UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X][x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR QUARTERLY PERIOD ENDED MARCH 31,For quarterly period ended June 30, 1998
[ ] 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: 0-20671020671
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
____________________________________________________________________________
(Exact name of registrant as specified in its charter)
TEXAS 75-2407159
_____________________________________________________________________________Texas 75-2533518
(State or other jurisdiction (I.R.S. Employer I.D. No.)
of incorporation or organization)
8080 NORTH CENTRAL EXPRESSWAY, DALLAS, TEXASNorth Central Expressway, Dallas, Texas 75206-1857
_____________________________________________________________________________
(Address of principal executive offices) (Zip Code)
214/891-8294
_____________________________________________________________________________
(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()
4,342,942X No
4,250,630 shares of common stock outstanding at March 31,June 30, 1998.
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)
ITEM 1. FINANCIAL STATEMENTS
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
Assets
December 31, 1997 March 31,June 30, 1998
Cash $15,972,424 $11,683,088$2,317,393
Accounts receivable 180,025 245,694261,449
Receivable from sale of investment 4,200,000 2,154,935
Temporary investments at cost - 4,986,564
Investments, at market value,
cost of $24,150,665 and $29,400,653$34,150,153 27,795,592 40,374,40542,294,818
Organizational costs,
net of accumulated amortization 208,529 177,779146,687
----------- ------------
$ 48,356,570 52,480,966$52,161,846
========== =========
Liabilities and Net Assets
Liabilities:
Accounts payable - related parties $ 1,440,889 47,387$ 1,020,713
Accounts payable - trade 31,198 23,21514,075
Dividends payable 2,387,123 347,4362,932,935
--------- ---------
3,859,210 418,0383,967,723
--------- ---------
Net Assets:
Common stock, $1 par value;
20,000,000 shares authorized;
4,342,942 and 4,342,9424,250,630 shares
issued and outstanding 40,601,838 40,601,83839,759,381
Accumulated undistributed income (loss) 3,895,522 11,461,0908,434,742
---------- ----------
Net assets $44,497,360 $52,062,928
$48,356,570 $52,480,96644,497,360 48,194,123
---------- ----------
$ 48,356,570 $ 52,161,846
========== ==========
Net asset value per share $ 10.25 $ 11.9911.34
========== ==========
See accompanying notes to financial statements.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Statement of Operations
(Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
1997 1998 1997 1998
Investment Income:
Interest $ 681,298 $ 572,596 $ 1,194,212 $ 1,184,777
Dividends 75,000 - 150,000 -
Other investment income 26,000 96,500 51,000 390,988
------- ------- --------- ---------
Total investment income 782,298 669,096 1,395,212 1,575,765
------- ------- --------- ---------
Expenses:
Amortization 31,092 31,092 61,842 61,842
Bank charges 5,314 5,502 10,632 9,774
Directors' fees 13,500 16,000 31,500 38,500
Legal and professional 18,694 29,745 81,937 57,662
Management fees 180,269 295,102 367,405 457,718
Taxes 6,866 7,330 7,677 7,890
Other 61,079 53,246 115,194 92,865
------- ------- ------- -------
Total expenses 316,814 438,017 676,187 726,251
------- ------- ------- -------
Net investment income 465,484 231,079 719,025 849,514
Realized gain on investments - 2,504,596 419,905 2,504,596
Unrealized gain (loss) on investments (1,680,956) (2,829,090) (8,937,641) 4,499,723
Net increase (decrease) in net assets --------- --------- ---------- ---------
resulting from operations $(1,215,472) $ (93,415) $(7,798,711) $7,853,833
========= ========= ========== =========
See accompanying notes to financial statements.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)Statement of Changes in Net Assets
(Unaudited)
Three Months ended March 31,Ended June 30, Six Months Ended June 30,
1997 1998 1997 1998
Investment Income:
Interest $ 512,913 $ 612,181
Dividends 75,000 -
Other investment income 25,000 294,488
Total investment income 612,913 906,669
Expenses:
Amortization 30,750 30,750
Bank charges 5,318 4,272
Directors' fees 18,000 22,500
Legal and professional 63,243 27,917
Management fees 187,137 162,616
Taxes 811 560
Other 54,114 39,619
Total Expenses 359,373 288,234
Net investment income 253,540 618,435
Realized gain on investments 419,905 -
Unrealized gain (loss) on investments (7,256,685) 7,328,813
Net increase (decrease) in net assets
