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 March 31, 1999
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)
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
Not applicable
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets as of March 31, 1999 (Unaudited) and December 31, 1998
Schedule of Portfolio Investments as of March 31, 1999 (Unaudited)
Statements of Operations for the Three Months Ended March 31, 1999 and 1998
(Unaudited)
Statements of Cash Flows for the Three Months Ended March 31, 1999 and 1998
(Unaudited)
Statement of Changes in Partners' Capital for the Three Months Ended March 31,
1999 (Unaudited)
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
March 31, 1999 December 31,
(Unaudited) 1998
ASSETS
<S> <C>
Portfolio investments at fair value (cost $2,396,644 as of
March 31, 1999 and $2,625,384 as of December 31, 1998) $ 5,036,433 $ 6,367,148
Short-term investments, at amortized cost 497,745 -
Cash and cash equivalents 82,593 731,956
Accrued interest receivable - 28,778
---------------- -----------------
TOTAL ASSETS $ 5,616,771 $ 7,127,882
================ =================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 78,196 $ 61,845
Due to Management Company 40,000 137,649
Due to Independent General Partners 11,500 15,000
---------------- -----------------
Total liabilities 129,696 214,494
---------------- -----------------
Partners' Capital:
Managing General Partner 28,473 31,716
Individual General Partners 1,104 1,229
Limited Partners (10,248 Units) 2,817,709 3,138,679
Unallocated net unrealized appreciation of investments 2,639,789 3,741,764
---------------- -----------------
Total partners' capital 5,487,075 6,913,388
---------------- -----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 5,616,771 $ 7,127,882
================ =================
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
As of March 31, 1999
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Initial Investment
Investment Date Cost Fair Value
Data Critical Corp.*(B)
Wireless data transmission
<C> <C> <C> <C>
762,500 shares of Preferred Stock April 1993 $ 700,000 $ 1,437,500
775,000 shares of Common Stock 310,000 775,000
- -------------------------------------------------------------------------------------------------------------------------------
Silverado Foods, Inc.(A)(B)(E)
Gourmet snacks and food products
705,681 shares of Common Stock June 1992 529,900 0
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
- ---------------------------------------------------------------------------------------------------------------------------------
UroCor, Inc. (A)(B)
Urological disease management
479,174 shares of Common Stock May 1991 855,626 2,320,691
- -------------------------------------------------------------------------------------------------------------------------------
ZymeTx, Inc.(A)(B)
Viral diagnostics and therapeutics
279,579 shares of Common Stock July 1994 1,118 503,242
- -------------------------------------------------------------------------------------------------------------------------------
Totals from Active Portfolio Investments $ 2,396,644 $ 5,036,433
============== ==============
Supplemental Information - Liquidated Portfolio Investments: (C) (D)
Realized
Cost Gain (Loss) Return
Totals from Liquidated Portfolio Investments $ 7,576,410 $ 611,672 $ 8,188,082
============== ============ ==============
Combined Combined
Unrealized and Fair Value
Cost Realized Gain and Return
Totals from Active and Liquidated Portfolio Investments $ 9,973,054 $ 3,251,461 $ 13,224,515
======================= ================== ================
</TABLE>
(A) Public company
(B) Qualifies as an "Oklahoma business venture" under Oklahoma law.
(C) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through March 31, 1999.
(D) In February 1999, the Partnership received $4,909, representing an
escrow release payment in connection with the February 1995 sale of
Bace Manufacturing, Inc. The payment was comprised of a realized gain
of $3,898 and interest of $1,011.
(E) In March 1999, the Partnership wrote-off the cost of its bridge loan to
Silverado Foods, Inc., realizing a loss of $228,740.
