SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant To Section 13 Or 15(d) of the Securities
Exchange Act of 1934
For the Quarterly Period Ended September 30, 1998
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
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(Exact name of registrant as specified in its charter)
Oklahoma 73-1329487
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10830 E. 45th Street, Suite 307
Tulsa, Oklahoma 74146
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (918) 663-2500
Meridian Tower, Suite 1060
5100 East Skelly Drive
Tulsa, Oklahoma 74135
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets as of September 30, 1998 (Unaudited) and December 31, 1997
Schedule of Portfolio Investments as of September 30, 1998 (Unaudited)
Statements of Operations for the Three and Nine Months Ended September 30, 1998
and 1997 (Unaudited)
Statements of Cash Flows for the Nine Months Ended September 30, 1998 and 1997
(Unaudited)
Statement of Changes in Partners' Capital for the Nine Months Ended September
30, 1998 (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.
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
September 30,
1998 December 31,
(Unaudited) 1997
ASSETS
Portfolio investments, at fair value (cost $3,055,356 as of
<S> <C> <C> <C> <C> <C> <C> <C>
September 30, 1998 and $4,673,359 as of December 31, 1997) $ 5,356,431 $ 7,697,927
Short-term investments, at amortized cost 1,194,690 -
Cash and cash equivalents 238,645 85,653
Accrued interest receivable 20,706 480
---------------- ----------------
TOTAL ASSETS $ 6,810,472 $ 7,784,060
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Cash distribution payable $ 880,222 $ -
Accounts payable and accrued expenses 71,766 60,068
Due to Management Company 106,832 108,971
Due to Independent General Partners 18,000 15,000
---------------- ----------------
Total liabilities 1,076,820 184,039
---------------- ----------------
Partners' Capital:
Managing General Partner 34,325 45,754
Individual General Partners 1,329 1,771
Limited Partners (10,248 Units) 3,396,923 4,527,928
Unallocated net unrealized appreciation of investments 2,301,075 3,024,568
---------------- ----------------
Total partners' capital 5,733,652 7,600,021
---------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 6,810,472 $ 7,784,060
================ ================
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
As of September 30, 1998
<TABLE>
Initial Investment
Company / Position Date Cost Fair Value
Americo Publishing, Inc. (B)
<S><C> <C> <C> <C>
8%-10% Demand Promissory Notes Feb. 1994 $ 364,000 $ 0
- -------------------------------------------------------------------------------------------------------------------------------
Data Critical Corp.*(B)
762,500 shares of Preferred Stock April 1993 700,000 1,437,500
775,000 shares of Common Stock 310,000 775,000
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Silverado Foods, Inc.(A)(B)
705,681 shares of Common Stock June 1992 529,900 132,315
Warrant to purchase 12,121 shares of Common Stock
at $8.25 per share, expiring 6/2/99 0 0
Warrant to purchase 35,000 shares of Common Stock
at $.625 per share, expiring 12/19/02 0 0
14% Bridge Loan 228,740 228,740
- -------------------------------------------------------------------------------------------------------------------------------
UroCor, Inc. (A)(B)(C)
496,635 shares of Common Stock May 1991 921,305 2,172,778
Warrant to purchase 12,539 shares of Common Stock
at $4.30 per share, expiring 10/18/98 0 940
- -------------------------------------------------------------------------------------------------------------------------------
ZymeTx, Inc.(A)(B)
304,579 shares of Common Stock July 1994 1,411 609,158
- -------------------------------------------------------------------------------------------------------------------------------
Totals from Active Portfolio Investments $ 3,055,356 $ 5,356,431
============== ==============
Supplemental Information - Liquidated Portfolio Investments:(D)(E)
Net Realized
Cost Gain Return
Totals from Liquidated Portfolio Investments $ 6,863,780 $ 1,039,638 $ 7,903,418
============== ============== ==============
Combined Net Combined
Unrealized andFair Value
Cost Realized Gain and Return
Totals from Active & Liquidated Portfolio Investments $ 9,919,136 $ 3,340,713 $ 13,259,849
============== ============== ==============
</TABLE>
(A) Public company
(B) Qualifies as an "Oklahoma business venture" under Oklahoma law.
