-----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, LepkZoI5QbIiqppqHMABArHNOXtWVKnhOQisu1QoMEuCSutG/GzkmQk7ShImC3Ki 473GK4IY1sV4dUukOg+MIw== 0000898733-97-000914.txt : 19971117 0000898733-97-000914.hdr.sgml : 19971117 ACCESSION NUMBER: 0000898733-97-000914 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRUTECH RESEARCH & DEVELOPMENT PARTNERSHIP II CENTRAL INDEX KEY: 0000774560 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 133268435 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-21464 FILM NUMBER: 97717711 BUSINESS ADDRESS: STREET 1: 440 MISSION CT STE 250 CITY: FREMONT STATE: CA ZIP: 94539 BUSINESS PHONE: 5106561855 MAIL ADDRESS: STREET 1: 440 MISSION CT STREET 2: SUITE 250 CITY: FREMONT STATE: CA ZIP: 10292-0116 10-Q 1 PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________________ to ______________________ Commission file number 0-21464 PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 13-3268435 - -------------------------------------------------------------------------------- (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 440 Mission Court, Suite 250, Fremont, California 94539 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (510) 656-1855 N/A - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report 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 CK No _ Part I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II (a limited partnership) STATEMENTS OF NET ASSETS (in process of liquidation) (unaudited)
September 30, December 31, 1997 1996 - ---------------------------------------------------------------------------------------------------- Assets Cash and cash equivalents $ 3,381,048 $ 4,718,876 Investments in equity securities 141,875 20,078,870 ------------- ------------ Total assets 3,522,923 24,797,746 ------------- ------------ Liabilities Estimated liquidation costs 348,094 1,593,996 Accrued expenses and other liabilities -- 101,801 Accrued management fee -- 500,000 ------------- ------------ Total liabilities 348,094 2,195,797 ------------- ------------ Contingencies Net assets in liquidation $ 3,174,829 $22,601,949 ------------- ------------ ------------- ------------ Net assets in liquidation Limited partners (100,000 units issued and outstanding) $ 2,788,846 $20,273,254 General partner 385,983 2,328,695 ------------- ------------ Total net assets in liquidation $ 3,174,829 $22,601,949 ------------- ------------ ------------- ------------ - ----------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (in process of liquidation) (unaudited)
LIMITED GENERAL PARTNERS PARTNER TOTAL - ----------------------------------------------------------------------------------------------------- Net assets in liquidation--December 31, 1996 $ 20,273,254 $ 2,328,695 $ 22,601,949 Changes in estimated liquidation values of assets and liabilities 1,515,592 168,399 1,683,991 Distributions (19,000,000) (2,111,111) (21,111,111) ------------ ----------- ------------ Net assets in liquidation--September 30, 1997 $ 2,788,846 $ 385,983 $ 3,174,829 ------------ ----------- ------------ ------------ ----------- ------------ - ----------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of these statements
2 PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II (a limited partnership) STATEMENTS OF OPERATIONS (going concern basis) (unaudited)
Nine Months Three Months Ended Ended September 30, 1996 September 30, 1996 - ------------------------------------------------------------------------------------------------------ REVENUES Termination of royalty rights $3,472,000 $ -- Gain on sale of investment in equity securities 915,947 101,129 Royalty income 299,070 9,655 Interest and other income 567,682 63,510 ------------------ ------------------- 5,254,699 174,294 ------------------ ------------------- EXPENSES Management fee 1,500,000 500,000 General and administrative 343,278 165,466 ------------------ ------------------- 1,843,278 665,466 ------------------ ------------------- Net income (loss) $3,411,421 $(491,172) ------------------ ------------------- ------------------ ------------------- ALLOCATION OF NET INCOME (LOSS) Limited partners $3,070,279 $(442,055) ------------------ ------------------- ------------------ ------------------- General partner $ 341,142 $ (49,117) ------------------ ------------------- ------------------ ------------------- Net income (loss) per limited partnership unit $ 30.70 $ (4.42) ------------------ ------------------- ------------------ ------------------- - ------------------------------------------------------------------------------------------------------ The accompanying notes are an integral part of these statements
3 PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II (a limited partnership) STATEMENT OF CASH FLOWS Nine Months Ended September 30, 1996 (going concern basis) (unaudited)
