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, 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
December 31, March 31,
1999 2000
___________ _____________
Cash and cash equivalents $ 1,012,358 $ 1,024,667
Short term investments 100,000 100,000
Investments at fair value,
cost of $8,066,598 and $7,977,233 at
December 31, 1999 and March 31, 2000,
Respectively 15,634,975 34,902,757
Interest receivable 2,315 3,086
Other Assets 30,898 22,534
___________ ___________
Total Assets $ 16,780,546 $ 36,053,044
=========== ===========
Liabilities and Partners' Equity
Liabilities:
Accounts payable $ 27,946 $ 15,824
Accrued liabilities 50,000 50,000
__________ __________
Total liabilities 77,946 65,824
__________ __________
Partners' equity:
General Partner -0- -0-
Limited Partners (43,254.01 units at
December 31, 1999 and 43,254.01
units at March 31, 2000) 16,702,600 35,987,220
__________ __________
Total partners' equity 16,702,600 35,987,220
__________ __________
$ 16,780,546 $ 36,053,044
========== ==========
Limited partners' equity per limited
partnership unit $386 $832
==== ====
See accompanying notes to financial statements.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31,
1999 2000
_________ _________
Income:
Interest $ 217,232 $ 16,557
Dividends 8,194 8,929
Other Income 28,559 -0-
______________ ______________
Total Income 253,985 25,486
______________ ______________
Expenses:
Operating expenses 135,020 69,248
Trustee fees 18,000 18,000
______________ ______________
Total expenses 153,020 87,248
______________ ______________
Net income (loss) from operations 100,965 (61,762)
Net realized gain (loss) on investments (7,316) (10,765)
Net unrealized gain (loss) on investments 595,264 19,357,147
______________ ______________
Net income $ 688,913 $ 19,284,620
============== ==============
Net income (loss) per limited partnership
Unit $ 15.93 $ 445.84
============== ==============
Weighted average limited
partnership units 43,254.01 43,254.01
========= =========
See accompanying notes to financial statements.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(Unaudited)
General Limited
Partner Partners Total
________ ________ ________
Balance at December 31, 1999 -0- $16,702,600 $16,702,600
Net income -0- 19,284,620 19,284,620
__________ ___________ ___________
Balance at March 31, 2000 -0- $35,987,220 $35,987,220
========== =========== ===========
See accompanying notes to financial statements.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31,
1999 2000
_________ _________
Cash flows from operating activities:
Net income $ 688,913 $ 19,284,620
Adjustments to reconcile net income to
net cash used in operating activities:
Net realized and unrealized (gain) loss
on investments (587,947) (19,346,382)
(Increase) decrease in other assets (3,868) 8,364
Decrease (Increase) in interest receivable (176,614) (771)
Increase (Decrease) in accounts payable (11,445) (12,122)
_____________ ____________
Net cash provided by (used in)
operating activities (90,961) (66,291)
_____________ ____________
Cash flows from investing activities:
Repayment of principal on investments 1,675 78,600
Purchase of investments (300,306) -0-
_____________ ____________
Net cash provided by (used in)
investing activities (298,631) 78,600
_____________ ____________
Net increase (decrease) in cash (389,592) 12,309
Cash and cash equivalents at the beginning
of the period 1,239,015 1,012,358
_____________ ____________
Cash and cash equivalents at the end of
the period $ 849,423 $ 1,024,667
============= ============
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.
See accompanying notes to financial statements.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
NOTES TO FINANCIAL STATEMENTS
March 31, 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 March 31, 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.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
NOTES TO FINANCIAL STATEMENTS (continued)
March 31, 2000
(Unaudited)
(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 three months ended March 31, 2000, and 1999, were $18,000.
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.
<PAGE>
RENAISSANCE CAPITAL PARTNERS II, LTD.
NOTES TO FINANCIAL STATEMENTS (continued)
March 31, 2000
(Unaudited)
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 $34,902,757 (97% of total assets) as of December 31, 1999
and March 31, 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.
Convertible Debenture $ 490,050 $ 490,050 $ 490,050
Common Stock 7,487,183 34,412,707 34,412,707
___________ ___________ ____________
$ 7,977,233 $34,902,757 $34,902,757
=========== =========== ============
[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
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 first quarter ended March 31, 2000, total Partners' Equity
increased $19,284,620 due primarily to the increase in the valuation of
common stock of Tutogen Medical, Inc. with value of $6.00 per share.
The following portfolio transactions are noted for the quarter ended March
31, 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. In the third quarter of 1999, the
Partnership accrued expenses of $50,000 to cover anticipated legal fees.
CONSOLIDATED HEALTH CARE 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. In March 2000, the Partnership received an additional
payment of $65,000 in full settlement of this Note.
Consolidated Health Care Associates, Inc. filed for bankruptcy in Chapter
11 proceedings in Boston in the first quarter of 2000.
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. The Company has paid its interest obligation on this Debenture
through March 31, 2000. The Partnership anticipates that it will exercise
its right to convert the Debenture to shares of common stock and also
exercise some of the warrants prior to June 30, 2000.
Tutogen continues to be a profitable company. The first quarter of
Tutogen's fiscal year 2000 reported earnings of $0.05 per share.
Subsequent to the first quarter of 2000, the Trustee was appointed Chairman
of the Board of Tutogen Medical, Inc. during the company's Annual Meeting
held in late April, 2000, in New York.
<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, 2000, the Partnership recorded net income
of $19,284,620, 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.
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.
May 9, 2000 By: _____/S/_____
Thomas W. Pauken
Liquidation Trustee
[ARTICLE] 6
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-END] MAR-31-2000
[INVESTMENTS-AT-COST] 7977233
[INVESTMENTS-AT-VALUE] 34902757
[RECEIVABLES] 3086
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 1147201
[TOTAL-ASSETS] 36053044
[PAYABLE-FOR-SECURITIES] 0
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 65824
[TOTAL-LIABILITIES] 65824
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 38899583
[SHARES-COMMON-STOCK] 43254
[SHARES-COMMON-PRIOR] 43254
[ACCUMULATED-NII-CURRENT] (61762)
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (12107503)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 13159581
[NET-ASSETS] 35987220
[DIVIDEND-INCOME] 8929
[INTEREST-INCOME] 16557
[OTHER-INCOME] 0
[EXPENSES-NET] 87248
[NET-INVESTMENT-INCOME] (61762)
[REALIZED-GAINS-CURRENT] (10766)
[APPREC-INCREASE-CURRENT] 19357147
[NET-CHANGE-FROM-OPS] 19284620
[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] 19284620
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] (12107503)
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 0
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 87248
[AVERAGE-NET-ASSETS] 26344910
[PER-SHARE-NAV-BEGIN] 386
[PER-SHARE-NII] (1)
[PER-SHARE-GAIN-APPREC] 447
[PER-SHARE-DIVIDEND] 0
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 832
[EXPENSE-RATIO] .003
</TABLE>