(C) Subsequent to the end of the quarter, in October 1998, the Partnership sold
30,000 common shares of UroCor, Inc. for $180,299. As a result, the
Partnership will realize a gain of $60,703 during the fourth quarter of
1998. Also, in October 1998, the Partnership exercised warrants to purchase
12,539 shares of UroCor, Inc. common stock for $53,918.
(D) During the quarter ended September 30, 1998, the Partnership sold its
investment in Independent Gas Company Holdings, Inc. for $1,278,800,
realizing a gain of $811,464.
(E) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through September 30, 1998.
* 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 (Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------- -------------- -------------- -------------
INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C> <C> <C>
Interest from short-term investments $ 5,201 $ 24,417 $ 9,316 $ 43,976
Interest and other income from portfolio
investments 8,072 - 27,573 -
Other interest income - (3,432) 7,295 9,520
------------- -------------- ------------- ---------------
Total investment income 13,273 20,985 44,184 53,496
------------- -------------- ------------- ---------------
Expenses:
Management fee 50,000 50,000 150,000 150,000
Professional fees 33,120 12,339 60,601 29,538
Independent General Partners' fees 18,000 15,329 47,843 45,947
Mailing and printing 5,051 1,651 13,180 10,864
Custodial fees 702 (3,245) 820 (1,788)
Miscellaneous - 2,114 1,290 2,407
------------- -------------- ------------- ---------------
Total expenses 106,873 78,188 273,734 236,968
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NET INVESTMENT LOSS (93,600) (57,203) (229,550) (183,472)
Net realized gain (loss) from portfolio investments 811,464 - (33,104) 884,626
------------- -------------- ------------- ---------------
NET REALIZED GAIN (LOSS) FROM
OPERATIONS 717,864 (57,203) (262,654) 701,154
Change in unrealized appreciation of
investments (1,685,772) (216,456) (723,493) (1,535,333)
------------- -------------- ------------- ---------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (967,908) $ (273,659) $ (986,147) $ (834,179)
============= ============== ============= ===============
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS (Unaudited)
For the Nine Months Ended September 30,
<TABLE>
1998 1997
------------- -------------
CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C>
Net investment loss $ (229,550) $ (183,472)
Adjustments to reconcile net investment loss to cash
used for operating activities:
Increase (decrease) in operating payables, net 12,559 (48,105)
Increase in accrued interest on short-term investments (2,758) (8,703)
Increase in accrued interest receivable (20,226) -
------------- -------------
Cash used for operating activities (239,975) (240,280)
------------- -------------
CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES
Proceeds from the sale of portfolio investments 1,513,639 2,348,955
Proceeds from the repayment of note and bridge loan 71,260 -
Net purchase of short-term investments (1,191,932) (989,122)
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Cash provided from investing activities 392,967 1,359,833
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CASH FLOWS USED FOR FINANCING ACTIVITIES
Cash distributions to Partners - (1,035,554)
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Increase in cash and cash equivalents 152,992 83,999
Cash and cash equivalents at beginning of period 85,653 380,685
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 238,645 $ 464,684
============= =============
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited)
For the Nine Months Ended September 30, 1998
<TABLE>
Unallocated
Managing Individual Net Unrealized
General General Limited Appreciation
Partner Partners Partners of Investments Total
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 45,754 $ 1,771 $ 4,527,928 $ 3,024,568 $ 7,600,021
Cash distribution accrued (8,802) (340) (871,080) - (880,222)
Net investment loss (2,296) (89) (227,165) - (229,550)
Net realized loss (331) (13) (32,760) - (33,104)
Change in unrealized
appreciation of investments - - - (723,493) (723,493)
---------- -------- ------------- ------------- ---------------
Balance at end of period $ 34,325 $ 1,329 $ 3,396,923(A) $ 2,301,075 $ 5,733,652
========== ======== ============= ============= ===============
</TABLE>
(A) The net asset value per unit of limited partnership interest, including an
assumed allocation of net unrealized appreciation of investments, was $554
as of September 30, 1998. Additionally, cumulative cash distributions paid
or accrued to Limited Partners, as of September 30, 1998, totaled $560 per
Unit.
