UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended September 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 12 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 0-20671
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
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(Exact name of registrant as specified in its charter)
Texas 75-2533518
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(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
8080 North Central Expressway, Dallas, Texas 75206-1857
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(Address of principal executive offices) (Zip Code)
214-891-8294
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(Registrant's telephone number, including area code)
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 _____
4,361,618 shares of common stock were outstanding at October 15, 2001.
The Registrant's Registration Statement on Form N-2 was declared effective by
the Securities and Exchange Commission on May 6, 1994.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Statement of Assets and Liabilities
(Unaudited)
Assets
December 31, 2000 September 30, 2001
Cash and cash equivalents $ 18,206,540 $ 24,208,711
Investments at fair value, cost of
$39,985,786 and $33,674,981
in 2000 and 2001 respectively 45,367,138 44,323,395
Accounts receivable 464,110 626,066
Other assets 39,812 20,404
------------ ------------
$ 64,077,600 $ 69,178,576
============ ============
Liabilities and Net Assets
Liabilities:
Securities sold under agreements
to repurchase $ 16,482,024 $ 18,020,094
Accounts payable 14,082 52,019
Incentive fee and administrative fee
due to Investment Advisor 235,427 245,254
------------- ------------
16,731,533 18,317,367
------------- ------------
Net Assets:
Common stock, $1 par value;
20,000,000 shares authorized;
4,561,618 issued, and 4,361,618
outstanding 4,561,618 4,561,618
Additional paid-in capital 38,799,907 38,799,907
Treasury stock at cost, 200,000 shares
at December 31, 2000, and at September
30, 2001 ( 1,665,220) ( 1,665,220)
Undistributed net investment income 5,649,762 9,164,904
------------ -----------
Net assets 47,346,067 50,861,209
------------ -----------
$ 64,077,600 $69,178,576
============== ===========
Net asset value per share $ 10.86 $ 11.66
============== ===========
See accompanying notes to financial statements.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Statement of Operations
(Unaudited)
Three Months Ended September 30,
2000 2001
---- ----
Investment Income:
Interest $ 366,633 $ 43,040
Dividends 23,403 104,511
Other investment income 20,375 3,000
----------- -----------
Total investment income 410,411 150,551
----------- -----------
Expenses:
Bank charges 14,506 7,707
Directors' fees 18,000 15,000
Incentive fees -0- 7,571
Legal and professional 37,923 67,547
Management fees 258,461 223,529
Franchise Taxes -0- 129
Other 42,886 45,651
----------- -----------
Total expenses 371,776 367,134
----------- -----------
Net investment income (loss) 38,635 ( 216,583)
Realized gain on investments -0- 37,857
Unrealized gain (loss) on investments 3,601,156 ( 209,694)
----------- -----------
Net increase (decrease) in net assets
resulting from operations $ 3,639 791 $( 388,420)
============ ============
See accompanying notes to financial statements.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Statement of Operations
(Unaudited)
Nine Months Ended September 30,
2000 2001
---- ----
Investment Income:
Interest $ 1,125,791 $ 357,605
Dividends 84,490 159,903
Other investment income 105,250 7,600
----------- ----------
Total investment income 1,315,531 525,108
----------- ----------
Expenses:
Bank charges 32,686 19,835
Directors' fees 51,000 46,500
Incentive fees 1,611,135 919,429
Legal and professional 154,832 179,598
Management fees 848,434 672,894
Franchise Taxes 24,884 32,139
Other 169,719 180,832
----------- ----------
Total expenses 2,892,690 2,051,227
----------- ----------
Net investment income (loss) (1,577,159) (1,526,119)
Realized gain on investments 8,055,675 2,129,486
Unrealized gain (loss) on investments 10,025,894 5,267,049
----------- ----------
Net increase (decrease) in net assets
resulting from operations $ 16,504,410 $ 5,870,416
============ ===========
See accompanying notes to financial statements.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Statements of Changes in Net Assets
(Unaudited)
Three Months Ended September 30,
2000 2001
---- ----
Increase (decrease) in net assets
resulting from operations:
Investment income - net $ 38,635 $( 216,583)
Realized gain on investment -0- 37,857
Unrealized gain (loss) on investments 3,601,156 ( 209,694)
------------ ------------
Net increase (decrease in net assets
resulting from operations 3,639,791 ( 388,420)
Distributions to shareholders -0- ( 2,355,274)