resulting from operations $ (6,583,240) $ 7,947,248
See accompanying notes to financial statements.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
Three Months ended March 31,
1997 1998
Increase (Decrease)(decrease) in net assets
resulting from operations
Investment income - net $ 253,540465,484 $ 618,435231,079 $ 719,025 $ 849,514
Realized gain on investments - 2,504,596 419,905 -2,504,596
Unrealized gain (loss) on investments (7,256,685) 7,328,813(1,680,956) (2,829,090) (8,937,641) 4,499,723
--------- --------- --------- ---------
Net increase (decrease) in net assets
resulting from operations (6,583,240) 7,947,248(1,215,472) (93,415) (7,798,711) 7,853,833
Distributions to shareholders (347,436) (2,932,935) (694,872) (3,314,615)
Proceeds from net investment income (347,435) (381,680)
Capital share transactionsshares issued - - 39,848 -
Cost of shares repurchased - (842,455) - (842,455)
---------- --------- --------- ---------
Total increase (decrease) (6,890,827) 7,565,568(1,562,908) (3,868,805) (8,453,735) 3,696,763
Net assets
Beginning of period 42,239,493 52,062,928 49,130,320 44,497,360
----------- ---------- ---------- ----------
End of period $ 42,239,493 $52,062,928$40,676,585 $48,194,123 $40,676,585 $48,194,123
========== ========== ========== ==========
See accompanying notes to financial statements.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31,Notes to Financial Statements
June 30, 1998
(Unaudited)
1. Organization and Business Purpose
Renaissance Capital Growth & Income Fund III, Inc. (the "Fund"), a Texas
Corporation, was incorporated on January 20, 1994, and had no operations
prior to June 24, 1994. The Fund seeks to achieve current income and
capital appreciation potential by investing primarily in unregistered
preferred stock investments of small and medium size companies which are
in need of capital and which it believes offer the opportunity for growth.
The Fund has elected to be treated as a business development company under
the Investment Company Act of 1940, as amended ("1940 Act").
2. Significant Accounting Policies
A. Federal Income Taxes - The Fund intends to elect the special income
tax treatment available to "regulated investment companies" under SubchapterSub-
chapter 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. The
Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies
and to distribute all its taxable income to its shareholders.
Therefore, no federal income tax provision is required.
B. Distributions to Shareholders - Dividends to shareholders are
recorded on the ex-dividend date. The Fund declared dividends of
$381,680$2,932,935 for the quarter ended March 31,June 30, 1998.
C. Management Estimates - The financial statements have been prepared in
conformity with generally accepted accounting principles. The preparationpre-
paration of the accompanying financial statements requires estimates
and assumptions made by management of the Fund that affect the
reported amounts of assets and liabilities as of the date of the
statements of financial condition and income and expenses for the
period. 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 Financial 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 than the carrying value of those financial instruments.instru-
ments. When the fair value reasonably approximates the carrying
value, no additional disclosure is made.
3. Organization Expenses
In connection with the offering of its shares, the Fund paid Renaissance
Capital Group, Inc. (the "Investment Advisor"Adviser") organizational expenses of
$623,544. Such expenses are deferred and amortized on a straight-line
basis over a five-year period. Amortization expense for the quarter ended
March
31,June 30, 1998 was $30,750.$61,842.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements (cont'd)
June 30, 1998
(unaudited)
4. Investment Advisory Agreement
The Investment AdvisorAdviser for the Fund is registered as an investment advisoradviser
under the Investment AdvisorsAdvisers Act of 1940. Pursuant to an Investment AdvisoryAd-
visory Agreement, the Investment AdvisorAdviser performs certain services, includingin-
cluding certain management, investment advisory and administrative servicesserv-
ices necessary for the operation of the Fund. The Investment AdvisorAdviser
receives a fee equal to .4375% (1.75% annually) of the Net Assets each
quarter. The Fund accrued a liability of $162,616$295,102 for such operational
management fees performed during the quarter ended March 31,June 30, 1998.
