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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 2000
Commission file number 0-18042
COMMUNITY INVESTMENT PARTNERS II, L.P.
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(Exact name of registrant as specified in its charter)
MISSOURI 43-1609351
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(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
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COMMUNITY INVESTMENT PARTNERS II, L.P.
INDEX
Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Schedule of Portfolio Investments 3
Statement of Financial Condition 7
Statement of Income 8
Statement of Cash Flows 9
Statement of Changes in Partnership Capital 10
Notes to Financial Statements 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
AS OF JUNE 30, 2000
<CAPTION>
----------------------------------------------------------------------------------------------------
Company Nature of Business
Initial Investment Date Investment Cost Fair Value
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GLOBAL SURGICAL Formed to acquire the Urban Microscope
CORPORATION Division and the Surgical Mechanical
Research subsidiary of Storz Medical
January 31, 1994 3,000 shares of Common Stock $300,000 $300,000
September 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
(RBOT)
September 6, 1996 40,948 warrants to purchase
common stock, exercisable at
$4.569 per warrant through 5/2/03 8 150,730
September 6, 1996 13,508 shares of Common Stock 104,171 111,440
16,209 warrants to purchase
common stock, exercisable at
$7.712 per warrant, through 12/31/03 250 8,720
FCOA ACQUISITION A chain of greeting card/
CORPORATION party stores which offer
(d/b/a Factory Card a full line of products at
Outlet) (FCPY) everyday value prices
July 30, 1996 26,063 shares of Common Stock 249,865 -
----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
3
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D.)
AS OF JUNE 30, 2000
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Company Nature of Business
Initial 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
September 24, 1996 25,000 shares of Convertible
Preferred Stock and warrants
to purchase 25,000 shares
of 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
December 30, 1996 138,889 shares of Series B
Preferred Stock 100,000 100,000
November 12, 1997 28,019 shares of Series C Preferred
Stock and 5,281 warrants to purchase
Preferred Stock 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
----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D.)
AS OF JUNE 30, 2000
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Company Nature of Business
Initial Investment Date Investment Cost Fair Value
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ONLINE RESOURCES & Provides a variety of inter-
COMMUNICATIONS active banking and financial services
CORPORATION to end-users and corporate
(ORCC) customers in the banking and
financial services industry
March 17, 1997 16,018 shares of Common Stock $134,794 $103,116
Warrants to purchase
7,233 shares of Common
Stock at $8.43 per share,
expiring 6/1/02 - -
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
NOVOCELL, INC. Research and development
of minimally invasive,
encapsulated cellular transplants
for the treatment of diabetes.
September 9, 1999 10,000 shares of
Series A Preferred Stock 10,000 10,000
March 30, 2000 9.5% convertibe promissory
note, due 9/30/00 1,531 1,531
April 26, 2000 1,402 shares of Series B
Preferred Stock 11,875 11,875
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The accompanying notes are an integral part of these financial statements.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<CAPTION>
COMMUNITY INVESTMENT PARTNERS II, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D.)
AS OF JUNE 30, 2000
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Company Nature of Business
Initial Investment Date Investment Cost Fair Value
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<S> <C> <C> <C>
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 - -
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$1,667,024 $1,551,942
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The accompanying notes are an integral part of these financial statements.
</TABLE>
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF FINANCIAL CONDITION
<CAPTION>
(Unaudited)
June 30, December 31,
2000 1999
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<S> <C> <C>
ASSETS
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Investments at Fair Value
(cost $1,667,024 and $1,692,112, respectively) $1,551,942 $2,019,936
Cash and Cash Equivalents 17,175 12,635
Accrued Interest and Dividends Receivable 36,619 32,682
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TOTAL ASSETS $1,605,736 $2,065,253
========== ==========
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
Liabilities:
Accounts Payable and Accrued Expenses $ 7,450 $ 14,604
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TOTAL LIABILITIES 7,450 14,604
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Partnership Capital:
Capital - Limited Partners 1,582,185 2,030,024
Capital - General Partners 16,101 20,625
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TOTAL PARTNERSHIP CAPITAL 1,598,286 2,050,649
---------- ----------
TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $1,605,736 $2,065,253
========== ==========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
======================================================================================================================
INCOME
------
<S> <C> <C> <C> <C>
Dividend and Interest Income $ 1,969 $ 1,969 $ 3,938 $ 3,949
--------- ------- --------- --------
TOTAL INCOME 1,969 1,969 3,938 3,949
--------- ------- --------- --------
EXPENSES
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Professional Fees 10,336 6,441 14,856 12,655
--------- ------- --------- --------
TOTAL EXPENSES 10,336 6,441 14,856 12,655
--------- ------- --------- --------
Net (Loss) before Realized Gains (Losses)
and Unrealized Gains (Losses) (8,367) (4,472) (10,918) (8,706)
Net Realized Gains (Losses) on
Sale of Investments 1,461 - 1,461 (913)
Net Unrealized (Losses) Gains on
Investments (342,274) 96,299 (442,906) 19,942
--------- ------- --------- --------
NET (LOSS) INCOME $(349,180) $91,827 $(452,363) $ 10,323
========= ======= ========= ========
Per Unit Information:
Net (Loss) Income $ (3.11) $ .81 $ (4.02) $ .09
========= ======= ========= ========
Net Asset Value (as of June 30, 2000
and December 31, 1999) $ 14.20 $ 18.22
========= ========
Units Outstanding:
Limited Partners 111,395 111,395
General Partners 1,135 1,135
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The accompanying notes are an integral part of these financial statements.
