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 March 31, 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)
10751 Mapleridge Drive, Dallas, Texas 75238
____________________________________________________________________________
(Address of principal executive offices) (Zip code)
(214) 341-5033
____________________________________________________________________________
(Registrants 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)
Assets
<TABLE>
December 31, March 31,
1998 1999
_________ _________
<S> <C> <C>
Cash and cash equivalents $ 1,239,015 $ 849,423
Investments at fair value,
cost of $21,607,598 and $8,407,390 at
December 31, 1998 and March 31, 1999,
respectively 6,568,982 7,729,936
Interest receivable 103,022 5,260
Other Assets 6,396 10,264
___________ ___________
Total Assets $ 7,917,415 $ 8,594,883
=========== ===========
Liabilities and Partners' Equity
Liabilities:
Accounts payable $ 41,587 $ 60,077
Accounts payable - related parties 37,596 7,661
___________ ___________
Total liabilities 79,183 67,738
___________ ___________
Partners' equity:
General Partner -0- -0-
Limited Partners (43,254.01 units at
December 31, 1998 and 43,254.01
units at March 31, 1999) 7,838,232 8,527,145
___________ ___________
Total partners' equity 7,838,232 8,527,145
___________ ___________
$ 7,917,415 $ 8,594,883
=========== ===========
Limited partners' equity per
limited partnership unit $181 $199
==== ====
</TABLE>
[FN]
See accompanying notes to financial statements.
</FN>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended March 31,
1998 1999
___________ ___________
<S> <C> <C>
Income:
Interest $ 102,350 $ 217,232
Dividends 6,732 8,194
Other Income -0- 28,559
___________ _____________
Total Income 109,082 253,985
___________ _____________
Expenses:
Operating expenses 80,727 135,020
Management fees 114,951 18,000
___________ _____________
Total expenses 195,678 153,020
___________ _____________
Net income (loss) from operations (86,596) 100,965
Net realized gain (loss) on investments 9,951,204 (7,316)
Net unrealized gain (loss) on investments (1,476,238) 595,264
____________ _____________
Net income $ 8,388,370 $ 688,913
============ =============
Net income (loss) per limited partnership
unit $ 191.77 $ 15.93
Weighted average limited
partnership units 43,741.83 43,254.01
</TABLE>
[FN]
See accompanying notes to financial statements.
</FN>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
Three Months Ended March 31, 1998 and March 31, 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- 688,913 688,913
__________ __________ __________
Balance at March 31, 1999 -0- $8,527,145 $8,527,145
========== ========== ==========
</TABLE>
[FN]
See accompanying notes to financial statements.
</FN>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Three Months Ended March 31,
1998 1999
_________ _________
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,388,370 $ 688,913
Adjustments to reconcile net income
to net cash flows from
operating activities:
Net realized and unrealized (gain) loss
on investments (8,474,966) (587,947)
Increase in short term investments (2,299) -0-
Decrease (Increase) in accounts receivable (62,699) (176,614)
Increase (Decrease) in accounts payable 140,337 (11,445)
____________ _____________
Net cash provided by (used in)
operating activities (11,257) (87,093)
____________ _____________
Cash flows from investing activities:
Repayment of principal on investments -0- 1,675
Purchase of investments (649,748) (300,306)
Increase in other assets -0- (3,868)
____________ _____________
Net cash provided by (used in)
investing activities (649,748) (302,499)
____________ _____________
Net decrease in cash (661,005) (389,592)
Cash and cash equivalents at the beginning
of the period 755,755 1,239,015
-------------- ------------
Cash and cash equivalents at the end
of the period $ 94,750 $ 849,423
=============== ============
</TABLE>
Noncash investing transactions:
During 1999, $274,376 of interest receivable was capitalized to 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]
See accompanying notes to financial statements.
</FN>
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
NOTES TO FINANCIAL STATEMENTS
March 31, 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 liquidating of all its investments, but no later than eight
years from the final closing of the sale of units, 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 March 31, 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 partners 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.
(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 March 31, 1999, were $18,000.
At March 31, 1999, the Partnership owed Renaissance Group $7,661 for labor fees
and expenses.
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.
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 $7,729,936 (90% of total assets) as of December 31, 1998
and March 31, 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
CONVERSION OR FAIR
COST FACE VALUE VALUE
<TABLE>
<S> <C> <C> <C>
Coded Communications Corporation
Promissory Note $ 311,060 $ 311,060 $ 311,060
Consolidated Healthcare Associates, Inc.
Promissory Note 96,745 96,745 96,745
Tutogen Medical, Inc.
Convertible Debentures 500,000 500,000 500,000
Common Stock 7,499,585 6,822,131 6,822,131
__________ __________ __________
$8,407,390 $7,729,936 $7,729,936
========== ========== ==========
</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 first quarter ended March 31, 1999, total Partners' Equity increased
$688,913 due primarily to the conversion of the Tutogen Medical, Inc.,
Debenture 1 for 4,749,841 shares of common stock at $0.469 per share with a
subsequent valuation of $1.1875 per share.
The following portfolio transactions are noted for the quarter ended March 31,
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.
Consolidated HealthCare Associates, Inc. In the first quarter, the
Partnership received $8,054 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 March 31, 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 April 13, 1999, the Company paid its interest obligation on the $500,000
Debenture through March 31, 1999.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
1. 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.
For the quarter ended March 31, 1999, the Partnership recorded net income of
$688,913, which was primarily attributed to a valuation change in the new
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 March 31, 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
$3,822. Subsequent to March 31, 1999, Tutogen Medical, Inc. paid its interest
obligation through the first quarter of 1999.
<PAGE>
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.
March 14, 1999 By: ______/s/_____________
Thomas W. Pauken
Liquidation Trustee
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] 12-31-1999
[PERIOD-END] 3-31-1999
[INVESTMENTS-AT-COST] 8407390
[INVESTMENTS-AT-VALUE] 7729936
[RECEIVABLES] 5260
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 859687
[TOTAL-ASSETS] 8594883
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 67738
[TOTAL-LIABILITIES] 67738
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 38899583
[SHARES-COMMON-STOCK] 43254
[SHARES-COMMON-PRIOR] 43254
[ACCUMULATED-NII-CURRENT] 100965
[OVERDISTRIBUTION-NII] 3824869
[ACCUMULATED-NET-GAINS] (21689509)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (677454)
[NET-ASSETS] 8527145
[DIVIDEND-INCOME] 8194
[INTEREST-INCOME] 217232
[OTHER-INCOME] 28559
[EXPENSES-NET] 153020
[NET-INVESTMENT-INCOME] 100965
[REALIZED-GAINS-CURRENT] (7316)
[APPREC-INCREASE-CURRENT] 595263
[NET-CHANGE-FROM-OPS] 688913
[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] 688913
[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] 153019
[AVERAGE-NET-ASSETS] 8182689
[PER-SHARE-NAV-BEGIN] 181
[PER-SHARE-NII] 2.33
[PER-SHARE-GAIN-APPREC] 13.59
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 199
[EXPENSE-RATIO] .019
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
