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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 MARCH 31, 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
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(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
Page
Number
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
2
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS II, L.P.
<TABLE>
SCHEDULE OF PORTFOLIO INVESTMENTS
As of March 31, 2000
<CAPTION>
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Company Nature of Business
Investment Date Investment Cost Fair Value
- -----------------------------------------------------------------------------------------------
<C> <S> <C> <C>
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
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 8 199,347
September 6, 1996 16,208 shares of Common Stock 124,993 152,963
16,209 warrants to purchase
common stock, exercisable
at $7.712 per warrant,
through 12/31/03 250 27,719
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 -
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 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.
3
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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 March 31, 2000
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Company Nature of Business
Investment Date Investment Cost Fair Value
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<C> <S> <C> <C>
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 Series B
Preferred Stock $ 100,000 $ 100,000
Nov. 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-active
COMMUNICATIONS banking and financial services to
CORPORATION end-users and corporate customers in
(ORCC) the banking and financial services
industry
March 17, 1997 18,118 shares of common stock 152,466 311,403
Warrants to purchase
7,233 shares of Common
Stock at $8.43 per share,
expiring 6/1/02 - 63,343
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
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<CAPTION>
The accompanying notes are an integral part of these financial statements.
4
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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 March 31, 2000
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Company Nature of Business
Investment Date Investment Cost Fair Value
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<C> <S> <C> <C>
NOVOCELL, INC. Research and development
of minimally invasive,
encapsulated cellular transplants
for the treatment of diabetes
Sept. 9, 1999 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
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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TOTAL INVESTMENTS $1,693,643 $1,920,836
========== ==========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
5
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS II, L.P.
<TABLE>
STATEMENT OF FINANCIAL CONDITION
(UNAUDITED)
<CAPTION>
March 31, December 31,
2000 1999
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<S> <C> <C>
ASSETS
------
Investments at Fair Value
(cost $1,693,643 and $1,692,112, respectively) $1,920,836 $2,019,936
Cash and Cash Equivalents 11,104 12,635
Accrued Interest and Dividends Receivable 34,650 32,682
---------- ----------
TOTAL ASSETS $1,966,590 $2,065,253
========== ==========
LIABILITIES AND PARTNERSHIP CAPITAL
-----------------------------------
Liabilities:
Accounts Payable and Accrued Expenses $ 19,124 $ 14,604
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TOTAL LIABILITIES 19,124 14,604
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Partnership Capital:
Capital - Limited Partners 1,927,873 2,030,024
Capital - General Partners 19,593 20,625
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TOTAL PARTNERSHIP CAPITAL 1,947,466 2,050,649
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TOTAL LIABILITIES AND
PARTNERSHIP CAPITAL $1,966,590 $2,065,253
========== ==========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
6
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS II, L.P.
<TABLE>
STATEMENT OF INCOME
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
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<S> <C> <C>
INCOME
------
Dividend and Interest Income $ 1,969 $ 1,980
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TOTAL INCOME 1,969 1,980
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EXPENSES
--------
Professional Fees 4,520 6,213
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TOTAL EXPENSES 4,520 6,213
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Net Loss before Realized Losses and
Unrealized Losses (2,551) (4,233)
Net Realized Losses on
Sale of Investments - (913)
Net Unrealized Losses on
Investments (100,632) (76,357)
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NET LOSS $(103,183) $(81,503)
========= ========
Per Unit Information:
Net Loss $ (.92) $ (.72)
========= ========
Net Asset Value $ 17.30 $ 14.47
========= ========
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>
7
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS II, L.P.