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited)
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 Managing General Partner
is working toward the ultimate termination of the Partnership, with an emphasis
on liquidating the remaining assets as soon as practical with the goal of
maximizing returns. The Partnership's originally scheduled termination date was
December 31, 1998. In November 1998, the Individual General Partners voted to
extend the term of the Partnership for an additional two-year period. The
Partnership is now scheduled to terminate no later than December 31, 2000. The
Individual General Partners have the right to extend the term of the Partnership
for an additional two-year period if they determine that such extension is in
the best interest of the Partnership.
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 closing public market price
for the last trading day of the accounting period 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.
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.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited), continued
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
approximately $2.3 million as of September 30, 1998, which was recorded for
financial statement purposes, has not been recognized for tax purposes.
Additionally, from inception to September 30, 1998, other timing differences
totaling $1.0 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.
Reclassifications - Certain reclassifications have been made to the prior year's
financial statements to conform with the current year's presentation.
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 is responsible for 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. See Note 8 of the Notes to Financial
Statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited), continued
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 not to exceed $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. See Note 8 of the Notes to Financial Statements.
7. Portfolio Investments
As of September 30, 1998, the Partnership's portfolio investments, all of which
are located in the state of Oklahoma, were categorized as follows:
<TABLE>
Type of Investments Cost Fair Value Net Assets*
- ------------------- ---------------- --------------- -----------
<S> <C> <C> <C>
Common Stock $ 1,762,616 $ 3,690,191 64.36%
Preferred Stock 700,000 1,437,500 25.07%
Debt Securities 592,740 228,740 3.99%
---------------- --------------- -------
$ 3,055,356 $ 5,356,431 93.42%
================ =============== ======
Industry
Publishing $ 364,000 $ 0 0.00%
Food Manufacturing & Distribution 758,640 361,055 6.30%
Data Communications 1,010,000 2,212,500 38.59%
Healthcare/Biotechnology 922,716 2,782,876 48.53%
---------------- --------------- ------
$ 3,055,356 $ 5,356,431 93.42%
================ =============== ======
</TABLE>
* Represents fair value as a percentage of net assets.
8. Subsequent Events
On October 28, 1998, the Partnership made a cash distribution to Partners
totaling $880,222. Limited Partners of record on September 30, 1998 received
$871,080, or $85 per Unit, the Individual General Partners received $340, and
the Managing General Partner received $8,802.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited), continued
In October 1998, the Partnership sold 30,000 common shares of UroCor, Inc. for
$180,299. As a result, the Partnership will realize a gain of $60,703 during the
fourth quarter of 1998. Also, in October 1998, the Partnership exercised
warrants to purchase 12,539 shares of UroCor, Inc. common stock for $53,918.
In connection with the extension of term of the Partnership, the Partnership and
the Management Company agreed to reduce the minimum management fee payable by
the Partnership from $200,000 to $160,000 per annum. In addition, the Individual
General Partners determined to reduce the annual fee paid to each Independent
General Partner from $16,000 to $12,000. Both changes will become effective as
of January 1, 1999. The meeting fees paid to the Independent General Partners
will remain unchanged.
9. Interim Financial Statements
In the opinion the Managing General Partner, the unaudited financial statements
as of September 30, 1998, and for the three and nine month periods then ended,
reflect all adjustments necessary for the fair presentation of the results of
the interim periods.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
As of September 30, 1998, the Partnership held $1,433,335 in cash and short-term
investments, consisting of $1,194,690 in short-term securities with maturities
of less than one year and $238,645 in an interest-bearing cash account. Interest
earned from such investments for the three and nine months ended September 30,
1998 was $5,201 and $9,316, 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.
The accrued cash distribution of $880,222 as of September 30, 1998, was paid in
October 1998. Limited Partners of record on September 30, 1998 received
$871,080, or $85 per Unit, the Individual General Partners received $340, and
the Managing General Partner received $8,802.
The Partnership has fully invested its original net proceeds and will not make
investments in new portfolio companies. Generally, the Partnership will
distribute to Partners all proceeds received from the sale of its portfolio
investments, after an adequate reserve for future operating expenses and
follow-on investments, as soon as practicable after receipt of such proceeds.
Funds needed to cover future operating expenses and follow-on investments in
existing companies are expected to be obtained from existing cash reserves,
interest and other investment income received and proceeds from the sale of
portfolio investments.
The Partnership's originally scheduled termination date was December 31, 1998.