- --------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Royalty income received $ 441,630 Interest and other income received 291,340 General and administrative expenses paid (214,603) Evaluation and monitoring expenses paid (27,781) Management fee paid (1,500,000) Cash received from affiliate, net 459,852 ----------------- Net cash used in operating activities (549,562) ----------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from the termination of royalty rights 3,472,000 Proceeds from the sale of investment in equity securities 1,362,874 Proceeds from the sale of stock and warrant rights 288,718 Collection of note receivable 19,031 Purchase of U.S. Treasury bills held in escrow (1,991,217) Redemption of U.S. Treasury bills held in escrow 2,570,133 ----------------- Net cash provided by investing activities 5,721,539 ----------------- CASH FLOWS FROM FINANCING ACTIVITY Distribution paid (4,444,444) ----------------- Net increase in cash and cash equivalents 727,533 Cash and cash equivalents at beginning of period 2,936,616 ----------------- Cash and cash equivalents at end of period $ 3,664,149 ----------------- ----------------- - --------------------------------------------------------------------------------------------------- RECONCILIATION OF NET INCOME TO NET CASH USED IN OPERATING ACTIVITIES Net income $ 3,411,421 ----------------- Adjustments to reconcile net income to net cash used in operating activities: Gain on sale of investment in equity securities (915,947) Gain on sale of stock and warrant rights (288,718) Termination of royalty rights (3,472,000) Changes in: Due from affiliate 459,852 Royalties receivable 142,560 Interest receivable 12,376 Accrued expenses and other liabilities 100,894 ----------------- Total adjustments (3,960,983) ----------------- Net cash used in operating activities $ (549,562) ----------------- ----------------- - --------------------------------------------------------------------------------------------------- SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING ACTIVITIES Received 21,965 shares of Biocompatibles International plc ('Biocompatibles') common stock in July 1996 as a result of Biocompatibles' achievement of certain financial targets in 1995. Received 17,360 shares of Optical Specialties, Inc. common stock for granting an extension of its term loan. Ecogen Inc. completed a 1:5 reverse stock split which resulted in the receipt of 102,165 shares of common stock in exchange for 510,827 shares of common stock. Silicon Valley Research, Inc. completed a 1:2 reverse stock split which resulted in the receipt of 146,806 shares of common stock in exchange for 293,612 shares of common stock. - --------------------------------------------------------------------------------------------------- The accompanying notes are an integral part of this statement
4 PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II (a limited partnership) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (unaudited) A. General These financial statements have been prepared without audit. In the opinion of management, the financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the financial statements of PruTech Research and Development Partnership II (the 'Partnership') as of September 30, 1997, subject to the effects of any further liquidation accounting adjustments that would have been required had the realizable values of certain assets been known when the Partnership first adopted the liquidation basis of accounting. (See discussion below.) Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Partnership's Annual Report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1996. In September 1996, R&D Funding Corp (the 'General Partner') mailed to all limited partners a Consent Solicitation Statement (the 'Statement') asking for their written consent to approve a plan of dissolution and liquidation of the Partnership (the 'Plan'), as more fully described in the Statement. On October 30, 1996, holders of 68.4% of the limited partnership units approved the Plan. Accordingly, the Plan has been adopted. In accordance with the terms of the Plan, the General Partner is proceeding to sell or otherwise dispose of the Partnership's remaining investments and distribute the resulting proceeds (reduced by a working capital reserve to satisfy any liabilities or contingencies of the Partnership) to the partners in accordance with the terms of the Agreement of Limited Partnership, as amended (the 'Partnership Agreement'). It is not expected that the Partnership's eventual total distributions will equal the partners' initial investment. As a result of the adoption of the Plan, the Partnership adopted the liquidation basis of accounting effective December 31, 1996, whereby assets are valued at their estimated net realizable values and liabilities stated at their estimated settlement amounts. However, due to the nature of certain of the Partnership's remaining investments, the General Partner is not able to predict with any degree of certainty the amounts which will be realized from these investments and therefore, such assets continue to be carried at cost or have been written off. Accruals totaling approximately $1,594,000 were recorded as of December 31, 1996 for the estimated costs of liquidating the Partnership which include, but are not limited to, costs of selling or otherwise disposing of the Partnership's remaining investments and general and administrative costs through