-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OepBIE3hD/6WpymR40/c/C7MWEJAx0VsU3xHVV9+UO5lYlM87g0tVScO0tI4B206 yDP573xsG60mi406cay8vA== 0001068800-99-000111.txt : 20030430 0001068800-99-000111.hdr.sgml : 20030430 19990330133800 ACCESSION NUMBER: 0001068800-99-000111 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990330 DATE AS OF CHANGE: 19990406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMMUNITY INVESTMENT PARTNERS III LP LLP CENTRAL INDEX KEY: 0001043161 STATE OF INCORPORATION: MO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 814-00147 FILM NUMBER: 99578041 BUSINESS ADDRESS: STREET 1: C/O CIP MANAGEMENT INC STREET 2: 12555 MANCHESTER ROAD CITY: ST LOUIS STATE: MO ZIP: 63131 BUSINESS PHONE: 3145152000 MAIL ADDRESS: STREET 1: C/O CIP MANAGEMENT INC STREET 2: 12555 MANCHESTER ROAD CITY: ST LOUIS STATE: MO ZIP: 63131 10-K 1 COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 Commission file number 000-23037 ----------------- --------- COMMUNITY INVESTMENT PARTNERS III L.P., LLLP ______________________________________________________________________________ (Exact name of registrant as specified in its charter) MISSOURI 43-1790352 ______________________________________________________________________________ (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 12555 Manchester Road St. Louis, Missouri 63131 ______________________________________________________________________________ (Address and principal executive office) (Zip Code) Registrant's telephone number, including area code (314) 515-2000 ---------------- Securities registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to Section 12(g) of the Act: None. 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 [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge in definitive proxy or information statements incorporated by reference in part III of this Form 10-K or any amendment to this form 10-K. YES [ ] NO [ X ] As of March 15, 1999, 48,440 units of limited partnership interest (Units), representing net assets of $1,094,700 were held by non- affiliates. There is no established public market for such Units. DOCUMENTS INCORPORATED BY REFERENCE Portions of the Prospectus of the Registrant dated January 9, 1998, filed with the Securities and Exchange Commission are incorporated by reference in Part I, Part II and Part III hereof. COMMUNITY INVESTMENT PARTNERS III L.P., LLLP TABLE OF CONTENTS
PART I Page ---- Item 1. Business 4 Item 2. Properties 5 Item 3. Legal Proceedings 6 Item 4. Submission of Matters to a Vote of Security Holders 6 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters 7 Item 6. Selected Financial Data 8 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 8. Index to Financial Statements and Supplementary Financial Data 11 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 24 PART III Item 10. Directors and Executive Officers of the Registrant 25 Item 11. Executive Compensation 26 Item 12. Security Ownership of Certain Beneficial Owners and Management 27 Item 13 Certain Relationships and Related Transactions 27 Part IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 28 SIGNATURES 29 INDEX TO EXHIBITS 30
PART I ITEM 1. BUSINESS Community Investment Partners III L.P., LLLP (the "Partnership") was formed to seek long-term capital appreciation by making investments in companies and other special investment situations. The Partnership will not engage in any other business or activity. The Partnership will dissolve on December 31, 2012, subject to the right of the Individual General Partners to extend the term for up to two additional two-year periods. The Partnership 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 assets in qualifying investments as specified in the Investment Company Act. The Partnership was formed on July 23, 1997, under the Missouri Uniform Partnership Law and the Missouri Revised Uniform Limited Partnership Law. CIP Management, L.P., LLLP, the Managing General Partner, is a Missouri limited liability limited partnership originally formed on October 10, 1989 as a Missouri limited partnership and registered as a limited liability limited partnership on July 23, 1997. The general partner of CIP Management, L.P., LLLP is CIP Management, Inc., an indirect subsidiary of Edward D. Jones & Co., L.P. The Partnership participated in a public offering of its limited partnership interests in the first quarter of 1998. The Partnership sold 54,340 Units of limited partnership interest and 549 Units of general partnership interest for an aggregate price of $686,111. In the fourth quarter, the Partnership executed a call to each partner for an additional aggregate amount of $686,111. After offering expenses, the Partnership received approximately $1,289,859 in proceeds available for investment. The Managing General Partner is required to have invested the net proceeds of the Partnership's offering (excluding amounts held in reserve) within two years of the date of the