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, 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: 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 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)
Assets
<TABLE>
December 31, June 30,
1999 2000
_________ _________
<S> <C> <C>
Cash and cash equivalents $ 1,012,358 $ 642,672
Short term investments 100,000 -0-
Investments at fair value,
cost of $8,066,598 and $9,371,179 at
December 31, 1999 and June 30, 2000, respectively 15,634,975 29,782,788
Interest receivable 2,315 5,149
Other Assets 30,898 29,934
__________ __________
Total Assets $ 16,780,546 $ 30,460,544
========== ==========
Liabilities and Partners' Equity
Liabilities:
Accounts payable $ 27,946 $ 28,073
Accrued liabilities 50,000 50,000
_________ _________
Total liabilities 77,946 78,073
_________ _________
Partners' equity:
General Partner -0- -0-
Limited Partners (43,254.01 units at
December 31, 1999 and 43,254.01 units
at June 30, 2000) 16,702,600 30,382,471
_________ _________
Total partners' equity 16,702,600 30,382,471
___________ ___________
$16,780,546 $30,460,544
=========== ===========
Limited partners' equity per limited partnership unit $386 $702
==== ====
</TABLE>
See accompanying notes to financial statements.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1999 2000 1999 2000
_______ _______ _______ _______
<S> <C> <C> <C> <C>
Income:
Interest $ 15,461 16,173 $ 232,693 32,730
Dividends 8,237 8,758 16,431 17,687
Other Income 14,053 -0- 42,612 -0-
________ _______ _______ ________
Total Income 37,751 24,931 291,736 50,417
________ _______ _______ ________
Expenses:
Operating expenses 38,934 46,189 173,954 115,437
Management fees 18,000 18,000 36,000 36,000
________ _______ _______ ________
Total expenses 56,934 64,189 209,954 151,437
________ _______ _______ ________
Net income (loss)
from operations (19,183) (39,258) 81,782 (101,020)
Net realized and unrealized
gain (loss) on investments 1,077,179 (5,565,490) 1,665,126 13,780,891
_________ __________ _________ __________
Net income (loss) $1,057,996 (5,604,748) $1,746,908 13,679,871
========= ========== ========= ==========
Net income (loss) per
limited partnership unit $ 24.46 (129.58) $ 40.38 316.27
======== ======== ======== =======
Weighted average limited
partnership units 43,254.01 43,254.01 43,254.01 43,254.01
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
Six Months Ended June 30, 2000
(Unaudited)
<TABLE>
General Limited
Partner Partners Total
________ ________ ________
<S> <C> <C> <C>
Balance at December 31, 1999 -0- $ 16,702,600 $ 16,702,600
Net income -0- 13,679,871 13,679,871
___________ ___________ ____________
Balance at June 30, 2000
-0- $ 30,382,471 $ 30,382,471
=========== =========== ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1999 2000 1999 2000
_________ _________ _________ _________
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) 1,057,996 (5,604,748) 1,746,908 13,679,871
Adjustments to reconcile net income to
net cash flows from operating activities:
Net realized and unrealized (gain)
loss on investments (1,077,179) 5,565,490 (1,665,126) (13,780,891)
Decrease (Increase) in interest
receivable 1,561 (2,063) (175,053) (2,834)
Decrease (Increase) in other assets 3,245 (7,401) (623) 963
Increase (Decrease) in accounts payable (34,565) 12,248 (46,010) 126
___________ ___________ __________ ___________
Net cash provided by (used in)
operating activities (48,942) (36,474) (139,904) (102,765)
___________ ___________ __________ ___________
Cash flows from investing activities:
Repayment of principal on investments 6,704 -0- 8,379 78,600
Purchase of investments -0- (1,393,946) (300,306) (1,393,946)
Proceeds from sale of investments -0- 948,425 -0- 948,425
Investments in short term investments, net -0- 100,000 -0- 100,000
___________ ___________ __________ ___________
Net cash provided by (used in) investing
activities 6,704 (345,521) (291,926) (266,921)
___________ ___________ __________ ___________
Net increase (decrease) in cash (42,238) (381,995) (431,830) (369,686)
Cash and cash equivalents at the beginning
of the period 849,423 1,024,667 1,239,015 1,012,358
___________ ___________ __________ ___________
Cash and cash equivalents at the end
of the period 807,185 642,672 807,185 642,672
=========== =========== ========== ===========
</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 amounnt of $2,074,081 to 4,600,507
shares of common stock of Tutogen Medical, Inc.
In the second quarter of 2000, the Partnership exercised its right to
convert a debenture in the principal amount of $490,050 to 363,000 shares of
common stock of Tutogen Medical, Inc.
</FN>
See accompanying notes to financial statements.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
NOTES TO FINANCIAL STATEMENTS
June 30, 2000
(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, 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) Valuation of Investments
Portfolio investments are stated at quoted market or fair value as
determined by the Trustee in 2000 and 1999. Most securities held by the
Partnership are unregistered and their value does not necessarily represent
the amounts that may be realized from their immediate sale or disposition.
(b) Statements of Cash Flows
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, 2000 and 1999.
