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 June 30, 2000
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
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 June 30, 2000 (Unaudited) and December 31, 1999
Schedule of Portfolio Investments as of June 30, 2000 (Unaudited)
Statements of Operations for the Three and Six Months Ended June 30, 2000 and
1999 (Unaudited)
Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999
(Unaudited)
Statement of Changes in Partners' Capital for the Six Months Ended June 30, 2000
(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 and Use of Proceeds.
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>
<S> <C> <C> <C> <C> <C> <C>
June 30, 2000 December 31,
(Unaudited) 1999
----------------- -----------------
ASSETS
Portfolio investments, at fair value (cost of $1,484,986 as of
June 30, 2000 and $1,935,622 as of December 31, 1999) $ 6,785,692 $ 7,528,215
Short-term investments at amortized cost - 747,585
Cash and cash equivalents 1,128,412 202,075
Accrued interest receivable 3,234 -
---------------- ----------------
TOTAL ASSETS $ 7,917,338 $ 8,477,875
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accounts payable and accrued expenses $ 55,776 $ 60,421
Due to Management Company 70,025 139,300
Due to Independent General Partners 10,500 10,500
---------------- ----------------
Total liabilities 136,301 210,221
---------------- ----------------
Partners' Capital:
Managing General Partner 24,804 26,751
Individual General Partners 963 1,038
Limited Partners (10,248 Units) 2,454,564 2,647,272
Unallocated net unrealized appreciation of investments 5,300,706 5,592,593
---------------- ----------------
Total partners' capital 7,781,037 8,267,654
---------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 7,917,338 $ 8,477,875
================ ================
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
As of June 30, 2000
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Initial
Investment
Investment Date Cost Fair Value
-------------------------------------------------------------------------------------------------------------------------------
Data Critical Corp.*(A)(B)(C)
Wireless data transmission
503,125 shares of Common Stock April 1993 $ 850,000 $ 6,540,625
-------------------------------------------------------------------------------------------------------------------------------
Silverado Foods, Inc.(A)(B)
Gourmet snacks and food products
705,681 shares of Common Stock June 1992 529,900 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
53,474 shares of Common Stock May 1991 105,086 245,067
-------------------------------------------------------------------------------------------------------------------------------
Total Portfolio Investments $ 1,484,986 $ 6,785,692
============== ==============
Supplemental Information - Liquidated Portfolio Investments: (D)
Realized
Cost Gain (Loss) Return
Totals from Liquidated Portfolio Investments $ 8,488,068 $ 3,418,292 $ 11,906,360
=============== ============= ================
Combined Combined
Unrealized and Fair Value
Cost Realized Gain and Return
Totals from Active & Liquidated Portfolio Investments $ 9,973,054 $ 8,718,998 $ 18,692,052
=============== ============== ===============
</TABLE>
(A) Public company
(B) Originally qualified as an "Oklahoma business venture" under Oklahoma law.
(C) In June 2000, the Partnership sold 50,000 common shares of Data Critical
Corp. for $750,600, resulting in a realized gain of $590,600.
(D) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through June 30, 2000.
* 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 and Six Months Ended June 30,
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
-------------- ------------ -------------- -------------
INVESTMENT INCOME AND EXPENSES
Income:
Interest from short-term investments $ 14,742 $ 7,430 $ 37,503 $ 16,960
Other income - - 1,200 -
Reversal of accrued interest income from portfolio
investments - - - (28,778)
-------------- ------------ -------------- -----------------
Total investment income 14,742 7,430 38,703 (11,818)
-------------- ------------ -------------- ----------------
Expenses:
Management fee 40,000 40,000 80,000 80,000
Professional fees 15,205 11,514 33,342 34,140
Independent General Partners' fees 10,500 12,000 21,000 23,500
Mailing and printing 7,243 3,071 12,152 7,717
Custodial fees 400 500 800 1,007
Miscellaneous - 456 - 1,425
-------------- ------------ -------------- ----------------
Total investment expenses 73,348 67,541 147,294 147,789
-------------- ------------ -------------- ----------------
NET INVESTMENT LOSS (58,606) (60,111) (108,591) (159,607)
Net realized gain from portfolio investments 590,600 417,041 1,984,972 192,199
-------------- ------------ -------------- ----------------
NET REALIZED GAIN FROM OPERATIONS 531,994 356,930 1,876,381 32,592
Change in net unrealized appreciation of portfolio
investments 704,868 (394,134) (291,887) (1,496,109)
-------------- ------------ -------------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $ 1,236,862 $ (37,204) $ 1,584,494 $ (1,463,517)
============== ============ ============== ================
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS (Unaudited)
For the Six Months Ended June 30,
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
2000 1999
-------------- ---------------
CASH FLOWS USED FOR OPERATING ACTIVITIES
Net investment loss $ (108,591) $ (159,607)
Adjustments to reconcile net investment loss to cash
used for operating activities:
