<PAGE>
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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 MARCH 31, 1999
Commission file number 0-18042
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 Road
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
YES [ X ] NO [ ]
1
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COMMUNITY INVESTMENT PARTNERS II, L.P.
INDEX
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Schedule of Portfolio Investments 3
Statement of Financial Condition 6
Statement of Income 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 <F*>
Item 1. Legal Proceedings 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
<FN>
<F*> Items 2,3,4 and 5 are omitted as they are not applicable
</TABLE>
2
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
As of March 31, 1999
___________________________________________________________________________________________________
<CAPTION>
Company Nature of Business
Investment Date Investment Cost Fair Value
___________________________________________________________________________________________________
<S> <C> <C> <C>
HAWK CORPORATION Designs, engineers, manufactures,
(Houghton Acquisition and markets friction products and
Corporation) precision engineered components
8% Contingent EBITDA
Promissory Note, due 4/30/00 - -
GLOBAL SURGICAL Formed to acquire the Urban
CORPORATION Microscope Division and the
Surgical Mechanical Research
subsidiary of Storz Medical
January 31, 1994 3,000 shares of Common Stock 300,000 300,000
June 30, 1995 7% Promissory Note, due 6/29/00 45,000 45,000
January 26, 1996 7% Promissory Note, due 1/25/01 67,500 67,500
COMPUTER MOTION, INC. Develops and supplies medical robotics
September 6, 1996 40,948 warrants to purchase
common stock, exercisable
at $4.569 per warrant through
5/2/03 8 8
September 6, 1996 16,208 shares of Common Stock 124,993 162,080
16,209 warrants to purchase
common stock, exercisable
at $7.712 per warrant,
through 12/31/03 250 250
FOCI 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 -
___________________________________________________________________________________________________
<CAPTION>
The accompanying notes are an integral part of these financial statements.
3
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D)
As of March 31, 1999
___________________________________________________________________________________________________
Company Nature of Business
Investment Date Investment Cost Fair Value
___________________________________________________________________________________________________
<S> <C> <C> <C>
PERMALOK CORPORATION Develops and sells steel
pipe joining system to the
domestic underground
utility construction industry
Sept. 24, 1996 25,000 shares of Convertible
Preferred Stock and 25,000
Warrants to purchase convertible
Preferred Stock, exercisable
at $9.60 per share, through 7/31/03 $ 200,000 $ 200,000
STEREOTAXIS, INC. Develops and markets a system
by which surgery can be conducted
remotely using computer
controlled magnets
Dec. 30, 1996 138,889 shares of Preferred Stock 100,000 100,000
Nov. 12, 1997 28,019 shares of Series C Preferred
Stocks and 5,281 Warrants to purchase
Preferred Stock, exercisable at
$1.50 per share, through 10/31/02. 42,029 42,029
June, 26, 1998 66,667 shares of Series C
Preferred Stock 100,001 100,001
MEDICAL DEVICE Specializes in the development,
ALLIANCE, INC, manufacture and marketing of devices
for ultrasound-assisted lipoplasty
January 24, 1997 20,000 shares of Common Stock 100,000 100,000
ONLINE RESOURCES & Provides a variety of inter-active
COMMUNICATIONS banking and financial services to end-
CORPORATION users and corporate customers in the
banking and financial services industry
March 17, 1997 1,525 shares of Series C
Convertible Preferred Stock 152,466 152,466
Warrants to purchase
20,327 shares of Common
Stock at $3.00 per warrant,
expiring 6/1/02
___________________________________________________________________________________________________
<CAPTION>
The accompanying notes are an integral part of these financial statements.
4
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D)
As of March 31, 1999
___________________________________________________________________________________________________
Company Nature of Business
Investment Date Investment Cost Fair Value
___________________________________________________________________________________________________
<S> <C> <C> <C>
ADVANCED UROSCIENCE, Developing Acyst, an injectable
INC. bulking agent, for the treatment
of stress urinary incontinence.
April 7, 1997 25,000 shares of Series A
Preferred Stock $ 100,000 $ 100,000
NEOCRIN COMPANY Research and development
of minimally invasive,
encapsulated cellular transplants
for the treatment of diabetes.