capital call. The information set forth under the captions "Investment Objectives and Policies" and "Regulation" in the Prospectus of the Partnership dated January 9, 1998, filed with the Securities and Exchange Commission pursuant to Rule 497(b) under the Securities Act of 1933, is incorporated herein by reference. RISKS OF UNIT OWNERSHIP The purchase and ownership of Units involve a number of significant risks and other important factors. The portfolio company investments of the Partnership involve a high degree of business and financial risk that can result in substantial losses. Among these are the risks associated with investment in companies with little operating history, companies operating at a loss or with substantial variations in operating results from period to period, companies with the need for substantial additional capital to support expansion or achieve or maintain a competitive position, companies which may be highly leveraged, companies which may not be diversified and companies in which the Partnership may be the sole or primary lender. The Partnership intends to invest in only a few companies; therefore, a loss or other problem with a single investment would have a material adverse effect on the Partnership. Other risks include the Partnership's ability to find suitable investments for its funds because of competition from other entities having similar investment objectives. Risks may arise due to the significant period of time that may elapse before the Partnership has completed the selection of its portfolio company investments and the significant period of time (typically four to seven years or longer) which will elapse before portfolio company investments have reached a state of maturity such that disposition can be considered. It is unlikely that any significant distributions of the proceeds from the disposition of investments will be made until the later years of the term of the Partnership. Portfolio companies may require additional funds. There can be no assurance that the Partnership will have sufficient funds from reserves or borrowing to make such follow-up investments which may have a substantial negative impact on a portfolio company in need of additional funds or may result in a missed opportunity to increase participation in a successful operation. All decisions with respect to the management of the Partnership, including identifying and making portfolio investments, are made exclusively by the General Partners. Limited Partners must rely on the abilities of the General Partners. The key personnel of the Managing General Partner have considerable prior experience in investment banking and in structuring investments similar to those which the Partnership intends to pursue. In addition, they have prior experience in the operation of Community Investment Partners, L.P. and Community Investment Partners II, L.P., both business development companies with similar investment strategies. Ownership of the Units also entails risk because Limited Partners may not be able to liquidate their investment in the event of an emergency or for any other reason due to the substantial restrictions on transfers contained in the Partnership Agreement and the lack of a market for the resale of Units. The information set forth under the captions "Risk and Other Important Factors" (including the subsections "Risks of Investment," "Size of Partnership," "Ability to Invest Funds," "Time Required to Maturity of Investments; Illiquidity of Investments," "Need for Follow- on Investments," "Use of Leverage," "Unspecified Investments," "Reliance on Management," "New Business," "No Market for Units," "Distributions in Kind" and "Federal Income Tax Considerations") on pages 13 through 17 of the Prospectus of Partnership dated January 9, 1998, filed with the Securities and Exchange Commission pursuant to Rule 497(b) under the Securities Act of 1933 on January 9, 1998, is incorporated herein by this reference. (This information has been restated herein pursuant to section 64(b) of the Investment Company Act of 1940). Partners should refer to the Partnership Agreement for more detailed information. EMPLOYEES The Partnership has no employees. The Managing General Partner performs management and administrative services for the operation of the Partnership. The Managing General Partner is paid an annual management fee of 1.5% of total assets. The Managing General Partner is reimbursed by the Partnership for out of pocket expenses in connection with finding, evaluating, structuring, approving, monitoring and liquidating the Partnership's portfolio investments. ITEM 2. PROPERTIES The Partnership does not own or lease any physical properties. ITEM 3. LEGAL PROCEEDINGS The Partnership is not a party to any material pending legal proceedings. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of security holders during the period covered by this report. PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS There is no established public trading market for the Limited Partnership interests. As of March 15, 1999, the total number of holders of units is 111. The number of limited partnership units outstanding is 54,340. The number of general partnership units outstanding is 549 as of March 15, 1999. The information set forth under the captions "Partnership Distributions and Allocations" and "Transferability of Units" in the Prospectus of the Partnership dated January 9, 1998, filed with the Securities and Exchange Commission pursuant to Rule 497(b) under the Securities Act of 1933 is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA, STATEMENTS OF FINANCIAL CONDITION:
