UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 1999
[ ] 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: 038593
_____________________________________________________________________________
RENAISSANCE CAPITAL PARTNERS II, LTD.
_____________________________________________________________________________
(Exact name of registrant as specified in its charter)
Texas 75-2407159
_____________________________________________________________________________
(State or other jurisdiction (IRS Employer ID No.)
of incorporation or organization)
5646 Milton Street, Suite 900, Dallas, Texas 75206
_____________________________________________________________________________
(Address of principal executive offices) (Zip code)
(214) 378-9340
_____________________________________________________________________________
(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 II, LTD.
STATEMENTS OF ASSETS, LIABILITIES,
AND PARTNERS' EQUITY
(Unaudited)
<TABLE>
Assets
December 31, June 30,
1998 1999
_________ _________
<S> <C> <C>
Cash and cash equivalents $ 1,239,015 $ 807,185
Investments at fair value,
cost of $21,607,598 and $8,407,390 at
December 31, 1998 and June 30, 1999, respectively 6,568,982 8,800,409
Interest receivable 103,022 3,699
Other Assets 6,396 7,018
_________ _________
Total Assets $ 7,917,415 $ 9,618,311
========== =========
Liabilities and Partners' Equity
Liabilities:
Accounts payable $ 41,587 $ 33,171
Accounts payable - related parties 37,596 -0-
_________ _________
Total liabilities 79,183 33,171
_________ _________
Partners' equity:
General Partner -0- -0-
Limited Partners (43,254.01 units at December 31, 1998
and 43,254.01 units at June 30, 1999) 7,838,232 9,585,140
_________ _________
Total partners' equity 7,838,232 9,585,140
_________ _________
$ 7,917,415 $ 9,618,311
========= =========
Limited partners' equity per limited partnership unit $181 $222
</TABLE>
[FN]
See accompanying notes to financial statements.
</FN>
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended June 30, Six Months Ended June 30,
1998 1999 1998 1999
________ ________ ________ ________
<S> <C> <C> <C> <C>
Income:
Interest $ 98,820 $ 15,461 $ 201,170 $ 232,693
Dividends -0- 8,237 6,732 16,431
Other Income -0- 14,053 -0- 42,612
_______ _______ _______ _______
Total Income 98,820 37,751 207,902 291,736
_______ _______ _______ _______
Expenses:
Operating expenses 82,185 38,935 162,912 173,954
Management fees 81,467 18,000 196,418 36,000
_______ _______ _______ _______
Total expenses 163,652 56,935 359,330 209,954
_______ _______ _______ _______
Net income (loss) from
operations (64,832) (19,183) (151,428) 81,782
Net realized and
unrealized gain
(loss) on
investments (6,571,996) 1,077,179 1,902,970 1,665,126
_______ _______ _______ _______
Net income $ 6,636,828 $ 1,057,996 $ 1,751,542 $ 1,746,908
_______ _______ _______ _______
Net income (loss)
per limited
partnership
unit $ (151.90) $ 24.46 $ 40.07 $ 40.38
_______ _______ _______ _______
Weighted average
limited
partnership units 43,692.09 43,254.01 43,712.05 43,254.01
_______ _______ _______ _______
</TABLE>
[FN]
See accompanying notes to financial statements.
</FN>
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
Six Months Ended June 30, 1999
(Unaudited)
<TABLE>
General Limited
Partner Partners Total
<S> <C> <C> <C>
Balance at December 31, 1998 -0- $ 7,838,232 $ 7,838,232
Net income -0- 1,746,908 1,746,908
__________ __________ __________
Balance at June 30, 1999 -0- $ 9,585,140 $ 9,585,140
========== ========== ==========
</TABLE>
[FN]
See accompanying notes to financial statements.
