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 June 30, 2000
[ ] 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>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RENAISSANCE CAPITAL PARTNERS, LTD.
Statements of Assets, Liabilities and
Partners' Equity
<TABLE> <S> <S>
Assets December 31, 1999 June 30, 2000
----------------- -------------
(Unaudited)
<C> <C>
Cash and cash equivalents $ 377,803 $ 590,069
Accounts receivable - Perlmutter 100,000 -0-
Investments at fair value, cost of $6,045,517
and $5,325,205 at December 31, 1999 and
June 30, 2000 respectively 2,113,347 1,157,707
Interest and fees receivable 18,835 18,549
Other assets 22,729 18,603
---------- ----------
$2,632,714 $1,784,928
========== ==========
Liabilities and Partners' Equity
Accounts payable $ 380 $ -0-
Accounts payable - affiliate 42,147 37,725
---------- ----------
Total liabilities 42,527 37,725
---------- ----------
Partners' equity:
General partner -0- -0-
Limited partners: 128.36 units outstanding 2,590,187 1,747,203
---------- ----------
Total partners' equity 2,590,187 1,747,203
---------- ----------
$2,632,714 $1,784,928
========== ==========
Limited partners' equity per limited
partnership unit $ 20,179 $ 13,612
========== ==========
<FN>
See accompanying notes to financial statements. </FN> </TABLE> <PAGE>
RENAISSANCE CAPITAL PARTNERS, LTD.
Statements of Operations
(Unaudited)
<TABLE> <S> <S>
Three Months Ended June 30, Six Months Ended June 30,
<S> <S> <S> <S>
1999 2000 1999 2000
--------- --------- ---------- ----------
<C> <C> <C> <C>
Income:
Interest $ 4,538 $ 336 $ 11,968 $ 1,104
Dividends 4,905 3,144 9,674 6,084
Other investment
income -0- -0- -0- -0-
--------- ---------- ---------- ----------
Total income 9,443 3,480 21,642 7,188
--------- ---------- ---------- ----------
Expenses:
General and
administrative 27,752 33,592 59,599 61,084
Management fees 17,146 8,780 36,863 23,173
--------- ---------- ---------- ----------
Total expenses 44,898 42,372 96,462 84,257
--------- ---------- ---------- ----------
Investment loss net (35,455) (38,892) (74,820) (77,069)
Loss from investment
in Sunrise Media LLC (40,623) -0- (114,936) -0-
Net realized gain
(loss) on invest-
ments -0- (531,587) -0- (531,587)
Net unrealized gain
(loss) on invest-
ments (435,551) (546,618) (84,404) (234,328)
--------- ---------- --------- ---------
Net income (loss)
resulting from
operations $(511,629) $(1,117,097) $(274,160) $(842,984)
========= =========== ========= =========
Net income (loss) per
limited partnership
unit $ (3,986) $ (8,703) $ (2,136) $ (6,567)
========= =========== ========= =========
Weighted average
limited partnership
units 128.36 128.36 128.36 128.36
========= =========== ========= =========
<FN>
See accompanying notes to financial statements. </FN> </TABLE> <PAGE>
RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Partners' Equity
<TABLE> <S> <S> <S>
General Limited
Partner Partners Total
------- -------- -----
<C> <C> <C>
Balance, December 31, 1999 $ -0- $2,590,187 $2,590,187
Net income (unaudited) -0- (842,984) (842,984)
------- ---------- ----------
Balance, June 30, 2000 (unaudited) $ -0- $1,747,203 $1,747,203
======= ========== ==========
<FN>
See accompanying notes to financial statements. </FN> </TABLE> <PAGE>
RENAISSANCE CAPITAL PARTNERS, LTD.
