<PAGE> 1
UNITED STATES
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 quarterly period ended March 31, 1996
[ ] 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: 018581
RENAISSANCE CAPITAL PARTNERS, LTD.
_____________________________________________________________________
(Exact name of registrant as specified in its charter)
Texas 75-2296301
__________________________________________________________________________
(State or other jurisdiction (I.R.S. Employer I.D. No.)
of incorporation or organization)
8080 North Central Expressway, Dallas, Texas 75206-1857
________________________________________________________________________
(Address of principal executive offices) (Zip Code)
214/891-8294
_________________________________________________________________________
(Registrant's telephone number, including area code)
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> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Assets, Liabilities and
Partners' Equity
(Unaudited)
<TABLE>
<CAPTION>
Assets December 31, 1995 March 31, 1996
<S> <C> <C>
Cash and cash equivalents $ 2,823 $ 62,926
Investments in convertible debenture bonds at
market value, cost of $10,235,147 and $10,239,472 10,264,655 8,804,500
Interest and fees receivable 328,189 333,174
$10,595,667 $ 9,200,600
Liabilities and Partners' Equity
Accounts payable - related party $669,829 $ 699,164
Total liabilities 669,829 699,164
Partners' equity:
General partner 25,991 11,747
Limited partners (128.86 units) 9,899,847 8,489,689
Total partners' equity 9,925,838 8,501,436
$10,595,667 $9,200,600
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended March 31,
1995 1996
<S> <C> <C>
Income:
Interest $ 68,402 $ 3,678
Dividends 4,681 -
Total income 73,083 3,678
Expenses:
General and administrative 42,650 56,262
Management fee 64,430 42,720
Total expenses 107,080 98,982
Investment income (loss) net (33,997) (95,304)
Net realized and unrealized gain
(loss) on investments:
Realized gains (losses) - 135,382
Unrealized gains 393,268 (1,464,480)
Net increase (decrease) in net assets
resulting from operations $359,271 $(1,424,402)
Income (loss) per limited
partnership unit $ 2,760 $ (10,943)
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Partners' Equity
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
<S> <C> <C> <C>
Balance, December 31, 1989 $ (3,465) $ (74,131) $ (77,596)
Proceeds from issuance of 128.86
limited partnership Units, net of syndication
fees and brokers' commissions of $845,132 - 12,114,964 12,114,964
Net income 2,615 258,925 261,540
Distributions - (433,329) (433,329)
Balance, December 31, 1990 (850) 11,866,429 11,865,579
Net income 28,551 2,826,506 2,855,057
Distributions - (795,605) (795,605)
Balance, December 31, 1991 27,701 13,897,330 13,925,031
Net income 58,124 5,754,260 5,812,384
Distributions - (1,280,000) (1,280,000)
Balance, December 31, 1992 85,825 18,371,590 18,457,415
Net income 17,954 1,777,408 1,795,362
Distributions - (973,160) (973,160)
Balance, December 31, 1993 103,779 19,175,838 19,279,617
Net Income (loss) (46,675) (4,620,838) (4,667,513)
Distributions - (1,500,000) (1,500,000)
Balance, December 31, 1994 57,104 13,055,000 13,112,104
Net Income (loss) (31,113) (3,080,153) (3,111,266)
Distributions - (75,000) (75,000)
Balance, December 31, 1995 25,991 9,899,847 9,925,838
Net Income (loss) (14,244) (1,410,158) (1,424,402)
Balance, March 31, 1996 $ 11,747 $8,489,689 $8,501,436
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended March 31,
1995 1996
<S> <C> <C>
Cash flows from operating activities:
Net increase (decrease) in net assets
resulting from operations $359,271 $(1,424,402)
Adjustments to reconcile net increase to
cash flows from operating activities:
Amortization of organizational costs 2,625 -
Unrealized (gain) loss on investments (393,268) 1,464,480
Realized (gain) on investments - (135,382)
(Increase) decrease in:
Accounts receivable 22,677 (4,985)
Increase (decrease) in:
Accounts payable - related parties 90,537 29,335
Total adjustments (277,429) 1,353,448
Net cash flows from operating activities 81,842 (70,954)
Cash flows from investing activities:
Purchase of investments (100,000) (42,500)
Proceeds from sale of securities - 173,557
Net cash flows from investing activities (100,000) 131,057
Cash flows from financing activities:
Distributions to limited partners (100,000) -
Net increase (decrease) in cash (118,158) 60,103
Cash and cash equivalents at beginning of period 331,253 2,823
Cash and cash equivalents at end of period $213,095 $ 62,926
</TABLE>
Partnership distribution of $75,000 was accrued at March 31, 1995
See accompanying notes to financial statements.