the estimated conclusion of liquidation. The General Partner believes that the final liquidation of the Partnership will occur by December 31, 1997 subject to the liquidation of the Partnership's remaining investments and the settlement of liabilities and contingencies, certain of which have ongoing discussions; however, due to the nature of the remaining investments and contingencies to be resolved, liquidation may take longer. During the nine months ended September 30, 1997, the Partnership reflected an increase of $1,684,000 in the estimated net liquidation value of its assets and liabilities, of which $194,000 was recorded during the third quarter. Approximately $1,282,000 of the nine month increase was attributed to the March 31, 1997 valuation of certain of the Partnership's remaining investments which were previously carried at cost (see Notes B and C for additional discussion). The remainder of the increase was principally attributed to a reduction in the management fee (see Note D), market fluctuations in the Partnership's remaining investments in equity securities, interest earned on the Partnership's cash and cash equivalents and royalty income received. 5 B. Royalties Pursuant to an agreement dated as of March 31, 1997 between the Partnership and Ecogen Inc. ('Ecogen'), the Partnership assigned to Ecogen its right, title and interest in and to certain technologies, products and property licensed to Ecogen and agreed to terminate all license agreements with Ecogen (the 'Ecogen Rights') in exchange for 136,000 shares of Ecogen common stock with an estimated net realizable value of $484,000 as of the date of the agreement. Prior to this agreement, the Ecogen Rights were carried at zero. The Partnership was restricted from selling such shares until the Securities and Exchange Commission declared the registration of the shares effective on August 11, 1997. (The shares were subsequently sold as further discussed in Note C). No further royalty payments will be received by the Partnership from Ecogen as a result of this agreement. C. Investments in Equity Securities Investments in equity securities include the following:
September 30, 1997 December 31, 1996 ----------------------------- ----------------------------- Estimated Estimated net realizable net realizable Shares value Shares value - --------------------------------------------------------------------------------------------------------------------------------- Ecogen Inc.--Common Stock 32,100 $ 91,531 102,165 $ 264,352 Synbiotics Corporation--Common Stock 12,586 50,344 293,003 1,042,291 Optical Specialties, Inc.--Common Stock* 274,628 -- 291,988 -- Optical Specialties, Inc.--Preferred Stock** 144,666 -- 144,666 43,400 Biocompatibles International plc--Common Stock -- -- 942,045 18,557,380 Navigation Technologies Corporation--Common Stock** -- -- 2,284,541 2,218 Silicon Valley Research, Inc.--Common Stock -- -- 84,614 169,229 Texas Biotechnology Corporation-- Directors' Options** -- -- 7,980 -- -------------- -------------- $ 141,875 $ 20,078,870 -------------- -------------- -------------- --------------
* Position carried at cost as of September 30, 1997 and December 31, 1996. ** Position carried at cost as of December 31, 1996. As more fully discussed in Note F, the Partnership has fully realized the September 30, 1997 $142,000 value from the sale of securities during the fourth quarter through November 7, 1997. The Partnership's remaining positions are carried at cost or have been determined to be permanently impaired (as further discussed below) as of September 30, 1997. Ecogen Inc. During the first quarter of 1997, the Partnership sold 6,500 shares of Ecogen common stock for approximately $25,000. The December 31, 1996 carrying amount for Ecogen common stock reflected the net amount realized on these sales. Additionally, pursuant to an agreement which closed March 31, 1997, the Partnership received 136,000 shares of Ecogen common stock, as more fully discussed in Note B. During the second quarter of 1997, the Partnership sold 95,665 shares of Ecogen common stock for approximately $300,000. During the third quarter of 1997, the Partnership sold 103,900 shares of Ecogen common stock for approximately $349,000. Between October 1 and October 10, 1997, the Partnership sold its remaining 32,100 shares of Ecogen common stock for approximately $92,000 as discussed in Note F. Synbiotics Corporation During the first quarter of 1997, the Partnership sold 167,500 shares of Synbiotics Corporation common stock for approximately $655,000. The December 31, 1996 carrying amount for Synbiotics Corporation common stock reflected the net amount of approximately $594,000 realized on the sales of 152,500 of such shares through March 14, 1997. During the second quarter of 1997, the Partnership sold 108,900 shares of Synbiotics Corporation common stock for approximately $396,000. During the third quarter of 1997, the Partnership exercised its options to purchase 21,266 shares of Synbiotics Corporation common stock at exercise prices ranging from $2.63 to $2.94 for a total cost of $59,000. Also during the third quarter, the Partnership sold 25,283 shares of Synbiotics Corporation common stock for approximately $104,000. 