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United States
SECURITIES & ECHANGE 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 the quarterly period ended March 31, 2005
Or
o 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 33-35938
PAINEWEBBER R&D PARTNERS III, L.P.
(Exact name of registrant as specified in its charter)
 
 
Delaware
 
13-3588219
(State or other jurisdiction of
(I.R.S. Employer
Incorporation or organization)
Identification No.)
 
1285 Avenue of the Americas, New York, New York
 
10019
(Address of principal executive offices)
(Zip code)
 
Registrant’s telephone number, including area code: (212) 713-2000
 
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x     No o        
 
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
 
 

 


SPECIAL NOTE REGARDING
 
FORWARD LOOKING STATEMENTS
 
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Except for the historical information contained herein, the matters discussed herein are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of PaineWebber R&D Partners III, L.P. or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; fluctuations in the value of securities for which only a limited, or no, public market exists; dependence on the development of new technologies; dependence on timely development and introduction of new and competitively priced products; the need for regulatory approvals; the Sponsor Companies (hereinafter defined) having insufficient funds to commercialize products to their maximum potential; the restructuring of Sponsor Companies; the dependence of PaineWebber R&D Partners III, L.P. on the skills of certain scientific personnel; and the dependence of PaineWebber R&D Partners III, L.P. on the General Partner (hereinafter defined).

 


PAINEWEBBER R&D PARNTERS III, L.P.
(A Delaware Limited Partnership)
 
Form 10-Q
March 31, 2005
 
 
Table of Contents
  
PART I.
FINANCIAL INFORMATION
Page
Item 1.
Financial Statements
  
Statements of Financial Condition (unaudited) at March 31, 2005 and December 31, 2004
2
Statements of Operations
(unaudited) for the three months ended March 31, 2005 and 2004
3
 
Statement of Changes in Partners’ Capital (Deficit) (unaudited) for the three months ended March 31, 2005
3
Statements of Cash Flows
(unaudited) for the three months ended March 31, 2005 and 2004
4
Notes to Financial Statements
(unaudited)
5-8
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
9
Item 3.
Quantitative and Qualitative Disclosures about Market Risks
10
Item 4.
Controls and Procedures
11
PART II.
OTHER INFORMATION
  
Item 6.
Exhibits
11
  Signatures
12
 
Certifications
13-16
 
All schedules are omitted either because they are not applicable or the information required to be submitted has been included in the financial statements or notes thereto.

 
-i-
 
PART I. FINANCIAL INFORMATION
                 
Item 1. Financial Statements
                 
PAINEWEBBER R&D PARTNERS III, L.P.
(a Delaware Limited Partnership)
                 
Statements of Financial Condition
(unaudited)
 
   
March 31,
  
December 31,
  
      
2005
  
2004
  
Assets:
          
Marketable securities, at market value
  
$
1,809,709
  
$
2,082,760
  
               
Liabilities and partners' capital:
              
               
Accrued liabilities
  
$
105,545
  
$
95,083
  
Partners' capital
    
1,704,164
   
1,987,677
 
Total liabilities and partners' capital
  
$
1,809,709
  
$
2,082,760
  
                           
See notes to financial statements.
              
 
-2-
 
PAINEWEBBER R&D PARTNERS III, L.P.
(a Delaware Limited Partnership)
                 
Statements of Operations
(unaudited)
 
For the three months ended March 31,
  
2005
  
2004
  
Revenues:
          
Interest income
  
$
44
  
$
--
  
Realized loss on the sale of marketable securities
    
(94,118
)
  
--
 
Unrealized depreciation of marketable securities
    
(159,344
)
  
(448,261
)
     
(253,418
)
  
(448,261
)
               
Expenses:
              
General and administrative costs
    
30,095
   
49,682
 
               
Net loss
  
$
(283,513
)
$
(497,943
)
               
Net loss per partnership unit:
              
Limited partners (based on 50,000 units)
  