Statement of Cash Flows
(Unaudited)
<TABLE> <S> <S>
Three Months Ended June 30, Six Months Ended June 30,
<S> <S> <S> <S>
1999 2000 1999 2000
---- ---- ---- ----
<C> <C> <C> <C>
Cash flows from
operating activities:
Net income (loss) $(511,629) $(1,117,097) $(274,160) $(842,984)
Adjustments to
reconcile net in-
come (loss) to net
cash used in operat-
ing activities:
Loss from Sunrise
Media LLC 40,623 -0- 114,936 -0-
Unrealized (gain)
loss on investments 435,551 546,618 84,404 234,328
Realized loss on
investments -0- 531,587 -0- 531,587
(Increase) decrease
in:
Accounts receivable 12,994 (1,959) 5,327 100,286
Other assets 1,223 2,063 2,178 4,126
Increase (decrease)
in:
Accounts payable 4,417 16,345 (30,662) (4,802)
--------- ----------- --------- ---------
Net cash flows from
operating activ-
ities (16,821) (22,443) (97,977) 22,541
--------- ----------- --------- ---------
Cash flows from investing
activities:
Purchase of investments (42,532) -0- (242,532) (37,000)
Proceeds from sale of
securities -0- 219,738 -0- 226,725
--------- ----------- --------- ---------
Net cash used by
investing activ-
ities (42,532) 219,738 (242,532) 189,725
--------- ----------- --------- ---------
Cash flows from financing
activities:
Liquidation of partners
interests -0- -0- -0- -0-
--------- ----------- --------- ---------
Net increase (decrease)
in cash (59,353) 197,295 (340,509) 212,266
Cash and cash equivalents
at beginning of period 643,630 392,774 924,786 377,803
--------- ----------- --------- ---------
Cash and cash equivalents
at end of period $ 584,277 $ 590,069 $ 584,277 $590,069
========= =========== ========= ========
<FN>
See accompanying notes to financial statements. </FN> </TABLE> <PAGE>
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements
June 30, 2000
1. Organization and Business Purpose
Pursuant to the Partnership Agreement (the "Agreement"), the term of the
Partnership expired June 30, 2000. The Managing General Partner ("MGP") is
now winding up the affairs of the Partnership pursuant to Article 9 of the
Agreement, and the MGP will no longer accrue management fees during the
wind-up period.
2. Summary of Significant Accounting Policies
A. Contributed Capital - Proceeds from the sale of the limited partnership
interests, net of related selling commissions and syndication costs, are
recorded as contributed capital.
B. 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.
C. Valuation of Investments - The valuation of investments in debt
instruments 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. The
only debt instruments of a portfolio company held by the Partnership are
the Notes of Feminique Corp. Due to that Company's financial
difficulties, the Partnership's investment in these Notes has been
reserved to its estimated value.
D. 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 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.
E. 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. No interest
was accrued for the current quarter because the only debt obligations held
by the Partnership are the Feminique Corporation Notes which have been
reserved. The Partnership is no longer accruing any interest income on
the Feminique debt due to the financial difficulties being experienced by
the Company, and does not expect to receive any interest income on this
debt going forward. Danzer Corporation repaid all of its principal and
interest obligations to the Partnership in the quarter ending June 30,
2000.
F. Financial Instruments - In accordance with the reporting requirements of
Statement of Financial Accounting Standards No. 107, "Disclosures about
Fair Value of Financial Instruments," the Company calculates the fair
value of its financial instruments and includes this additional
information in the notes to the financial statements when the fair value
is different than the carrying value of those financial instruments. When
the fair value reasonably approximates the carrying value, no additional
disclosure is made. The valuation of common stock positions is based on
the public market for those securities less appropriate reserves for
selling restricted securities.
3. Basis of Presentation
The accompanying financial statements have been prepared without audit, in
accordance with the rules and regulations of the Securities and Exchange
Commission and do not include all disclosures normally required by generally
accepted accounting principles or those normally made in annual reports on
Form 10-K. All material adjustments, consisting only of those of a normal
recurring nature, which, in the opinion of management, were necessary for a
fair presentation of the results for the interim periods have been made.
<PAGE>
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements (Continued)
June 30, 2000
4. Partnership Agreement
Pursuant to the terms of the 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. To the extent that allocation
of losses create a negative capital balance in either the Managing General
Partner's or the Limited Partners' capital accounts, losses shall be
allocated as described herein until such capital account is $0. The
remaining loss is allocated to the capital account with a positive capital
balance.
5. 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 MGP 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.
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 MGP, subject to the approval and supervision of the Independent General
Partners, will be responsible for determining fair value.
The financial statements include investments valued at $2,113,347 (80% of
total assets) and $1,157,707 (65% of total assets) as of December 31, 1999
and June 30, 2000, respectively. Because of the inherent uncertainty of
valuation, those estimated values may differ significantly from the values
that might ultimately be realized in the liquidation and wind-up process, and
the differences could be material. <PAGE>
RENAISSANCE CAPITAL PARTNERS, LTD.