In addition, the Fund has agreed to pay the Investment AdvisorAdviser an
incentive fee equal to 20% of any net realized capital gains after
allowance for any realizedunrealized capital losses and
unrealized depreciationloss of the Fund. This management
incentive fee is calculated on an annuala quarterly basis.
5. Capital Gains
The Fund realized a capital gain of $3,130,746 on the sale of 333,665
shares of TAVA Technologies, Inc. common stock. The gain is shown on
the accompanying statement of operations net of the $626,149 management
incentive fee payable to the Investment Adviser.
6. Capital Share Transactions
As of March 31,June 30, 1998 there were 20,000,000 shares of $1 par value capital
stock authorized and capital paid-in aggregated $36,258,896.
Year-to-date transactions in capital stock are as follows:
Shares Amount
Balance December 31, 1997 4,342,942 $40,601,838
Shares repurchased (92,312) (842,457)
--------- -----------
Balance March 31,June 30, 1998 4,342,942 $40,601,838
The Fund received an additional $61,200 from its shareholders during the
current quarter. These funds were used to purchase Fund shares in the open
market.
4,250,630 $39,759,381
========= ==========
6.7. Related Party Transactions
The Investment AdvisorAdviser is reimbursed by the Fund for certain administrativeadministra-
tive expenses under the Investment Advisory Agreement. The Fund accrued a
liability of $28,236Such reimburse-
ments were $52,075 for such reimbursements during the quarter ended March
31,June 30, 1998.
7.8. Short-term Investments
Short-term investments are comprised of U. S. Government and Agency obligationsobli-
gations maturing from May 7, 1998 to May 20,1998.no later than August 5, 1998. Such investments qualify
for investment as permitted in Section 55(a) (1) through (5) of the 1940
Act.
8.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements (cont'd)
June 30, 1998
9. Investments
The Fund invests primarily in convertible securities and equity investmentsinvest-
ments of companies that qualify as Eligible Portfolio Companies as definedde-
fined in Section 2(a) (46) of the 1940 Act or in securities that otherwiseother-
wise qualify for investment as permitted in Section 55(a) (1) through (5).
Under the provisions of the 1940 Act at least 70% of the Fund's assets
must be invested in Eligible Portfolio Companies. These stocks are
carried on the Statement of Assets and Liabilities as of March 31,June 30, 1998,
at fair value, as determined in good faith by the Investment Advisor.Adviser.
The securities held by the Fund are unregistered and their value does not
necessarily represent the amounts that may be realized from their immediateimmed-
iate sale or disposition. The investments held by the Fund are convertible,convert-
ible, generally after five years, into the common stock of the issuer
at a set conversion price. The common stock acquired upon exercise of the
conversion feature is generally unregistered and is thinly to moderately
traded but is not otherwise restricted. The Fund generally may register
and sell such securities at any time with the Fund paying the costs of
registration. Dividends are generally payable monthly. The stocks often
have call options, usually commencing three years subsequent to issuance,
at prices specified in the stock agreements.
INVESTMENT VALUATION SUMMARY
CONVERSION FAIR
COST OR FACE VALUE FAIR VALUE
Bentley Pharmaceuticals, Inc.
12% Convertible Debenture 744,800 1,180,000 1,069,200960,000 950,400
Document Authentication Systems
5% Convertible Preferred Stock 500,000 500,000 500,0001,500,000 1,500,000 1,500,000
The Dwyer Group, Inc.
