<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
Commission file number 0-20213
COMMUNITY INVESTMENT PARTNERS II, L.P.
______________________________________________________________________
(Exact name of registrant as specified in its charter)
MISSOURI 43-1609351
______________________________________________________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
12555 Manchester
St. Louis, Missouri 63131
______________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
__________________
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.
(1) YES X NO (2) YES NO X
____ ____ ____ ____
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COMMUNITY INVESTMENT PARTNERS II, L.P.
INDEX
Page
Number
Part I.FINANCIAL INFORMATION
Item 1.Financial Statements
Balance Sheet ...........................................3
Schedule of Portfolio Investments .......................4
Income Statement ........................................7
Statement of Cash Flows .................................8
Statement of Changes in Partnership Capital .............9
Notes to Financial Statements ...........................10
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations .....................11
Part II.OTHER INFORMATION *
Item 1.Legal Proceedings.......................................14
Item 6.Exhibits and Reports on Form 8-K........................14
Signatures ..............................................15
* Items 2, 3,4 and 5 are omitted as they are not applicable
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
BALANCE SHEET
(Unaudited)
June 30, December 31,
1997 1996
ASSETS
Investments at Fair Market Value
(cost $1,640,023 and $1,412,628,
respectively) $ 1,541,649 $ 1,397,330
Cash and Cash Equivalents 249,485 540,528
Deferred Organizational Costs, net 18,341 36,683
Accrued Interest Receivable 24,867 17,835
Prepaid Expenses - 2,449
____________ ___________
TOTAL ASSETS $ 1,834,342 $ 1,994,825
============ ===========
LIABILITIES AND PARTNERSHIP CAPITAL
Liabilities:
Accounts Payable and Accrued Expenses $ 14,394 $ 12,100
_____________ ____________
TOTAL LIABILITIES 14,394 12,100
_____________ ____________
Partnership Capital:
Capital - Limited Partners 1,801,629 1,962,730
Capital - General Partners 18,319 19,995
_____________ ____________
TOTAL PARTNERSHIP CAPITAL 1,819,948 1,982,725
_____________ ____________
TOTAL LIABILITIES AND PARTNERSHIP
CAPITAL $ 1,834,342 $ 1,994,825
=========== ============
The accompanying notes are an integral part of these financial
statements.
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COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
AS OF JUNE 30, 1997
Company Fair Market
Initial Nature of Business Value
Investment Date Investment Cost June 30, 1997
Houghton Acquisition Organized for the purpose of
Corporation acquiring Hutchinson Foundry
Products, Inc.
January 2, 1997 8% Convertible Promissory Note,
due 1/2/99 77,400 77,400
Contingent EBITDA Promissory
Note 0 0
Global Surgical Formed to acquire the Urban
Corporation Microscope Division and the
Surgical Mechanical Research
subsidiary of Storz Medical
January 31, 19943,000 shares of Common
Stock 300,000 300,000
June 30, 1995 7% Promissory Note,
due 6/29/00 45,000 45,000
January 26, 19967% Promissory Note,
due 1/25/01 67,500 67,500
Computer Motion, Inc. Develops and supplies medical robotics
May 3, 1996 Prime +1% Term Note,
due 10/31/98 125,000 125,000
June 26, 1997 78,947.5 warrants, exercisable
for 7 years from issuance
at $2.37 per warrant 8 8
September 9, 1996 25,000 shares of Series E
Preferred Stock convertible
into 31,250 shares of
Common Stock 125,000 125,000
31,250 warrants, exercisable
at $4.00 per warrant 250 250
FCOA Acquisition A chain of greeting card/
Corporation party stores which offer
(d/b/a Factory Card a full line of products at
Outlet) everyday value prices
July 30, 1996 26,063 Common Shares 249,865 151,491
The accompanying notes are an integral
part of these financial statements.
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COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (cont'd.)