Notes to Financial Statements (Continued)
June 30, 2000
<TABLE> <S> <S> <S>
CONVERSION
OR
COST FACE VALUE FAIR VALUE
Feminique Corporation <C> <C> <C>
Convertible Promissory Notes $ 137,000 $ 137,000 $ 36,533
Common Stock 1,733,740 213,887 10,694
Danzer Corporation
Common Stock 2,678,480 1,171,911 1,051,596
BigHub.com
Common Stock 775,985 115,833 58,883
---------- ---------- ----------
Total: $5,325,205 $1,638,631 $1,157,707
========== ========== ==========
<FN>
The fair value of debt securities convertible into common stock is the sum of
(a) the value of such securities without regard to the conversion feature, and
(b) the value, if any, of the conversion feature. The fair value of debt
securities without regard to conversion features is determined on the basis of
the terms of the debt security, the interest yield and the financial condition
of the issuer. The fair value of the conversion features of a security, if any,
are based on fair values as of this date less an allowance, as appropriate, for
costs of registration, if any, and selling expenses. Publicly traded
securities, or securities that are convertible into publicly traded securities
are valued at the last sale price, or at the average closing bid and asked
price, as of the valuation date. While these valuations are believed to
represent fair value, these values do not necessarily reflect amounts which may
be ultimately realized upon disposition of such securities. </FN> </TABLE>
<PAGE>
RENAISSANCE CAPITAL PARTNERS, LTD.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
(1) Material Changes in Financial Condition
The following portfolio transactions are noted for the quarter ended June
30, 2000 (portfolio companies are herein referred to as the "Company"):
Danzer Corporation (DNZR) In the second quarter, the Company completely
repaid all of its obligations pursuant to its $25,000 Promissory Note with the
Partnership. The principal balance remaining at the beginning of the second
quarter was $18,013, which was fully repaid with interest in the second quarter.
Lion's Gate Entertainment Corp. (LGF) In the quarter ended June 30, 2000,
the Partnership sold its entire position in Lion's Gate on the open market. In
total, the Partnership sold 73,125 shares during the quarter, realizing proceeds
of $201,983.75, representing a loss of $531,328.67 to the Partnership.
BigHub.com (BHUB) Effective May 1, 2000, BigHub.com completed its
transaction to obtain 51% of Next Generation Media Corp. with BigHub.com common
stock. As part of the exchange transaction, the Partnership received 161,218
shares of BigHub.com common stock. The stock bears a legend and is restricted
by Rule 144 of the Securities Act of 1933.
(2) Material Changes in Operations
During the quarter ended June 30, 2000, the Partnership experienced a net
loss of $1,117,097. This loss resulted from a net investment loss of $531,587
on the sale of Lion's Gate common stock, and an unrealized loss on investments
of $546,618, resulting primarily from a decrease in the fair value of the
Partnership's investments in the common stock of Danzer Corp. Interest income
has decreased $4,202 for the three months ended June 30, 2000 when compared to
the same period last year due to a decrease in the number of interest bearing
instruments held by the Partnership.
LIQUIDITY AND CAPITAL RESOURCES
No cash distributions were made to Limited Partners in the second quarter
and cash provided by operating activities amounted to $(22,443), primarily due
to the net loss of $1,117,097 being booked for the quarter.
At June 30, 2000, the Partnership had $590,069 in cash. Effective July 28,
2000, $500,000 was distributed to the Limited Partners. The Partnership's
ability to make future distributions will depend upon the Partnership's success
in realizing a return of investment cost and the realization of any capital
gains from selling its three remaining positions in Feminique Corp., Danzer
Corp. and BigHub.com.
Because the Partnership's portfolio investments are being wound down and
the Partnership is being liquidated, no new or follow-on investments will be
made. Moreover, cash will only be generated when investment positions are sold.
The MGP does not expect any interest income in the future.
YEAR 2000
Many computer software systems in use today cannot process date-related
information from and after January 1, 2000. The Partnership's Managing General
Partner has taken steps to review and modify their computer systems as necessary
and are prepared for the Year 2000. In addition, the Partnership has inquired
of its major service providers as well as its portfolio companies to determine
if they are in the process of reviewing their systems with the same goals. The
<PAGE>
majority of all providers and portfolio companies have represented that they are
either taking the necessary steps to be prepared or are currently prepared for
the Year 2000. Should any of the computer systems employed by the major service
providers, or companies in which the Partnership has an investment, fail to
process this type of information properly, that could have a negative impact on
the Partnership's operations and the services provided to the Limited Partners.
It is anticipated that the Partnership will incur no material expenses related
to the Year 2000 issues. Moreover, at the time of this filing, the Partnership
had not experienced any Year 2000 difficulties with its systems.
RENAISSANCE CAPITAL PARTNERS, LTD.
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.
By RENAISSANCE CAPITAL GROUP, INC.
Managing General Partner
August 14, 2000 By____________________________________________
Russell Cleveland, President
August 14, 2000 By____________________________________________
Barbe Butschek, Chief Financial Officer
<PAGE>