------------ ------------
Total increase (decrease) 3,639,791 ( 2,743,694)
Net assets:
Beginning of period 55,178,483 53,604,903
------------ ------------
End of period $ 58,818,274 $ 50,861,209
Nine Months Ended September 30,
2000 2001
---- ----
Increase (decrease) in net assets
resulting from operations:
Investment income - net $( 1,577,159) $( 1,526,119)
Realized gain on investment 8,055,675 2,129,486
Unrealized gain (loss) on investments 10,025,894 5,267,049
------------ -----------
Net increase (decrease in net assets
resulting from operations 16,504,410 5,870,416
Distributions to shareholders ( 6,380,130) ( 2,355,274)
Cost of shares repurchased 2,759,688 -0-
------------- -----------
Total increase (decrease) 12,883,968 3,515,142
Net assets:
Beginning of period 45,934,306 47,346,067
------------ -----------
End of period $58,818,274 $ 50,861,209
See accompanying notes to financial statements.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements
September 30, 2001
1. Organization and Business Purpose
Renaissance Capital Growth & Income Fund III, Inc. (the "Fund"), a
Texas corporation formed in 1994, is a non-diversified closed-end
investment company and has elected to be treated as a business
development company ("BDC") under the Investment Company Act of 1940,
as amended ("1940 Act"). The Fund seeks to achieve current income and
capital appreciation by investing primarily in unregistered convertible
securities of emerging growth size companies.
2. Significant Accounting Policies
A. Federal Income Taxes - The Fund has elected the special income tax
treatment available to a regulated investment company ("RIC") under
Subchapter M of the Internal Revenue Code in order to be relieved of
federal income tax on that part of its net investment income and
realized capital gains that it pays out to its shareholders. If a RIC
meets certain diversification and distribution requirements under the
Code, it qualifies for pass-through tax treatment. The Fund would cease
to qualify for pass-through tax treatment if it were unable to comply
with these requirements. Failure to qualify as a RIC would subject the
Fund to federal income tax as if the Fund were an ordinary corporation,
which could result in a substantial reduction in both the Fund's net
assets and the amount of income available for distribution to
shareholders.
B. Distributions to Shareholders - Dividends paid to shareholders are
recorded on the ex- dividend date. The Fund announced a dividend of
$0.54 per share on July 16, 2001. The ex- dividend date was July 20,
2001, and the dividend was paid on August 16, 2001, to shareholders of
record July 24, 2001. With this dividend, the Fund has paid
shareholders a total of $7.56 per share in cash distributions since
inception.
C. Management Estimates - The financial statements have been prepared
in conformity with generally accepted accounting principles. The
preparation of the accompanying financial statements requires estimates
and assumptions made by the Investment Adviser as to the valuation of
investments that effect the amounts and disclosures in the financial
statements. Actual results could differ significantly from those
estimates.
D. Financial Instruments - In accordance with the reporting
requirements of Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financials Instruments," the Company
calculates the fair value of its financial instruments and includes
this additional information in the notes to the financial statements
when the fair value is different from the carrying value of those
financial instruments. When the fair value reasonably approximates the
carrying value, no additional disclosure is made.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements
September 30, 2001
3. Investment Advisory Agreement
The Investment Adviser for the Fund, Renaissance Capital Group, Inc.
("RCG"), is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended. Pursuant to an Investment Advisory
Agreement, the Investment Adviser performs certain services, including
certain management, investment advisory, and administrative services
necessary for the operation of the Fund. The Investment Adviser
receives a fee equal to .4375% (1.75% annually) of the net assets each
quarter. The Fund accrued a liability of $223,529 for such operational
management fees performed during the quarter ended September 30, 2001.
In addition to the management fee, the Investment Advisory Agreement
entitles the Investment Adviser to an incentive fee equal to 20% of any
net realized capital gains after allowance for any unrealized capital
depreciation of the Fund. This management incentive fee is calculated
on a quarterly basis. For the three-month period ended September 30,
2001, the Investment Adviser earned incentive fees of $7,571.