<PAGE> 6
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements
March 31, 1996
(1) Organization and Business Purpose
Renaissance Capital Partners, Ltd. (the "Partnership"), a Texas limited
partnership, was formed on July 31, 1989. Limited Partnership contributions
of $12,886,000 were secured upon final closing of the Partnership on June 14,
1990. The Partnership seeks to achieve current income and long-term capital
appreciation by making investments primarily in private placement convertible
debt securities of smaller public companies. The Partnership has elected to
be treated as a business development company under the Investment Company Act
of 1940, as amended. The Partnership will terminate upon liquidation of all
its investments, but no later than June 14, 1998, subject to the right of
the Independent General Partners to extend the term for up to three
additional one-year periods if they determine that such extension is in the
best interest of the Partnership.
(2) Summary of Significant Accounting Policies
(a) Organizational Costs
Costs of organizing the Partnership were capitalized and amortized on a
straight-line basis over five years. These costs were completely amortized
during the quarter ended June 30, 1995.
(b) Contributed Capital
Proceeds from the sale of the limited partnership interests, net of
related selling commissions and syndication costs, are recorded as
contributed capital.
(c) Statement of Cash Flows
The Partnership considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents. No interest or
income taxes were paid during the periods.
(d) Valuation of Investments
The valuation of investments in debentures which are convertible into
unregistered securities is based upon the bid price of the underlying
securities obtained through normal market systems less a discount for selling
and registration costs. For those investments not having an established
market, the valuation is at the Partnership's costs for the first six months
after closing and will be redetermined by the General Partners subsequent to
that time period.
(e) Management Estimates
The financial statements have been prepared in conformity with generally
accepted accounting principles. The preparation of the accompanying
financial statements requires estimates and assumptions made by management of
the Partnership that affect the reported amounts of assets and liabilities as
<PAGE> 7
of the date of the statements of assets, liabilities and partners' equity and
income and expenses for the period. Actual results could differ
significantly from those estimates.
(f) Interest Income
Interest income is accrued on all debt securities owned by the partnership
on a quarterly basis. When it is determined that the interest accrued will
not be collected, the income for that quarter is reduced to reflect the net
interest earned during the period. Interest accrued for the current quarter
was $225,335, and the amount determined to be uncollectible and charged
against the income was $221,657.
(3) Management
Renaissance Capital Group, Inc. (Renaissance), the Managing General
Partner, serves as the investment adviser for the Partnership. Renaissance
is registered as an investment adviser under the Investment Advisers Act of
1940. Pursuant to the management agreement, Renaissance will perform certain
services, including certain management, investment, and administrative
services, necessary for the operation of the Partnership.
<PAGE> 8
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements (Continued)
March 31, 1996
(3) Management (cont'd)
Renaissance is entitled to quarterly fees equal to 0.5% of the Partnership
assets at the end of each quarter. On April 21, 1994, at the Annual Meeting
of Limited Partners, a proposal to amend the Advisory Agreement was ratified
by the Limited Partners. The agreement now dictates that to the extent any
portion of such fee is based on an increase in Net Assets Value attributable
to non-realized appreciation of securities or other assets that exceed
capital contributions, such portion of the fee shall be deferred and not
earned or payable until such time as appreciation or any portion thereof is
in fact realized and then such deferred fees shall be earned and paid in
proportion to the gains in fact realized. Fees due to Renaissance for the
three months ended March 31, 1996, were $42,720.
Renaissance is reimbursed by the Partnership for administrative expenses
paid by Renaissance on behalf of the Partnership. For the three months ended
March 31, 1996, the Partnership incurred reimbursable expenses of $45,615
and reimbursed Renaissance $59,000 to be applied to the total account.
In addition, the Partnership is served by two independent, individual
general partners (the "Independent General Partners"). The Independent
General Partners receive a quarterly fee of $6,000 each, payable in advance.