Company Fair Market
Initial Nature of Business Value
Investment Date Investment Cost June 30, 1997
Permalok Corporation Develops and sells steel
pipe joining system to the
domestic underground
utility construction industry
September 24, 1996 25,000 shares of Convertible
Preferred Stock 200,000 200,000
Stereotaxis, Inc. Develops and markets a system
by which surgery can be conducted
remotely using computer
controlled magnets
December 30, 1996 138,889 shares of
Preferred Stock 100,000 100,000
Medical Device
Alliance, Inc. Specializes in the development,
manufacture and marketing of
devices for ultrasound-assisted
lipoplasty
January 24, 199720,000 shares of Stock 100,000 100,000
Online Resources &
Communications
Corporation Provides a variety of inter-
active banking and financial
services to end-users and
corporate customers in the
banking and financial
services industry
March 17, 1997 8% Promissory Note, due
8/31/97 150,000 150,000
Warrants to purchase
20,000 shares of Common
Stock, expiring 1/31/04 0 0
The accompanying notes are an integral
part of these financial statements.
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COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (cont'd.)
Company Fair Market
Initial Nature of Business Value
Investment Date Investment Cost June 30, 1997
Advanced UroScience,
Inc. Developing Acyst, an injectable
bulking agent, for the treatment
of stress urinary incontinence.
25,000 shares of Series A
Preferred Stock 100,000 100,000
_________ _________
$1,640,023 $1,541,649
======== ========
The accompanying notes are an integral
part of these financial statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
INCOME STATEMENT
(Unaudited)
Three Months Ended Six Months Ended
1997 1996 1997 1996
INCOME
Interest and Dividend Income $ 14,508 $ 16,646 $22,676 $36,053
Gain on Sale of Investment 19,656 - 510,422 -
_________ ________ _______ _______
TOTAL INCOME 34,164 16,646 533,098 36,053
_________ ________ _______ _______
EXPENSES
Amortization of Deferred
Organizational Costs 9,171 9,171 18,342 18,342
Independent General Partners'
Fees 3,000 3,000 6,000 6,000
Management Fees 7,254 7,610 14,394 15,191
Professional Fees 1,658 783 9,565 4,787
Other 35 - 1,848 1,072
_________ _________ _______ _______
TOTAL EXPENSES 21,118 20,564 50,149 45,392
_________ _________ _______ _______
Net Income (Loss) before Unrealized
Gains and Losses 13,046 (3,918) 482,949 (9,339)
Net Unrealized Losses on
Investments (57,013) - (83,076) -
_________ ________ _______ _______
NET (LOSS) INCOME $(43,967) $ (3,918)$399,873 $ (9,339)
========= ======== ======= =======
Per Unit Information:
Net (Loss) Income
(as of June 30, 1997 and
June 30, 1996) $ (.39) $ (.03) $ 3.55 $ (.08)
========= ======== ======== ========
Net Asset Value (as of June 30, 1997
and December 31, 1996) $ 16.17 $ 17.62
======== ========
Units Outstanding:
Limited Partners 111,395 111,395
General Partners 1,135 1,135
The accompanying notes are an integral part of these financial
statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1997 1996
CASH FLOWS PROVIDED (USED) BY OPERATING
ACTIVITIES:
Net Income (Loss) $ 399,873 $ (9,339)
Adjustments to Reconcile Net Income
(Loss) to Net
Cash Provided by Operating Activities -
Purchase of Portfolio Investments (350,008) (192,500)
Amortization of Deferred Organization
Costs 18,342 18,342
(Increase) Decrease in Accrued Interest
Receivable (7,032) 2,752
Decrease in Prepaid Expense 2,449 -
Increase in Accounts Payable and
Accrued Expenses 2,294 6,091
Sale of Portfolio Investments 633,035 -
Unrealized Losses on Portfolio
Investments 83,076 -
Net Realized Gains on Sale of Portfolio
Investments (510,422) -
_____________ _____________
Total Cash Provided (Used) by
Operating Activities 271,607 (174,654)
CASH FLOWS USED BY
FINANCING ACTIVITIES:
Capital Distributions (562,650) -
_____________ ____________
Total Cash Used by Financing Activities (562,650) -
_____________ ____________
Net Decrease in Cash and Cash
Equivalents (291,043) (174,654)
CASH AND EQUIVALENTS, beginning of year 540,528 1,399,026
_____________ ____________
CASH AND EQUIVALENTS, end of year $ 249,485 $ 1,224,372
=========== ============
The accompanying notes are an integral part of these financial
statements.
