SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17198
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Oklahoma 73-1329487
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Meridian Tower, Suite 1060
5100 East Skelly Drive
Tulsa, Oklahoma 74135
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 663-2500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of class)
<PAGE>
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. [X]
At March 17, 1995, 10,248 units of limited partnership interest ("Units") were
held by non-affiliates of the Registrant. There is no established public trading
market for such Units.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Prospectus of the Registrant dated December 1, 1988, filed with
the Securities and Exchange Commission, as supplemented by a supplement dated
April 25, 1989, are incorporated by reference in Part I, Part II and Part III
hereof.
Portions of the Registrant's Form 10-Q for the quarter ended March 31, 1994,
filed with the Securities and Exchange Commission on May 13, 1994, are
incorporated by reference in Part I hereof.
Portions of the Registrant's Form 10-Q for the quarter ended June 30, 1994,
filed with the Securities and Exchange Commission on August 12, 1994, are
incorporated by reference in Part I hereof.
Portions of the Registrant's Form 10-Q for the quarter ended September 30, 1994,
filed with the Securities and Exchange Commission on November 11, 1994, are
incorporated by reference in Part I hereof.
<PAGE>
PART I
Item 1. Business.
Formation
ML Oklahoma Venture Partners, Limited Partnership (the "Partnership" or the
"Registrant") was organized under the Revised Uniform Limited Partnership Act of
the State of Oklahoma on July 15, 1988. MLOK Co., Limited Partnership (the
"Managing General Partner") and four individuals (the "Individual General
Partners") are the general partners of the Partnership. The Managing General
Partner is an Oklahoma limited partnership in which Merrill Lynch Venture
Capital Inc. (the "Management Company") is the general partner. The Management
Company is an indirect subsidiary of Merrill Lynch & Co., Inc. and an affiliate
of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S").
The Partnership operates as a business development company under the Investment
Company Act of 1940. The Partnership's investment objective is to seek long-term
capital appreciation by making venture capital investments in new and developing
companies which the Managing General Partner believes offer significant
long-term growth potential. The Partnership considers this activity to
constitute the single industry segment of venture capital investing.
The Partnership was organized as a "qualified venture capital company" under
Oklahoma law and, therefore, invested over 55% of its capitalization in
companies which constitute "Oklahoma business ventures", as that term is defined
under Oklahoma law. Accordingly, in 1989, the Partnership's limited partners
(the "Limited Partners") were entitled to a credit against their Oklahoma state
income tax equal to 20% of the amount of their original investment in the
Partnership. From its inception through December 31, 1994, the Partnership had
invested $8.9 million in 18 portfolio investments of which approximately 63%
represents investments in Oklahoma business ventures.
The Partnership publicly offered, through MLPF&S, 25,000 units of limited
partnership interest at $1,000 per unit (the "Units"). The Units were registered
under the Securities Act of 1933 pursuant to a Registration Statement on Form
N-2 (File No. 33-24547), which was declared effective on December 1, 1988. The
Partnership completed its offering on August 14, 1989. A total of 10,248 Units
were sold to the Limited Partners. Gross capital contributions to the
Partnership total $10,355,556; $10,248,000 from the Limited Partners, $103,556
from the Managing General Partner and $4,000 from the Individual General
Partners.
The information set forth under the captions "Risk and Other Important Factors"
(pages 11 through 18), "Investment Objective and Policies" (pages 21 through 26)
and "Oklahoma Considerations" (pages 26 through 28) in the Prospectus of the
Partnership dated December 1, 1988 filed with the Securities and Exchange
Commission pursuant to Rule 497(b) under the Securities Act of 1933, as
supplemented by a supplement dated April 25, 1989 filed pursuant to Rule 497(d)
under the Securities Act of 1933 (the "Prospectus"), is incorporated herein by
reference.
<PAGE>
The Venture Capital Investments
During 1994, the Partnership purchased venture capital investments totaling $1.1
million: $225,000 in two new portfolio companies and $896,000 in seven existing
portfolio companies. From August 14, 1989 (commencement of operations) to
December 31, 1994, the Partnership had invested $8.9 million in 18 portfolio
companies, representing 97% of the $9.2 million of net proceeds from the
offering of Units. At December 31, 1994, the Partnership's investment portfolio
consisted of 14 active investments with a cost basis of $6.6 million and a fair
value of $10.5 million. From its inception to December 31, 1994, the Partnership
had liquidated investments with an aggregate cost basis of $2.3 million. These
liquidated investments returned $435,000 for a cumulative net realized loss of
$1.9 million as of December 31, 1994.
The descriptions of the Partnership's initial investment in Americo Publishing,
Inc. and the Partnership's follow-on investments in Excel Energy Technologies,
Ltd., Great Outdoors Publishing, Inc. and Data Critical Corp. set forth in Item
5 of Part II of the Partnership's quarterly report on Form 10-Q for the quarter
ended March 31, 1994 are incorporated herein by reference.
The descriptions of the Partnership's follow-on investments in Data Critical
Corp. and Silverado Foods, Inc. set forth in Item 5 of Part II of the
Partnership's quarterly report on Form 10-Q for the quarter ended June 30, 1994
are incorporated herein by reference.
The descriptions of the Partnership's follow-on investments in Americo
Publishing, Inc., Diagnetics, Inc., Independent Gas Company Holdings, Inc. and
Data Critical Corp. set forth in Item 5 of Part II of the Partnership's
quarterly report on Form 10-Q for the quarter ended September 30, 1994 are
incorporated herein by reference.
In January 1994, Symex Corp. ceased operations and transferred its intellectual
property to its senior secured creditor. As a former junior secured creditor of
Symex, the Partnership was entitled to purchase shares of ZymeTx, Inc., a
company formed to advance the intellectual property previously owned by Symex.
In August 1994, the Partnership purchased 21,052 common shares of ZymeTx at par
value, or $211.
Competition
The Partnership encounters competition from other entities having similar
investment objectives, including other entities affiliated with Merrill Lynch &
Co., Inc. Primary competition for venture capital investments has been from
venture capital partnerships, venture capital affiliates of large industrial and
financial companies, small business investment companies and wealthy
individuals.
Employees
The Partnership has no employees. The Managing General Partner, subject to the
supervision of the Individual General Partners, manages and controls the
Partnership's venture capital investments. The Management Company performs, or
arranges for others to perform, the management and administrative services
necessary for the operation of the Partnership and is responsible for managing
the Partnership's short-term investments.
<PAGE>
Item 2. Properties.
The Partnership does not own or lease physical properties.
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 matter was submitted during the fourth quarter of the fiscal year covered by
this report to a vote of security holders.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The information with respect to the market for the Units set forth under the
subcaption "Substituted Limited Partners" on page 40 of the Prospectus, is
incorporated herein by reference. There is no established public trading market
for the Units as of March 17, 1995. The approximate number of holders of Units
as of March 17, 1995 is 1,150. The Managing General Partner and the four
Individual General Partners of the Partnership also hold interests in the
Partnership.