</TABLE>
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 2000 June 30, 1999
===========================================================================================
<S> <C> <C>
CASH FLOWS (USED) PROVIDED BY
OPERATING ACTIVITIES:
Net (Loss) Income $(452,363) $ 10,323
Adjustments to reconcile Net Income to Net
Cash Used by Operating Activities -
Decrease in Accrued Expenses (7,154) (6,880)
Increase in Accrued Interest and
Dividends Receivable (3,937) (3,420)
Purchase of Portfolio Investments (13,406) (6,000)
Sale of Portfolio Investments 39,955 24,887
Net Unrealized Losses (Gains) on Portfolio Investments 442,906 (19,942)
Net Realized (Gains) Losses on Sale of
Portfolio Investments (1,461) 913
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Total Cash Provided (Used) by Operating Activities $ 4,540 $ (119)
CASH AND EQUIVALENTS, beginning of period 12,635 26,598
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CASH AND EQUIVALENTS, end of period $ 17,175 $ 26,479
========= ========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
(UNAUDITED)
<CAPTION>
Six Months Ended June 30, 2000 and 1999
Limited Partners General Partners Total
==============================================================================================================
<S> <C> <C> <C>
Balance, December 31, 1998 $1,692,198 $17,213 $1,709,411
Net Income 10,220 103 10,323
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Balance, June 30, 1999 $1,702,418 $17,316 $1,719,734
========== ======= ==========
Balance, December 31, 1999 $2,030,024 $20,625 $2,050,649
Net Loss (447,839) (4,524) (452,363)
---------- ------- ----------
Balance, June 30, 2000 $1,582,185 $16,101 $1,598,286
========== ======= ==========
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The accompanying notes are an integral part of these financial statements.
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Part I. 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 increase existing holdings.
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.
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Part I. 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
QUARTER ENDED JUNE 30, 2000 VERSUS QUARTER ENDED JUNE 30, 1999
Net loss for the three months ended June 30, 2000 was $349,180,
compared to net income of $91,827 for the three months ended June 30,
1999.
Total revenues for the three months ended June 30, 2000 were a
negative $338,844, consisting of $1,969 of interest income, $1,461 of
realized gains from the sales of investments and $342,274 unrealized
losses on investments. Total revenues for the three months ended June
30, 1999 were $98,268, consisting of $1,969 of interest income and
$96,299 of unrealized gains on investments. The increase in unrealized
losses between June 30, 1999 and June 30, 2000 is due to decreases in
the share prices of Computer Motion, Inc. and Online Resources and
Communications Corporation.
Expenses for the three months ended June 30, 2000 were $10,336, a
60% increase from total expenses for the three months ended June 30,
1999 of $6,441. The increase is a result of increased legal expenses
related to an 8-K filed for the change in the Partnership's certifying
accountant.
SIX MONTHS ENDED JUNE 30, 2000 VERSUS SIX MONTHS ENDED JUNE 30, 1999
Net loss for the six months ended June 30, 2000 was $452,363,
compared to net income of $10,323 for the six months ended June 30,
1999.
The main contributor to the June 30, 2000 net loss is a $442,906
unrealized loss on publicly traded investments. The share prices of
Computer Motion, Inc. and Online Resources and Communications decreased
25% and 61%, respectively, from their December 31, 1999 levels. In
contrast, unrealized gains of $19,942 were recorded for the six months
ended June 30, 1999 due to increasing market values during that time
period.
Expenses for the six months ended June 30, 2000 were $14,856, a
17% increase from total expenses for the six months ended June 30, 1999
of $12,655. The increase is due to higher legal expenses in 2000 noted
above.
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Part I. 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
six months ended June 30, 2000.
</TABLE>
<TABLE>
<CAPTION>
Type of Realized
Company Transaction Cost Proceeds Gain (Loss)
------------------------ ------------------------- ------- -------- -----------
<S> <C> <C> <C> <C>
SALES:
------
Quarter 2 ended:
----------------
Computer Motion, Inc. Sold 2,700 shares
of common stock $20,822 $19,743 $(1,079)
Online Resources & Sold 2,100 shares
Communications Corp. of common stock 17,672 20,212 2,540
------- ------- -------
Total Sales $38,494 $39,955 $ 1,461
======= ======= =======
PURCHASES:
----------
Quarter 1 ended:
----------------
Novocell, Inc. Purchase of 9.5%
Promissory Note $ 1,531
Quarter 2 ended:
----------------
Novocell, Inc. Purchase of 1,402
shares of Series B
preferred stock 11,875
-------
Total Purchases $13,406
=======
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The partnership's total capital of $1,598,286 as of June 30, 2000,
consisted of $1,582,185 in limited partner capital and $16,101 in
general partner capital. Net loss was allocated to the limited partners
in the amount of $447,839 and to the general partners in the amount of
$4,524.
At June 30, 2000, the Partnership had $17,175 in cash and cash
equivalents.
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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
27 Financial Data Schedule
(b) Reports on Form 8-K
An 8-K, dated April 28, 2000, was filed on May 4, 2000 to
report a change in the Partnership's certifying accountant.
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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
/s/ Daniel A. Burkhardt
-------------------- President, Treasurer and Director August 11, 2000
Daniel A. Burkhardt
/s/ Ray L. Robbins, Jr.
-------------------- Vice-President and Director August 11, 2000
Ray L. Robbins, Jr.
15