6 Between October 1 and October 10, 1997, the Partnership sold its remaining 12,586 shares of Synbiotics Corporation common stock for approximately $50,000 as discussed in Note F. Silicon Valley Research, Inc. During the second quarter of 1997, the Partnership sold 77,000 shares of Silicon Valley Research, Inc. common stock for approximately $82,000. During the third quarter of 1997, the Partnership sold its remaining 7,614 shares of Silicon Valley Research, Inc. for approximately $7,000. Optical Specialties, Inc. During June 1997, the Partnership sold 17,360 shares of Optical Specialties, Inc. common stock, which had been carried at a cost basis of zero, for $700. At September 30, 1997, the General Partner determined that the Partnership's investment in Optical Specialties, Inc. preferred stock was permanently impaired in value and therefore its $43,000 carrying value was written off. Biocompatibles International plc On February 7, 1997, the Partnership sold its remaining 942,045 shares of Biocompatibles International plc common stock for approximately $18,557,000 representing the liquidation of the most significant remaining asset of the Partnership. The December 31, 1996 carrying amount of this investment reflected the net amount realized on this sale. Navigation Technologies Corporation During April 1997, the Partnership sold its remaining 2,284,541 shares of Navigation Technologies Corporation ('Navigation Technologies') common stock, which had been carried at a cost basis of $2,218 at December 31, 1996, for approximately $800,000. Texas Biotechnology Corporation During July 1997, the Partnership exercised its options to purchase 7,980 shares of Texas Biotechnology Corporation common stock at exercise prices ranging from $1.38 to $2.40 for a total cost of $16,000. On August 5, 1997, the Partnership sold these shares of Texas Biotechnology Corporation common stock for $46,000. D. Related Parties The General Partner and its affiliates perform certain services for the Partnership (for which they are reimbursed through the management fee) which include but are not limited to: accounting and financial management; registrar, transfer and assignment functions; asset management; investor communications and other administrative services. The Partnership also reimburses an affiliate of the General Partner for printing services. These costs and expenses were approximately $1,505,000 and $503,000 for the nine and three months ended September 30, 1996. Additionally, in conjunction with the adoption of the liquidation basis of accounting, the Partnership recorded an accrual for the estimated future costs expected to be incurred to liquidate the Partnership. Included in these liquidation cost estimates as of December 31, 1996 are approximately $1,507,000 which were expected to be charged by the General Partner and its affiliates during the anticipated liquidation period. Effective July 1, 1997, the General Partner reduced its management fee to $125,000 per quarter which results in an anticipated cost reduction from the December 31, 1996 estimate of $250,000. The actual charges will depend primarily upon the length of the time required to liquidate the Partnership and may differ from the amount accrued. Prudential Securities Incorporated, an affiliate of the General Partner, owned 340 limited partnership units at September 30, 1997. The Partnership maintains an account with the Prudential Institutional Liquidity Portfolio Fund, an affiliate of the General Partner, for investment of its available cash in short-term instruments pursuant to the guidelines established by the Partnership Agreement. The Partnership has engaged in research and development co-investment projects with PruTech Research and Development Partnership, PruTech Research and Development Partnership III, and PruTech Project Development Partnership (collectively, the 'PruTech R&D Partnerships'), for which R&D Funding 7 Corp serves as the general partner. The allocation of the co-investment projects' profits or losses among the PruTech R&D Partnerships is consistent with the costs incurred to fund the research and development projects. E. Contingencies On April 15, 1994 a multiparty petition captioned Mack et al. v. Prudential Securities Incorporated et al. (Cause No. 94-17695) was filed in the 80th Judicial District Court of Harris County, Texas, purportedly on behalf of investors in the Partnership against the Partnership, the General Partner, Prudential Securities Incorporated, The Prudential Insurance Company of America and a number of other defendants. The petition alleges common law fraud, fraud in the inducement and negligent misrepresentation in connection with the offering of the Partnership; negligence and breach of fiduciary duty in connection with the operation of the Partnership; civil conspiracy; and violations of the federal Securities Act of 1933 (sections 11 and 12), as amended, and of the Texas Securities and Deceptive Trade Practices statutes. The suit seeks, among other things, compensatory and punitive damages, costs and attorneys' fees. The General