Beginning with December 1994 client account statements, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S") implemented new guidelines for valuing
limited partnerships and other direct investments reported on client account
statements. As a result, MLPF&S no longer reports general partner estimates of
limited partnership net asset value on its client account statements, although
the Partnership's managing general partner may continue to provide its estimate
of net asset value in quarterly reports to unit holders. Pursuant to the new
guidelines, estimated values for limited partnership investments will be
provided annually to MLPF&S by independent valuation services. The estimated
values will be based on financial and other information available to the
independent services on the prior August 15th. MLPF&S clients may contact their
Merrill Lynch Financial Consultants or telephone the number provided to them on
their account statements to obtain a general description of the methodology used
by the independent valuation services to determine their estimates of value. The
estimated values provided by the independent services are not market values and
unit holders may not be able to sell their units or realize the amounts shown on
their MLPF&S statements upon a sale. In addition, unit holders may not realize
the amount shown on their account statements upon the liquidation of the
Registrant over its remaining life.
The Partnership has not made any cash distributions to its Partners during the
period from August 14, 1989 (commencement of operations) to December 31, 1994.
In March 1995, the General Partners approved a cash distribution to the Limited
Partners totaling $2 million, or $200 per Unit. The distribution will be paid in
April 1995 to Limited Partners of record on March 31, 1995. The information
under the heading "Distributions" contained in the section entitled "Partnership
Distributions and Allocations" on pages 35 and 36 of the Prospectus is
incorporated herein by reference.
<PAGE>
Item 6. Selected Financial Data.
($ in thousands, except for per Unit information)
<TABLE>
Years ended December 31,
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net investment income (loss) $ (143) $ (159) $ (110) $ 55 $ 307
Realized loss on investments (272) (1,043) - (63) (510)
Net change in unrealized appreciation
(depreciation) of investments 3,424 (388) 1,167 (18) (262)
Net assets 11,370 8,361 9,950 8,893 8,918
Net unrealized appreciation (depreciation)
of investments 3,924 500 888 (280) (262)
Cost of portfolio investments purchased 1,121 2,543 2,400 1,654 477
Cumulative cost of portfolio investments 8,905 7,784 5,241 2,841 1,187
PER UNIT OF LIMITED
PARTNERSHIP INTEREST:
Net investment income (loss) $ (14) $ (15) $ (11) $ 5 $ 30
Realized loss on investments (26) (101) - (6) (49)
Net unrealized appreciation (depreciation)
of investments 379 48 86 (27) (25)
Net asset value, including net unrealized
appreciation (depreciation) of investments 1,098 807 961 859 861
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
At December 31, 1994, the Partnership held $889,000 in cash and short-term
investments: $598,000 in short-term investments with maturities of less than one
year and $292,000 in an interest-bearing cash account. Interest earned on such
investments for the years ended December 31, 1994, 1993 and 1992, was $40,000,
$93,000 and $201,000, respectively. Interest earned from short-term investments
in future periods is subject to fluctuations in short-term interest rates and
changes in amounts available for investment in such securities.
During 1994, the Partnership purchased venture capital investments totaling $1.1
million: $225,000 in two new portfolio companies and $896,000 in seven existing
portfolio companies. From August 14, 1989 (commencement of operations) to
December 31, 1994, the Partnership had invested $8.9 million in 18 portfolio
companies, representing 97% of the original net proceeds to the Partnership.
The Partnership will not purchase any new portfolio investments. Funds needed to
cover the Partnership's future operating expenses and follow-on investments in
existing companies is expected to be obtained from existing cash reserves,
interest and other investment income and proceeds from the sale of portfolio
investments.
Results of Operations
For the years ended December 31, 1994, 1993 and 1992, the Partnership had a net
realized loss from operations of $415,000, $1.2 million and $110,000,
respectively. Net realized gain or loss from operations is comprised of 1) net
realized gains or losses from portfolio investments and 2) net investment income
or loss (interest and dividend income less operating expenses).
Realized Gains and Losses from Portfolio Investments - For the year ended
December 31, 1994, the Partnership had a $272,000 net realized loss from
portfolio investments. In June 1994, the Partnership sold 10,000 common stock
warrants of Envirogen, Inc. in the public market for $6,000, realizing a gain of
$6,000. Additionally during June 1994, the Partnership's warrants to purchase
common stock of C.R. Anthony Company expired, resulting in a realized loss of
$2,175. During 1994, Sports Tactics International, Inc. ceased operations. In
connection with the liquidation of the company, the Partnership received
payments totaling $19,000, resulting in a realized loss of $81,000. Also during
1994, Symex Corp. ceased operations resulting in the write-off of the
Partnership's remaining $146,000 debt investment in the company. In December
1994, the Partnership sold its investment in QuanTem Laboratories, Inc. in a
private transaction for $26,000, realizing a loss of $49,000.
For the year ended December 31, 1993, the Partnership had a $1 million realized
loss from portfolio investments. During 1993, the Partnership wrote-off its
$693,000 equity investment in Symex Corp. and wrote-off $350,000 of its $450,000
equity investment in Sports Tactics International, Inc. due to business and
financial difficulties at these companies.
<PAGE>
The Partnership had no realized gains or losses from portfolio investments for
the year ended December 31, 1992.
Investment Income and Expenses - For the years ended December 31, 1994, 1993 and
1992, the Partnership had a net investment loss of $143,000, $159,000 and
$110,000, respectively. The $16,000 decrease in net investment loss for 1994
compared to 1993 primarily was the result of a $39,000 decline in operating
expenses for 1994, primarily professional fees, partially offset by a $24,000
decline in investment income for 1994. Professional fees declined $25,000 for
1994, from $78,000 in 1993 to $53,000 in 1994, due to a reduction in the
Partnership's legal expenses for 1994. Investment income declined $24,000 for
1994 compared to 1993. Interest earned on short-term investments for 1994
declined $53,000, from $93,000 in 1993 to $40,000 in 1994. This decrease was
offset by a $29,000 increase in interest and other income from portfolio
investments for 1994, from $126,000 in 1993 to $155,000 in 1994. The decrease in
interest earned from short-term investments primarily was a result of a decline
in the amount available for investments in such securities during the 1994
period. The increase in interest and other income from portfolio investments for
1994 primarily was the result of an increase in the amount invested in interest
bearing debt securities of portfolio investments during 1994 compared to 1993.
The $49,000 increase in net investment loss for 1993 compared to 1992 primarily
was a result of a $67,000 decline in investment income for 1993 partially offset
by a $19,000 decline in operating expenses for 1993. The $67,000 decline in
investment income was comprised of a $108,000 decrease in interest earned from
short-term investments for 1993 partially offset by a $41,000 increase in
interest and other income from portfolio investments for 1993. The decrease in
short-term investment income for 1993 was due to a decline in short-term
interest rates and a decline in funds invested in such securities for 1993
compared to 1992. The increase in portfolio income for 1993 was due to an
increase in dividends received from Diagnetics, Inc. during 1993 and an increase
in the amount invested in interest bearing debt securities of other portfolio
investments during 1993 compared to 1992.
The Management Company performs, or arranges for others to perform, the
management and administrative services necessary for the operation of the
Partnership. The Management Company receives a management fee of 2.5% of the
gross capital contributions to the Partnership, reduced by selling commissions
and organizational and offering expenses paid by the Partnership, capital
distributed and realized losses, with a minimum fee of $200,000 annually. Such
fee is determined and paid quarterly. The management fee for the years ended
December 31, 1994, 1993 and 1992, was $200,000, $204,000 and $215,000,
respectively. To the extent possible, the management fee and other expenses
incurred directly by the Partnership are paid with funds provided from
operations.