</FN>
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF CASH FLOWS
<TABLE>
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
1998 1999 1998 1999
________ ________ ________ ________
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss) (6,636,828) 1,057,996 1,751,542 1,746,908
Adjustments to
reconcile netincome to
net cash flows from
operating activities:
Net realized and
unrealized(gain)loss
on investments 6,571,996 (1,077,179) (1,902,970) (1,665,126)
Decrease (Increase)
in accounts
receivable (75,203) 1,561 (137,902) (175,053)
Increase (Decrease)
in accounts
payable (165,376) (34,565) (25,201) (46,010)
________ ________ ________ ________
Net cash provided by
(used in) operating
activities (305,411) (52,187) (314,351) (139,280)
________ ________ ________ ________
Cash flows from investing
activities:
Repayment of principal
on investments -0- 6,704 -0- 8,379
Purchase of
investments -0- -0- (652,065) (300,306)
Proceeds from sale
of investments 388,216 -0- 388,126 -0-
Decrease (Increase)
in other assets -0- 3,245 -0- (623)
________ ________ ________ ________
Net cash provided by
(used in) investing
activities 388,126 9,949 (263,939) (292,550)
________ ________ ________ ________
Cash flows from
financing activities:
Limited partner
withdrawal (26,443) -0- (26,443) -0-
________ ________ ________ ________
Net cash from
financing
activities (26,443) -0- (26,443) -0-
________ ________ ________ ________
Net increase
(decrease)
in cash 56,272 (42,238) (604,733) (431,830)
Cash and cash equivalents
at the beginning of
the period 94,750 849,423 755,755 1,239,015
________ ________ ________ ________
Cash and cash
equivalents
at the end of
the period $ 151,022 $ 807,185 $ 151,022 $ 807,185
======== ======= ======= ========
</TABLE>
[FN]
Noncash investing transactions:
During 1999, $274,376 of interest receivable was capitalized to
investment in common stock.
In the first quarter of 1999, the Partnership exercised its right to
convert a debenture in the principal amount of $2,074,081 to 4,600,507 shares
of common stock of Tutogen Medical, Inc.
</FN>
[FN]
See accompanying notes to financial statements.
</FN>
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
1. Organization and Business Purpose
Renaissance Capital Partners II, Ltd. ( the "Partnership"), a Texas limited
partnership, was formed on January 14, 1991. The Partnership sought to achieve
current income and capital appreciation principally by making direct investments
primarily in private placement convertible debt securities of small to medium
size public companies.
The Partnership 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 eight years from the final
closing of the sale of units, which was March 31, 1993, subject to the right of
the Independent General Partners to extend the term for up to two additional
one-year periods if they determine that such extension is in the best interest
of the Partnership. The Independent General Partners and the Managing General
Partner agreed to begin the liquidation of the Partnership in 1998. Effective
October 1, 1998, Renaissance Group, Inc. ("Renaissance Group") withdrew as
Managing General Partner of the Partnership. Mr. Thomas W. Pauken, who had
served as an Independent General Partner agreed to become the Liquidation
Trustee (the "Trustee") pursuant to the Liquidation Trustee's Agreement which
was filed as an Exhibit to Form 10-Q for the period ending September 30, 1998,
and is incorporated for all purposes herein. The Trustee assumed all
responsibilities, and has the authority, of the Managing General Partner.
2. Summary of Significant Accounting Policies
(a) Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash equivalents include
cash in checking and savings accounts and all instruments on hand with original
maturities of three months or less. The Partnership paid no interest for the
periods ended June 30, 1999 and 1998.
(b) Federal Income Taxes
No provision has been made for federal income taxes as any liability for such
taxes is that of the partners rather than the Partnership.
(c) Net Income (Loss) Per Limited Partnership Unit
Net income (loss) per limited partnership unit is based on the weighted average
of the limited partnership units outstanding during the period and net income
(loss) allocated to the limited partners.
(d) Management Estimates
The financial statements have been prepared in conformity with generally
accepted
accounting principle. The preparation of the accompanying financial statements
requires estimates and assumptions made by the Liquidation Trustee of the
Partnership that affect the reported amounts of assets and liabilities as of the
date of the statements of assets, liabilities and partner's equity and income
and
expenses for the period presented. 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 period is reduced to reflect the estimated
interest expected to be collected during the period.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1999
(Unaudited)
(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.
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 period have been made.