Finally, the Investment Adviser is reimbursed for administrative
expenses paid by the Investment Adviser on behalf of the Fund. The Fund
accrued a liability of $29,107 for these reimbursable administrative
expenses in the quarter ended September 30, 2001, which accrual is
included in general and administrative expenses in the accompanying
statement of operations.
4. Capital Share Transactions
As of September 30, 2001, there were 20,000,000 shares of $1 par value
capital stock authorized, 4,561,618 shares issued, 4,361,618 shares
outstanding, and additional paid-in capital aggregating $41,696,305.
Year-to-date transactions in capital stock are as follows:
Shares Amount
Balance December 31, 2000 4,361,618 $41,696,305
Shares repurchased - -
---------- -----------
Balance September 30, 2001 4,361,618 $41,696,305
========== ===========
5. Temporary Investments
At September 30, 2001, temporary investments were held in a money
market fund made up of U.S. Treasury obligations and a U.S. Treasury
bill. These investments qualify for investment as permitted in Section
55(a)(1) of the 1940 Act.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements
September 30, 2001
6. Functions and Activities of Business Development Companies
Pursuant to Section 55(a) of the 1940 Act, a BDC is required to have at
least 70% of the value of its total assets invested in eligible
portfolio companies, as defined in Section 2(a)(46) of the 1940 Act, or
in securities that otherwise qualify for investment as permitted in
Section 55(a)(1) through (6) of the 1940 Act. In the event a BDC has
less than 70% of its assets in eligible or other qualified portfolio
investments, then it will be prohibited from making non-eligible
investments until such time as the percentage of eligible or other
qualified investments again exceeds the 70% threshold. At September 30,
2001, the Fund had more than 70% of its assets in eligible and other
qualified portfolio investments.
7. Investments
The Fund's investments are carried in the statements of assets and
liabilities as of September 30, 2001, at fair value as determined by
the Investment Advisor. The convertible debt securities held by the
Fund generally have maturities between five and seven years and are
convertible into the common stock of the issuer at the discretion of
the Fund at a set conversion price. The common stock underlying these
securities is generally unregistered and thinly to moderately traded.
In certain instances, the Fund has registration rights. In addition,
the Fund may sell restricted securities pursuant to Rule 144 of the
Securities Act of 1933.
Interest on convertible debentures is generally payable monthly. The
convertible debt securities generally contain embedded call options
giving the issuer the right to call the underlying issue. In these
instances, the Fund has the right of redemption or conversion. The
embedded call option will generally not vest until certain conditions
are achieved by the issuer. Such conditions may require that minimum
thresholds be met relating to underlying market prices, liquidity, and
other factors.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements
September 30, 2001
INVESTMENT VALUATION SUMMARY
CONVERSION
COST OR FACE FAIR
VALUE VALUE
800America.com, Inc.
Common Stock $ 221,376 $ 92,880 $ 91,951
Active Link Communications, Inc.
8% Subordinated Convertible
Promissory Notes $ 375,000 $ 375,000 $ 375,000
Bentley Pharmaceuticals, Inc.
Common Stock $ 1,970,478 $ 5,781,118 $ 5,723,307
CaminoSoft Corp.
Common Stock $ 4,625,000 $ 3,825,000 $ 3,694,250
CareerEngine Network, Inc.
12% Convertible Debenture $ 250,000 $ 250,000 $ 250,000
Dexterity Surgical, Inc.
9% Convertible Debenture $ 1,370,276 $ 1,370,276 $ 1,370,276
8% Convertible Preferred Stock 1,000,000 38,462 38,462
Common Stock 635,000 13,000 -0-
Display Technologies, Inc.
8.75% Convertible Debenture $ 1,750,000 $ 1,750,000 $ 450,000
5.25% Convertible Preferred Stock 500,000 8,100 -0-
Common Stock 1,049,741 7,193 -0-
The Dwyer Group, Inc.
Common Stock $ 1,966,632 $ 1,957,500 $ 1,937,925
eOriginal, Inc.
5% Convertible Preferred Stock $ 4,000,030 $ 8,997,250 $ 8,577,418
Senior Secured Promissory Note 500,000 500,000 500,000
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements
September 30, 2001
Fortune Natural Resources Corp.