Unrealized Gains and Losses and Changes in Unrealized Appreciation of Portfolio
Investments - For the year ended December 31, 1994, the Partnership had a $3.1
million net unrealized gain primarily resulting from the upward revaluation of
its investments in Silverado Foods, Inc., resulting from the company's initial
public offering completed in August 1994, and BACE Manufacturing, Inc.
Additionally during 1994, a net $297,000 was transferred from unrealized loss to
realized loss relating to portfolio investments sold and written-off during
1994, as discussed above. The $3.1 million unrealized gain and the $297,000
transfer from unrealized loss to realized loss resulted in a $3.4 million
increase to net unrealized appreciation of investments for 1994.
For the year ended December 31, 1993, the Partnership had a net unrealized loss
of $928,000 resulting from the net downward revaluation of certain portfolio
investments. Additionally during 1993, the Partnership transferred $540,000 from
unrealized loss to realized loss relating to portfolio investments written-off
in 1993, as discussed above. The $928,000 unrealized loss less the $540,000
transfer from unrealized loss to realized loss resulted in a $388,000 decrease
to net unrealized appreciation of investments for 1993.
For the year ended December 31, 1992, the Partnership had a $1.2 million net
unrealized gain resulting from the net upward revaluation of certain portfolio
investments.
Net Assets - Changes to net assets resulting from operations are comprised of 1)
net realized gains and losses from operations and 2) changes to net unrealized
appreciation or depreciation of portfolio investments.
At December 31, 1994, the Partnership's net assets were $11.4 million, up $3
million from $8.4 million at December 31, 1993. The increase in net assets from
operations was comprised of the $3.4 million increase to net unrealized
appreciation of investments partially offset by the $415,000 net realized loss
from operations for 1994.
At December 31, 1993, the Partnership's net assets were $8.4 million, down $1.6
million from $10 million at December 31, 1992. The decrease in net assets from
operations resulted from the $1.2 million net realized loss from operations and
the $388,000 decrease to net unrealized appreciation of investments for 1993.
At December 31, 1992, the Partnership's net assets were $10 million, up $1.1
million from $8.9 million at December 31, 1991. The increase in net assets from
operations resulted from the $1.2 million net unrealized gain from portfolio
investments partially offset by the $110,000 net realized loss from operations
for 1992.
Gains or losses from investments are allocated to the Partners' capital accounts
when realized in accordance with the Partnership Agreement (see Note 3 of Notes
to Financial Statements). However, for purposes of calculating the net asset
value per unit of limited partnership interest, net unrealized appreciation or
depreciation of investments has been included as if the net appreciation or
depreciation had been realized and allocated to the Limited Partners in
accordance with the Partnership Agreement. Pursuant to such calculation, the net
asset value per $1,000 Unit at December 31, 1994, 1993 and 1992 was $1,098, $807
and $961, respectively.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
INDEX
Independent Auditors' Report
Balance Sheets as of December 31, 1994 and 1993
Schedule of Portfolio Investments as of December 31, 1994 Schedule of Portfolio
Investments as of December 31, 1993
Statements of Operations for the years ended December 31, 1994, 1993 and 1992
Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992
Statements of Changes in Partners' Capital for the years ended December 31,
1992, 1993 and 1994
Notes to Financial Statements
NOTE - All other schedules are omitted because of the absence of conditions
under which they are required or because the required information is included in
the financial statements or the notes thereto.
<PAGE>
INDEPENDENT AUDITORS' REPORT
ML Oklahoma Venture Partners, Limited Partnership:
We have audited the accompanying balance sheets of ML Oklahoma Venture Partners,
Limited Partnership (the "Partnership"), including the schedules of portfolio
investments, as of December 31, 1994 and 1993, and the related statements of
operations, cash flows, and changes in partners' capital for each of the three
years in the period ended December 31, 1994. 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 in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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. Our procedures included
confirmation of securities owned at December 31, 1994 and 1993 by correspondence
with the custodian; where confirmation was not possible, we performed other
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Partnership at December 31, 1994 and
1993, and the results of its operations, its cash flows and the changes in its
partners' capital for each of the three years in the period ended December 31,
1994 in conformity with generally accepted accounting principles.
As explained in Note 2, the financial statements include securities valued at
$10,296,209 and $6,563,579 at December 31, 1994 and 1993, respectively,
representing 91% and 79% of net assets, respectively, whose values have been
estimated by the Managing General Partner in the absence of readily
ascertainable market values. We have reviewed the procedures used by the
Managing General Partner in arriving at its estimate of value of such securities
and have inspected underlying documentation, and, in the circumstances, we
believe the procedures are reasonable and the documentation appropriate.
However, because of the inherent uncertainty of valuation, those estimated
values may differ significantly from the values that would have been used had a
ready market for the securities existed, and the differences could be material.
Deloitte & Touche LLP
New York, New York
March 7, 1995, except for Note 8, as to which the date is March 16, 1995
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
BALANCE SHEETS
December 31,
<TABLE>
1994 1993
---- ----
<S> <C> <C>
ASSETS
Investments - Note 2
Portfolio investments, at fair value (cost $6,582,245 at
December 31, 1994 and $6,063,931 at December 31, 1993) $ 10,506,209 $ 6,563,579
Short-term investments, at amortized cost - Note 7 597,738 997,743
Cash and cash equivalents 291,508 880,833
Accrued interest and other receivables 76,706 34,781
Deferred organizational costs, net of accumulated amortization of $47,718 at
December 31, 1994 and $41,754 at December 31, 1993
- Note 2 - 5,964
- -----
TOTAL ASSETS $ 11,472,161 $ 8,482,900
= ========== = =========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable $ 26,710 $ 60,264
Due to Management Company - Note 4 62,032 46,704
Due to Independent General Partners - Note 6 13,000 15,000
------ ------
Total liabilities 101,742 121,968
------- -------
Partners' Capital:
Managing General Partner 74,464 78,613
Individual General Partners 2,878 3,038
Limited Partners (10,248 Units) 7,369,113 7,779,633
Unallocated net unrealized appreciation of investments - Note 2 3,923,964 499,648
--------- -------
Total partners' capital 11,370,419 8,360,932
---------- ---------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 11,472,161 $ 8,482,900
= ========== = =========
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1994
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Americo Publishing, Inc.