Decrease in payables, net (73,920) (99,988)
Decrease (increase) in accrued interest on short-term investments 8,260 (1,220)
(Increase) decrease in accrued interest receivable (3,234) 28,778
-------------- ---------------
Cash used for operating activities (177,485) (232,037)
-------------- ---------------
CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES
Proceeds from the sale of portfolio investments 2,435,608 803,863
Net return of cost (purchase) of short-term investments 739,325 (297,641)
-------------- ----------------
Cash provided from investing activities 3,174,933 506,222
-------------- ---------------
CASH FLOWS USED FOR FINANCING ACTIVITIES
Cash distributions paid to partners (2,071,111) -
-------------- ---------------
Cash used for financing activities (2,071,111) -
-------------- ---------------
Increase in cash and cash equivalents 926,337 274,185
Cash and cash equivalents at beginning of period 202,075 731,956
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,128,412 $ 1,006,141
============== ===============
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (Unaudited)
For the Six Months Ended June 30, 2000
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Unallocated
Managing Individual Net Unrealized
General General Limited Appreciation
Partner Partners Partners of Investments Total
----------- ----------- -------------- --------------- ---------------
Balance at beginning of period $ 26,751 $ 1,038 $ 2,647,272 $ 5,592,593 $ 8,267,654
Cash distribution paid - April 25, 2000 (20,711) (800) (2,049,600) - (2,071,111)
Net investment loss (1,086) (42) (107,463) - (108,591)
Net realized gain from investments 19,850 767 1,964,355 - 1,984,972
Change in unrealized
appreciation of investments - - - (291,887) (291,887)
----------- -------- -------------- -------------- ---------------
Balance at end of period $ 24,804 $ 963 $ 2,454,564(A) $ 5,300,706 $ 7,781,037
=========== ======== ============== ============== ===============
</TABLE>
(A) The net asset value per $1,000 unit of limited partnership interest
("Unit"), including an assumed allocation of net unrealized appreciation of
investments, was $751 as of June 30, 2000. Additionally, cumulative cash
distributions paid to limited partners as of June 30, 2000 totaled $840 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 Partnership is scheduled
to terminate no later than December 31, 2000. However, 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 Managing General Partner is working toward liquidating the
Partnership's remaining assets and terminating the Partnership as soon as
practical with the goal of maximizing returns to Partners.
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 the Partnership's portfolio investments by applying consistent
guidelines. Publicly held portfolio securities are valued at the closing public
market price on the valuation date, less an appropriate discount for sales
restrictions, the size of the Partnership's holdings and the public market
trading volume. Privately held portfolio securities are valued at cost until
significant developments affecting the portfolio company provide a basis for
change in valuation. The fair value of private securities is adjusted to reflect
1) meaningful third-party transactions in the private market or 2) 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 as of the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Investment Transactions - Investment transactions are recorded on the accrual
method. 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.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS (Unaudited), continued
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 $5.3 million as of June 30, 2000, was recorded for financial
statement purposes but has not been recognized for tax purposes. Additionally,
from inception to June 30, 2000, other timing differences totaling $1.4 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.
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. From inception of the
Partnership through December 31, 1998, the Management Company had received 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, capital distributed and realized losses, with a minimum annual
fee of $200,000. Effective January 1, 1999, the Management Company agreed to
reduce the minimum management fee from $200,000 to $160,000 per annum.
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. Effective January 1, 1999, the
Individual General Partners agreed to reduce the annual fee paid to each
Independent General Partner from $16,000 to $12,000. 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.
<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. Classification of Portfolio Investments
The Partnership's portfolio investments, all of which are located in the state
of Oklahoma, except Data Critical Corp., which is located in the state of
Washington, were categorized as follows as of June 30, 2000.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Type of Investments Cost Fair Value Net Assets*
------------------- ------------- ------------- -----------
Common Stock $ 1,484,986 $ 6,785,692 87.21%
============= ============= =========
Industry
Healthcare/Biotechnology $ 105,086 $ 245,067 3.15%
Data Communications 850,000 6,540,625 84.06%
Food Manufacturing and Distribution 529,900 0 0.00%
------------- ------------- ---------
$ 1,484,986 $ 6,785,692 87.21%
============= ============= =========
</TABLE>
*Represents fair value as a percentage of net assets.