Sept. 3, 1997 50,000 shares of Series E
Preferred Stock 100,000 100,000
BIOSEPARATIONS, INC. Develops automated
instrumentation that can
isolate and process cells for
use in biotechnology,
diagnostic, therapeutic, and
clinical research applications
October 14, 1997 50,000 shares of Series B
Preferred Stock 100,000 100,000
Warrant to purchase 9,091
shares of Common Stock
at $1.10 per share, through
10/15/02 - -
Warrant to purchase 50,000
shares of Series B Preferred Stock
at $0.20 per share, through 1/31/01 - -
---------- ----------
TOTAL INVESTMENTS $1,782,112 $1,569,334
========== ==========
___________________________________________________________________________________________________
The accompanying notes are an integral part of these financial statements.
</TABLE>
5
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Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF FINANCIAL CONDITION
(UNAUDITED)
<CAPTION>
March 31, December 31,
1999 1998
______________________________________________________________________________________________
<S> <C> <C>
ASSETS
------
Investments at Fair Value
(cost $1,782,112 and $1,807,912, respectively) $1,569,334 $1,671,491
Cash and Cash Equivalents 49,299 26,598
Accrued Interest and Dividends Receivable 26,775 25,322
---------- ----------
TOTAL ASSETS $1,645,408 $1,723,411
========== ==========
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
Liabilities:
Accounts Payable and Accrued Expenses $ 17,500 $ 14,000
---------- ----------
TOTAL LIABILITIES 17,500 14,000
---------- ----------
Partnership Capital:
Capital - Limited Partners 1,611,510 1,692,198
Capital - General Partners 16,398 17,213
---------- ----------
TOTAL PARTNERSHIP CAPITAL 1,627,908 1,709,411
---------- ----------
TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $1,645,408 $1,723,411
========== ==========
______________________________________________________________________________________________
The accompanying notes are an integral part of these financial statements.
</TABLE>
6
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<PAGE>
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
___________________________________________________________________________________________________
<S> <C> <C>
INCOME
------
Dividend and Interest Income $ 1,980 $ 3,874
-------- --------
TOTAL INCOME 1,980 3,874
-------- --------
EXPENSES
--------
Management Fees - 7,092
Professional Fees 6,213 4,096
Independent General Partners' Fees - 1,000
-------- --------
TOTAL EXPENSES 6,213 12,188
-------- --------
Net Loss before Realized Losses and
Unrealized (Losses) Gains (4,233) (8,314)
Net Realized Losses on
Sale of Investments (913) -
Net Unrealized (Losses) Gains on
Investments (76,357) 120,144
-------- --------
NET (LOSS) INCOME $(81,503) $111,830
======== ========
Per Unit Information:
Net (Loss) Income $ (.72) $ .99
======== ========
Net Asset Value $ 14.47 $ 17.42
======== ========
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.
</TABLE>
7
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<PAGE>
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
___________________________________________________________________________________________________
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net (loss) income $(81,503) $ 111,830
Adjustments to reconcile net (loss) income to net
cash provided by operating activities -
Increase in accrued expenses 3,500 8,254
Increase in accrued interest and
dividends receivable (1,453) (1,928)
Sale of portfolio investments 24,887 51,600
Unrealized losses (gains) on portfolio investments 76,357 (120,144)
Net realized losses on sale of portfolio investments 913 -
-------- ---------
Total cash provided by operating activities 22,701 49,612
-------- ---------
Net increase in cash and cash equivalents 22,701 49,612
CASH AND EQUIVALENTS, beginning of period 26,598 112,496
-------- ---------
CASH AND EQUIVALENTS, end of period $ 49,299 $162,108
======== ========
___________________________________________________________________________________________________
The accompanying notes are an integral part of these financial statements.
</TABLE>
8
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<PAGE>
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
(UNAUDITED)
<CAPTION>
Three Months Ended March 31, 1999 and 1998
Limited Partners General Partners Total
_______________________________________________________________________________________________
<S> <C> <C> <C>
Balance, December 31, 1997 $1,830,287 $18,608 $1,848,895
Net Income 110,712 1,118 111,830
---------- ------- ----------
Balance, March 31, 1998 $1,940,999 $19,726 $1,960,725
========== ======= ==========
Balance, December 31, 1998 $1,692,198 $17,213 $1,709,411
Net Loss (80,688) (815) (81,503)
---------- ------- ----------
Balance, March 31, 1999 $1,611,510 $16,398 $1,627,908
========== ======= ==========
_______________________________________________________________________________________________
The accompanying notes are an integral part of these financial statements.
</TABLE>
9
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<PAGE>
Part. 1. FINANCIAL INFORMATION
Item 1. Financial Statements
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., LLLP (Management), a
limited liability limited partnership, is the Managing General Partner
of CIP II. Management is responsible for making all decisions regarding
CIP II's investment portfolio. CIP II is no longer making initial
investments, but may continue to make follow-on investments.