<C> <C> <C> <C>
10% Demand Promissory Notes Feb. 1994 $ 225,000 $ 225,000
--------------------------- --------- - ------- - -------
BACE Manufacturing, Inc.*(C)
1,078 shares of Preferred Stock Feb. 1992 539,000 1,931,200
------------------------------- --------- ------- ---------
C.R. Anthony Company(D)
275,317 shares of Common Stock Oct. 1992 600,191 600,191
------------------------------ --------- ------- -------
Data Critical Corp.*(B)(E)
75,000 shares of Preferred Stock April 1993 150,000 150,000
8% Promissory Note due 4/6/95 350,000 350,000
Warrant to purchase 87,500 shares of Common Stock
at $4 per share, expiring 10/6/97 0 0
--------------------------------- - -
Diagnetics, Inc.*(B)(F)
314,807 shares of Preferred Stock April 1991 800,582 800,582
10,006 shares of Common Stock 13,028 13,028
----------------------------- ------ ------
Eckerd Corporation*(A)
15,491 shares of Common Stock July 1992 142,992 406,755
----------------------------- --------- ------- -------
Enerpro International, Inc.*
35,000 shares of Preferred Stock Aug. 1993 350,000 350,000
-------------------------------- --------- ------- -------
Envirogen, Inc.(A)(G)
150,000 shares of Common Stock Sept. 1991 525,000 210,000
90,000 Warrants to purchase 45,000 shares of Common
Stock at $5.20 per share, expiring 10/13/98 0 12,645
------------------------------------------- - ------
Excel Energy Technologies, Ltd.*(B)(H)
16,304 shares of Preferred Stock Oct. 1993 500,000 500,000
17,336 shares of Common Stock 2,500 2,500
9% Debenture due 12/8/95 150,000 150,000
------------------------ ------- -------
Great Outdoors Publishing, Inc.*(B)
275,000 shares of Preferred Stock Aug. 1992 275,000 75,000
8% Demand Promissory Notes 50,000 50,000
-------------------------- ------ ------
Independent Gas Company Holdings, Inc.*
450 shares of Preferred Stock June 1993 450,000 450,000
4,786 shares of Common Stock 3,336 3,336
10% Promissory Note due 2/20/95 14,100 14,100
------------------------------- ------ ------
</TABLE>
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
December 31, 1994
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Silverado Foods, Inc.*(A)(B)(I)
<C> <C> <C> <C>
683,181 shares of Common Stock June 1992 $ 520,000 $ 2,017,775
Warrant to purchase 22,500 shares of Common Stock
at $0.44 per share, expiring 1/19/98 0 56,554
Warrant to purchase 12,121 shares of Common Stock
at $8.25 per share, expiring 6/2/99 0 0
----------------------------------- - -
UroCor, Inc.*(B)(J)
474,007 shares of Preferred Stock May 1991 921,305 2,137,332
Warrant to purchase 12,539 shares of Common Stock
at $4.30 per share, expiring 10/18/98 0 0
------------------------------------- - -
ZymeTx, Inc.(K)
21,052 shares of Common Stock July 1994 211 211
----------------------------- --------- --- ---
TOTALS(L) $ 6,582,245 $ 10,506,209
= ========= = ==========
</TABLE>
(A) Public company
(B) Qualifies as an "Oklahoma business venture" under Oklahoma law.
(C) In February 1995, the Partnership sold its investment in BACE
Manufacturing, Inc. for $2.2 million of which approximately $300,000 will
be held in escrow. The release of the escrow is contingent upon certain
future events.
(D) During June 1994, the Partnership's warrants to purchase 48,045 shares of
common stock of C.R. Anthony Company expired, resulting in a realized loss
of $2,175.
(E) During 1994, the Partnership purchased 8% and 10% promissory notes of Data
Critical Corp. totaling $350,000 and a warrant to purchase 17,500 shares of
Data Critical common stock at $5 per share. Subsequently, in connection
with the restructuring of the company's outstanding debt, the Partnership
exchanged such notes and warrant for a $350,000 8% promissory note and a
warrant to purchase 87,500 shares of common stock at $4 per share.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
December 31, 1994
(F) On July 22, 1994, the Partnership converted its Diagnetics, Inc. promissory
notes aggregating $250,000 in face value, including a $50,000 note
purchased in July 1994, and accrued interest of $12,812 into 189,073
preferred shares of the company. In addition, the Partnership exchanged its
warrants to purchase 418,000 preferred shares of Diagnetics and accrued
preferred stock dividends totaling $35,770 into 25,734 preferred shares of
Diagnetics.
(G) In June 1994, the Partnership sold 10,000 Envirogen, Inc. common stock
warrants for $6,000, realizing a gain of $6,000.
(H) In April 1994, the Partnership converted its demand notes of Excel Energy
Technologies, Ltd. totaling $500,000, including $100,000 of notes purchased
in March 1994, into 16,304 shares of preferred stock of the company.
(I) On August 5, 1994, Silverado Foods, Inc. completed its initial public
offering. In connection with the offering, the Partnership converted its
preferred shares into common shares of the company and the company effected
a 2.25-for-1 split of its outstanding stock. As a result, the Partnership
exchanged its 267,144 preferred shares for 638,181 common shares of the
company. The Partnership also exchanged its $20,000 subordinated note for
45,000 common shares of the company. Additionally, the $180,000 9% note and
a $100,000 9% promissory note purchased by the Partnership during 1994,
were repaid with interest.
(J) During 1994, CytoDiagnostics, Inc. changed its name to UroCor, Inc. In
March 1994, the Partnership converted its $100,000 note due from UroCor and
$3,596 of accrued interest into 24,092 shares of preferred stock of the
company.
(K) In January 1994, Symex Corp. ceased operations and transferred its
intellectual property to its senior secured creditor. As a former junior
secured creditor of Symex, the Partnership was entitled to purchase shares
of ZymeTx, Inc., a company formed to advance the intellectual property
previously owned by Symex. In August 1994, the Partnership purchased 21,052
common shares of ZymeTx at par value, or $211.
(L) In December 1994, the Partnership sold its investment in QuanTem
Laboratories, Inc. for $26,000, realizing a loss of $49,000.
* May be deemed an affiliated person of the Partnership as defined in the
Investment Company Act of 1940.
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1993
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
BACE Manufacturing, Inc.*
<C> <C> <C> <C>
1,078 shares of Preferred Stock Feb. 1992 $ 539,000 $ 898,000
------------------------------- --------- - ------- - -------
C.R. Anthony Company
275,317 shares of Common Stock Oct. 1992 600,191 600,191
Warrants to purchase 48,045 shares of Common Stock
at $3.75 per share, expiring 6/3/94 2,175 2,175
----------------------------------- ----- -----
CytoDiagnostics, Inc.*(B)
449,915 shares of Preferred Stock May 1991 817,709 1,279,805
8% Convertible Subordinated Note due 10/18/94 100,000 100,000
--------------------------------------------- ------- -------
Data Critical Corp.*(B)
75,000 shares of Preferred Stock April 1993 150,000 150,000
-------------------------------- ---------- ------- -------
Diagnetics, Inc.*(B)
100,000 shares of Preferred Stock April 1991 500,000 500,000
10,006 shares of Common Stock 13,028 13,028
Warrant to purchase 25,000 shares of Common Stock
at $5 per share, expiring 4/11/95 1,000 1,000
Warrant to purchase 393,000 shares of Common Stock
at $0.01 per share, expiring 12/31/96 1,000 1,000
Convertible Subordinated Promissory Note
due 6/30/94, Prime + 1.75% 200,000 200,000
-------------------------- ------- -------
Eckerd Corporation*(A)
15,491 shares of Common Stock July 1992 142,992 248,166
----------------------------- --------- ------- -------
Enerpro International, Inc.*
35,000 shares of Preferred Stock Aug. 1993 350,000 350,000
-------------------------------- --------- ------- -------
Envirogen, Inc.(A)
150,000 shares of Common Stock Sept. 1991 525,000 385,313
100,000 Warrants to purchase 50,000 shares of Common
Stock at $5.20 per share, expiring 10/13/98 0 14,063
------------------------------------------- - ------
Excel Energy Technologies, Ltd.*(B)
9% Debenture due 10/14/94 Oct. 1993 400,000 400,000
17,336 shares of Common Stock 2,500 2,500
----------------------------- ----- -----
Great Outdoors Publishing, Inc.*(B)
275,000 shares of Preferred Stock Aug. 1992 275,000 275,000
8% Promissory Note due 6/30/94 20,000 20,000
------------------------------ ------ ------
Independent Gas Company Holdings, Inc.*
400 shares of Preferred Stock June 1993 400,000 400,000
3,336 shares of Common Stock 3,336 3,336
---------------------------- ----- -----
</TABLE>
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
December 31, 1993
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
QuanTem Laboratories, Inc.*(B)
<C> <C> <C> <C>
42,589 shares of Preferred Stock Jan. 1990 $ 75,000 $ 20,000
-------------------------------- --------- - ------ - ------
Silverado Foods, Inc.*(B)
267,144 shares of Preferred Stock June 1992 500,000 500,000
9% Senior Note 180,000 180,000
9% Convertible Subordinated Note 20,000 20,000
Warrant to purchase 10,000 shares of Common Stock
at $7 per share, expiring 1/19/98 0 0
--------------------------------- - -
Sports Tactics International, Inc.*
10,000 shares of Preferred Stock Mar. 1992 100,000 1
-------------------------------- --------- ------- -
Symex Corp.*(B)
10% Promissory Notes Oct. 1989 146,000 1
-------------------- --------- ------- -
TOTALS $ 6,063,931 $ 6,563,579
= ========= = =========
</TABLE>
(A) Public company
(B) Qualifies as an "Oklahoma business venture" under Oklahoma law.