7. Cash Distributions
Cash distributions paid during the periods presented and cumulative cash
distributions to partners from the inception of the Partnership through June 30,
2000 are listed below:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Managing Independent
General General Limited Per $1,000
Distribution Date Partner Partners Partners Unit
----------------- ------------ ------------- ---------------- --------
Inception to December 31, 1999 $ 66,274 $ 2,560 $ 6,558,720 $ 640
April 25, 2000 20,711 800 2,049,600 200
------------ ----------- -------------- --------
Cumulative as of June 30, 2000 $ 86,985 $ 3,360 $ 8,608,320 $ 840
============ =========== ================ ========
</TABLE>
8. Subsequent Events
In July 2000, the Partnership sold 15,000 common shares of UroCor, Inc. for
$86,247, resulting in a realized gain of $4,500.
In August 2000, the General Partners approved a cash distribution to partners
totaling $776,667 to be paid in October 2000. Limited partners of record on
September 30, 2000 will receive $768,600, or $75 per Unit, the Individual
General Partners will receive $300 and the Managing General Partner will receive
$7,767.
9. Interim Financial Statements
In the opinion of the Managing General Partner, the unaudited financial
statements as of June 30, 2000, and for the six-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
The Partnership invests its idle cash balances in short-term securities with
maturities of less than one year and in an interest-bearing cash account. As of
June 30, 2000, the Partnership held $1,128,412 in its interest-bearing cash
account. Interest earned from such idle cash balances totaled $14,742 and
$37,503 for the three and six months ended June 30, 2000, respectively. Interest
earned in future periods is subject to fluctuations in short-term interest rates
and changes in amounts available for investment in such securities. Funds needed
to cover future operating expenses and follow-on investments, if any, will be
obtained from existing cash reserves, interest and other investment income and
proceeds from the sale of portfolio investments.
The Partnership is 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. However, the Managing General Partner is
working toward liquidating the Partnership's remaining assets and terminating
the Partnership as soon as practicable with the goal of maximizing returns to
partners.
The Partnership will not make investments in new portfolio companies and does
not expect to make additional follow-on investments in any of the remaining
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 future operating expenses and follow-on
investments, if any, will be obtained from existing cash reserves, interest and
other investment income and proceeds from the sale of the remaining portfolio
investments.
As discussed below, during the six months ended June 30, 2000, the Partnership
sold certain portfolio investments for net proceeds totaling $2,435,608.
Additionally, subsequent to the end of the quarter, in July 2000, the
Partnership sold an additional 15,000 common shares of UroCor, Inc. for $86,247.
On April 25, 2000, the Partnership made a cash distribution to partners totaling
$2,071,111. Limited partners of record on March 31, 2000 received $2,049,600, or
$200 per Unit, the Individual General Partners received $800 and the Managing
General Partner received $20,711. The General Partners have approved an
additional cash distribution to partners totaling $776,667 to be paid in October
2000. Limited partners of record on September 30, 2000 will receive $768,600, or
$75 per Unit, the Individual General Partners will receive $300 and the Managing
General Partner will receive $7,767.
Results of Operations
For the three and six months ended June 30, 2000, the Partnership had a net
realized gain from operations of $531,994 and $1,876,381, respectively. For the
three and six months ended June 30, 1999, the Partnership had a net realized
gain from operations of $356,930 and $32,592, 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).
<PAGE>
Realized Gains and Losses from Portfolio Investments - For the three and six
months ended June 30, 2000, the Partnership had a net realized gain from
portfolio investments of $590,600 and $1,984,972, respectively. The realized
gain for the three months ended June 30, 2000, resulted from the sale of 50,000
common shares of Data Critical Corp. in the public market for net proceeds
totaling $750,600. During the three months ended March 31, 2000, the Partnership
sold 225,700 common shares of UroCor, Inc. for $1,343,840, resulting in a
realized gain of $1,053,724. The Partnership also sold its remaining 130,000
common shares of ZymeTx, Inc. for $325,004, resulting in a realized gain of
$324,484. Additionally, in March 2000, the Partnership received $18,019,
representing the final escrow release in connection with the 1995 sale of Bace
Manufacturing, Inc. The payment was comprised of a $16,164 realized gain and
$1,855 of interest.
For the three and six months ended June 30, 1999, the Partnership had a net
realized gain from portfolio investments of $417,041 and $192,199, respectively.
The realized gain for the three months ended June 30, 1999, resulted from the
sale of 150,000 common shares of UroCor in the public market for net proceeds
totaling $799,965. During 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 connection with the February 1995 sale of
Bace Manufacturing.