The Managing General Partner is working toward the ultimate termination of the
Partnership, with an emphasis on liquidating the remaining assets as soon as
practical with the goal of maximizing returns. In November 1998, the Individual
General Partners voted to extend the term of the Partnership for an additional
two-year period. The Partnership is now scheduled to terminate no later than
December 31, 2000. The Individual General Partners have the right to extend the
term of the Partnership for an additional two-year period if they determine that
such extension is in the best interest of the Partnership.
In connection with the extension of term of the Partnership, the Partnership and
the Management Company agreed to reduce the minimum management fee payable by
the Partnership from $200,000 to $160,000 per annum. In addition, the Individual
General Partners determined to reduce the annual fee paid to each Independent
General Partner from $16,000 to $12,000. Both changes will become effective as
of January 1, 1999. The meeting fees paid to the Independent General Partners
will remain unchanged.
Results of Operations
For the three and nine months ended September 30, 1998, the Partnership had a
net realized gain from operations of $717,864 and a net realized loss from
operations of $262,654, respectively. For the three and nine months ended
September 30, 1997, the Partnership had a net realized loss from operations of
$57,203 and a net realized gain from operations of $701,154, respectively. Net
realized gain or loss from operations is comprised of (1) net realized gain or
loss 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 three months
ended September 30, 1998, the Partnership had an $811,464 realized gain
resulting from the sale of its investment in Independent Gas Company Holdings,
Inc. In September 1998, the investment was sold back to Independent Gas for
$1,278,800 in connection with a recapitalization of the company.
For the nine months ended September 30, 1998, the Partnership had a $33,104 net
realized loss from the liquidation of certain portfolio investments. The net
realized loss for the nine month period consisted of a $252,292 realized loss
from the sale of the Partnership's remaining 118,000 common shares of Envirogen,
Inc., and a $649,684 realized loss from the sale of the Partnership's remaining
investment in Excel Energy Technologies, Inc. These losses were offset by the
$811,464 realized gain from the sale of Independent Gas, as discussed above, a
realized gain of $2,500 from the sale of the Partnership's previously
written-off interest in QuanTEM Laboratories L.L.C. and a realized gain of
$54,908 resulting from a payment received in March 1998 in connection with the
February 1995 sale of the Partnership's investment in Bace Manufacturing, Inc.
The Partnership had no realized gains or losses from portfolio investments for
the three months ended September 30, 1997. For the nine months ended September
30, 1997, the Partnership had a net realized gain from portfolio investments of
$884,626, comprised of a realized gain of $1,584,101 from the sale of its entire
position of 275,317 common shares of C.R. Anthony Company, a realized gain of
$21,825 from the receipt of the final escrow release in connection with the 1996
acquisition of Enerpro International, Inc. by Energy Ventures, Inc. and an
offsetting loss of $721,300 from the sale of the Partnership's remaining
investment in Diagnetics, Inc.
Investment Income and Expenses - For the three months ended September 30, 1998
and 1997, the Partnership had a net investment loss of $93,600 and $57,203,
respectively. The $36,397 increase in net investment loss for the 1998 period
compared to the 1997 period resulted from a $7,712 decrease in investment income
and a $28,685 increase in operating expenses. The decrease in investment income
included a $19,216 decline in interest from short-term investments primarily due
to a decrease in funds available for such investments during the 1998 period
compared to the same period in 1997. This decrease was partially offset by an
$11,504 net increase in other interest income, including interest and other
income from portfolio investments. The net increase in interest income from
portfolio investments and other interest income primarily was due to an increase
in income producing securities held by the Partnership during the 1998 period.
The increase in operating expenses resulted primarily from a $20,781 increase in
professional fees which was primarily due to legal expenses in the 1998 period
related to the Partnership's investment in Americo Publishing, Inc. and
favorable accrual adjustments made during the 1997 period.
For the nine months ended September 30, 1998 and 1997, the Partnership had a net
investment loss of $229,550 and $183,472, respectively. The $46,078 increase in
net investment loss for the 1998 period compared to the 1997 period resulted
from a $9,312 decrease in investment income and a $36,766 increase in operating
expenses. The decrease in investment income included a $34,660 decline in
interest from short-term investments primarily due to a decrease in funds
available for such investments during the 1998 period compared to the same
period in 1997. This decrease was partially offset by a $25,348 net increase in
other interest income, including interest and other income from portfolio
investments, primarily due to an increase in income producing securities held by
the Partnership during the 1998 period. The increase in operating expenses
resulted primarily from a $31,063 increase in professional fees which was
primarily due to an increase in legal expenses as discussed above.