(4) Federal Income Taxes
No provision has been made for Federal income taxes as the liability for
such taxes is that of the partners rather than the Partnership.
(5) Partnership Agreement
Pursuant to the terms of the partnership agreement, all items of income,
gain, loss and deduction of the Partnership, other than any Capital
Transaction, as defined, will be allocated 1% to Renaissance and 99% to the
Limited Partners. All items of gain of the Partnership resulting from a
Capital Transaction shall be allocated such that the Limited Partners receive
a cumulative simple annual return of 10% on their capital contributions and
any remaining gains shall be allocated 20% to Renaissance and 80% to the
Limited Partners. All items of loss resulting from Capital Transactions
shall be allocated 1% to Renaissance and 99% to the Limited Partners.
(6) Investments
Investments of the Partnership are carried in the statements of assets,
liabilities and partners' equity at quoted market or fair value, as
determined in good faith by the Managing General Partner and approved by the
Independent General Partners.
For securities that are publicly traded and for which quotations are
available, the Partnership will value the investments based on the closing
sale as of the last day of the fiscal quarter, or in the event of an interim
valuation, as of the date of the valuation. If no sale is reported on such
date, the securities will be valued at the average of the closing bid and
asked prices.
<PAGE> 9
Generally, debt securities will be valued at their face value. However, if
the debt is impaired, an appropriate valuation reserve will be established or
the investment discounted to estimated realizable value. Conversely, if the
underlying stock has appreciated in value and the conversion feature
justifies a premium value, such premium will of necessity be recognized.
The Managing General Partner, subject to the approval and supervision of
the Independent General Partners, will be responsible for determining fair
value.
<PAGE> 10
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements (Continued)
March 31, 1996
<TABLE>
<CAPTION>
CONVERSION FAIR
COST OR FACE VALUE VALUE
<S> <C> <C> <C>
Biopharmaceutics, Inc.
12.5% Convertible Debenture 1,000,000 1,480,000 1,341,200
Conversion price $.25, maturity 10/10/98
CEL Communications, Inc.
12.50% Convertible Debenture $1,825,000 $1,825,000 $1,165,850
Conversion price $.80, maturity 7/1/98
Nine-month secured note 50,000 50,000 50,000
Post Petition loans 465,000 465,000 465,000
Standby Commitment* 130,000 130,000 130,000
Global Environmental Corp.
Convertible Preferred Stock 100,000 50,000 44,059
B Preferred Stock 1,600,000 800,000 704,941
Term Note 211,635 211,635 211,635
International Movie Group, Inc.
12% Convertible Subordinated Debenture 1,500,000 1,500,000 750,000
Conversion price $1.50, maturity 3/31/98
MaxServ, Inc.
Common Stock 398,825 1,528,829 1,513,541
Microlytics, Inc.
Convertible Preferred Stock 1,556,654 1,089,658 1,024,278
Common Stock 133,108 143,347 134,746
UNICO, Inc.
12.50% Convertible Debenture 1,250,000 1,250,000 1,250,000
Conversion price $.90, maturity 1/1/99
Term Note 149,250 149,250 149,250
*Less undisbursed commitments (130,000) (130,000) (130,000)
$10,239,472 $10,542,719 $8,804,500
</TABLE>
The Partnership loaned UNICO, Inc. $12,500 to increase their term note to
$149,250 at March 31, 1996.
Additional post petition loans in the aggregate amount of $30,000 were
made to CEL Communications, Inc. in the current quarter. The Partnership has
a standby commitment with CEL Communications, Inc. for an additional
$130,000.
The Partnership realized a capital gain of $135,382 on the sale of 50,900
shares of MaxServ, Inc. during the quarter ended March 31, 1996.
<PAGE> 11
(7) Related Party Transactions
Certain officers of Renaissance are also limited partners in the
Partnership. There were no distributions for the three months ended March
31, 1996.
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS
OF OPERATIONS
(1) Material Changes in Financial Condition
Discuss material changes from end of preceding fiscal year to date of
most recent interim balance sheet provided. If necessary for an
understanding discuss seasonal fluctuations.
