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, 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 September 30, 2000 (Unaudited) and December 31, 1999
Schedule of Portfolio Investments as of September 30, 2000 (Unaudited)
Statements of Operations for the Three and Nine Months Ended September 30, 2000
and 1999 (Unaudited)
Statements of Cash Flows for the Nine Months Ended September 30, 2000 and 1999
(Unaudited)
Statement of Changes in Partners' Capital for the Nine Months Ended
September 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>
September 30,
2000 December 31,
(Unaudited) 1999
ASSETS
Portfolio investments, at fair value (cost of $1,379,900 as of
September 30, 2000 and $1,935,622 as of December 31, 1999) $ 3,710,547 $ 7,528,215
Short-term investments at amortized cost - 747,585
Cash and cash equivalents 1,450,023 202,075
Accrued interest receivable 5,964 -
---------------- ----------------
TOTAL ASSETS $ 5,166,534 $ 8,477,875
================ ================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Cash distribution payable $ 776,667 $ -
Accounts payable and accrued expenses 90,085 60,421
Due to Management Company 110,025 139,300
Due to Independent General Partners 10,500 10,500
---------------- ----------------
Total liabilities 987,277 210,221
---------------- ----------------
Partners' Capital:
Managing General Partner 18,486 26,751
Individual General Partners 719 1,038
Limited Partners (10,248 Units) 1,829,405 2,647,272
Unallocated net unrealized appreciation of investments 2,330,647 5,592,593
---------------- ----------------
Total partners' capital 4,179,257 8,267,654
---------------- ----------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 5,166,534 $ 8,477,875
================ ================
</TABLE>
See notes to financial statements.
<PAGE>
ML OKLAHOMA VENTURE PARTNERS, LIMITED PARTNERSHIP
SCHEDULE OF PORTFOLIO INVESTMENTS (Unaudited)
As of September 30, 2000
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Initial
Investment
Investment Date Cost Fair Value
Data Critical Corp.*(A)(B)
Wireless data transmission
503,125 shares of Common Stock April 1993 $ 850,000 $ 3,710,547
-------------------------------------------------------------------------------------------------------------------------------
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
---------------------------------------------------------------------------------------------------------------------------------
Total Portfolio Investments $ 1,379,900 $ 3,710,547
============== ==============
Supplemental Information - Liquidated Portfolio Investments: (C)
Cost Realized Gain Return
Totals from Liquidated Portfolio Investments (D) $ 8,593,154 $ 3,636,107 $ 12,229,261
============= ============= ================
Combined Combined
Unrealized and Fair Value
Cost Realized Gain and Return
Totals from Active & Liquidated Portfolio Investments $ 9,973,054 $ 5,966,754 $ 15,939,808
============ ============= ===============
</TABLE>
(A) Public company
(B) Originally qualified as an "Oklahoma business venture" under Oklahoma law.
(C) Amounts provided for "Supplemental Information: Liquidated Portfolio
Investments" are cumulative from inception through September 30, 2000.
(D) During the quarter ended September 30, 2000, the Partnership sold its
remaining 53,474 common shares of UroCor, Inc. for $322,901, realizing a
gain of $217,815.