Common Stock 1,966,632 1,476,563 1,476,5631,560,938 1,560,938
Fortune Natural Resources Corp.
12% Convertible Debenture 350,000 350,000 350,000
Integrated Security Systems, Inc.
9% Convertible Debenture 2,300,000 2,487,687 2,359,8164,713,115 4,503,542
Warrants 3,750 3,750 3,750
Interscience Computer Corporation
Series A and Series B
Cumulative Convertible
Redeemable Preferred Stock 4,000,000 4,000,000 1,400,000
Redeemable Preferred Stock
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
8. Investments (continued)
INVESTMENT VALUATIONSUMMARY
CONVERSION
COST OR FACE VALUE FAIR VALUE
Intile Designs, Inc.
Common Stock 500,000 125,000 67,500
Jakks236,350 50,000
JAKKS Pacific, Inc.
9% Convertible Debenture 3,000,000 4,076,087 4,035,3266,391,304 6,327,391
7% Convertible Preferred Stock 3,000,000 4,106,145 3,809,776
La-Man Corporation
8.75% Convertible Debenture 1,750,000 1,750,000 1,750,000
Common Stock 500,000 368,924 296,789390,625 317,188
LifeQuest Medical, Inc.
9% Convertible Debenture 1,500,000 1,546,875 1,531,4061,500,000 1,500,000
Common Stock 500,000 546,875 541,719296,875 293,906
NewCare Health Corp.
8.5% Convertible Debenture 2,500,000 2,500,000 2,500,000
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
Notes to Financial Statements (Continued)
June 30, 1998
9. Investments (continued)
INVESTMENT VALUATION SUMMARY
CONVERSION FAIR
COST FACE VALUE VALUE
Optical Security Group, Inc.
8% Convertible Debenture 500,000 500,000 500,000
Play by Play Toys & Novelties, Inc.
8% Convertible Debenture 2,500,000 2,949,219 2,919,7272,500,000 2,500,000
Poore Brothers., Inc.
9% Convertible Debenture 1,788,571 1,788,571 1,788,5712,102,473 2,081,448
Simtek Corporation
9% Convertible Debenture 750,000 750,000 750,000
Warrants -0- -0- -0-
TAVA Technologies, Inc.
9% Convertible Debentures 1,500,500 13,129,375 12,998,0801,000,000 6,583,333 6,517,500
Warrants -0- 290,625 287,719209,375 207,281
Voice It Worldwide, Inc.
8% Convertible Debenture 2,450,000 3,546,053 3,283,2902,450,000 2,176,116
Common Stock 1,046,400 1,292,500 1,214,950
$29,400,653 $43,908,104 $40,374,406
793,172 745,582
Warrants -0- -0- -0-
--------- --------- ----------
$34,150,153 $46,147,455 $42,294,818
========== ========== ==========
The fair value of debt securities convertible into common stock is the sum of
[FN]
(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 conditioncon-
dition of the issuer. The fair value of the conversion features of a security,secur-
ity, if any, are based on fair values as of this date less an allowance, as
appropriate, for costs of registration, if any, and selling expenses. Publicly
traded securities, or securities that are convertible into publicly traded
securities, are valued at the last sale price, or at the average closing bid
and asked price, as of the valuation date. While these valuations are believedbe-
lieved 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.
(1) MATERIAL CHANGES IN FINANCIAL CONDITIONMaterial Changes in Financial Condition
The following portfolio transactions are noted for the quarter ended
March
31,June 30, 1998 (portfolio companies are herein referred to as the "Company"):
INTEGRATED SECURITY SYSTEMS, INC. Effective March 18, 1998, the
conversion price on the Fund's Convertible Debenture was reduced from $1.05
per share to $0.549 per share. The terms of the Debenture allowed
the Fund the one-time adjustment when the Company failed to achieve minimum
net sales and net after tax income benchmarks based on 1997 year end numbers.
As a result of the adjustment, the Fund's Debenture is now convertible into
4,189,435 shares of the Company's common stock, of which 1,998,959 are
considered unregistered, while the remaining 2,190,476 shares are registered
and are freely marketable in the event the Fund converts from debt into
equity.