The Management Company is responsible for 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 nine months ended September 30, 1998 and 1997 was
$150,000 for each period. To the extent possible, the management fee and other
expenses incurred directly by the Partnership are paid with funds provided from
operations, including proceeds from the sale of portfolio investments.
Unrealized Gains and Losses and Changes in Unrealized Appreciation of
Investments - For the nine months ended September 30, 1998, the Partnership had
a $1,573,509 reduction to net unrealized appreciation resulting from the net
downward revaluation of certain portfolio investments. Additionally, $850,016
was transferred from unrealized loss to realized loss resulting from the sale of
Envirogen and Excel Energy, as discussed above. The $1,573,509 downward
revaluation partially offset by the $850,016 transfer from unrealized loss to
realized loss resulted in a $723,493 decrease to the Partnership's net
unrealized appreciation of investments for the nine month period ended September
30, 1998.
For the nine months ended September 30, 1997, the Partnership had a $1,259,566
reduction to net unrealized appreciation resulting from the net downward
revaluation of certain portfolio investments. Additionally, a net $275,767 was
transferred from unrealized gain to realized gain resulting from the sale of
C.R. Anthony and Diagnetics, as discussed above. The $1,259,566 downward
revaluation combined with the $275,767 transfer from unrealized gain to realized
gain, resulted in a $1,535,333 decrease to the Partnership's net unrealized
appreciation of investments for the nine month period ended September 30, 1997.
Net Assets - Changes to net assets resulting from operations are comprised of
(1) net realized gains and losses and (2) changes to net unrealized appreciation
or depreciation of portfolio investments.
For the nine months ended September 30, 1998, the Partnership had a net decrease
in net assets from operations of $986,147 comprised of the $262,654 realized
loss from operations and the $723,493 decrease in unrealized appreciation. As of
September 30, 1998, the Partnership's net assets were $5,733,652, a decrease of
$1,866,369 from $7,600,021 as of December 31, 1997. This decrease resulted from
the $880,222 accrued cash distribution to Partners and the $986,147 decrease in
net assets from operations for the nine months ended September 30, 1998. For the
nine months ended September 30, 1997, the Partnership had a net decrease in net
assets from operations of $834,179 comprised of the $701,154 realized gain from
operations offset by the $1,535,333 decrease in unrealized appreciation. As of
September 30, 1997, the Partnership's net assets were $8,072,591, a decrease of
$2,646,602 from $10,719,193 as of December 31, 1996. This decrease resulted from
$1,812,423 of cash distributions accrued or paid to Partners and the $834,179
net decrease in net assets from operations for the nine months ended September
30, 1997.
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 as of September 30, 1998 and December 31, 1997 was
$554 and $734, respectively.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Partnership is not a party to any material pending legal proceedings.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period covered
by this report.
Item 5. Other Information.
None.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(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.*
(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) The Registrant filed with the Commission a current report on
Form 8-K dated September 15, 1998. This current report
contained details with respect to the sale of the
Partnership's investment in Independent Gas Company
Holdings, Inc. and the Partnership's cash distribution paid
to Partners on October 28, 1998.
- ------------------------------
* 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 June 30, 1989 filed with the Securities and
Exchange Commission on May 15, 1989.
<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.
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)
By: /s/ Diane T. Herte
Diane T. Herte
Vice President and Treasurer
(Principal Financial and Accounting Officer)
Date: November 13, 1998
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ML
OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP'S QUARTERLY REPORT ON FORM
10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 3,055,356
<INVESTMENTS-AT-VALUE> 5,356,431
<RECEIVABLES> 20,706
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 1,433,335
<TOTAL-ASSETS> 6,810,472
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,076,820
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<SHARES-COMMON-STOCK> 10,248
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<NET-ASSETS> 5,733,652
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 44,184
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<EXPENSES-NET> 273,734
<NET-INVESTMENT-INCOME> (229,550)
<REALIZED-GAINS-CURRENT> (33,104)
<APPREC-INCREASE-CURRENT> (723,493)
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<EQUALIZATION> 0
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</TABLE>