As of December 31, ---------------------- 1998 1997 ---------- ------ Net Assets $1,240,442 $1,100 Portfolio Investments at Fair Value 512,003 - STATEMENTS OF INCOME: For the Years Ended December 31, ---------------------- 1998 1997 ---------- ------ Net Loss before Realized Gains (Losses) and Unrealized Gains (Losses) $ (131,780) - Realized Gains (Losses) - - Unrealized Gains (Losses) - - Net Loss (131,780) - Per Unit of Partnership Interest: Net Asset Value 22.60 - Net Loss before Realized Gains (Losses) and Unrealized Gains (Losses) (2.40) - Realized Gains (Losses) - - Unrealized Gains (Losses) - - Net Loss (2.40) -
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (FISCAL YEAR 1998 VERSUS 1997) Net loss for the year ended December 31, 1998, was $131,780. Operating activities did not commence until 1998; only initial contributions of $1,100 were made to establish the Partnership in 1997. The net loss is attributable to $29,060 in professional fees incurred by the Partnership and $19,813 in director and management fees. In addition, $82,363 for organization costs were expensed during 1998. The Partnership participated in a public offering of its limited partnership interests in the first quarter of 1998. The Partnership sold 54,340 Units of limited partnership interest and 549 Units of general partnership interest for an aggregate price of $686,111. In the fourth quarter, the Partnership executed a call to each partner for an additional aggregate amount of $686,111. After offering expenses, the Partnership received approximately $1,289,859 in proceeds available for investment. The Partnership has made several initial investments totaling $512,003 in its first year of operations (Note 6). The Partnership made no distributions during 1998. The future income or loss of the Partnership is contingent upon the performance of the portfolio investments. LIQUIDITY AND CAPITAL RESOURCES Total capital for the Partnership as of December 31, 1998, was $1,240,442. This consisted of $1,228,038 in Limited Partner capital and $12,404 in General Partner capital. Net loss of $131,780 for 1998 was allocated in the amount of $130,462 to the Limited Partners and in the amount of $1,318 to the General Partner. The Partnership is actively reviewing potential portfolio investments. Until the Partnership finishes investing in portfolio investments, it intends to invest its cash balances in a money market account. Due to their short-term nature, such investments provide the Partnership with the liquidity necessary for investments as opportunities arise. At December 31, 1998, the Partnership had $742,439 in cash and cash equivalents. SUBSEQUENT EVENTS None 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. Item 8. INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
Page ---- Report of Independent Accountants 12 Schedule of Portfolio Investments as of December 31, 1998 and 1997 13 Statements of Financial Condition as of December 31, 1998 and 1997 16 Statements of Income for the Years Ended December 31, 1998 and 1997. 17 Statements of Cash Flows for the Years Ended December 31, 1998 and 1997. 18 Statements of Changes in Partnership Capital for the Years Ended December 31, 1998 and 1997. 19 Notes to Financial Statements. 20
Financial Statement Schedules: All financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. REPORT OF INDEPENDENT ACCOUNTANTS To the Partners of Community Investment Partners III L.P., LLLP In our opinion, the accompanying Statements of Financial Condition, including the Schedule of Portfolio Investments, and the related Statements of Income, of Cash Flows and of Changes in Partnership Capital present fairly, in all material respects, the financial position of Community Investment Partners III L.P., LLLP (the "Partnership") at December 31, 1998 and 1997, and the results of its operations, its cash flows and the changes in Partnership Capital for each of the two years in the period ended December 31, 1998, in confomity with generally accepted accounting principles. These financial statements are the responsibility of the Partnership's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of portfolio investments owned at December 31, 1998, provide a reasonable basis for the opinion expressed above. As explained in Note 3, the financial statements include securities valued at $512,003 (41 percent of net assets), whose values have been estimated by the Managing General Partner in the absence of readily ascertainable market values. Those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and the differences could be material. PRICEWATERHOUSECOOPERS LLP St. Louis, Missouri March 12, 1999 COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP SCHEDULE OF PORTFOLIO INVESTMENTS As of December 31, 1998