* Company may be deemed an affiliated person of the Partnership as defined in
the Investment Company Act of 1940.
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
For the Years Ended December 31,
<TABLE>
1994 1993 1992
---- ---- ----
INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C> <C>
Interest from short-term investments $ 40,371 $ 93,067 $ 201,368
Interest and other income from portfolio investments 75,684 48,648 47,623
Dividend income 78,890 76,968 37,233
------ ------ ------
Total investment income 194,945 218,683 286,224
------- ------- -------
Expenses:
Management fee - Note 4 200,000 204,256 215,104
Professional fees 52,799 78,123 71,406
Independent General Partners' fees - Note 6 52,826 57,230 55,364
Mailing and printing 18,566 21,311 17,602
Amortization of deferred organizational costs - Note 2 5,964 9,544 9,544
Custodial fees 6,664 5,967 5,704
Miscellaneous 1,180 918 3,693
Interest expense - Note 4 - - 17,804
- - ------
Total expenses 337,999 377,349 396,221
------- ------- -------
NET INVESTMENT LOSS (143,054) (158,666) (109,997)
Net realized loss from investments (271,775) (1,042,899) -
-------- ---------- -
NET REALIZED LOSS FROM OPERATIONS
(allocable to Partners) - Note 3 (414,829) (1,201,565) (109,997)
Net change in unrealized appreciation or depreciation
of investments 3,424,316 (387,994) 1,167,277
--------- -------- ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ 3,009,487 $ (1,589,559) $ 1,057,280
= ========= = ========== = =========
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
<TABLE>
1994 1993 1992
---- ---- ----
CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C> <C>
Net investment loss $ (143,054) $ (158,666) $ (109,997)
Adjustments to reconcile net investment loss to cash
used for operating activities:
Amortization of deferred organizational costs 5,964 9,544 9,544
Increase (decrease) in payables (20,226) 9,237 20,063
Decrease in accrued interest on short-term investments 18 4,796 31,612
(Increase) decrease in receivables and other assets (15,638) (20,671) 1,651
------- ------- -----
Cash used for operating activities (172,936) (155,760) (47,127)
-------- -------- -------
CASH FLOWS PROVIDED FROM (USED FOR)
INVESTING ACTIVITIES
Purchase of portfolio investments (1,121,489) (2,542,497) (2,399,994)
Proceeds from the sale of portfolio investments 25,113 - -
Net deposits released from escrow - 70,295 469,960
Net return (purchase) of short-term investments 399,987 2,979,364 962,964
Proceeds from the redemption of notes 280,000 5,000 -
------- ----- -
Cash provided from (used for) investing activities (416,389) 512,162 (967,070)
-------- ------- --------
Increase (decrease) in cash and cash equivalents (589,325) 356,402 (1,014,197)
Cash and cash equivalents at beginning of period 880,833 524,431 1,538,628
------- ------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 291,508 $ 880,833 $ 524,431
= ======= = ======= = =======
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Years Ended December 31, 1992, 1993 and 1994
<TABLE>
Unallocated
Net Unrealized
Managing Individual Appreciation
General General Limited (Depreciation)
Partner Partners Partners of Investments Total
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1991 $ 91,729 $ 3,544 $ 9,077,573 $ (279,635) $ 8,893,211
Net investment loss - Note 3 (1,100) (42) (108,855) - (109,997)
Net change in unrealized apprecia-
tion or depreciation of investments - - - 1,167,277 1,167,277
- - - --------- ---------
Balance at December 31, 1992 90,629 3,502 8,968,718(A) 887,642 9,950,491
Net investment loss - Note 3 (1,587) (61) (157,018) - (158,666)
Net realized loss from investments
- Note 3 (10,429) (403) (1,032,067) - (1,042,899)
Net change in unrealized apprecia-
tion or depreciation of investments - - - (387,994) (387,994)
- - - -------- --------
Balance at December 31, 1993 78,613 3,038 7,779,633(A) 499,648 8,360,932
Net investment loss - Note 3 (1,431) (55) (141,568) - (143,054)
Net realized loss from investments
- Note 3 (2,718) (105) (268,952) - (271,775)
Net change in unrealized apprecia-
tion or depreciation of investments - - - 3,424,316 3,424,316
- - - --------- ---------
Balance at December 31, 1994 $ 74,464 $ 2,878 $ 7,369,113(A) $ 3,923,964 $ 11,370,419
= ====== = ===== = ========= = ========= = ==========
</TABLE>
(A) The net asset value per unit of limited partnership interest, including
an assumed allocation of net unrealized appreciation or depreciation of
investments, was $961, $807 and $1,098 at December 31, 1992, 1993 and
1994, respectively.
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
1. Organization and Purpose
ML Oklahoma Venture Partners, Limited Partnership (the "Partnership") was formed
on July 15, 1988 under the Revised Uniform Limited Partnership Act of the State
of Oklahoma. The Partnership's operations commenced on August 14, 1989. MLOK
Co., Limited Partnership, the managing general partner of the Partnership (the
"Managing General Partner"), is an Oklahoma limited partnership formed on July
15, 1988, the general partner of which is Merrill Lynch Venture Capital Inc.
(the "Management Company"), an indirect subsidiary of Merrill Lynch & Co., Inc.
The Partnership's objective is to achieve long-term capital appreciation by
making venture capital investments in new or developing companies, primarily
Oklahoma companies, and other special investment situations. The Partnership
does not engage in any other business or activity. The Partnership will
terminate on December 31, 1998, subject to the right of the Individual General
Partners to extend the term for up to two additional two-year periods.
2. Significant Accounting Policies
Valuation of Investments - Short-term investments are carried at amortized cost
which approximates market. Portfolio investments are carried at fair value as
determined quarterly by the Managing General Partner under the supervision of
the Individual General Partners. The Managing General Partner determines the
fair value of its portfolio investments by applying consistent guidelines. The
fair value of public securities is adjusted to the average closing public market
price for the last five trading days of the quarter less an appropriate discount
for sales restrictions, the size of the Partnership's holdings and the public
market trading volume. Private securities are carried at cost until significant
developments affecting a portfolio investment provide a basis for change in
valuation. The fair value of private securities is adjusted 1) to reflect
meaningful third-party transactions in the private market or 2) 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.