DOCUMENT AUTHENTICATION SYSTEMS. Effective February 5,Document Authentication Systems. On May 11, 1998, the Fund invested $500,000$1
million in the 5% Series A Cumulative Convertible Preferred Stock of Document Authentication Systems, Inc. ("DAS").the
Company. The Preferred is convertible into shares of common stock of DAS at
$250.00$250 per share. DAS is currently private, and owns a patented process covering
paperless transactions.
In addition to the Fund's Investment,investment, Renaissance US Growth and& Income Trust,
PLC ("RUSGIT") invested $500,000$1 million in the 5% Series A Cumulative Convertible
Preferred Stock of DAS. The investment by RUSGIT was made under the same
terms and conditions as the Fund's investment.
LA-MAN CORPORATION.Interscience Computer Corporation. Subsequent to June 30, 1998, Inter-
science effectuated its Chapter XI Plan of Reorganization and emerged from
bankruptcy. As a result of the reorganization, the Fund converted all of its
shares of Series A and B Preferred Stock into 1,750,000 shares of Inter-
science common stock, or 40% of the common shares outstanding, and warrants
to purchase 500,000 shares of the Company's common stock at $1.00 per share.
JAKKS Pacific, Inc. On March 2,April 1, 1998, the Fund invested $2,250,000 in
La-Man Corporation ("La-Man"). Of the total investment, the Fund invested
$1,750,000$3 million for the
purchase of an 8.75%600 shares of the Company's Series A Cumulative Convertible Debenture, maturing in
seven years and convertible into La-Man's common stock at $4.75 per share.
In addition, the Fund invested $500,000 in La-Man's common stock atPre-
ferred Stock. The Preferred has a price
of $4.32 per share. La-Man is a leading competitor in the market for design,
manufacture, and placement of large electronic advertising signs for
businesses, entertainment, and sports venues, as well as signage for schools
and churches.
In addition to the Fund's investment, RUSGIT invested $2,250,000 in
La-Man by purchasing an 8.75% Convertible Debenture for $1,750,000, and by
purchasing $500,000 of La-Man common stock at $4.32 per share. The investment
by RUSGIT was made under the same terms and conditions as the Fund's
investment.
NEWCARE HEALTH CORPORATION. On January 27, 1998, the Fund invested
$2,500,000 for the purchase of an 8.50% Convertible Debenture of NewCare
Health Corporation ("NewCare"). The Debenture matures in seven
years7% cumulative dividend, payable quarterly,
and is convertible into shares of NewCare'sthe Company's common stock at $3.81 per
share. In addition, the Fund has options to purchase 100,000 shares of
NewCare's common stock at a price of $4.19 per share. NewCare is a fast
growing provider of senior residential care services, including long-term
care, assisted living and independent living services. NewCare also owns and
manages hospitals.
In addition to the Fund's investment, RUSGIT invested $2,500,000 in an
8.50% Convertible Debenture of NewCare, and also received options on 100,000
shares of NewCare's common stock. The investment by RUSGIT was made under
the same terms and conditions as the Fund's investment.
JAKKS PACIFIC INC. Subsequent to March 31, 1998, the Fund invested
$3,000,000 in the Series A Cumulative Convertible Preferred Stock of JAKKS
Pacific, Inc. ("JAKKS"). The Preferred stock calls for a 7% dividend, and is
convertible into common stock of JAKKS at a price of $8.95 per
share. This represents the Fund's second investment in JAKKS. On December
31, 1996, the Fund invested $3,000,000$3 million in a 9% convertible debenture of the
Company.
Optical Security Group, Inc. On June 18, 1998, the Fund invested $500,000
in the 8% Senior Subordinated Convertible Debentures of Optical Security Group,
Inc. ("OPSC"). The Debentures are convertible into shares of OPSC common
stock at $6.50 per share and are subordinate to all senior indebtedness of the
Company, which is defined to include both secured and unsecured obligations of
the Company. In addition, the Debenture provides for the establishment of a
sinking fund whereby the Company will make payments into the Fund to cover the
Debenture obligations beginning on July 1, 2002, with payments to be made every
July 1 thereafter until July 1, 2004.