* 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>
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
------------- -------------- -------------- -------------
INVESTMENT INCOME AND EXPENSES
Income:
Interest from short-term investments $ 21,152 $ 18,092 $ 58,655 $ 35,052
Other income - - 1,200 -
Reversal of accrued interest income from
portfolio investments - - - (28,778)
-------------- ------------ -------------- ---------------
Total investment income 21,152 18,092 59,855 6,274
-------------- ------------ -------------- ---------------
Expenses:
Management fee 40,000 40,000 120,000 120,000
Professional fees 38,610 14,526 71,952 46,550
Independent General Partners' fees 10,500 10,500 31,500 34,000
Mailing and printing 4,413 3,423 16,565 11,140
Custodial fees 315 417 1,115 1,424
Miscellaneous 183 - 183 3,541
-------------- ------------ -------------- ---------------
Total investment expenses 94,021 68,866 241,315 216,655
-------------- ------------ -------------- ---------------
NET INVESTMENT LOSS (72,869) (50,774) (181,460) (210,381)
Net realized gain from portfolio investments 217,815 401,407 2,202,787 593,606
-------------- ------------ -------------- ---------------
NET REALIZED GAIN FROM OPERATIONS 144,946 350,633 2,021,327 383,225
Change in unrealized appreciation of
portfolio investments (2,970,059) (604,741) (3,261,946) (2,100,850)
-------------- ------------ -------------- ---------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (2,825,113) $ (254,108) $ (1,240,619) $ (1,717,625)
============== ============ ============== ===============
</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>
<S> <C> <C> <C> <C> <C> <C>
2000 1999
--------------- -------------
CASH FLOWS USED FOR OPERATING ACTIVITIES
Net investment loss $ (181,460) $ (210,381)
Adjustments to reconcile net investment loss to cash
used for operating activities:
Increase (decrease) in payables, net 389 (57,351)
Decrease (increase) in accrued interest on short-term investments 2,296 (5,201)
Decrease in accrued interest receivable from portfolio investments - 28,778
--------------- -------------
Cash used for operating activities (178,775) (244,155)
--------------- -------------
CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES
Proceeds from the sale of portfolio investments 2,758,509 1,283,368
Net return of cost (purchase) of short-term investments 739,325 (994,204)
--------------- -------------
Cash provided from investing activities 3,497,834 289,164
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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 1,247,948 45,009
Cash and cash equivalents at beginning of period 202,075 731,956
--------------- -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,450,023 $ 776,965
=============== =============
</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, 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 distributions, paid or accrued (28,478) (1,100) (2,818,200) - (2,847,778)
Net investment loss (1,815) (70) (179,575) - (181,460)
Net realized gain from investments 22,028 851 2,179,908 - 2,202,787
Change in unrealized
appreciation of investments - - - (3,261,946) (3,261,946)
----------- -------- -------------- -------------- ---------------
Balance at end of period $ 18,486 $ 719 $ 1,829,405(A) $ 2,330,647 $ 4,179,257
=========== ======== ============== ============== ===============
</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 $404 as of September 30, 2000. Additionally, cumulative
cash distributions paid or accrued to limited partners as of September 30,
2000 totaled $915 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"), and four individuals (the "Individual General
Partners") are the general partners of the Partnership. The general partner of
MLOK Co., Limited Partnership is Merrill Lynch Venture Capital Inc. (the
"Management Company"), an indirect subsidiary of Merrill Lynch & Co., Inc.
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. In November 2000, the Individual General
Partners agreed to extend the term of the Partnership for the final two-year
extension available under the partnership agreement in the event the Partnership
has not completed the winding up of its operations prior to the end of December
2000.
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
accounting principles generally accepted in the United States of America
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 $2.3 million as of September 30, 2000, was recorded for financial
statement purposes but has not been recognized for tax purposes. Additionally,
from inception to September 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
As of September 30, 2000, the Partnership's portfolio investments, all of
which were investments in common stock, were categorized by industry as follows.
Silverado Foods, Inc. is located in the state of Oklahoma and Data Critical
Corp. is located in the state of Washington.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Industry
Data Communications $ 850,000 $ 3,710,547 88.78%
Food Manufacturing and Distribution 529,900 0 0.00%
------------- ------------- --------
$ 1,379,900 $ 3,710,547 88.78%
============= ============= ========
</TABLE>
*Represents fair value as a percentage of net assets.