Common Stock $ 545,500 $ 436,390 $ 432,026
Integrated Security Systems, Inc.
8% Promissory Note $ 75,000 $ 75,000 $ 75,000
Series D Preferred 150,000 90,000 90,000
Series F Convertible Preferred 542,989 1,085,978 1,020,819
Series G Convertible Preferred 3,666,950 7,333,902 6,843,868
Common Stock 215,899 157,303 155,730
JAKKS Pacific, Inc.
Common Stock $ 521,172 $ 1,179,184 $ 1,167,392
Laserscope
8% Convertible Debenture $ 1,500,000 $ 1,980,000 $ 1,811,200
Northwestern Steel & Wire Corp.
Bonds $ 127,500 $ 127,500 $ 127,500
Play by Play Toys & Novelties, Inc.
8% Convertible Debenture $ 2,425,748 $ 2,425,748 $ 1,925,748
Poore Brothers, Inc.
Common Stock $ 1,963,170 $ 6,064,461 $ 5,650,593
Precis, Inc.
Common Stock $ 14,105 $ 14,000 $ 13,860
RailAmerica, Inc.
6% Convertible Debenture $ 500,000 $ 625,000 $ 618,750
Simtek Corporation
Common Stock $ 195,000 $ 365,000 $ 343,100
ThermoView Industries, Inc.
Common Stock $ 500,000 $ 33,750 $ -0-
Verso Technologies, Inc.
Common Stock $ 512,500 $ 111,212 $ 104,539
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements
September 30, 2001
Miscellaneous Securities $ 5,915 $ 1,049,559 $ 934,681
----------- ----------- -----------
Total $33,674,981 $48,119,766 $44,323,395
=========== =========== ===========
Pursuant to procedures established by the Investment Adviser, the fair value of
each investment is based upon its cost to the Fund. Costs are the primary factor
used to determine fair value until significant developments affecting the
investee company provide a basis for use in an appraisal valuation. The fair
value of debt securities and preferred securities convertible into common stock
is the sum of (a) the value of such securities without regard to the conversion
feature, and (b) the value, if any, of the conversion feature. The fair value of
debt securities without regard to conversion features is determined on the basis
of the terms of the debt security, the interest yield, and the financial
condition of the issuer. The fair value of preferred securities without regard
to conversion features is determined on the basis of the terms of the preferred
security, its dividend, and its liquidation and redemption rights, and absent
special circumstances will typically be equal to the lower of cost or 120% of
the value of the underlying common stock. The fair value of the conversion
features of a security, if any, are based on fair values as of the relevant date
less an allowance, as appropriate, for costs of registration, if any would be
required to liquidate the position, and selling expenses. Publicly traded
securities, or securities that are convertible into publicly traded securities,
are valued at the last sale price, or in the event an over-the-counter security
has no closing price, then the security is valued at the average closing bid and
asked price, as of the valuation date. While these valuations are believed to
represent fair value, these values do not necessarily reflect amounts which may
be ultimately realized upon disposition of such securities.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Material Changes in Portfolio Investments
The following portfolio transactions are noted for the quarter ended
September 30, 2001 (portfolio companies are herein referred to as the
"Company"):
800America.com, Inc. (ACCO) In the third quarter 2001, the Fund
purchased 54,000 shares of the Company's common stock in the open market
for $221,376, a cost of $4.10 per share. The shares are freely tradeable.
Bentley Pharmaceutical, Inc. (BNT) In the third quarter 2001, the Fund
exercised its option to purchase 7,779 shares of the Company's common stock
at a rate of $3 per share. The Fund sold none of the common stock during
the quarter. The shares are freely tradeable.
Dexterity Surgical, Inc. (DEXT) In the quarter ended September 30,
2001, the Company made principal repayments on the Fund's convertible
debentures of $41,944, reducing the outstanding principal balance on the
debentures to $1,370,276.
Renaissance US Growth & Income Trust PLC ("RUSGIT") also received
$41,944 in principal repayments on its debentures in the second quarter,
reducing the outstanding balance on the RUSGIT debentures to $1,370,276 at
September 30, 2001.