Investment Transactions - Investment transactions are recorded on the accrual
method. Portfolio investments are recorded on the trade date, the date the
Partnership obtains an enforceable right to demand the securities or payment
therefor. Realized gains and losses on investments sold are computed on a
specific identification basis.
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 appreciation of $3.9
million at December 31, 1994, which was recorded for financial statement
purposes, was not recognized for tax purposes.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
Additionally, from inception to December 31, 1994, other timing differences
totaling $1.2 million relating to the 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.
Statements of Cash Flows - The Partnership considers its interest-bearing cash
account to be cash equivalents.
Organizational Costs - Organizational costs of $47,718 were amortized over a
sixty-month period which commenced August 14, 1989.
3. Allocation of Partnership Profits and Losses
Pursuant to the Partnership Agreement, profits from venture capital investments
are allocated to all Partners in proportion to their capital contributions until
all Partners have been allocated a 10% Priority Return from liquidated
investments. Profits in excess of this amount are allocated 30% to the Managing
General Partner and 70% to all Partners in proportion to their capital
contributions until the Managing General Partner has been allocated 20% of the
total profits from venture capital investments. Thereafter, profits from venture
capital investments are allocated 20% to the Managing General Partner and 80% to
all Partners in proportion to their capital contributions. Profits from other
sources are allocated to all Partners in proportion to their capital
contributions.
Losses are allocated to all Partners in proportion to their capital
contributions. However, if profits had been previously allocated in the 70-30 or
80-20 ratios as discussed above, then losses will be allocated in the reverse
order in which profits were allocated.
4. Related Party Transactions
The Management Company performs, or arranges for others to perform, the
management and administrative services necessary for the operation of the
Partnership. The Management Company receives a management fee at an annual rate
of 2.5% of the gross capital contributions to the Partnership, reduced by
selling commissions and organizational and offering expenses paid by the
Partnership, capital distributed and realized losses, with a minimum annual fee
of $200,000. Such fee is determined and paid quarterly.
On May 29, 1992, the SEC issued an exemptive order permitting the Partnership to
acquire 11,916 shares of class A common stock of EDS Holdings Inc. from an
affiliate of the Management Company subject to certain conditions, including
review and approval by the Independent General Partners. On July 22, 1992, the
Partnership purchased these shares for $160,796, representing original cost of
$142,992 plus interest expense of $17,804.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
5. Limitation on Operating Expenses
The Management Company has undertaken to the Partnership that it will reduce its
management fee or otherwise reimburse the Partnership in order to limit the
annual operating expenses of the Partnership, exclusive of the management fee,
to an amount equal to $203,720.
6. Independent General Partners' Fees
As compensation for services rendered to the Partnership, each of the three
Independent General Partners receives $16,000 annually in quarterly
installments, $1,000 for each meeting of the General Partners attended, $1,000
for each committee meeting attended ($500 if a committee meeting is held on the
same day as a meeting of the General Partners) and $500 for meetings held by
telephone conference.
7. Short-Term Investments
At December 31, 1994 and 1993, the Partnership had investments in short-term
securities as detailed below.
<TABLE>
Maturity Purchase Amortized
Issuer Yield Date Price Cost Face Value
Investments in Commercial Paper at December 31, 1994:
<S> <C> <C> <C> <C> <C>
First Brands Commercial Inc. 5.90% 1/23/95 $ 596,853 $ 597,738 $ 600,000
- ------- - ------- - -------
Investments in Commercial Paper at December 31, 1993:
Iowa Student Loan Liquidity
Corporation 3.25% 1/25/94 $ 996,840 $ 997,743 $ 1,000,000
- ------- - ------- - ---------
</TABLE>
8. Subsequent events
In March 1995, the General Partners approved a cash distribution to the Limited
Partners totaling $2 million, or $200 per Unit. The distribution will be paid in
April 1995 to Limited Partners of record on March 31, 1995.
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Partnership
GENERAL PARTNERS
The five General Partners of the Partnership are responsible for the management
and administration of the Partnership. The General Partners consist of the four
Individual General Partners and the Managing General Partner. As required by the
Investment Company Act of 1940 (the "Investment Company Act"), a majority of the
General Partners must be individuals who are not "interested persons" of the
Partnership as defined in the Investment Company Act. In 1989, the Securities
and Exchange Commission issued an order declaring that the independent general
partners of the Partnership (the "Independent General Partners") are not
"interested persons" of the Partnership as defined in the Investment Company Act
solely by reason of their being general partners of the Partnership. The
Managing General Partner and the four Individual General Partners will serve as
the General Partners until successors have been elected or until their earlier
resignation or removal.
The Individual General Partners have full authority over the management of the
Partnership and provide overall guidance and supervision with respect to the
operations of the Partnership and perform the various duties imposed on the
directors of business development companies by the Investment Company Act. In
addition to general fiduciary duties, the Individual General Partners, among
other things, supervise the management arrangements of the Partnership and
supervise the activities of the Managing General Partner.
The Managing General Partner has exclusive power and authority to manage and
control the Partnership's venture capital investments subject to the supervision
of the Individual General Partners. Additionally, subject to the supervision of
the Individual General Partners, the Managing General Partner is authorized to
make all decisions regarding the Partnership's venture capital investment
portfolio including, among other things, find, evaluate, structure, monitor and
liquidate such investments and to provide, or arrange for the provision of,
managerial assistance to the portfolio companies in which the Partnership
invests.
<PAGE>
Individual General Partners
William C. Liedtke, III (1)
P.O. Box 54369
Oklahoma City, OK 73154
Age 43
Individual General Partner since 1988
0 Units of the Partnership beneficially owned at March 17, 1995 (3)
Energy consultant since 1991; Assistant to the Governor of the State of Oklahoma
from 1989 to 1991; an independent natural gas marketing consultant since
1984; an oil and gas marketing manager for Trigg Drilling Company, Inc.; a
member of the State Bar of Texas; a trustee of the Casady School.
Richard P. Miller (1)
7500 N. Mockingbird Lane
Paradise Valley, AZ 85253
Age 67
Individual General Partner since 1988
0 Units of the Partnership beneficially owned at March 17, 1995 (3)
Since1988 Director and Chief Financial Officer of Techlaw, Inc.; from 1983 to
1990, Executive Vice President of Private Sector Counsel; in 1983 and 1984,
Vice President, Corporate Finance, Union Bank of California; from 1968 to
1983, founder and Chief Executive Officer of Systems Control Inc.
George A. Singer (1)
2222 E. 25th Place
Tulsa, OK 74114
Age 47
Individual General Partner since 1995
0 Units of the Partnership beneficially owned at March 17, 1995 (3)
Since1978 General Partner of Singer Bros. and several related family entities;
Executive Vice President, Pedestal Oil Company, Inc.; Director of
Manchester Pipeline Corporation; a member of the Independent Petroleum
Association of America.
Bruce W. Shewmaker (2)
12 Briarwood Drive
Short Hills, NJ 07078
Age 49
Individual General Partner since 1988
0 Units of the Partnership beneficially owned at March 17, 1995 (3)
Since1992 President of New Century Management Inc., a venture capital
management and advisory firm; since 1991, a self-employed business
consultant; from 1990 to 1991, venture investment advisor with Vector
Securities International Inc., an investment banking firm specializing in
health care companies; from 1984 to 1990, President of Merrill Lynch R&D
Management Inc.; from 1982 to 1983 and from 1988 to 1990, Vice President of
Merrill Lynch Venture Capital Inc.