- ----------------------------------------------------------------------------------------------------- Company Nature of Business Fair Value Investment Date Investment Cost (Note 3) - ----------------------------------------------------------------------------------------------------- IMPLEMED, INC. Develops polymers that are used to coat medical and other devices where infection is a serious problem April 6, 1998 10,000 shares of Series D Convertible Preferred Stock $100,000 $100,000 LIPOMED, INC. A diagnostic testing and analytical company that is pioneering new medical applications of nuclear magnetic resonance (NMR) spectroscopy. June 16, 1998 16,667 shares of Series B Convertible Preferred Stock 100,002 100,002 OPTIMARK TECHNOLOGIES, INC. Developed and patented a computer-based method for structuring auction markets that significantly improves liquidity and efficiency, lowering transaction costs in the process. September 23, 1998 10,000 shares of Series B Convertible Participating Preferred Stock 100,000 100,000 PROTEIN DELIVERY INC. Drug delivery company specializing in proprietary polymer-based systems for the delivery and stabilization of protein and peptide drugs. April 6, 1998 44,445 shares of Series D Preferred Stock 100,001 100,001 December 23, 1998 10% Bridge Note, due 4/1/99 and a Warrant to purchase shares of Common Stock, expiring 12/31/04 12,000 12,000 COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP SCHEDULE OF PORTFOLIO INVESTMENTS (CONT'D.) As of December 31, 1998 - ----------------------------------------------------------------------------------------------------- Company Nature of Business Fair Value Investment Date Investment Cost (Note 3) - ----------------------------------------------------------------------------------------------------- UNITED THERAPEUTICS Develops innovative pharmaceutical CORPORATION and biotechnological therapies for the treatment of life threatening diseases. March 31, 1998 100,000 shares of Common Stock 100,000 100,000 -------- -------- TOTAL INVESTMENTS $512,003 $512,003 ======== ======== The accompanying notes are an integral part of these financial statements.
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP SCHEDULE OF PORTFOLIO INVESTMENTS As of December 31, 1997
- ----------------------------------------------------------------------------------------------------- Company Nature of Business Fair Value Investment Date Investment Cost (Note 3) - ----------------------------------------------------------------------------------------------------- No investments were made in 1997 The accompanying notes are an integral part of these financial statements.
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP STATEMENTS OF FINANCIAL CONDITION ASSETS ------
December 31, ---------------------------- 1998 1997 ---------- ------ Investments at Fair Value (Note 3) (cost $512,003 and $0 respectively) $ 512,003 $ - Cash and Cash Equivalents 742,439 1,100 Deferred Organizational Costs (Note 3) - 8,532 ---------- ------ TOTAL ASSETS $1,254,442 $9,632 ========== ====== LIABILITIES AND PARTNERSHIP CAPITAL ----------------------------------- December 31, ---------------------------- 1998 1997 ---------- ------ Liabilities: Accounts Payable and Accrued Expenses $ 14,000 $ - Payable to Affiliates (Note 5) - 8,532 ---------- ------ TOTAL LIABILITIES 14,000 8,532 ---------- ------ Partnership Capital: Capital - Limited Partners 1,228,038 100 Capital - General Partners 12,404 1,000 ---------- ------ TOTAL PARTNERSHIP CAPITAL 1,240,442 1,100 ---------- ------ TOTAL LIABILITIES AND PARTNERSHIP CAPITAL $1,254,442 $9,632 ========== ====== The accompanying notes are an integral part of these financial statements.
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP STATEMENTS OF INCOME
For the Years Ended December 31, --------------------------- 1998 1997 --------- ----- INCOME ------ Interest Income $ 119 $ - --------- ----- TOTAL INCOME 119 - --------- ----- EXPENSES -------- Management Fees (Note 5) 7,813 - Organization Costs (Note 3) 82,363 - Professional Fees 29,060 - Independent General Partners' Fees 12,000 - Other 663 - --------- ----- TOTAL EXPENSES 131,899 - --------- ----- Net Loss before Net Realized Gains (Losses) and Unrealized Gains (Losses) (131,780) - Net Realized Gains (Losses) on Sales of Investments - - Net Unrealized Gains (Losses) on Investments - - --------- ----- NET LOSS $(131,780) $ - ========= ===== The accompanying notes are an integral part of these financial statements.