For the past 3 months, the Partnership recorded a decrease of
approximately $1,424,402 in the net assets resulting from operations. This
was due primarily to a decrease in market values for the common
stocks of certain of its Portfolio companies.
The following Portfolio transactions are noted for the quarter (portfolio
companies are herein referred to as the "Company"):
CEL COMMUNICATIONS - The Company is seeking a sale of assets or merger as
a basis for finalizing a plan of liquidation. The Partnership has agreed to
stay foreclosure action until July 9, 1996 pending such plan of liquidation.
The Partnership has provided additional post petition financing of $30,000
during the first quarter of 1996. This brings the Partnerships' post
petition financing to a total of $465,000.00 at the quarter end. In
addition, the Partnership has agreed to provide additional loans to the
Company in the amount of $130,000 to cover legal fees. Subsequently, the
Partnership has provided additional post petition financing during the second
quarter, in the amount of $60,000, reducing this commitment to $70,000 to
cover legal fees.
GLOBAL ENVIRONMENTAL - The Company has employed a new president and CEO
and is in the process of finanizing the sale of the stock and assets of Rage,
Inc., it wholly owned subsidiary, engaged in design and construction of
material handling systems to the former President and CEO in consideration
for assumption of certain liabilities and for common stock.
INTERNATIONAL MOVIE GROUP, INC. - The Company is in the process of
reorganizing its basic business and financial structure. IMG has over 35
movies in its current library. Additionally, IMG recently settled the
majority of its bank debt for $50,000. The Company is currently planning to
do a pre-package Chapter 11 plan. A preliminary survey of bond holders
indicates the Company has the support to do this plan. It is possible
for the convertible bond holders to end up with a substantial majority of the
equity of IMG. Presently, the convertible bond holders are secured by the
majority of the Company's assets.
MICROLYTICS, INC. - The CEO of the Company has resigned and a search for
a replacement has been instituted. The Company will seek to reduce the scope
of operations pending development of marketing plans for its MicroPages
product line.
MAXSERV, INC. - The Partnership realized capital gains of $125,247.42 on
the sale of 50,900 shares of MaxServ, Inc. during the quarter ended March 31,
1995. The Partnership held 531,767 shares as of the quarter end.
Subsequently, the Partnership has sold an additional 13,500 shares for
capital gains of $32,697.25, and now holds 518,267 shares of MaxServ, Inc.
<PAGE> 13
UNICO, INC. The Partnership made an additional $12,500.00 bridge loan
investment to the Company on January 26, 1996, to increase the Partnerships'
total term notes to an aggregate of $149,250.00 at March
31, 1996.
During the quarter ending March 31, 1996, except as outlined above, no
additional investments were made.
(2) Material Changes in Operations
Discuss material changes with respect to the most recent year-to-date
period and corresponding period for prior year, if most recent quarter
included also covers changes for quarterly period.
During the past twelve months, interest income has declined substantially
as the result of not accruing certain past due payments from portfolio
companies because the likelihood of receiving such payments appears
to be in question. In addition, income has declined as the result of payment
defaults and as the Partnership has converted debentures into common and
preferred stock that traditionally have lower current yields as
compared to debentures.
Income received is primarily from interest income on a portfolio of
Convertible Debenture investments and upon the sale of common stock. In
prior quarters, as investments were committed or closed, income from closing
fees and commitment fees were also recorded. This source of income is not
available on an ongoing basis, except to the extent funds are available for
new investments.
Portfolio investments still held as debentures require interest payments
generally on either a monthly or quarterly basis. UNICO, Inc. has terms of
certain of its Term Notes for interest payable annually. As of March 31,
1996, all companies are current on interest payments with the following
exceptions. At March 31, 1996, Biopharmaceutics, is in arrears in interest
payments to the Partnership in the aggregate amount of $318,983.80. CEL
Communications is in arrears in interest payments to the Partnership in the
aggregate amount of $845,474.13. Global Environmental is in arrears in
interest payment to the Partnership in the aggregate amount of $28,129.94.
International Movie Group, Inc. is in arrears in interest payment to the
Partnership in the aggregate amount of $405,369.86. UNICO, Inc. is in
arrears in interest payment to the Partnership in the aggregate amount of
$126,975.20.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused
this report to be signed on its behalf by the undersigned thereunto duly
authorized.