<TABLE>
STATEMENT OF CASH FLOWS
(UNAUDITED)
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
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<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net loss $(103,183) $(81,503)
Adjustments to reconcile net (loss) income to net
cash provided by operating activities -
Increase in accrued expenses 4,520 3,500
Increase in accrued interest and
dividends receivable (1,969) (1,453)
Purchase of portfolio investments (1,531) -
Sale of portfolio investments - 24,887
Unrealized losses on portfolio investments 100,632 76,357
Net realized losses on sale of portfolio investments - 913
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Total cash (used) provided by operating activities (1,531) 22,701
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Net (decrease) increase in cash and cash equivalents (1,531) 22,701
CASH AND EQUIVALENTS, beginning of period 12,635 26,598
--------- --------
CASH AND EQUIVALENTS, end of period $ 11,104 $ 49,299
========= ========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
8
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY INVESTMENT PARTNERS II, L.P.
<TABLE>
STATEMENT OF CHANGES IN PARTNERSHIP CAPITAL
(UNAUDITED)
<CAPTION>
Three Months Ended March 31, 2000 and 1999
Limited Partners General Partners Total
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<S> <C> <C> <C>
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
========== ======= ==========
Balance, December 31, 1999 $2,030,024 $20,625 $2,050,649
Net Loss (102,151) (1,032) (103,183)
---------- ------- ----------
Balance, March 31, 2000 $1,927,873 $19,593 $1,947,466
========== ======= ==========
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The accompanying notes are an integral part of these financial statements.
</TABLE>
9
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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 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 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
Net loss for the period ending March 31, 2000 was $103,183,
compared to a net loss of $81,503 for the same period in 1999. The net
loss increased primarily due to a $24,275 (32%) increase in unrealized
losses on investment securities.
There were no realized gains or losses from the sale of
investments at March 31, 2000, compared to a $913 realized loss at March
31, 1999. Unrealized losses of $100,632 at March 31, 2000 were $24,275
greater than the $76,357 unrealized loss at March 31, 1999. The
increased losses were due primarily to a decrease in the share price of
Computer Motion, Inc. 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.
Expenses of $4,520 and $6,213 for the three months ended March 31,
2000 and March 31, 1999, respectively, represented professional
expenses. The expenses at March 31, 2000 consisted of legal, audit, and
tax expense. The decrease from 1999 is due to a decrease in trustee
fees.
11
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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 March 31, 2000.
<TABLE>
<CAPTION>
Type of Realized
Company Transaction Cost Proceeds Loss
- ----------------------- ---------------- -------- -------- --------
<S> <C> <C> <C> <C>
PURCHASES:
- ----------
Quarter 1 ended:
- ----------------
Novocell, Inc. Purchase of 9.5%
Promissory Note $ 1,531 $ - $ -
-------- -------- --------
TOTAL PURCHASES $ 1,531 $ - $ -
======== ======== ========
</TABLE>
There were no sales during the period ended March 31, 2000.
LIQUIDITY AND CAPITAL RESOURCES
The partnership's total capital of $1,947,466 as of March 31,
2000, consisted of $1,927,873 in limited partner capital and $19,593 in
general partner capital. Net loss was allocated to the limited partners
in the amount of $102,151 and to the general partners in the amount of
$1,032.
At March 31, 2000, the Partnership had $11,104 in cash and cash
equivalents.
SUBSEQUENT EVENTS
None.
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 during the quarter ended March
31, 2000.
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
/s/ Daniel A. Burkhardt
---------------------- President, Treasurer and Director May 11, 2000
Daniel A. Burkhardt
/s/ Ray L. Robbins
---------------------- Vice-President and Director May 11, 2000
Ray L. Robbins
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, 2000 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<INVESTMENTS-AT-COST> 1,693,643
<INVESTMENTS-AT-VALUE> 1,920,836
<RECEIVABLES> 34,650
<ASSETS-OTHER> 11,104
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,966,590
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 19,124
<TOTAL-LIABILITIES> 19,124
<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> 1,947,466
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,969
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (100,632)
<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> 4,520
<AVERAGE-NET-ASSETS> 1,999,058
<PER-SHARE-NAV-BEGIN> 18.22
<PER-SHARE-NII> (0.92)
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.30
<EXPENSE-RATIO> 0
</TABLE>