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP STATEMENTS OF CASH FLOWS
For the Years Ended December 31, --------------------------- 1998 1997 --------- ------- CASH FLOWS USED IN OPERATING ACTIVITIES: Net loss $(131,780) $ - Adjustments to reconcile net loss to net cash used by operating activities: Decrease (increase) in deferred organization costs 8,532 (8,532) Increase in accounts payable and accrued expenses 14,000 - (Decrease) increase in payable to affiliates (8,532) 8,532 Purchase of portfolio investments (512,003) - --------- ------- Net cash used in operating activities (629,783) - --------- ------- CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: Capital Contributions 1,371,122 1,100 --------- ------- Net cash provided by financing activities 1,371,122 1,100 --------- ------- Net increase in cash and cash equivalents 741,339 1,100 CASH AND CASH EQUIVALENTS: Beginning of year 1,100 - --------- ------- End of year $ 742,439 $ 1,100 ========= ======= The accompanying notes are an integral part of these financial statements.
COMMUNITY INVESTMENT PARTNERS III, L.P., LLLP STATEMENTS OF CHANGES IN PARTNERSHIP CAPITAL For the Years Ended December 31, 1998 and 1997
------------------------------------------- LIMITED GENERAL PARTNERS PARTNERS TOTAL ---------- -------- ---------- Balance, December 31, 1997 $ 100 $ 1,000 $ 1,100 Contributions 1,358,400 12,722 1,371,122 Net Loss (130,462) (1,318) (131,780) ---------- ------- ---------- Balance, December 31, 1998 $1,228,038 $12,404 $1,240,442 ========== ======= ========== The accompanying notes are an integral part of these financial statements.
COMMUNITY INVESTMENT PARTNERS III L.P., LLLP NOTES TO FINANCIAL STATEMENTS 1. GENERAL Partnership Organization ------------------------ Community Investment Partners III L.P., LLLP (the "Partnership") was formed on July 23, 1997, under the Missouri Uniform Partnership Law and the Missouri Revised Uniform Limited Partnership Law. CIP Management, L.P., LLLP, the Managing General Partner, is a Missouri limited liability limited partnership originally formed on October 10, 1989 as a Missouri limited partnership and elected to register as a limited liability limited partnership on July 23, 1997. The general partner of CIP Management, L.P., LLLP is CIP Management, Inc., an indirect subsidiary of Edward D. Jones & Co., L.P. Business -------- The Partnership 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 assets in qualifying investments as specified in the Investment Company Act. The Managing General Partner is responsible for making the Partnership's investment decisions. The Partnership will seek long-term capital appreciation by making investments in companies and other special investment situations. The Partnership is not permitted to engage in any other business or activity. The Partnership will dissolve on December 31, 2012, subject to the right of the Individual General Partners to extend the term for up to two additional two-year periods. The Managing General Partner expects to invest the net proceeds of the Partnership's offering (including amounts held in reserve) within two years of the date of the commencement of the offering. Risk of Ownership ----------------- The purchase and ownership of Partnership Units involve a number of significant risks and other important factors. The portfolio company investments of the Partnership involve a high degree of business and financial risk that can result in substantial losses. Among these are the risks associated with investing in companies with little operating history, companies operating at a loss or with substantial variations in operating results from period to period, companies with the need for substantial additional capital to support expansion or achieve or maintain a competitive position, companies which may be highly leveraged, companies which may not be diversified and companies in which the Partnership may be the sole or primary lender. The Partnership intends to invest in only a few companies; therefore, a loss or other problem with a single investment would have a material adverse effect on the Partnership. 