4. Management Agreement and Fees
Renaissance Group withdrew as Managing General Partner effective October 1,
1998. Mr. Thomas W. Pauken, who had served as an Independent General Partner
agreed to become the Liquidation Trustee (the "Trustee") pursuant to the
Liquidation Trustee's Agreement which was filed as an Exhibit to Form 10-Q for
the period ending September 30, 1998, and is incorporated for all purposes
herein. The Trustee assumed all responsibilities, and has the authority, of the
Managing General Partner. Fees paid to the Liquidation Trustee during the three
months ended June 30, 1999, were $18,000.
5. Partnership Agreement
Pursuant to the terms of the Limited 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 Group (the former Managing
General Partner) and 99% to the Limited Partners. All items of gain of the
Partnership resulting from Capital Transactions 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 Group and 80% to the Limited Partners. All items of loss resulting
from Capital Transactions shall be allocated 1% to Renaissance Group and 99% to
the Limited Partners.
The above allocations resulted in the capital account of Renaissance Group
having
a deficit balance of $197,969 at the time of the appointment of the Liquidation
Trustee. This appointment caused the end of Renaissance Group's year as it
relates to the Partnership's income and expense and the deficit balance was
allocated to the other partners in accordance with Section 4.8 of the Limited
Partnership Agreement.
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 Liquidation Trustee.
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>
RENAISSANCE CAPITAL PARTNERS II, LTD.
NOTES TO FINANCIAL STATEMENTS (continued)
June 30, 1999
(Unaudited)
6. Investments (continued)
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 Liquidation Trustee will be responsible for determining fair value.
The financial statements include investments valued at $6,568,982 (83% of total
assets) and $8,800,409 (92% of total assets) as of December 31, 1998 and June
30, 1999, respectively, whose values have been estimated by the Liquidation
Trustee in the absence of readily ascertainable market values. Because of the
inherent uncertainty of valuation, those estimate values may differ
significantly
from the values that would have been used had a ready market for the investments
existed and the difference could be material.
INVESTMENT VALUATION SUMMARY
<TABLE>
CONVERSION OR FAIR
COST FACE VALUE VALUE
<S> <C> <C> <C>
Coded Communications Corporation
Promissory Note $ 311,060 $ 311,060 $ 311,060
Consolidated Healthcare Associates, Inc.
Promissory Note 96,745 90,041 90,041
Tutogen Medical, Inc.
Convertible Debentures 500,000 500,000 500,000
Common Stock 7,499,585 7,899,308 7,899,308
__________ _________ _________
$ 8,407,390 $ 8,800,409 $ 8,800,409
========== ========= =========
</TABLE>
[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 values 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>
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1. Material Changes in Financial Condition
For the second quarter ended June 30, 1999, total Partners' Equity increased
$1,057,995 due primarily to the increase in valuation of common stock of Tutogen
Medical, Inc. with a value of $1.375 per share.
The following portfolio transactions are noted for the quarter ended June 30,
1999, (portfolio companies are herein referred to as the "Company"):
Coded Communications Corp. In the fourth quarter of 1998, Coded Communications
Corp. ("Coded") filed for bankruptcy in Chapter 11 proceedings in Delaware.
That
was converted to Chapter 7 status in the first quarter of 1999. The Trustee has
taken legal action to try to protect the Partnership's secured position on the
$311,060 Promissory Note and recover from the assets of the Estate. Subsequent
to June 30, 1999, the Trustee received gross proceeds of $385,000 from the
Estate
of Coded, of which the Trustee anticipates that more than $311,060 will be
realized for the Partnership.
Consolidated HealthCare Associates, Inc. In the second quarter, the Partnership
received $12,067 on Notes owed to Consolidated HealthCare Associates, Inc.
("CHCA") whose payments have been assigned to the Partnership by CHCA.