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COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
(Unaudited)
Six Months Ended June 30, 1997 and 1996
Limited General
Partners Partners Totals
Balance, December 31, 1995 $1,994,572 $ 20,317 $ 2,014,889
Net Loss (9,246) (93) (9,339)
___________ _________ ____________
Balance, June 30, 1996 $1,985,326 $ 20,224 $ 2,005,550
Balance, December 31, 1996 $1,962,730 $ 19,995 $ 1,982,725
Distribution (556,975) (5,675) (562,650)
Net Income 395,874 3,999 399,873
___________ __________ ____________
Balance, June 30, 1997 $1,801,629 $ 18,319 $ 1,819,948
The accompanying notes are an integral part of these financial
statements.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
BASIS OF PRESENTATION
Community Investment Partners II, L.P. (CIP II) is a limited
partnership which has elected to be a business development company
under the Investment Company Act of 1940, as amended. As a business
development company, the partnership is required to invest at least
70% of its total assets in qualifying investments as specified in the
Investment Company Act. CIP Management, L.P. (Management), a limited
partnership, is the Managing General Partner of CIP II. Management is
responsible for making all decisions regarding CIP II's investment
portfolio and is not engaged in any other activities. CIP II pays CIP
Management, L.P. a management fee based on 1.5% of CIP II's total
assets.
CIP II was formed May 8, 1992. The Partnership raised $1,406,625
through a public offering of its units during December, 1992. The
Partnership executed a call to each partner requesting the deposit of
an amount equal to the initial capital contribution on August 25,
1994.
All portfolio investments are carried at cost until significant
developments affecting an investment provide a basis for revaluation.
Thereafter, portfolio investments are carried at fair value as
obtained from outside sources or at a value determined quarterly by
the Managing General Partner under the supervision of the Independent
General Partners. Investments in securities traded on a national
securities exchange are valued at the latest reported sales price on
the last business day of the period. If no sale has taken place, the
securities are valued at the last bid price. If no bid price has been
reported, or if no exchange quotation is available, the securities are
valued at the quotation obtained from an outside broker.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
MANAGEMENT'S FINANCIAL DISCUSSION
RESULTS OF OPERATIONS
Losses for the three months ended June 30, 1997 and 1996 were
($43,967) and ($3,918), respectively. Income for the six months ended
June 30, 1997 was $399,873 compared to losses of ($9,339) for the six
months ended June 30, 1996. Income for the six months ended June 30,
1997 was primarily attributable to the Partnership's sale of its
investment in Houghton Acquisition Corporation (HAC) in the first
quarter of 1997. Interest and dividend income was derived from
investments and cash balances. Expenses incurred were related to
amortization of deferred organization costs, independent general
partners' fees, management fees, trustee fees and legal fees.
On April 7, 1997, the Partnership invested $100,000 in Advanced
UroScience, Inc. and received 25,000 shares of Series A Preferred
Stock. Advanced UroScience, Inc. is developing Acyst, an injectable
bulking agent, for the treatment of stress urinary incontinence.
During the second quarter of 1997, the Partnership received
additional purchase price consideration of $19,656 related to the sale
of the Houghton Acquisition Corporation (HAC) investment in January,
1997, which resulted in additional gain on the sale of investment.