*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)
For the Three Months Ended March 31,
<TABLE>
1999 1998
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INVESTMENT INCOME AND EXPENSES
Income:
<S> <C> <C>
Interest from short-term investments $ 9,530 $ 9,345
Interest and other income from portfolio investments (28,778) 10,047
--------------- -----------
Total investment income (19,248) 19,392
--------------- -----------
Expenses:
Management fee 40,000 50,000
Professional fees 22,626 11,450
Independent General Partners' fees 11,500 14,000
Mailing and printing 4,646 3,354
Custodial fees 507 28
Miscellaneous 969 436
--------------- -----------
Total expenses 80,248 79,268
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NET INVESTMENT LOSS (99,496) (59,876)
Net realized loss from portfolio investments (224,842) (78,722)
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NET REALIZED LOSS FROM OPERATIONS (324,338) (138,598)
Change in net unrealized appreciation of portfolio investments (1,101,975) 235,000
--------------- -----------
NET (DECREASE) INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ (1,426,313) $ 96,402
=============== ===========
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS (Unaudited)
For the Three Months Ended March 31,
<TABLE>
1999 1998
------------- -------------
CASH FLOWS USED FOR OPERATING ACTIVITIES
<S> <C> <C>
Net investment loss $ (99,496) $ (59,876)
Adjustments to reconcile net investment loss to cash
used for operating activities:
Decrease in payables, net (84,798) (72,309)
Increase in accrued interest on short-term investments (1,913) -
Decrease (increase) in accrued interest receivable 28,778 (6,307)
----------- ------------
Cash used for operating activities (157,429) (138,492)
----------- ------------
CASH FLOWS (USED FOR) PROVIDED FROM
INVESTING ACTIVITIES
Net purchase of short-term investments (495,832) -
Proceeds from repayment of bridge loan - 21,260
Proceeds from the sale of portfolio investments 3,898 133,484
----------- ------------
Cash (used for) provided from investing activities (491,934) 154,744
----------- ------------
(Decrease) increase in cash and cash equivalents (649,363) 16,252
Cash and cash equivalents at beginning of period 731,956 85,653
----------- ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 82,593 $ 101,905
=========== ============
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited)
For the Three Months Ended March 31, 1999
<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 $ 31,716 $ 1,229 $ 3,138,679 $ 3,741,764 $ 6,913,388
Net investment loss (995) (38) (98,463) - (99,496)
Net realized loss from investments (2,248) (87) (222,507) - (224,842)
Change in unrealized
appreciation of investments - - - (1,101,975) (1,101,975)
----------- ---------- -------------- --------------- ---------------
Balance at end of period $ 28,473 $ 1,104 $ 2,817,709(A) $ 2,639,789 $ 5,487,075
=========== ========== ============== =============== ===============
</TABLE>
(A) The net asset value per unit of limited partnership interest, including an
assumed allocation of net unrealized appreciation of investments, was $530.
Cumulative cash distributions paid to limited partners totaled $560 per
Unit as of March 31, 1999.
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
thereof. 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 $2.6 million as of March 31, 1999, which was recorded for
financial statement purposes, has not been recognized for tax purposes.
Additionally, from inception to March 31, 1999, other timing differences
totaling $1.5 million, including 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.
Reclassifications - Certain reclassifications have been made to the prior year's
financial statements to conform with the current year's presentation.
Statements of Cash Flows - The Partnership considers its interest-bearing cash
account to be cash equivalents.
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. In
connection with the extension of term of the Partnership, the Management Company
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited), continued
agreed to reduce the minimum management fee from $200,000 to $160,000 per
annum effective as of January 1, 1999. Such fee is determined and paid
quarterly.
5. Independent General Partners' Fees
As compensation for services rendered to the Partnership, each of the three
Independent General Partners had received $16,000 annually in quarterly
installments through December 31, 1998. In connection with the extension of the
term of the Partnership, the Individual General Partners agreed to reduce the
annual fee paid to each Independent General Partner from $16,000 to $12,000
effective as of January 1, 1999. In addition, the Individual General Partners
receive $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..
6. 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.
7. Classification of Portfolio Investments
As of March 31, 1999, 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 $ 1,696,644 $ 3,598,933 65.59%
Preferred Stock 700,000 1,437,500 26.20%
---------------- --------------- -----------
$ 2,396,644 $ 5,036,433 91.79%
================ =============== ===========
Industry
Healthcare/Biotechnology $ 856,744 $ 2,823,933 51.47%
Data Communications 1,010,000 2,212,500 40.32%
Food Manufacturing & Distribution 529,900 0 0.00%
---------------- --------------- ----------
$ 2,396,644 $ 5,036,433 91.79%
================ =============== ==========
</TABLE>
*Represents fair value as a percentage of net assets.
8. Interim Financial Statements
In the opinion of MLOK Co., Limited Partnership, the managing general partner of
the Partnership, the unaudited financial statements as of March 31, 1999, and
for the three month period then ended, reflect all adjustments necessary for the
fair presentation of the results of the interim period.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
As of March 31, 1999, the Partnership held $497,745 in short-term investments
with maturities of less than one year and $82,593 in an interest-bearing cash
account. Interest earned from such investments totaled $8,086 for the three
months ended March 31, 1999. Interest earned from such investments in future
periods is subject to fluctuations in short-term interest rates and changes in
amounts available for investment in such securities.