7. Cash Distributions
Cash distributions paid or accrued during the periods presented and cumulative
cash distributions to partners from the inception of the Partnership through
September 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
October 3, 2000 (accrued as of September
30, 2000) 7,767 300 768,600 75
------------ ----------- -------------- --------
Cumulative as of September 30, 2000 $ 94,752 $ 3,660 $ 9,376,920 $ 915
============ =========== ================ ========
</TABLE>
8. Interim Financial Statements
In the opinion of the Managing General Partner, the unaudited financial
statements as of September 30, 2000, and for the nine-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 holds its idle cash balances in an interest-bearing cash account
or invests such balances in short-term securities with maturities of less than
one year. As of September 30, 2000, the Partnership held $1,450,023 in its
interest-bearing cash account. As discussed below, the Partnership made a cash
distribution to partners totaling $776,667 in October 2000. Interest earned from
the Partnership's idle cash balances totaled $21,152 and $58,655 for the three
and nine months ended September 30, 2000, respectively. Interest earned in
future periods is subject to fluctuations in short-term interest rates and
changes in idle cash balances held by the Partnership. Funds needed to cover
future operating expenses will be obtained from existing cash reserves, interest
and other investment income and proceeds from the sale of portfolio investments.
As discussed below, during the nine months ended September 30, 2000, the
Partnership sold certain portfolio investments for net proceeds totaling
$2,758,509. Such proceeds were invested in interest-bearing accounts or
short-term securities until distributions were made to partners.
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 Partnership made an additional cash
distribution to partners totaling $776,667 in October 2000. Limited partners of
record on September 30, 2000 received $768,600, or $75 per Unit, the Individual
General Partners received $300 and the Managing General Partner received $7,767.
In November 2000, the Individual General Partners agreed to extend the term of
the Partnership for the final two-year extension available under the partnership
agreement. The Partnership is now scheduled to terminate no later than December
31, 2002. 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.
Results of Operations
For the three and nine months ended September 30, 2000, the Partnership had a
net realized gain from operations of $144,946 and $2,021,327, respectively. For
the three and nine months ended September 30, 1999, the Partnership had a net
realized gain from operations of $350,633 and $383,225, 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 and nine
months ended September 30, 2000, the Partnership had a net realized gain from
portfolio investments of $217,815 and $2,202,787, respectively. During the three
months ended September 30, 2000, the Partnership sold its remaining 53,474
common shares of UroCor, Inc. in the public market for $322,901, realizing a
gain of $217,815. During the six-month period ended June 30, 2000, the
Partnership sold the following publicly traded securities: 50,000 common shares
of Data Critical Corp. for $750,600, resulting in a realized gain of $590,600;
225,700 common shares of UroCor, Inc. for $1,343,840, resulting in a realized
gain of $1,053,724 and 130,000 common shares of ZymeTx, Inc. for $325,004,
resulting in a realized gain of $324,484. Additionally, in March 2000, the
Partnership realized a gain of $16,164, resulting from the final escrow payment
made in connection with the February 1995 sale of Bace Manufacturing, Inc.
For the three and nine months ended September 30, 1999, the Partnership had a
net realized gain from portfolio investments of $401,407 and $593,606,
respectively. During the three months ended September 30, 1999, the Partnership
sold 50,000 shares of UroCor, Inc. common stock for $211,238, realizing a gain
of $133,738 and sold 149,579 shares of ZymeTx, Inc. common stock for $268,267,
realizing a gain of $267,669. During the six-month period ended June 30, 1999,
the Partnership sold an additional 150,000 common shares of UroCor, Inc. for
$799,965, realizing a gain of $417,041. Also during the six-month period, the
Partnership realized a gain of $3,898 resulting from an escrow payment received
in connection with the 1995 sale of Bace Manufacturing, Inc. These gains were
offset by a $228,740 realized loss from the write-off of the remaining cost of a
bridge loan due from Silverado Foods, Inc.
Investment Income and Expenses - For the three months ended September 30, 2000
and 1999, the Partnership had a net investment loss of $72,869 and $50,774,
respectively. The $22,095 unfavorable change in net investment loss for the 2000
period compared to the 1999 period resulted from a $25,155 increase in operating
expenses partially offset by a $3,060 increase in investment income. 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. As
discussed above, proceeds received from the sale of portfolio investments are
invested in short-term securities until distributions are made to partners. The
increase in operating expenses primarily was due to a $24,084 increase in
professional fees for the 2000 period compared to the same period in 1999. The
increase in professional fees primarily is attributable to increased legal fees
relating to work in connection with obtaining approval for possible distribution
of securities to partners of the Partnership. Professional fees also increased
for additional outside accounting fees relating to quarterly reviews of the
Partnership's financial reports, in accordance with new requirements of the
Securities Exchange Commission.