2. ALLOCATION OF PARTNERSHIP PROFITS AND LOSSES Generally, profits will be allocated 99% to the Limited Partners and 1% to the General Partners until the Partners' Capital Accounts equal their undistributed Capital Contributions. Thereafter, profits will be allocated 90% to the Limited Partners and 10% to the General Partners in an amount sufficient to cause their Capital Accounts to equal an amount equal to (i) two times their Capital Contributions less (ii) cumulative distributions pursuant to paragraph 4.1 and paragraph 9.2.2 of the Partnership Agreement, at which time profits will be allocated 80% to the Limited Partners and 20% to the General Partners. Generally, losses will be allocated 99% to the Limited Partners and 1% to the General Partners; provided, however, that losses will be allocated 80% to the Limited Partners and 20% to the General Partners to the extent of any prior allocation of profits which were made to the Partners on an 80%/20% basis. Next, losses will be allocated 90% to the Limited Partners and 10% to the General Partners to the extent any prior allocations of profits were made to the Partners on an 90%/10% basis. Thereafter, losses, if any, will be allocated to those Partners who bear the economic risk of loss. Partners should refer to the information set forth under the caption "Partnership Distributions and Allocations" in the Prospectus of the Partnership dated January 9, 1998, filed with the Securities and Exchange Commission pursuant to Rule 497(b) under the Securities Act of 1933, for more specific information. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cash and Cash Equivalents ------------------------- All short-term investments with original maturities of three months or less are considered to be cash equivalents. Investment Transactions ----------------------- All portfolio investments are carried at cost until significant developments affecting an investment provide a basis for revaluation. Thereafter, portfolio investments will be 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 will be valued at the latest reported sales price on the last business day of the period. If no sale has taken place, the securities will be valued at the last bid price. If no bid price has been reported, or if no exchange quotation is available, the securities will be 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. Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Organizational Costs -------------------- Total organizational and offering expenses for the Partnership totaled $213,052, of which, $130,689 were paid by an affiliate. The remaining $82,363 of organization costs were expensed in accordance with AICPA Statement of Position 98-5, "Reporting on the Costs of Start-up Activities." Income Taxes ------------ Income taxes have not been provided for as the Partnership is a limited partnership and each partner is liable for its own tax payments. Allocation of Partnership profits and losses for tax purposes is based upon taxable income which may differ from net income for financial reporting primarily due to differences between book and tax accounting for portfolio investments. Distributions ------------- When excess cash, if any, becomes available, it is the Partnership's intent to make distributions on an annual basis. It is not anticipated that any investments will be sold until the later years of the Partnership. Accordingly, it is unlikely that any significant distributions of the proceeds from the disposition of investments will be made until the later years of the Partnership. No distributions were made for 1998 and distributions are unlikely during 1999. 4. PER UNIT INFORMATION There is no market for the Limited Partnership interests. Per Unit Information is as follows:
For the Year Ended December 31, 1998 ------------------------------------ Number of unit holders 111 ======= Limited partnership units 54,340 General partnership units 549 ------- Total units outstanding 54,889 ======= Net asset value per unit $ 22.60 ======= Net loss per unit $ (2.40) =======
5. RELATED PARTY TRANSACTIONS The Partnership is furnished with certain non-reimbursed management and accounting services by affiliates, which are not reflected in the accompanying financial statements. The Managing General Partner performs management and administrative services for the operation of the Partnership. The Managing General Partner is paid an annual management fee of 1.5% of total assets, this fee for 1998 was $7,813. The Managing General Partner is also reimbursed by the Partnership for out of pocket expenses in connection with finding, evaluating, structuring, approving, monitoring and liquidating the Partnership's portfolio investments. Total offering expenses for the Partnership amounted to $213,052, of which, $130,689 were paid by an affiliate. The Partnership may place its General Partners on Boards of Directors of portfolio companies. The Managing General Partner of the Partnership is also the managing general partner of Community Investment Partners, L.P. and Community Investment Partners II, L.P., both business development companies. 6. INVESTMENT TRANSACTIONS Following is a summary of portfolio investment transactions for the year ended December 31, 1998.