The Managing General Partner is working toward the 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.
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, as soon as
practicable after receipt of such proceeds. Funds needed to cover the
Partnership's future operating expenses and follow-on investments are 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 three months ended March 31, 1999 and 1998, the Partnership had a net
realized loss from operations of $324,338 and $138,598, 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 other investment income less operating expenses).
Realized Gains and Losses from Portfolio Investments - For the three months
ended March 31, 1999, the Partnership had a net realized loss from portfolio
investments of $224,842, consisting of a $228,740 realized loss from the
write-off of the remaining cost of the bridge loan due from Silverado Foods,
Inc., partially offset by a $3,898 realized gain resulting from a payment
received in March 1999 in connection with the February 1995 sale of the
Partnership's investment in Bace Manufacturing, Inc.
For the three months ended March 31, 1998, the Partnership had a net realized
loss of $78,722, comprised of a $133,630 realized loss from the sale of 62,000
common shares of Envirogen, Inc., partially offset by a $54,908 realized gain
resulting from a payment received in March 1998 in connection with the February
1995 sale of the Partnership's investment in Bace Manufacturing, Inc.
Investment Income and Expenses - For the three months ended March 31, 1999 and
1998, the Partnership had a net investment loss of $99,496 and $59,876,
respectively. The unfavorable change in net investment loss for the 1999 period
compared to the 1998 period, resulted from a $38,640 decrease in investment
income and a $980 increase in operating expenses. The decrease in investment
income primarily resulted from the $28,778 write-off of accrued interest on the
bridge loan due from Silverado Foods, Inc. which was written-off in March 1999.
Interest from short-term investments increased slightly for the 1999 period due
to an increase in funds available for investments in short-term securities
during the 1999 period compared to the same period in 1998.
Operating expenses increased by $980 for the three months ended March 31, 1999
compared to the same period in 1998. As discussed below, the minimum management
fee was reduced by $10,000 per quarter effective January 1, 1999. Also, the
annual fee paid to each Independent General Partner was reduced from $16,000 to
$12,000. See Note 5 of Notes to Financial Statements. These reductions were
offset by increases in professional fees, mailing and printing costs and other
expenses incurred during the three months ended March 31, 999 compared to the
same period in 1998. The increase in professional fees includes legal costs
related to the liquidation of the Partnership's investment in Americo
Publishing, Inc. and general increases in other legal and accounting fees.
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 annual fee of $160,000, which was reduced from $200,000 effective
January 1, 1999. See Note 4 of Notes to Financial Statements. Such fee is
determined and paid quarterly in arrears. The management fee for the three
months ended March 31, 1999 and 1998 was $40,000 and $50,000, respectively. To
the extent possible the management fee and other expenses incurred directly by
the Partnership are paid with funds provided from operations, which includes
proceeds from the sale of portfolio investments.
Unrealized Gains and Losses and Changes in Unrealized Appreciation of Portfolio
Investments - For the three months ended March 31, 1999, the Partnership had a
$1,101,975 net decrease to unrealized appreciation resulting from the net
downward revaluation of its investments in UroCor, Inc. and ZymeTx, Inc.
resulting from the reduced public market price of such securities as of the end
of the quarter.
For the three months ended March 31, 1998, the Partnership had a $111,000 net
increase to unrealized appreciation, resulting from the net upward revaluation
of certain portfolio investments. Additionally, during the quarter $124,000 of
unrealized loss was transferred to realized loss resulting from the sale of
62,000 common shares of Envirogen, as discussed above. As a result, net
unrealized appreciation of investments increased by $235,000 for the three
months ended March 31, 1998.
Net Assets - Changes to net assets resulting from operations are comprised of
(1) net realized gain or loss from operations and (2) changes to net unrealized
appreciation or depreciation of portfolio investments.
As of March 31, 1999, the Partnership's net assets were $5,487,075, a decrease
of $1,426,313 from $6,913,388 as of December 31, 1998. This decrease is
comprised of the $1,101,975 decrease in net unrealized appreciation and the
$324,338 net realized loss from operations for the quarter ended March 31, 1999.
As of March 31, 1998, the Partnership's net assets were $7,696,423, an increase
of $96,402 from $7,600,021 as of December 31, 1997. This increase is comprised
of the $235,000 increase in net unrealized appreciation partially offset by the
$138,598 net realized loss from operations for the quarter ended March 31, 1998.
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 March 31, 1999 and December 31, 1998 was $530
and $668, respectively.