Tutogen Medical, Inc. In the first quarter, the Partnership became the majority
shareholder of Tutogen Medical, Inc. ("Tutogen") pursuant to a series of
transactions involving the recapitalization of Tutogen. These transactions
included the conversion of a Tutogen debenture, the amendment of stock purchase
warrants held by the Partnership and the issuance of additional common stock of
Tutogen to the Partnership in exchange for assets of the Partnership. Effective
January 31, 1999, the Partnership and Tutogen entered into several inter-related
transactions, as follows: (i) the Partnership exercised its right to convert
the
outstanding principal, accrued interest and accrued expenses on a convertible
debenture in the principal amount of $2,074,081 in accordance with the terms of
the debenture, resulting in the issuance to the Partnership of 4,600,507 shares
and, as additional consideration for the agreement to convert the debenture,
Tutogen issued to the Partnership an additional 149,334 shares; (ii) warrants
held by the Partnership to purchase 1,353,957 shares were amended with an
exercise price of $1.25 per share if the warrants are exercised prior to June
30,
2000. If not so exercised, prices will revert to the original exercise prices
of the warrants of $2.50 and $2.60 per share; and (iii) the Partnership acquired
300,000 shares, together with warrants to purchase an additional 300,000 shares
at an exercise price of $1.50 per share, in exchange for $300,000 cash.
As of June 30, 1999, the Partnership is the beneficial owner of 8,169,277
shares, representing approximately 62.4% of the outstanding shares of the
Company
(including, for this purpose shares issued in transactions described above and
shares issuable upon exercise of warrants and upon conversion of a debenture
owned by the Partnership; all of the warrants and the debenture are presently
convertible or exercisable).
As of July 20, 1999, the Company paid its interest obligation on the $500,000
Debenture through June 30, 1999.
2. Material Changes in Operations
The Partnership currently is under liquidation and not actively considering
additional Portfolio Investments. Therefore, no significant further amount of
income from closing fees and commitment fees is anticipated.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
2. Material Changes in Operations (continued)
For the quarter ended June 30, 1999, the Partnership recorded net income of
$1,057,996, which was primarily attributed to a valuation change in the Tutogen
Medical, Inc. common stock issued in connection with the conversion of the
convertible debenture. Interest income continued to decline as a 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 in the past as a result of payment defaults and as the
Partnership has converted debentures into common and preferred stock that
traditionally have lower current yields in comparison to debentures.
Portfolio investments still held as Debentures require interest payments
generally on either a monthly or quarterly basis. At June 30, 1999, the
following Companies are in arrears on interest payments: Tutogen Medical, Inc.
is in arrears on interest payments owed to the Partnership in the amount of
$3,699. Subsequent to June 30, 1999, Tutogen Medical, Inc. paid its interest
obligation through the second quarter of 1999.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None other than what has been previously disclosed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to the signed on its behalf by the
undersigned thereunto duly authorized.
RENAISSANCE CAPITAL PARTNERS II, LTD.
August 10, 1999 By: _______/s/________
Thomas W. Pauken
Liquidation Trustee
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] 12-31-1999
[PERIOD-END] 6-30-1999
[INVESTMENTS-AT-COST] 8407390
[INVESTMENTS-AT-VALUE] 8800409
[RECEIVABLES] 3699
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 814203
[TOTAL-ASSETS] 9618311
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 33171
[TOTAL-LIABILITIES] 33171
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 38899583
[SHARES-COMMON-STOCK] 43254
[SHARES-COMMON-PRIOR] 43254
[ACCUMULATED-NII-CURRENT] 81782
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (12213395)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (13366174)
[NET-ASSETS] 9585140
[DIVIDEND-INCOME] 16431
[INTEREST-INCOME] 232693
[OTHER-INCOME] 42612
[EXPENSES-NET] 209954
[NET-INVESTMENT-INCOME] 81782
[REALIZED-GAINS-CURRENT] (7316)
[APPREC-INCREASE-CURRENT] 1672442
[NET-CHANGE-FROM-OPS] 1746908
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 0
[NUMBER-OF-SHARES-REDEEMED] 0
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 1746908
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (12206079)
[OVERDISTRIB-NII-PRIOR] 3925834
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 209954
[AVERAGE-NET-ASSETS] 8711686
[PER-SHARE-NAV-BEGIN] 181
[PER-SHARE-NII] 1.89
[PER-SHARE-GAIN-APPREC] 38.50
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 222
[EXPENSE-RATIO] .022
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
