
<OTHER-ITEMS-ASSETS> 6,056,102
<TOTAL-ASSETS> 11,758,027
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 161,515
<TOTAL-LIABILITIES> 161,515
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 38,727
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<ACCUMULATED-NII-CURRENT> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,422,730)
<NET-ASSETS> 11,596,512
<DIVIDEND-INCOME> 0
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<OTHER-INCOME> 0
<EXPENSES-NET> 242,588
<NET-INVESTMENT-INCOME> (84,504)
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (511,277)
<NET-CHANGE-FROM-OPS> (595,781)
<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> (566,463)
<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> 11,894,403
<PER-SHARE-NAV-BEGIN> 312
<PER-SHARE-NII> (3)
<PER-SHARE-GAIN-APPREC> (13)
<PER-SHARE-DIVIDEND> 0
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<PER-SHARE-NAV-END> 296
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