Partner, Prudential Securities Incorporated and the Partnership believe they have meritorious defenses to the complaint and are vigorously defending themselves against this action. The claims of most plaintiffs have been settled or dismissed. It is currently expected that the remaining claims will be resolved shortly. The Partnership has not contributed to any settlement or paid any costs of the litigation, nor is it anticipated that it will. Additionally, the General Partner believes that the litigation discussed above will not have an adverse impact on its ability to liquidate the Partnership in accordance with the Plan and in the time frame currently contemplated by the General Partner. F. Subsequent Events During October 1997, the Partnership sold its remaining 32,100 shares of Ecogen Inc. common stock for approximately $92,000. Also, during October 1997, the Partnership sold its remaining 12,586 shares of Synbiotics Corporation common stock for approximately $50,000. The September 30, 1997 carrying amount for these investments reflects the net amount realized from these sales. 8 PRUTECH RESEARCH AND DEVELOPMENT PARTNERSHIP II (a limited partnership) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources At September 30, 1997, the Partnership had cash and cash equivalents of approximately $3,381,000 which is approximately $1,338,000 less than the Partnership's cash balance at December 31, 1996. This decrease in cash was primarily due to distributions made in excess of proceeds from the sales of certain investments in equity securities as further discussed below, in addition to the payment of management fees. In September 1996, R&D Funding Corp (the 'General Partner') mailed to all limited partners a Consent Solicitation Statement (the 'Statement') asking for their written consent to approve a plan of dissolution and liquidation of the Partnership (the 'Plan'), as more fully described in the Statement. Holders of 68.4% of the limited partnership units approved the Plan on October 30, 1996 and accordingly, the Plan has been adopted. In accordance with the terms of the Plan, the General Partner is proceeding to sell or otherwise dispose of the Partnership's remaining investments and distribute the resulting proceeds (reduced by a working capital reserve to satisfy any liabilities or contingencies of the Partnership) to the partners in accordance with the terms of the Partnership Agreement. As of September 30, 1997, the Partnership had investments in equity securities with an estimated net realizable value of approximately $142,000, which has been fully realized from the sale of securities in the fourth quarter through November 7, 1997 as discussed below. The Partnership's remaining positions are carried at cost or have been determined to be permanently impaired (as further discussed below) as of September 30, 1997 and, as a result, the carrying value of these remaining positions as of September 30, 1997 is zero. The Partnership also holds royalty positions and technologies which have little or no value and such assets are carried at zero. The General Partner believes that the final distribution and liquidation of the Partnership will occur by December 31, 1997 subject to the liquidation of the Partnership's remaining investments and the settlement of liabilities and contingencies, certain of which have ongoing discussions; however, due to the nature of the remaining investments and contingencies to be resolved, liquidation may take longer. It is not expected that the Partnership's eventual total distributions will equal the partners' initial investment. During the nine months ended September 30, 1997, the Partnership reflected an increase of $1,684,000 in the estimated net liquidation values of its assets and liabilities, of which $194,000 was recorded during the third quarter. Approximately $1,282,000 of the nine month increase was attributed to the March 31, 1997 valuation of the Partnership's remaining investments in Ecogen and Navigation Technologies which were previously carried at cost as further discussed below. The remainder of the increase was principally attributed to a reduction in the management fee to $125,000 per quarter (as more fully discussed in Note D to the accompanying financial statements), market fluctuations in the Partnership's remaining investments in equity securities, interest earned on the Partnership's cash and cash equivalents and royalty income received. Pursuant to an agreement dated as of March 31, 1997 between the Partnership and Ecogen Inc. ('Ecogen'), the Partnership assigned to Ecogen its right, title and interest in and to certain technologies, products and property licensed to Ecogen and agreed to terminate all license agreements with Ecogen (the 'Ecogen Rights') in exchange for 136,000 shares of Ecogen common stock with an estimated net realizable value of $484,000 as of the date of the agreement. Prior to this agreement, the Ecogen Rights were carried at zero. The Partnership was restricted from selling such shares until the Securities and Exchange Commission declared the registration of the shares effective on August 11, 1997. The Partnership sold these shares as discussed below. No further royalty payments will be received by the Partnership from Ecogen as a result of this agreement. In February 1997, the Partnership sold its remaining 942,045 share of Biocompatibles International plc common stock for approximately $18,557,000 representing the liquidation of the most significant remaining asset of the Partnership. During the first quarter of 1997, the Partnership sold 6,500 shares of Ecogen common stock and 167,500 shares of Synbiotics Corporation common stock for approximately $25,000 and $655,000, respectively. 