Investment Income and Expenses - For the three months ended June 30, 2000 and
1999, the Partnership had a net investment loss of $58,606 and $60,111,
respectively. The $1,505 favorable change in net investment loss for the 2000
period compared to the 1999 period resulted from a $7,312 increase in investment
income partially offset by a $5,807 increase in operating expenses. The increase
in investment income was the result of an increase in interest from short-term
investments, due to an increase in funds available for such investments during
the 2000 period compared to the same period in 1999. The increase in operating
expenses primarily reflects increases in professional fees and mailing and
printing costs, partially offset by lower meeting fees paid to the Independent
General Partners for the three months ended June 30, 2000 compared to the same
period in 1999. The increase in professional fees primarily is attributable to
additional outside accounting fees relating to quarterly reviews. The increase
in mailing and printing expenses reflects the cost of additional limited partner
notifications and certain accrual adjustments made during the 2000 period.
For the six months ended June 30, 2000 and 1999, the Partnership had a net
investment loss of $108,591 and $159,607, respectively. The $51,016 favorable
change in net investment loss for the 2000 period compared to the 1999 period
resulted from a $50,521 increase in investment income and a $495 decrease in
operating expenses. The increase in investment income included a $28,778
increase in interest and other income from portfolio investments, resulting from
the reversal during 1999 of accrued interest income relating to a bridge loan
due from Silverado Foods, Inc., which was written off in 1999. The increase in
investment income also included an increase in interest from short-term
investments, due to an increase in funds available for such investments during
the 2000 period compared to the same period in 1999. The slight decrease in
operating expenses resulted from an increase in mailing and printing costs,
which was mostly offset with small decreases in the Partnership's other
operating expenses for the 2000 period compared to the 1999 period. The increase
in mailing and printing expenses reflects the cost of additional limited partner
notifications and certain accrual adjustments made during the 2000 period.
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. Such fee is determined and paid quarterly in arrears. As a
result, the management fee was $40,000 for the three months ended June 30, 2000
and 1999. The management fee was $80,000 for the six months ended June 30, 2000
and 1999. The management fee and other expenses incurred by the Partnership are
paid with existing cash reserves and funds provided from operations, which
includes proceeds from the sale of portfolio investments.
Unrealized Gains and Losses and Changes in Unrealized Appreciation of
Investments - For the six months ended June 30, 2000, the Partnership had a
$945,501 net unrealized gain, primarily resulting from an increase in the
valuation of its investment in Data Critical Corp., reflecting the increased
public market price of the company's common stock as of June 30, 2000.
Offsetting this increase was the transfer of $1,237,388 of unrealized gain to
realized gain, relating to portfolio investments sold during the period, as
discussed above. As a result, the Partnership has a $291,887 unfavorable change
to net unrealized appreciation of investments for the six-month period ended
June 30, 2000.
For the six months ended June 30, 1999, the Partnership had a $1,147,783 net
unrealized loss resulting from the net downward revaluation of its investment in
UroCor and ZymeTx. Unrealized appreciation was further reduced for the period
due to the transfer of $348,326 from unrealized gain to realized gain resulting
from the sale of 150,000 common shares of UroCor, as discussed above. As a
result, net unrealized appreciation of investments declined by $1,496,109 for
the six-month period ended June 30, 1999.
Net Assets - Changes to net assets resulting from operations are comprised of
(1) net realized gain or loss and (2) changes to net unrealized appreciation or
depreciation of portfolio investments.
As of June 30, 2000, the Partnership's net assets were $7,781,037, reflecting a
decrease of $486,617 from net assets of $8,267,654 as of December 31, 1999. This
decrease reflects the $2,071,111 of cash distributions paid during the six
months ended June 30, 2000 exceeding the $1,584,494 increase in net assets from
operations for the period. The net increase in net assets for the period was
comprised of the $1,876,381 net realized gain from operations partially offset
by the $291,887 unfavorable change in net unrealized appreciation of investments
for the six months ended June 30, 2000.
As of June 30, 1999, the Partnership's net assets were $5,449,871, reflecting a
decrease of $1,463,517 from net assets of $6,913,388 as of December 31, 1998.
This decrease was comprised of the $32,592 net realized gain from operations
offset by the $1,496,109 unfavorable change in net unrealized appreciation of
investments for the six months ended June 30, 1999.
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 June 30, 2000 and December 31, 1999 was $751
and $798, respectively.
<PAGE>
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, if any, 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
$6,785,692 as of June 30, 2000. 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 $678,569.
Market risk relating to the Partnership's interest-bearing cash equivalents held
as of June 30, 2000 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 and Use of Proceeds.
-----------------------------------------
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) 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 March 31, 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/ James V. Bruno
James V. Bruno
Vice President and Treasurer
(Principal Financial and Accounting Officer)
By: /s/ Diane T. Herte
Diane T. Herte
Vice President
Date: August 14, 2000