(c) 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.
(d) 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.
(e) Short Term Investments
Short term investments represent a bank certificate of deposit with a
maturity date of 6 months. Such investment was valued at cost, which
approximates market.
(f) 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
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.
(g) 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.
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 include all disclosures normally required by generally
accepted accounting principles, but do not include all disclosures 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. Trustee 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 six months ended June 30, 2000, and 1999, were $36,000.
5. Partners' Equity
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, are 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 are 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 $15,634,975 (93%
of total assets) and $29,782,788 (98% of total assets) as of December 31,
1999 and June 30, 2000, 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
______ ______ ______
Tutogen Medical, Inc.
Common Stock 9,357,179 29,709,933 29,709,933
Global Data, Inc. (GDI)
Common Stock -0- 58,855 58,855
Consolidated Health Care Associates
Promissory Note 14,000 14,000 14,000
__________ ___________ ___________
$ 9,371,179 $29,782,788 $29,782,788
========== =========== ===========
[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>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The discussion set forth herein contains certain forward looking
Statements with respect to the financial condition, results of operations and
business of the Partnership. These forward looking statements are subject to
certain risks and uncertainties, not all of which can be predicted or
anticipated. Factors that may cause actual results to differ materially from
those contemplated by the forward looking statements herein include, but are
not limited to, changes in economic conditions; competitive conditions in
the markets in which portfolio companies conduct their operations, including
competition from companies with substantially greater resources than those of
the portfolio companies; and the results of litigation, which cannot be
predicted with certainty. Readers of this Discussion should not place undue
reliance on forward looking statements.
1. Material Changes in Financial Condition
For the second quarter ended June 30, 2000, total Partners' Equity
decreased $5,604,748 due primarily to the decrease in the valuation of the
common stock of Tutogen Medical, Inc. ("Tutogen") with value of $4.125 per
share.
The following portfolio transactions are noted for the quarter ended
June 30, 2000 (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, and was converted to Chapter 7 status in the first
quarter of 1999. The Trustee took 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. In the third quarter ended September 30,
1999, the Partnership received proceeds of $385,000 from the Estate of Coded
for payment in full of a Promissory Note.
The Partnership's current lawsuit against former officers and directors
of Coded seeking recovery for the improper conversion of a debenture is
pending. Part of the case is proceeding forward towards an arbitration
hearing in California. In the third quarter of 1999, the Partnership accrued
expenses of $50,000 to cover anticipated legal fees.
CONSOLIDATED HEALTHCARE ASSOCIATES, INC. In the first quarter of 2000,
the Partnership received proceeds of $4,826 related to the Promissory Note
whose payments have been assigned to the Partnership by Consolidated Health
Care Associates, Inc. ("CHCA"). In March 2000, the Partnership received an
additional payment of $65,000 in full settlement of this Note.
CHCA filed for bankruptcy in Chapter 11 proceedings in Boston in the
first quarter of 2000. CHCA received funds in the amount of $14,000 in the
form of a 10% Promissory Note payable to the Partnership to cover the
operational costs of the company during the pending Chapter 11 proceedings.
GDI GLOBAL DATA, INC. In the second quarter of 2000, the Partnership
received 166,666 shares of common stock of GDI Global Data, Inc. ("GDI") in
exchange for its 8,333.33 shares of StarComm Products, Inc. ("StarComm") as
a result of a merger between GDI and StarComm. During the second quarter,
the Partnership received proceeds in the amount of $10,925 from the sale of
11,500 shares of common stock of GDI, a Canadian Exchange stock.
TUTOGEN MEDICAL, INC. In the first quarter of 2000, the Partnership
received a principal payment in the amount of $9,950 on the $500,000
Debenture.
On June 23, 2000, in a private transaction, the Partnership sold common
stock purchase warrants to purchase 250,000 shares at an exercise price of
$1.25 per share to Sulzer Medica USA Holding Co. The Partnership received
proceeds in the amount of $937,500 from the transfer of those warrants.
On June 28, 2000 the Partnership exercised its right to convert the
outstanding principal on this debenture in accordance with the terms of the
debenture, resulting in the issuance to the Partnership of 363,000 shares of
common stock of Tutogen. The Partnership also exercised common stock
purchase warrants to purchase 1,103,957 shares, at an exercise price of
$1.25 per share.
As of June 30, 2000, the Partnership is the beneficial owner of
7,902,408 shares, representing approximately 56.30% of the outstanding shares
of Tutogen (including, for this purpose shares issued in transactions
described above and shares issuable upon exercise of warrants; all of the
warrants are presently exercisable.)
The Company has paid its interest obligation on the $500,000 Debenture
through June 30, 2000.
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.
For the quarter ended June 30, 2000, the Partnership recorded a net loss
of $5,604,748, which was primarily due to a decline in the closing price of
Tutogen's common stock which was $6 as of March 31, 2000, and $4.125 on June
30, 2000. This valuation may fluctuate significantly due to the limited
trading market for Tutogen stock. 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.
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 4, 2000 By: /s/ Thomas W. Pauken
Thomas W. Pauken
Liquidation Trustee