9 In February 1997, the Partnership made distributions of $16,666,667 and $4,444,444 of which $15,000,000 ($150 per unit) and $4,000,000 ($40 per unit), respectively, were paid to the limited partners and the remainder to the General Partner. During the second quarter of 1997, the Partnership sold its remaining shares of Navigation Technologies common stock, 95,665 shares of Ecogen common stock, 108,900 shares of Synbiotics Corporation common stock, 77,000 shares of Silicon Valley Research, Inc. common stock, and 17,360 shares of Optical Specialties, Inc. common stock for approximately $800,000, $300,000, $396,000, $82,000 and $700, respectively. During the third quarter of 1997, the Partnership exercised its options to purchase 21,266 shares of Synbiotics Corporation common stock for a total cost of $59,000. Also, during the third quarter, the Partnership sold 103,900 shares of Ecogen common stock, 25,283 shares of Synbiotics Corporation common stock, 7,614 shares of Silicon Valley Research, Inc. common stock, and 7,980 shares of Texas Biotechnology Corporation common stock for approximately $349,000, $104,000, $7,000, and $46,000, respectively. At September 30, 1997, the General Partner determined that the Partnership's investment in Optical Specialties, Inc. preferred stock was permanently impaired in value and therefore its $43,000 carrying value was written off. Between October 1 and October 10, 1997, the Partnership sold its remaining 32,100 shares of Ecogen common stock and its remaining 12,586 shares of Synbiotics Corporation common stock for approximately $92,000 and $50,000, respectively. The September 30, 1997 carrying amount for these investments reflects the net amount realized from these sales. Results of Operations The Partnership adopted the liquidation basis of accounting as of December 31, 1996 in accordance with generally accepted accounting principles and no longer reports results of operations. As such, there is no management's discussion comparing the corresponding 1997 and 1996 periods. 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings--This information is incorporated by reference to Note E to the financial statements filed herewith in Item 1 of Part I of the Registrant's Quarterly Report. Item 2. Changes in Securities--None Item 3. Defaults Upon Senior Securities--None Item 4. Submission of Matters to a Vote of Security Holders--None Item 5. Other Information--None Item 6. Exhibits and Reports on Form 8-K a. Exhibits-- PruTech Research and Development Partnership II Agreement of Limited Partnership (incorporated by reference to Exhibit 3.1 included with Registrant's Form S-1 Registration Statement, File No. 2-94273, dated November 9, 1984) First Amendment to the Agreement of Limited Partnership of PruTech Research and Development Partnership II (incorporated by reference to Exhibit 3 included with Registrant's Annual Report on Form 10-K for the year ended December 31, 1991) Financial Data Schedule (filed herewith) b. Reports on Form 8-K No reports on Form 8-K were filed during the period covered by this report, however, a report on Form 8-K dated October 9, 1997 was filed with the Securities and Exchange Commission on October 29, 1997, relating to Item 2 and the sale of Registrant's remaining 136,000 shares of Ecogen Inc. common stock. 11 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. PruTech Research and Development Partnership II By: R&D Funding Corp A Delaware corporation, General Partner By: /s/ Michael S. Hasley Date: November 14, 1997 ---------------------------------------- Michael S. Hasley President for the Registrant By: R&D Funding Corp A Delaware corporation, General Partner By: /s/ Steven Carlino Date: November 14, 1997 ---------------------------------------- Steven Carlino Vice President Chief Accounting Officer for the Registrant 12 EX-27 2 ART. 5 FDS FOR 3RD QUARTER 10-Q
5 The Schedule contains summary financial information extracted from the financial statements for PruTech Research and Development Partnership II and is qualified in its entirety by reference to such financial statements 0000774560 PruTech Research and Development Partnership II 1 Dec-31-1997 Jan-1-1997 Sep-30-1997 9-Mos 3,381,048 141,875 0 0 0 3,522,923 0 0 3,522,923 348,094 0 0 0 0 3,174,829 3,522,923 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Registrant adopted the liquidation basis of accounting on December 31, 1996, and, accordingly, does not reflect operations subsequent to 1996. See Note A to the financial statements for further details.
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