Type of Realized Company Investment Cost Proceeds Gain (Loss) - ------- ---------- ---- -------- ----------- PURCHASES: United Therapeutics Corporation Common Stock $100,000 Implemed, Inc. Series D Convertible Preferred Stock 100,000 Protein Delivery Inc. Series D Preferred Stock 100,001 10% Bridge Note, due 4/1/99 and One Warrant 12,000 LipoMed, Inc. Series B Convertible Preferred stock 100,002 OptiMark Technologies, Inc. Series B Convertible Participating Preferred stock 100,000 -------- TOTAL PURCHASES $512,003 ========
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT There are two Independent General Partners and one Managing General Partner of the Partnership. These Independent General Partners and the Managing General Partner are responsible for the management and administration of the Partnership. The General Partners are "interested persons" of the Partnership as defined by the Investment Company Act, but the Partnership has obtained an exemptive order from the Securities and Exchange Commission permitting them to be considered disinterested persons. The Independent General Partners provide overall guidance and supervision with respect to the operation of the Partnership and perform the various duties imposed on the directors of a business development company by the Investment Company Act. In addition to general fiduciary duties, the Independent General Partners supervise the management and underwriting arrangement of the Partnership, the custody arrangement with respect to portfolio securities, the selection of accountants, fidelity bonding and transactions with affiliates. Specific Information regarding the Independent General Partners: Thomas A. Hughes, 55, is the Assistant Vice President, Associate General Counsel and Manager-Legal of The Detroit Edison Company, the utility subsidiary of DTE Energy Company. He also serves as the Associate General Counsel of DTE Energy Company. Headquartered in Detroit, Michigan, Detroit Edison is Michigan's largest electric utility serving two million customers in Southeastern Michigan. Prior to joining Detroit Edison in 1978, Mr. Hughes served as General Counsel of the Missouri Public Service Commission. Mr. Hughes has served as a Trustee of the Detroit Metropolitan Bar Association Foundation, and as a member of the Michigan State Bar Association Administrative Law Section Council and is currently serving as a member of the Board of Directors of the Michigan Chapter of the American Corporate Counsel Association. Mr. Hughes does not own any units. Ralph G. Kelly, 42, joined Charter Communications, Inc. in 1993 as Vice President -- Finance, a position he held until early 1994, when he became Chief Financial Officer of CableMaxx, Inc., a wireless cable television operator. Mr. Kelly returned as Senior Vice President -- Treasurer of Charter Communications, Inc. in February 1996, and has responsibility for treasury operations, investor relations and financial reporting. Mr. Kelly has worked in the cable industry since 1984 when he joined Cencom Cable Associates, Inc. as Controller. Mr. Kelly was promoted to Treasurer of Cencom Cable Associates, Inc. in 1989 and was responsible for treasury management, loan compliance, budget administration, supervision of internal audit and SEC reporting. Mr. Kelly is a Certified Public Accountant and was in the audit division of Arthur Andersen LLC from 1979 to 1984. Mr. Kelly owns 100 Units. CIP Management, L.P., LLLP (the "Managing General Partner") is the Managing General Partner of Community Investment Partners III L.P., LLLP. The Managing General Partner is also managing general partner of Community Investment Partners, L.P. and Community Investment Partners II, L.P., both business development companies. The General Partners of the Managing General Partner are CIP Management, Inc., a Missouri corporation and a wholly-owned subsidiary of Edward D. Jones & Co., L.P., and Daniel A. Burkhardt. The Directors and Officers of CIP Management's, Inc. are as follows: Daniel A. Burkhardt, 51, President, Treasurer and Director of CIP Management, Inc. since October, 1989 and general partner of CIP Management, L.P., LLLP since February 1990. He is a general partner of The Jones Financial Companies, L.L.L.P., the parent company of Edward D. Jones & Co., L.P., where he has specialized in investment banking and structuring investments since 1980. He is also a director of St. Joseph Light & Power Co. and SEMCO Energy, Inc. Mr. Burkhardt currently owns 2,000 Units. Ray A. Robbins, Jr., 54, Vice President and Director of CIP Management, Inc. since October 1989. He is a general partner of The Jones Financial Companies, L.L.L.P., the parent company of Edward D. Jones & Co., L.P., where he has specialized in securities analysis since 1984, and where he was responsible for municipal bond transactions from 1975 to 1983. Mr. Robbins is Co-Chairman of the Edward D. Jones & Co., L.P. Investment Policy Committee. Mr. Robbins currently owns 1,000 Units. Marilyn A. Gaffney, 40, Secretary of CIP Management, Inc. since October, 1989. She is a Limited Partner of The Jones Financial Companies, L.L.L.P., the parent company of Edward D. Jones & Co., L.P., where she has been a senior investment adviser in investment banking since 1980. Ms. Gaffney currently owns 100 Units. ITEM 