OPSC utilizes its diffractive coating, holographic, and other proprietary
imaging technologies to provide tamper-evident packaging labels, authenticat-
ing labels, and tags for consumer product protection, and security foils for
protection against counterfeiting of checks, cards and any other documents of
value. In addition to the Fund's investment, RUSGIT invested $500,000 in the
8% Senior Subordinated Convertible Debentures of OPSC. The investment by
RUSGIT was made under the same terms and conditions as the Fund's investment.
Simtek Corporation. On June 12, 1998, the Fund invested $750,000 in a 9%
Convertible Debenture of Simtek Corporation. Simtek designs and markets non-
volatile static random access memory chips in an all-silicon (and non-battery
driven) package, that enables the Company.computer to retain data even after the power
is shut off to the device. The Debentures are convertible into the Company's
common stock at $.35 per share. The Fund's position is secured by all the
assets of the Company, except that the Fund's security interest in certain of
the collateral is subordinate to previously existing security interests
granted to other lending institutions. In addition to the Debentures, the
Fund received warrants to purchase 400,000 shares of Simtek common stock exer-
cisable at $.40 per share.
In addition to the Fund's investment, RUSGIT invested $750,000 in a 9%
Convertible Debenture of Simtek and also received Warrants to purchase 400,000
shares of the Company's common stock. The investment by RUSGIT was made
under the same terms and conditions as the Fund's investment.
TAVA Technologies, Inc. During the Quarter ended June 30, 1998, the Fund
converted Debenture Nos. 4 - 8, which Debentures had a cost basis of $500,500,
into 333,664 shares of TAVA common stock, and subsequently sold these shares
for $3,631,243.04, recording a realized gain of $3,130,745.54.
Voice-It Worldwide, Inc. The Company is in arrears on its interest
obligations to the Fund. Accordingly, the Fund's position in the Company's
Convertible Debentures has been marked to the market price of the underlying
common stock.
(2) MATERIAL CHANGES IN OPERATIONSMaterial Changes in Operations
Net investment income for the quarter ended March 31,June 30, 1998, as compared
to March 31,June 30, 1997, reflects an increase of $346,895.$130,489. This reported increasein-
crease is primarily attributable to the closing fees generated from this
period's investment activity along with an adjustment from prior years
which generated $187,988 of prior year expenses resulting in an
increaseother income. Additionally, dividend income
decreased by $150,000 due to the bankruptcy of income.Interscience Computer Corp.
During the firstsecond quarter, the Fund experienced $7,328,813$2,289,090 of unrealized
gainslosses resulting from an increasea decrease in the fair value of its investments. The Fund
realized capital gains of $3,130,746 on the sale of 333,665 shares of TAVA
Technologies, Inc. common stock.
Pending investment in portfolio investments, funds are invested in temporary
cash accounts and in government securities. Although income and expenses are
essentially stable, the Registrant anticipates that income will continue to
increase as investments are made. AnAlthough an aggressive search for potential
investments is ongoing.ongoing, the Fund is nearing full investment, and Registrant
expects full investment to be achieved sometime in 1998.
During the quarter ended March 31,June 30, 1998, the Registrant paid dividend
distributions of income and capital gains to shareholders in the amount of
$2,421,369$347,435, and accrued dividends payable to shareholders in the amount of
$381,680.
$2,932,935.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Partnership has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
May 15,/s/ Russell Cleveland
August 13, 1998 _______________\S\_______________________------------------------------------------
Russell Cleveland, President and Chairman
May 15, 1998 _________________\S\_________________________/s/ Barbe Butschek
Corp.August 13, 1998 --------------------------------------------
Barbe Butschek, Secretary and Treasrer
Treasurer