On June 16, 1997, the Partnership purchased 78,947.50 warrants from
Computer Motion for $8. These warrants are exercisable for 7 years
from issuance at $2.37 per warrant. Also during June, 1997, the
Partnership's original investment of $125,250 in Computer Motion
Series E Preferred Stock and warrants was adjusted due to the Company
raising less than $3.7 million in equity financing within 120 days of
the first issuance of Series E Preferred Stock. The Partnership's
25,000 shares of Series E Preferred Stock that was convertible into
25,000 shares of common stock is now convertible into 31,250 shares of
<PAGE>
common stock. In addition, the Partnership's 25,000 warrants
exercisable at $5 per warrant has been adjusted to 31,250 warrants
exercisable at $4 per warrant.
During the quarter ended June 30, 1997, an unrealized loss of
$57,013 has been recorded for the FCOA Acquisition Corporation
investment. Cumulative unrealized losses related to this investment
total $98,374 as of June 30, 1997.
INVESTMENT TRANSACTIONS
Following is a summary of portfolio investment transactions during the
period ending June 30, 1997.
For the period ending June 30, 1997
Realized
Investment Cost Proceeds Gain (Loss)
___________ __________ __________ ____________
Purchases:
Quarter 1:
Medical Device
Alliance,Inc. $ 100,000 $ - $ -
Online Resources &
Communications
Corporation 150,000 - -
__________ __________ ___________
Quarter 2:
Advanced UroScience,
Inc. $ 100,000 $ - $ -
Computer Motion, Inc. 8 - -
_________ __________ ___________
Total Purchases$ 350,008 $ - $ -
========== ========== ===========
Sales:
Quarter 1:
Houghton
Acquisition Corp.$ 200,013 $ 690,779 (a) $ 490,766
Quarter 2:
Houghton
Acquisition Corp.$ - $ 19,656 (b) $ 19,656
__________ __________ ___________
Total Sales $ 200,013 $ 710,435 $ 510,422
========== ========== ===========
(a)Proceeds included $613,379 in cash, a $77,400 Convertible Promissory Note
and a $25,800 Promissory Note contingent upon the future income of HAC before
<PAGE>
interest, taxes, depreciation, amortization and corporate charges.
Due to the contingent nature of the $25,800 Promissory Note,
a gain has not been recorded. This note has been recorded at an
original cost of $0, and additional gain will be recorded if, or when,
payments become due under terms of the Note.
(b)Proceeds included additional purchase price consideration.
FINANCIAL CONDITION
See Schedule of Portfolio Investments, page 4.
LIQUIDITY AND CAPITAL RESOURCES
The partnership's total capital of $1,819,948 as of June 30, 1997,
consisted of $1,801,629 in limited partner capital and $18,319 in
general partner capital. Net income was allocated to the limited
partners in the amount of $395,874 and to the general partners in the
amount of $3,999.
The Partnership is actively reviewing potential portfolio
investments. Until the Partnership invests in portfolio investments,
it intends to invest its cash balances in a money market account. At
June 30, 1997, $186,000 was invested in the money market account.
Such investments provide the Partnership with the liquidity necessary
for investments as opportunities arise.
SUBSEQUENT EVENTS
There were no subsequent events.
<PAGE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
Item 1: Legal Proceedings
The partnership is not a party to any material pending legal
proceedings.
Item 6: Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the quarter ended June 30,
1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
COMMUNITY INVESTMENT PARTNERS II, L.P.
By: CIP Management, L.P., Managing General Partner
By: CIP Management, Inc., Its Managing General Partner
/s/Daniel A. Burkhardt President, Treasurer
_______________________ and Director
Daniel A. Burkhardt July 28, 1997
/s/Ray L. Robbins Vice-President
_______________________ and Director July 28, 1997
Ray L. Robbins
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
COMMUNITY INVESTMENT PARTNERS II, L.P.
By: CIP Management, L.P., Managing General Partner
By: CIP Management, Inc., Its Managing General Partner
President, Treasurer
_______________________ and Director
Daniel A. Burkhardt July 28, 1997
Vice-President
_______________________ and Director July 28, 1997
Ray L. Robbins
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for Community Investment Partners II, L.P. for the quarter
ended June 30, 1997 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
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<NAME> COMMUNITY INVESTMENT PARTNERS II, L.P.
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