Display Technologies, Inc. (DTEK) Due to the operational difficulties
being experienced at the Company, the Fund fully reserved all its preferred
and common stock positions in the Company and additionally reserved the
value of its convertible debenture to $450,000.
RUSGIT also placed identical reserves on its investments in the
Company in the third quarter 2001.
Grand Adventures Tour & Travel (GATT) In the quarter ended September
30, 2001, the Fund realized a tax loss on its investments in the Company
which consisted of $350,000 in principal balance of 10% convertible
debentures, $1,000,000 in principal balance of 8% convertible debentures,
and 45,500 shares of common stock having a cost basis of $130,089.
RUSGIT also wrote off its entire investment in the Company, which
consisted of $400,000 in principal balance of 10% convertible debentures,
$1,000,000 in principal balance of 8% convertible debentures, and 55,500
shares of common stock having a cost basis of $165,707.
Integrated Security Systems, Inc. (IZZI) In the third quarter 2001,
the Fund invested $75,000 to purchase an 8%, 120-day promissory note of the
Company, which is secured by all of the assets of the Company and all of
its subsidiary companies. As additional consideration for the investment,
the Fund received 375,000 warrants to purchase common stock of the Company
at a rate of $0.20 per share on or before September 27, 2006.
RUSGIT also invested $75,000 in the third quarter 2001 to purchase an
8%, 120-day promissory note of the Company that is secured by all the
assets of the Company and its subsidiaries. RUSGIT also received additional
consideration of 375,000 warrants to purchase common stock of the Company
at a rate of $0.20 per share on or before September 27, 2006.
Medical Action Industries, Inc. (MDCI) Throughout the third quarter
2001, the Fund sold its entire investment in the Company in the open
market. The total investment of the Fund was 160,000 shares of common stock
having a cost basis of $555,392, a rate of $3.47 per share. In total, the
Fund received proceeds of $2,073,337 from its stock sales, representing an
average exit price of $12.96 per share, representing a gain of $1,517,945.
RUSGIT also exited from its entire position in Medical Action
Industries, Inc., during the third quarter 2001.
Precis, Inc. (PCIS) In the third quarter 2001, the Fund made a new
investment into this Company by purchasing 3,500 shares of the Company's
common stock on the open market for approximately $4.03 per share,
representing a total cost of $14,105. Precis operates through two
subsidiary companies. Foresight, Inc., provides product enhancements in the
form of "club benefits" to markets including rent-to-own, banking, consumer
finance, and other national associations. Care Entree is the primary
business, and it is a provider of medical savings programs designed to
lower health care costs for consumers and accelerate payments to providers.
The Fund's stock in the Company is freely tradeable.
Results of Operations for the Quarter Ended September 30, 2001
For the three months ended September 30, 2001, the Fund had a net
decrease in net assets resulting from operations in the amount of $388,420,
in comparison to a net increase in net assets of $3,639,791 for the three
months ended September 30, 2000. The change is primarily due to an
unrealized loss on investments of $209,694, due to lower values for
portfolio investments and a net investment loss of $216,583, in comparison
to an unrealized gain on investments of $3,601,156 and net investment
income of $38,635 for the three months ended September 30, 2000. The Fund's
net decrease in net assets for the 2001 period was reduced somewhat by a
realized gain on investments of $37,857, which represents the gains
realized on the Fund's sale of its stock in Medical Action Industries,
Inc., net of the losses realized on the Fund's investments in Grand
Adventures Tour and Travel Publishing, Inc. The net realized gain on
investments resulted in an incentive fee of $7,571 for the third quarter
ended September 30, 2001.
In the third quarter of 2001, the Fund's total investment income was
$150,551, a 63.3% decrease relative to total investment income of $410,411
for the three months ended September 30, 2000. The reason for the
difference is a 62.2% decrease in interest and dividend income due to fewer
of the Fund's investments being held in interest-bearing instruments. Total
expenses for the Fund were $367,134 for the 2001 third quarter, a 1.3%
decrease in comparison to total expenses of $371,776 in the comparable
quarter of 2000. Expenses were driven lower primarily by a 13.5% reduction
in management fees due to lower valuations for the Fund's invested
portfolio, together with lower bank charges of 46.9% as a result of the new
custodial relationship, offset by higher legal and professional fees. For
the third quarter of 2001, professional fees were $67,547, a 78.1% increase
over the $37,923 in legal and professional fees incurred in the quarter
ended September 30, 2000.