(1) Member of Audit Committee.
(2) Interested person, as defined in the Investment Company Act, of the
Partnership.
(3) Each Individual General Partner has contributed $1,000 to the capital of
the Partnership. Mr. Shewmaker is a limited partner of the Managing General
Partner of the Partnership. The Managing General Partner contributed
$103,556 to the capital of the Partnership. George A. Singer succeeded to
the interest of a prior Independent General Partner who contributed $1,000
to the capital of the Partnership.
The Managing General Partner
MLOK Co., Limited Partnership (the "Managing General Partner") is a limited
partnership organized on July 15, 1988 under the laws of the State of Oklahoma.
The Managing General Partner maintains its legal address at Meridian Tower, 5100
East Skelly Drive, Suite 1060, Tulsa, OK 74135. The Managing General Partner has
acted as the managing general partner of the Partnership since the Partnership
commenced operations on August 14, 1989. The Managing General Partner is engaged
in no other activities at the date hereof. The Managing General Partner has
contributed $103,556 to the capital of the Partnership, equal to 1% of the
aggregate capital contributions of all Partners of the Partnership.
The general partner of the Managing General Partner is Merrill Lynch Venture
Capital Inc. (the "Management Company") and the limited partners of the Managing
General Partner include Joe D. Tippens and C. James Bode, independent
contractors to the Management Company. Information concerning the Management
Company is set forth below.
The Management Company
Merrill Lynch Venture Capital Inc. (the "Management Company") has served as the
management company for the Partnership since the Partnership commenced
operations. The Management Company performs, or arranges for others to perform,
the management and administrative services necessary for the operation of the
Partnership pursuant to a Management Agreement between the Partnership and the
Management Company.
The Management Company is an indirect subsidiary of Merrill Lynch & Co., Inc.
The Management Company, which was incorporated under Delaware law on January 25,
1982, maintains its principal office at North Tower, World Financial Center, New
York, New York 10281-1327. Listed below is information concerning the directors
and officers of the Management Company. Unless otherwise noted, the address of
each such person is in North Tower, World Financial Center, New York, New York
10281.
Kevin K. Albert, Age 42, Director, President
Officer or Director since 1990
Managing Director of Merrill Lynch & Co. Investment Banking Division ("MLIBK")
since 1988; Vice President of MLIBK from 1983 to 1988.
<PAGE>
Robert F. Aufenanger, Age 41, Director and Executive Vice President
Officer or Director since 1990
Vice President of Merrill Lynch & Co. Corporate Strategy, Credit and Research
and Director of the Partnership Management Group since 1991; Director of
MLIBK from 1990 to 1991; Vice President of MLIBK from 1984 to 1990.
Steven N. Baumgarten, Age 39, Vice President Officer or Director since 1993 Vice
President of MLPF&S since 1986.
Robert W. Seitz, Age 48, Director, Vice President
Officer or Director since 1993
FirstVice President of Merrill Lynch & Co. Corporate Strategy, Credit and
Research and a Managing Director within the Corporate Credit Division of
Merrill Lynch since 1987.
Joseph W. Sullivan, Age 37, Treasurer
Officer or Director since 1993
Vice President of MLIBK since 1994; Controller in the Partnership Analysis and
Management Department of MLIBK from 1990 to 1993; Assistant Vice President
of Standard & Poors Corporation from 1988 to 1990.
The directors of the Management Company will serve as directors until the next
annual meeting of stockholders and until their successors are elected and
qualify. The officers of the Management Company will hold office until the next
annual meeting of the Board of Directors of the Management Company and until
their successors are elected and qualify.
There are no family relationships among any of the Individual General Partners
of the Partnership and the officers and directors of the Management Company.
Item 11. Executive Compensation.
Compensation - The Partnership pays each Independent General Partner an annual
fee of $16,000 in quarterly installments, $1,000 per meeting of the Individual
General Partners attended and $500 for participating in each special meeting of
the Individual General Partners conducted by telephone conference call and pays
all non-interested Individual General Partners' actual out-of-pocket expenses
relating to attendance at meetings. The Independent General Partners receive
$1,000 for each meeting of the Audit Committee attended unless such committee
meeting is held on the same day as a meeting of the Individual General Partners.
In such case, the Independent General Partners receive $500 for each meeting of
the Audit Committee attended. The aggregate fees and expenses paid by the
Partnership to the Independent General Partners for the years ended December 31,
1994, 1993 and 1992, totaled $52,826, $57,230 and $55,364, respectively.
Allocations and Distributions - The information with respect to the allocation
and distribution of the Partnership's profits and losses to the Managing General
Partner set forth under the caption "Partnership Distributions and Allocations"
on pages 35 - 37 of the Prospectus is incorporated herein by reference.
For the years ended December 31, 1994, 1993 and 1992, the Partnership had a net
realized loss from operations of $414,829, $1,201,565 and $109,997,
respectively. In accordance with the Partnership's allocation procedure, the
Managing General Partner was allocated $4,149, $12,016 and $1,100 of such
losses. Since the inception of the Partnership, there have been no cash
distributions paid to Partners. In March 1995, the General Partners approved a
cash distribution to the Limited Partners totaling $2 million, or $200 per Unit.
The distribution will be paid in April 1995 to Limited Partners of record on
March 31, 1995.
Management Fee - The Management Agreement provides that as compensation for its
services to the Partnership, the Management Company will receive a fee at the
annual rate of 2.5% of the amount of the partners' gross capital contributions
(net of selling commissions and organizational and offering expenses paid by the
Partnership), reduced by capital distributed and realized capital losses, with a
minimum annual fee of $200,000. Such fee is determined and payable quarterly on
the basis of the amount of the partners' capital contributions at the end of the
preceding calendar quarter. For the years ended December 31, 1994, 1993 and
1992, the management fee was $200,000, $204,256 and $215,104, respectively.
Limitation on Operating Expenses - The Management Company has undertaken to the
Partnership that it will reduce its management fee or otherwise reimburse the
Partnership in order to limit the annual operating expenses of the Partnership,
exclusive of the management fee, to an amount equal to $203,720.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information concerning the security ownership of the Individual General
Partners set forth in Item 10 under the subcaption "Individual General Partners"
is incorporated herein by reference. As of March 17, 1995, no person or group is
known by the Partnership to be the beneficial owner of more than 5 percent 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.
Kevin K. Albert, a Director and President of the Management Company and a
Managing Director of Merrill Lynch Investment Banking Group ("ML Investment
Banking"), joined Merrill Lynch in 1981. Robert F. Aufenanger, a Director and
Executive Vice President of the Management Company, a Vice President of Merrill
Lynch & Co. Corporate Strategy, Credit and Research and a Director of the
Partnership Management Department, joined Merrill Lynch in 1980. Steven N.
Baumgarten, a Vice President of the Management Company and MLPF&S, joined
Merrill Lynch in 1986. Messrs. Albert, Aufenanger and Baumgarten are involved
with certain other entities affiliated with Merrill Lynch or its affiliates.
Robert W. Seitz, a Director and Vice President of the Management Company, a
First Vice President of Merrill Lynch & Co. Corporate Strategy, Credit and
Research and a Managing Director within the Corporate Credit Division of Merrill
Lynch, joined Merrill Lynch in 1981. Joseph W. Sullivan, a Treasurer of the
Management Company and a Vice President of ML Investment Banking, joined Merrill
Lynch in 1990. From 1988 to 1990, Mr.