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. Due to the inherent uncertainty of valuation, those estimated
values for portfolio investments carried at cost may differ
significantly from the values that would have been used had a ready
market for the investment existed, and the differences could be material
to the financial statements. 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.
Investment transactions are recorded on a trade date basis. Income is
recorded on an accrual basis.
The General Partners of CIP II, have amended, and Management has
agreed to amend, the Management Agreement for CIP II to clarify the
right of Management to waive all or any portion of the management fee
from time to time without any reduction in the level of services.
10
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Part. 1. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
COMMUNITY INVESTMENT PARTNERS II, L.P.
MANAGEMENT'S FINANCIAL DISCUSSION
RESULTS OF OPERATIONS
Net loss for the period ending March 31, 1999 was $81,503,
compared to net income of $111,830 for the period ending March 31, 1998.
The difference is primarily attributable to net unrealized losses of
$76,357 in the first quarter of 1999 versus net unrealized gains of
$120,144 in the first quarter of 1998. Also, expenses have decreased
nearly 50%, from $12,188 in the first quarter of 1998 to $6,213 in the
first quarter of 1999 due to management waiving the management fee and
the discontinuance of the director's fee.
Net unrealized losses are comprised of net unrealized losses from
FCOA Acquisition Corporation and Computer Motion, Inc. in the amounts of
$35,837 and $40,520, respectively. FCOA Acquisition Corporation has
filed for Chapter 11 Bankruptcy as of March 23, 1999.
As of March 31, 1999, unrealized losses on investments totaled
$212,778. The future income or loss of the Partnership is contingent
upon the performance of the portfolio investments and the ability to
find suitable investment alternatives.
11
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Part. 1. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INVESTMENT TRANSACTIONS
Following is a summary of portfolio investment transactions during the
period ended March 31, 1999.
<TABLE>
<CAPTION>
Type of Realized
Company Transaction Cost Proceeds Loss
- ------------------------ ------------------- -------- -------- --------
<S> <C> <C> <C> <C>
SALES:
- ------
Quarter 1 ended:
- ----------------
Hawk Corp. (Houghton Payment of
Acquisition Corp.) Term Note $25,800 $24,887 $(913)
-------- -------- --------
TOTAL SALES $25,800 $25,800 $(913)
======== ======== ========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The partnership's total capital of $1,627,908 as of March 31,
1999, consisted of $1,611,510 in limited partner capital and $16,398 in
general partner capital. Net loss was allocated to the limited partners
in the amount of $80,688 and to the general partners in the amount of
$815.
At March 31, 1999, the Partnership had $49,299 in cash and cash
equivalents.
SUBSEQUENT EVENTS
The Partnership has made an additional investment of $6,000 in
Neocrin Company on April 23, 1999, purchasing 3,000 shares of Series F
Preferred Stock.
YEAR 2000 ISSUE
Although the Partnership has no Year 2000 issues that would result
from its own information systems, the Partnership has investments in
publicly and privately placed securities and loans. The Partnership may
be exposed to credit risk to the extent that the related borrowers are
materially adversely impacted by the Year 2000 issue.
12
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Part. II. OTHER INFORMATION
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,
1998.
13
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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., LLLP, Managing General Partner
By: CIP Management, Inc., its Managing General Partner
<TABLE>
<S> <C> <C>
/s/ Daniel A. Burkhardt
_______________________ President, Treasurer and Director May 10, 1999
Daniel A. Burkhardt
/s/ Ray L. Robbins
_______________________ Vice-President and Director May 10, 1999
Ray L. Robbins
</TABLE>
14
<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 March 31, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<INVESTMENTS-AT-COST> 1,782,112
<INVESTMENTS-AT-VALUE> 1,569,334
<RECEIVABLES> 26,775
<ASSETS-OTHER> 49,299
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,645,408
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,500
<TOTAL-LIABILITIES> 17,500
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 112,530
<SHARES-COMMON-PRIOR> 112,530
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 1,627,908
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,980
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> (913)
<APPREC-INCREASE-CURRENT> (76,357)
<NET-CHANGE-FROM-OPS> 0
<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> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 6,213
<AVERAGE-NET-ASSETS> 1,668,660
<PER-SHARE-NAV-BEGIN> 15.19
<PER-SHARE-NII> (0.72)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.47
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