For the nine months ended September 30, 2001, the Fund's increase in
net assets resulting from operations amounted to $5,870,416 in comparison
to the net increase in net assets of $16,504,410 in the nine months ended
September 30, 2000. The net increase in net assets for the first three
quarters of 2001 is primarily due to an unrealized gain on the Fund's
investment portfolio of $5,267,049 coupled with net realized gains on
investments of $2,129,486. This compares to unrealized gains on investments
of $10,025,894 for the nine months ended September 30, 2000, together with
net realized gains on investments of $8,055,675. The net realized gain on
investments for the two periods includes incentive fees of $919,429 for the
nine months ended September 30, 2001, and $1,611,135 for incentive fees
realized in the first nine months of 2000. For 2001 the nine-month increase
in net assets was offset slightly by the Fund's net investment loss of
$1,526,119 due primarily to lower investment income being generated by Fund
investments.
For the nine months ended September 30, 2001, total investment income
was $525,108, a decline of 60.1% in comparison to the same period of 2000,
and is mostly explained by lower interest and dividend income on portfolio
investments. Interest and dividend income for the nine-month period ended
September 30, 2001, was $517,508, a decrease of 57.2% in relation to the
$1,210,281 in interest and dividend income for the same period of 2000. The
decrease in interest and dividend income is a result of fewer of the Fund's
investments being held in interest-bearing instruments. In addition, other
investment income declined 92.8% to $7,600 for the 2001 period in
comparison to $105,250 realized in the first nine months of 2000, due to
fewer originations of new privately placed investments. Offsetting the
decline in total investment income were lower overall total expenses. For
the first nine months of 2001, the Fund's total expenses were $2,051,227, a
29.1% decrease from the comparable period of 2000 when total expenses were
$2,892,690. The primary reason for the expense reduction is lower
management fees due to lower values for investment holdings, decreased
incentive fees resulting from a decrease in realized gains, and lower bank
charges resulting from a new custodial relationship, offset somewhat by
higher legal and professional fees.
Liquidity and Capital Resources
For the three months ended September 30, 2001, net assets declined
$2,743,694 representing a 5.1% decline over the period. The primary reason
for the decline is a $0.54 dividend declared and paid to shareholders in
the third quarter. The total dividend amounted to $2,355,274. The remaining
decrease in net assets resulted primarily from an unrealized loss on
investments of $209,694 together with a net investment loss of $216,583,
offset by the Fund's realized gain on investments of $37,857.
For the nine months ended September 30, 2001, net assets increased
$3,515,142, a 7.4% increase over the period. The increase is a result of
the Fund's unrealized gains on investments of $5,267,049 together with net
realized gains on investments of $2,129,486 offset by a net investment loss
of $1,526,119 and the $0.54 per share distribution to shareholders in the
third quarter which totaled $2,355,274.
At the end of the third quarter, the Fund had net cash and cash
equivalents of $6,188,617 versus net cash and cash equivalents of
$1,724,516 at December 31, 2000. In addition, the Fund's accounts
receivable was $626,066 in comparison to accounts receivable of $464,110 at
December 31, 2000. Overall, in the nine-month period ended September 30,
2001, net assets have returned 7.4% from December 31, 2000, after
distribution of the dividend, and have increased more than 12% on a total
return basis for the fiscal year to date before the distribution of the
$0.54 per share dividend to shareholders in the third quarter 2001.
Pending investment in portfolio investments, funds are invested in
temporary cash accounts and in government securities. Government securities
used as cash equivalents will typically consist of U. S. Treasury
securities or other U. S. Government and Agency obligations having slightly
higher yields and maturity dates of three months or less. These investments
qualify for investment as permitted in Section 55(a)(1) through (5) of the
1940 Act.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Fund
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
November 13, 2001 /S/__________________________________________________
Russell Cleveland, Chairman and President
(Principal Executive Officer)
November 13, 2001 /S/_________________________________________________
Barbe Butschek, Chief Financial Officer
(Principal Financial Officer)