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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 SEPTEMBER 30, 2000
Commission file number 0-20213
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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 515-2000
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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
<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
Item 1. Legal Proceedings.......................................................................13
Item 6. Exhibits and Reports on Form 8-K........................................................13
Signatures..............................................................................14
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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 SEPTEMBER 30, 2000
<CAPTION>
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Company Nature of Business
Initial Investment Date Investment Cost Fair Value
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<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
August 1, 2000 12% Subordinated Promissory
Note, due 4/30/03 155,221 155,221
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 8 201,914
September 6, 1996 13,508 shares of Common Stock 104,171 128,326
16,209 warrants to purchase
common stock, exercisable at
$7.712 per warrant, through 12/31/03 250 28,982
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 Common Shares 249,865 -
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
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<CAPTION>
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.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D.)
AS OF SEPTEMBER 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>
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
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 60,067
Warrants to purchase
7,233 shares of Common
Stock at $8.43 per share,
expiring 6/1/02 - -
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<CAPTION>
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.
SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D)
AS OF SEPTEMBER 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>
ADVANCED UROSCIENCE, Developing Acyst, an injectable bulking agent,
INC. 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, 2000 10,000 shares of Series A
Preferred Stock 10,000 10,000
March 30, 2000 9.5% convertible 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
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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$1,709,745 $1,639,946
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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)
September 30, December 31,
2000 1999
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<S> <C> <C>
ASSETS
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Investments at Fair Value
(cost $1,709,745 and $1,692,112, respectively) $ 1,639,946 $ 2,019,936
Cash and Cash Equivalents 15,963 12,635
Accrued Interest and Dividends Receivable 3,104 32,682
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TOTAL ASSETS $ 1,659,013 $ 2,065,253
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LIABILITIES AND PARTNERSHIP CAPITAL
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Liabilities:
Accounts Payable and Accrued Expenses $ 11,340 $ 14,604
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TOTAL LIABILITIES 11,340 14,604
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Partnership Capital:
Capital - Limited Partners 1,631,078 2,030,024
Capital - General Partners 16,595 20,625
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TOTAL PARTNERSHIP CAPITAL 1,647,673 2,050,649
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TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $ 1,659,013 $ 2,065,253
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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
<TABLE>
COMMUNITY INVESTMENT PARTNERS II, L.P.
STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
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INCOME
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<S> <C> <C> <C> <C>
Dividend and Interest Income $ 9,206 $ 1,969 $ 13,144 $ 5,918
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TOTAL INCOME 9,206 1,969 13,144 5,918
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EXPENSES
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Professional Fees 7,880 3,560 22,736 16,215
Other 515 515 515 515
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TOTAL EXPENSES 8,395 4,075 23,251 16,730
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Net Income (Loss) before Realized Gains
(Losses) and Unrealized Gains (Losses) 811 (2,106) (10,107) (10,812)
Net Realized Gains (Losses) on
Sale of Investments 3,293 (106,000) 4,754 (106,913)
Net Unrealized Gains (Losses) on
Investments 45,283 2,622 (397,623) 22,564
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NET INCOME (LOSS) $ 49,387 $ (105,484) $ (402,976) $ (95,161)
============= ============== ============= ==============
Per Unit Information:
Net Income (Loss) $ .43 $ (.94) $ (3.58) $ (.85)
============= ============== ============= ==============
Net Asset Value (as of September
30, 2000 and December 31, 1999) $ 14.64 $ 18.22
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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>
Nine Months Nine Months
Ended Ended
Sept. 30, 2000 Sept. 30, 1999
===================================================================================================================
<S> <C> <C>
CASH PROVIDED (USED) BY
OPERATING ACTIVITIES:
Net Loss $ (402,976) $ (95,161)
Adjustments to reconcile Net Income to Net
Cash Used by Operating Activities -
Decrease in Accrued Expenses (3,264) (3,320)
Decrease (Increase) in Accrued Interest and
Dividends Receivable 29,578 (5,390)
Purchase of Portfolio Investments (56,127) (16,000)
Sale of Portfolio Investments 43,248 24,887
Net Unrealized Losses (Gains) on Portfolio Investments 397,623 (22,564)
Net Realized (Gains) Losses on Sale of Portfolio Investments (4,754) 106,913
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Total Cash Used by Operating Activities $ 3,328 $ (10,635)
CASH AND EQUIVALENTS, beginning of period 12,635 26,598
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CASH AND EQUIVALENTS, end of period $ 15,963 $ 15,963
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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>
Nine Months Ended September 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 Loss (94,209) (952) (95,161)
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Balance, September 30, 1999 $ 1,597,989 $ 16,261 $ 1,614,250
================ ================ ================
Balance, December 31, 1999 $ 2,030,024 $ 20,625 $ 2,050,649
Net Loss (398,946) (4,030) (402,976)
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Balance, September 30, 2000 $ 1,631,078 $ 16,595 $ 1,647,673
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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
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 SEPTEMBER 30, 2000 VERSUS QUARTER ENDED SEPTEMBER 30, 1999
Net income for the three months ended September 30, 2000 was $49,387,
compared to a net loss of $105,484 for the three months ended September 30,
1999.