11. EXECUTIVE COMPENSATION Each Independent General Partner will receive an annual fee of $6,000 from the Partnership once the Partnership commences business operations, a fee of $1,000 for each meeting attended, and all out-of- pocket expenses relating to attendance at meetings of the Individual General Partners. Independent General Partner fees totaled $12,000 during 1998. The information set forth under the caption "Partnership Distributions and Allocations" in the Prospectus of the Partnership dated January 9, 1998, filed with the Securities and Exchange Commission pursuant to Rule 497(b) under the Securities Act of 1933, is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information concerning the security ownership of the General Partner, Independent General Partners and the Officers and Directors of CIP Management, Inc., described in Part I, Item 1 and Part III, Item 10, is herein incorporated by reference. The Managing General Partner has a 1% General Partner (549 units) interest and a 4.97% (2,700 units) Limited Partner interest. As of March 15, 1999, no parties are known by the Partnership to be the beneficial owners of more than 5% of the Units. The Partnership is not aware of any arrangement which may, at a subsequent date, result in a change of control of the Partnership. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Certain relationships and related transactions, described in Part III, Items 10 and 12, are herein incorporated by reference. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K a. The following documents are filed as part of this report: 1. Financial Statements: --------------------- See Index to Financial Statements and Supplementary Data contained in Item 8 of this Form 10-K. 2. Financial Statement Schedules: ------------------------------ All financial statement schedules are omitted because they are not applicable, or the required information is included in the balance sheet or notes thereto. 3. Exhibits: --------- (3) Amended and Restated Agreement of Limited Partnership dated as of July 23, 1997. (4) Form of Unit Certificate. (10) Management Agreement dated January 9, 1998, between the Partnership and CIP Management, L.P., LLLP. (28) Prospectus of the Partnership dated January 9, 1998, filed with the Securities and Exchange Commission in connection with Registration Statement No. 333-34363 on Form N-2 under the Securities Act of 1933. [FN] Incorporated by reference to Exhibit A of the Prospectus of the Partnership dated January 9, 1998 filed with the Securities and Exchange Commission pursuant to Rule 497(b) under the Securities Act of 1933. Incorporated by reference to the Partnership's Registration Statement No. 333-34363 on Form N-2 under the Securities Act of 1933. b. No reports on Form 8-K were filed during the quarter ended December 31, 1998. c. Exhibits filed as part of this report are included in Item (14) (a)(3) above. d. All financial statement schedules are omitted because they are not applicable, or the required information is included in the balance sheet or notes thereto. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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, on this 22nd day of March, 1999. Community Investment Partners III L.P., LLLP By: CIP Management, L.P., LLLP, its Managing General Partner By: CIP Management, Inc., its Managing General Partner /s/ Daniel A. Burkhardt, President -------------------------------------- By: Daniel A. Burkhardt, President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated. /s/ Daniel A. Burkhardt - ----------------------------- General Partner of CIP Management Daniel A. Burkhardt L.P., LLLP, President, Treasurer and Director of CIP Management, Inc. /s/ Ray L. Robbins - ----------------------------- Vice President and Director of CIP Ray L. Robbins Management, Inc. /s/ Thomas A. Hughes - ----------------------------- Individual General Partner, Thomas A. Hughes Community Investment Partners III L.P., LLLP /s/ Ralph G. Kelly - ----------------------------- Individual General Partner, Ralph G. Kelly Community Investment Partners III L.P., LLLP INDEX TO EXHIBITS
Exhibit Number Description of Exhibit Page - ------ ---------------------- ---- (3) Amended and Restated Certificate and Agreement of Limited Liability Limited Partnership dated as of January 9, 1998 (4) Form of Unit Certificate (10) Management Agreement dated January 9, 1998, between the Partnership and CIP Management, L.P., LLLP (28) Prospectus of the Partnership dated January 9, 1998, filed with the Securities and Exchange Commission in connection with Registration Statement No. 333-34363 on Form N-2 under the Securities Act of 1933 ______________________ Incorporated by reference
EX-27 2 FINANCIAL DATA SCHEDULE
6 This schedule contains summary financial information extracted from the financial statements for Community Investment Partners III, L.P., L.L.L.P. for the year ended December 31, 1998 and is qualified in its entirety by reference to such financial statements. 12-MOS DEC-31-1998 JAN-01-1998 DEC-31-1998 512,003 512,003 0 742,439 0 1,254,442 0 0 14,000 14,000 0 0 54,889 54,889 0 0 0 0 0 1,240,442 0 119 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 131,899 620,771 0 (2.40) 0 0 0 0 22.60 0 0 0
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