For the nine months ended September 30, 2000 and 1999, the Partnership had a net
investment loss of $181,460 and $210,381, respectively. The $28,921 favorable
change in net investment loss for the 2000 period compared to the 1999 period
resulted from a $53,581 increase in investment income partially offset by a
$24,660 increase 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 a $23,603 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, as
discussed above. The increase in operating expenses primarily was due to a
$25,402 increase in professional fees for the 2000 period compared to the same
period in 1999. As discussed above, the increase in professional fees primarily
is attributable to increased legal fees relating to work in connection with
obtaining approval for possible distribution of securities to partners of the
Partnership. Professional fees also increased for additional outside accounting
fees relating to quarterly reviews of the Partnership's financial reports. The
increase in operating expenses also included an increase in mailing and printing
costs, which reflects the cost of additional limited partner notifications and
certain accrual adjustments made during the 2000 period. These increased
expenses were partially offset by reduced fees paid to the Independent General
Partners, reflecting fewer meeting fees paid during the nine months ended
September 30, 2000 compared to the same period in 1999, and a reduction in
miscellaneous expense, primarily resulting from a one-time insurance expense
incurred during the 1999 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 September 30,
2000 and 1999. The management fee was $120,000 for the nine months ended
September 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 nine months ended September 30, 2000, the Partnership had
a $1,884,577 net unrealized loss, primarily resulting from the downward
revaluation of its investment in Data Critical Corp., reflecting the reduced
public market price of the company's common stock as of September 30, 2000.
Unrealized appreciation was further reduced for the period due to the transfer
of $1,377,369 from unrealized gain to realized gain, relating to the portfolio
investments sold during the period, as discussed above. As a result, the
Partnership has a $3,261,946 unfavorable change to net unrealized appreciation
of investments for the nine-month period ended September 30, 2000.
For the nine months ended September 30, 1999, the Partnership reduced the fair
value of its remaining portfolio investments by $1,345,996, resulting from the
net downward revaluation of its investments in UroCor, Inc. and ZymeTx, Inc.
Unrealized appreciation was further reduced for the period due to the transfer
of $754,854 from unrealized gain to realized gain resulting from portfolio
investments sold during the period, as discussed above. As a result, the
Partnership had a $2,100,850 unfavorable change to net unrealized appreciation
of investments for nine-month period ended September 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 September 30, 2000, the Partnership's net assets were $4,179,257 compared
to $8,267,654 as of December 31, 1999. The $4,088,397 reduction in net assets
reflects the $2,847,778 of cash distributions to partners paid or accrued during
the nine months ended September 30, 2000 and the $1,240,619 net decrease in net
assets from operations for the nine months ended September 30, 2000. The net
decrease in net assets from operations for the period was comprised of the
$2,021,327 net realized gain from operations, which was more than offset by the
$3,261,946 unfavorable change in unrealized appreciation of investments for the
nine-month period ended September 30, 2000.
As of September 30, 1999, the Partnership's net assets were $4,367,319,
reflecting a decrease of $2,546,069 from net assets of $6,913,388 as of December
31, 1998. This decrease was comprised of the $1,717,625 decrease in net assets
from operations for the nine-month period ended September 30, 1999 and the
$828,444 cash distribution accrued as of September 30, 1999 and paid to partners
in October 1999. The decrease in net assets from operations was comprised of the
$2,100,850 decrease in unrealized appreciation of investments partially offset
by the $383,225 net realized gain from operations for the nine-month period
ended September 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 September 30, 2000 and December 31, 1999 was
$404 and $798, respectively.
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
$3,710,547 as of September 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 $371,055.
Market risk relating to the Partnership's interest-bearing cash equivalents held
as of September 30, 2000 is 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: November 14, 2000