Year 2000 Issue - The Year 2000 ("Y2K") concern arose because many existing
computer programs use only the last two digits to refer to a year. Therefore,
these computer programs do not properly recognize a year that begins with "20"
instead of "19". If not corrected, many computer applications could fail or
create erroneous results. The impact of the Y2K concern on the Partnership's
operations is currently being assessed.
The Management Company is responsible to provide or arrange for the provision of
administrative services necessary to support the Partnership's operations. The
Management Company has arranged for Palmeri Fund Administrators, Inc. (the
"Administrator") to provide certain administrative and accounting services for
the Partnership, including maintenance of the books and records of the
Partnership, maintenance of the limited partner database, issuance of financial
reports and tax information to limited partners and processing distribution
payments to limited partners. Fees charged by the Administrator are paid
directly by the Management Company.
The Administrator has assessed its computer hardware and software systems,
specifically as they relate to the operations of the Partnership. As part of
this investigation of potential Y2K concerns, the Administrator contracted with
an outside computer service provider to examine all of its computer hardware and
software applications. This review and evaluation has been completed. The
Administrator currently is in the process of purchasing, installing and testing
the necessary software patches and new computer hardware required to ensure that
all of its computer systems are Y2K compliant. This correction phase is expected
to be completed by September 1999.
Additionally, the Administrator has contacted the outside service providers used
to assist the Administrator or the Management Company with the administration of
the Partnership's operations to ascertain whether these entities are addressing
the Y2K issue within their own operation. There can be no guarantee that the
Administrator's systems or that systems of other companies providing services to
the Partnership will be corrected in a timely manner.
Since the Partnership does not own any equipment and all of its administrative
needs are provided by the Management Company, any costs relating to the
investigation and correction of potential Y2K concerns affecting the
Partnership's operations will be incurred by the Administrator, the Management
Company or the outside service providers. Therefore, the Management Company and
the Managing General Partner do not expect the Partnership to incur any costs
relating to the investigation or correction of Y2K concerns.
Finally the Y2K issue is a global concern that may affect all business entities,
including the Partnership's portfolio companies. The General Partner is
continuing to assess the impact of Y2K concerns affecting its portfolio
companies. However, the extent to which any potential Y2K problems could affect
the valuations of these companies is presently unknown. At the time that
specific Y2K problems are identified, if any, the Managing General Partner will
take such issues into consideration in adjusting the fair value of the
Partnership's portfolio investments.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
The Partnership is subject to market risk arising from changes in the value of
its portfolio investments, short-term investments and interest-bearing cash
equivalents, which may result from fluctuations in interest rates and equity
prices. The Partnership has calculated its market risk related to its holdings
of these investments based on changes in interest rates and equity prices
utilizing a sensitivity analysis. The sensitivity analysis estimates the
hypothetical change in fair values, cash flows and earnings based on an assumed
10% change (increase or decrease) in interest rates and equity prices. To
perform the sensitivity analysis, the assumed 10% change is applied to market
rates and prices on investments held by the Partnership at the end of the
accounting period.
The Partnership's portfolio investments had an aggregate fair value of
$5,036,433 as of March 31, 1999. An assumed 10% decline from this fair value,
including an assumed 10% decline of the per share market prices of the
Partnership's publicly traded securities, would result in a reduction to the
fair value of such investments and a corresponding unrealized loss of $503,643.
As of March 31, 1999, the Partnership held discounted commercial paper with a
remaining maturity of 33 days. This short-term investment was carried at an
aggregate amortized cost of $497,745 as of March 31, 1999. An assumed 10%
increase in the market interest rates of such short-term investments held by the
Partnership as of March 31, 1999, would result in a reduction to the fair value
of such investments and a corresponding unrealized loss which is considered to
be immaterial.
Market risk relating to the Partnership's interest-bearing cash equivalents
held as of March 31, 1999 is also considered to be immaterial.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Partnership is not a party to any material pending legal proceedings.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the quarter 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) No reports on Form 8-K have been filed during the
quarter for which this report is filed.
- ------------------------------
* 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/ David G. Cohen
David G. Cohen
Vice President
By: /s/ Diane T. Herte
Diane T. Herte
Vice President and Treasurer
(Principal Financial and Accounting Officer)
Date: May 17, 1999
<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 MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 2,396,644
<INVESTMENTS-AT-VALUE> 5,036,433
<RECEIVABLES> 0
<ASSETS-OTHER> 497,745
<OTHER-ITEMS-ASSETS> 82,593
<TOTAL-ASSETS> 5,616,771
<PAYABLE-FOR-SECURITIES> 0
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