Sullivan was an Assistant Vice President with Standard & Poor's Debt Rating
Group.
<PAGE>
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.
(a) 1. Financial Statements
Independent Auditors' Report
Balance Sheets as of December 31, 1994 and 1993
Schedule of Portfolio Investments as of December 31, 1994
Schedule of Portfolio Investments as of December 31, 1993
<TABLE>
<S> <C> <C> <C> <C>
Statements of Operations for the years ended December 31, 1994, 1993 and 1992
Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992
Statements of Changes in Partners' Capital for the years ended December 31, 1992, 1993 and 1994
Notes to Financial Statements
2. (a) Exhibits
(3) (a) Amended and Restated Certificate of Limited Partnership of the Partnership dated as of
November 29, 1988.*
(b) Amended and Restated Agreement of Limited Partnership of the Partnership dated as of November
29, 1988.*
(c) Amended and Restated Agreement of Limited Partnership of the Partnership dated as of August
14, 1989.**
(10) Management Agreement dated as of November 29, 1988 between the Partnership and the Management
Company.*
(13) (a) Page 13 of the Quarterly Report on Form 10-Q for the quarter ended March 31, 1994.
(13) (b) Page 13 of the Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.
(13) (c) Page 14 of the Quarterly Report on Form 10-Q for the quarter ended September 30, 1994.
(27) Financial Data Schedule.
(28) (a) Prospectus of the Partnership dated
December 1, 1988 filed with the Securities and
Exchange Commission pursuant to Rule 497 (b)
under the Securities Act of 1933, as
supplemented by a supplement dated April 25,
1989 filed pursuant to Rule 497 (d) under the
Securities Act of 1933.***
(b) No reports on Form 8-K have been filed during the quarter for which this report is filed.
</TABLE>
* Incorporated by reference to the Partnership's Annual Report on Form 10-K
for the fiscal year ended December 31, 1988 filed with the Securities and
Exchange Commission on April 3, 1989.
** Incorporated by reference to the Partnership's Quarterly Report on Form
10-Q for the quarter ended September 30, 1989 filed with the Securities
and Exchange Commission on November 14, 1989.
*** Incorporated by reference to the Partnership's Quarterly Report on Form
10-Q for the quarter ended March 31, 1989 filed with the Securities and
Exchange Commission on May 15, 1989.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 the 27th day of March, 1995.
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
By: MLOK Co. Limited Partnership
its Managing General Partner
By: Merrill Lynch Venture Capital Inc.
its General Partner
By: /s/ Kevin K. Albert
Kevin K. Albert
President
(Principal Executive Officer)
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 on the 27th day of March 1995.
By: MLOK Co., Limited Partnership
its Managing General Partner
By: Merrill Lynch Venture Capital Inc.
its General Partner
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<S> <C> <C> <C>
By: /s/ Kevin K. Albert By: /s/ Richard P. Miller
----------------------- -------------------------
Kevin K. Albert Richard P. Miller
President General Partner
(Principal Executive Officer) ML Oklahoma Venture Partners, Limited Partnership
By: /s/ Joseph W. Sullivan By:
Joseph W. Sullivan George A. Singer
Treasurer General Partner
(Principal Financial and Accounting Officer) ML Oklahoma Venture Partners, Limited Partnership
By: /s/ William C. Liedtke, III By: /s/ Bruce W. Shewmaker
William C. Liedtke, III Bruce W. Shewmaker
General Partner General Partner
ML Oklahoma Venture Partners, Limited Partnership ML Oklahoma Venture Partners, Limited Partnership
</TABLE>
Exhibit 13(a)
On January 18, 1994, the Partnership purchased an 8% promissory note from Data
Critical Corp. for $100,000. This investment is in addition to the 75,000 shares
of preferred stock previously owned by the Partnership.
On January 18, 1994, the Partnership purchased an 8% demand note from Great
Outdoors Publishing, Inc. for $30,000. This investment is in addition to the
275,000 shares of preferred stock and 8% demand note previously owned by the
Partnership.
On February 28, 1994, the Partnership purchased a 10% demand note from Americo
Publishing, Inc. for $200,000. Americo, located in Tulsa, Oklahoma, is a
publisher of outdoor recreational magazines.
On March 16 and March 31, 1994, the Partnership purchased 9% debentures from
Excel Energy Technologies, Ltd. totaling $100,000. This investment is in
addition to the 17,336 shares of common stock and 9% debenture previously owned
by the Partnership.
Exhibit 13(b)
On May 20, 1994, the Partnership purchased a 10% demand note and a warrant to
purchase 17,500 shares of common stock of Data Critical Corp. for $75,000. This
investment is in addition to the 75,000 shares of preferred stock and $100,000
promissory note previously owned by the Partnership.
On May 26, 1994, the Partnership purchased a 9% promissory note and a warrant to
purchase 12,121 shares of common stock of Silverado Foods, Inc. for $100,000.
This investment is in addition to the 267,144 shares of preferred stock, notes
totaling $200,000 and a warrant to purchase 10,000 shares of common stock
previously owned by the Partnership.
Exhibit 13.(c)
On July 1, 1994, the Partnership purchased a $50,000 convertible promissory note
from Diagnetics, Inc. On July 22, 1994, the Partnership converted its promissory
notes aggregating $250,000 in face value and accrued interest of $12,812 into
189,073 preferred shares of Diagnetics. In addition, the Partnership exchanged
its warrants and accrued dividends of $35,770 into 25,734 preferred shares of
the company.
On September 1, 1994, the Partnership purchased a 10% promissory note of
Independent Gas Company Holdings, Inc. for $14,100. This investment is in
addition to the 400 shares of preferred stock and 3,336 shares of common stock
previously owned by the Partnership.
On September 30, 1994, the Partnership purchased a 10% demand note from Americo
Publishing, Inc. for $25,000. This investment is in addition to the $200,000
demand note previously owned by the Partnership.
During the quarter, the Partnership purchased promissory notes of Data Critical
Corp. for $175,000. Additionally, in connection with a debt restructuring, the
Partnership exchanged its 8% and 10% notes aggregating $350,000 in face value
and its warrant to purchase 17,500 shares of common stock at $5 per share for a
$350,000 8% promissory note and a warrant to purchase 87,500 shares of common
stock at $4 per share.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ML OKLAHOMA
VENTURE PARTNERS, LIMITED PARTNERSHIP'S ANNUAL REPORT ON FORM 10-K FOR THE
PERIOD ENDED DECEMBER 31, 1994 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-1-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 6,582,245
<INVESTMENTS-AT-VALUE> 10,506,209
<RECEIVABLES> 76,706
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 889,246
<TOTAL-ASSETS> 11,472,161
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 101,742
<TOTAL-LIABILITIES> 101,742
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
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<NET-ASSETS> 11,370,419
<DIVIDEND-INCOME> 78,890
<INTEREST-INCOME> 116,055
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<EXPENSES-NET> 337,999
<NET-INVESTMENT-INCOME> (143,054)
<REALIZED-GAINS-CURRENT> (271,775)
<APPREC-INCREASE-CURRENT> 3,424,316
<NET-CHANGE-FROM-OPS> 3,009,487
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 2,989,261
<ACCUMULATED-NII-PRIOR> 0
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<PER-SHARE-NAV-END> 1,098
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