Realized gains for the three months ended September 30, 2000 were $3,293,
compared to unrealized losses of $106,000 for the three months ended September
30, 1999. The unrealized loss for the three months ended September 30, 1999
was the result of the write-off of the Neocrin investment. Net unrealized gains
for the three months ended September 30, 2000 were $45,283, a $42,661 increase
over net unrealized gains of $2,622 for the three months ended September 30,
1999. The increase in unrealized gains is due to the valuation of the Computer
Motion warrants at current market prices. Prior to December 1999, warrants were
valued at cost. The unrealized gain at September 30, 2000 is offset by
unrealized losses on Online Resources & Communications Corporation common
stock, due to a decrease in the market value per share.
Expenses for the three months ended September 30, 2000 were $8,395, up
106% from total expenses of $4,075 for the three months ended September 30,
1999. The increase is caused by timing of the $3,195 annual payment for
trustee fees. The fees were paid in the first quarter during 1999, but in
the third quarter of 2000.
NINE MONTHS ENDED SEPTEMBER 30, 2000 VERSUS NINE MONTHS ENDED SEPTEMBER 30, 1999
Net losses for the nine months ended September 30, 2000 and 1999 were
$402,976 and $95,161, respectively.
The increased net loss is primarily due to a $397,623 unrealized loss
on publicly traded investments for the nine months ended September 30, 2000,
compared to a $22,564 unrealized gain for the nine months ended September
30, 1999. From December 31, 1999 to September 30, 2000, the share prices of
Computer Motion and Online Resources and Communications Corporation
decreased 14% and 77%, respectively.
Expenses for the nine months ended September 30, 2000 were $23,251, an
increase of 39% compared to the $16,730 total expenses recorded through
September 30, 1999. Within total expenses, legal expenses increased
approximately $4,700 and professional expenses increased approximately
$1,300.
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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
period ended September 30, 2000.
<TABLE>
<CAPTION>
Type of Realized
Company Transaction Cost Proceeds Gain (Loss)
----------------------- ------------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
SALES:
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Quarter 2 ended:
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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
Houghton Acquisition Escrow
Corporation Disbursement -- 3,293 3,293
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Total Sales $ 38,494 $ 43,248 $ 4,754
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PURCHASES:
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Quarter 1 ended:
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Novocell, Inc. Purchase of 9.5%
Promissory Note $ 1,531
Quarter 2 ended:
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Novocell, Inc. Purchase of 1,402
shares of Series B
preferred stock 11,875
Quarter 3 ended:
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Global Surgical, Corp. Purchase of 12%
Promissory Note 42,721
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Total Purchases $ 56,127
=============
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
The partnership's total capital of $1,647,673 as of September 30, 2000,
consisted of $1,631,078 in limited partner capital and $16,595 in general
partner capital. Net loss was allocated to the limited partners in the
amount of $398,946 and to the general partners in the amount of $4,030.
At September 30, 2000, the Partnership had $15,963 in cash and cash
equivalents.
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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 September 30,
2000.
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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 November 14, 2000
Daniel A. Burkhardt
/s/ Ray L. Robbins, Jr.
_______________________ Vice-President and Director November 14, 2000
Ray L. Robbins, Jr.
</TABLE>
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