RENAISSANCE CAPITAL PARTNERS, LTD.
May 16, 1996 /S/ Russell Cleveland
---------------------------------------------
Russell Cleveland, President
Renaissance Capital Group, Inc.,
Managing General Partner
May 16, 1996 /S/ Barbe Butschek
----------------------------------------------
Barbe Butschek,
Chief Accounting Officer
Renaissance Capital Group, Inc.
Managing General Partner
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996 DEC-31-1996 DEC-31-1995
<PERIOD-END> DEC-31-1995 MAR-31-1996 MAR-31-1996 MAR-31-1995
<INVESTMENTS-AT-COST> 10,237,147 10,239,472 0 0
<INVESTMENTS-AT-VALUE> 10,264,655 8,804,500 0 0
<RECEIVABLES> 328,189 333,174 0 0
<ASSETS-OTHER> 2,823 62,926 0 0
<OTHER-ITEMS-ASSETS> 0 0 0 0
<TOTAL-ASSETS> 10,595,667 9,200,600 0 0
<PAYABLE-FOR-SECURITIES> 0 0 0 0
<SENIOR-LONG-TERM-DEBT> 0 0 0 0
<OTHER-ITEMS-LIABILITIES> 669,829 699,164 0 0
<TOTAL-LIABILITIES> 669,829 699,164 0 0
<SENIOR-EQUITY> 0 0 0 0
<PAID-IN-CAPITAL-COMMON> 0 0 0 0
<SHARES-COMMON-STOCK> 0 0 0 0
<SHARES-COMMON-PRIOR> 0 0 0 0
<ACCUMULATED-NII-CURRENT> 0 0 0 0
<OVERDISTRIBUTION-NII> 0 0 0 0
<ACCUMULATED-NET-GAINS> 0 0 0 0
<OVERDISTRIBUTION-GAINS> 0 0 0 0
<ACCUM-APPREC-OR-DEPREC> 0 0 0 0
<NET-ASSETS> 9,925,838 8,501,436 0 0
<DIVIDEND-INCOME> 0 0 0 4,681
<INTEREST-INCOME> 0 0 3,678 68,402
<OTHER-INCOME> 0 0 0 0
<EXPENSES-NET> 0 0 98,982 107,080
<NET-INVESTMENT-INCOME> 0 0 (95,304) (33,997)
<REALIZED-GAINS-CURRENT> 0 0 135,382 0
<APPREC-INCREASE-CURRENT> 0 0 (1,464,480) 393,268
<NET-CHANGE-FROM-OPS> 0 0 (1,424,402) 359,271
<EQUALIZATION> 0 0 0 0
<DISTRIBUTIONS-OF-INCOME> 0 0 0 0
<DISTRIBUTIONS-OF-GAINS> 0 0 0 0
<DISTRIBUTIONS-OTHER> 0 0 0 0
<NUMBER-OF-SHARES-SOLD> 0 0 0 0
<NUMBER-OF-SHARES-REDEEMED> 0 0 0 0
<SHARES-REINVESTED> 0 0 0 0
<NET-CHANGE-IN-ASSETS> 0 0 (1,424,402) 359,271
<ACCUMULATED-NII-PRIOR> 0 0 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0 0 0
<OVERDISTRIB-NII-PRIOR> 0 0 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0 0 0
<GROSS-ADVISORY-FEES> 0 0 98,982 64,430
<INTEREST-EXPENSE> 0 0 0 0
<GROSS-EXPENSE> 0 0 98,982 107,080
<AVERAGE-NET-ASSETS> 0 0 0 0
<PER-SHARE-NAV-BEGIN> 0 0 101,312 76,826
<PER-SHARE-NII> 0 0 (23,904) (10,943)
<PER-SHARE-GAIN-APPREC> 0 0 0 0
<PER-SHARE-DIVIDEND> 0 0 0 0
<PER-SHARE-DISTRIBUTIONS> 0 0 (582) 0
<RETURNS-OF-CAPITAL> 0 0 0 0
<PER-SHARE-NAV-END> 0 0 76,826 65,883
<EXPENSE-RATIO> 0 0 0 0
<AVG-DEBT-OUTSTANDING> 0 0 0 0
<AVG-DEBT-PER-SHARE> 0 0 0 0
</TABLE>