$
(5.61
)
$
(9.86
)
General partner
  
$
(2,835.13
)
$
(4,979.43
)
                          

Statement of Changes in Partners' Capital (Deficit)
(unaudited)
 
   
Limited
  
General
      
For the three months ended March 31, 2005
  
Partners
  
Partner
  
Total
  
               
Balance at January 1, 2005
  
$
3,522,365
  
$
(1,534,688
)
$
1,987,677
  
                     
Net loss
    
(280,678
)
  
(2,835
)
  
(283,513
)
                     
Balance at March 31, 2005
  
$
3,241,687
  
$
(1,537,523
)
$
1,704,164
  
                                      
See notes to financial statements.
                    
 
-3-
 
PAINEWEBBER R&D PARTNERS III, L.P.
(a Delaware Limited Partnership)
                 
Statements of Cash Flows
(unaudited)
 
For the three months ended March 31,
 
2005
  
2004
  
           
Cash flows from operating activities:
          
Net loss
  
$
(283,513
)
$
(497,943
)
Adjustments to reconcile net loss to cash provided by operating activities:
              
Unrealized depreciation of marketable securities
    
159,344
   
448,261
 
               
Decrease in operating assets:
              
Marketable securities
    
113,707
   
-
  
               
Increase in operating liabilities:
              
Accrued liabilities
    
10,462
   
49,622
 
Due to bank
     -      60  
Cash provided by operating activities
    
-
   
-
 
               
Increase in cash
    
-
   
-
 
               
Cash at beginning of period
    
-
   
-
 
Cash at end of period
  
$
-
  
$
-
  
                               
Supplemental disclosure of cash flow information:
              
The Partnership paid no cash for interest or taxes during the three months ended March 31, 2005 and 2004.
  
 
              
                               
See notes to financial statements.
              

-4-
 
PAINEWEBBER R&D PARNTERS III, L.P.
(A Delaware Limited Partnership)
 
NOTES TO FINANCIAL STATEMENTS
March 31, 2005
(UNAUDITED)
1. Organization and Business
 
The financial information as of March 31, 2005, and for the three months ended March 31, 2005 and 2004 is unaudited. However, in the opinion of management of PaineWebber R&D Partners III, L.P. (the “Partnership”), such information includes all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation. The results of operations reported for the interim period ended March 31, 2005, are not necessarily indicative of results to be expected for the year ended December 31, 2005. These financial statements should be read in conjunction with the most recent annual report of the Partnership on Form 10-K for the year ended December 31, 2004.

  The Partnership is a Delaware limited partnership that commenced operations on June 3, 1991. Paine Webber Development Corporation (“PWDC” or the “General Partner”), an indirect, wholly-owned subsidiary of UBS Americas Inc. is the general partner and manager of the Partnership. The Partnership will terminate on December 15, 2015, unless its term is extended or reduced by the General Partner.

The principal objective of the Partnership has been to provide long-term capital appreciation to investors through investing in the development and commercialization of new products with technology and biotechnology companies (“Sponsor Companies”), which have been expected to address significant market opportunities. The Partnership has been engaged in diverse product development projects (the “Projects”) including product development contracts, participation in other partnerships and investments in securities of Sponsor Companies. Once the product development phase has been completed, the Sponsor Companies have had the option to license and commercialize the products resulting from the product development project, and the Partnership has had the right to receive payments based upon the sale of such products.

-5-

PAINEWEBBER R&D PARNTERS III, L.P.
(A Delaware Limited Partnership)
 
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(Note 1 Continued)
 
The following table sets forth the proportion of each distribution to be received by limited partners of the Partnership (the “Limited Partners”) and the General Partner (collectively, the “Partners”). All distributions to the individual Limited Partners have been made pro rata in accordance with their individual capital contributions.

       
Limited Partners
  
General Partner
  
I.
    
Until the value of the aggregate distributions for each limited partnership unit (“Unit”) equals $1,000 plus simple interest on such amount accrued at 5% per annum (“Contribution Payout”) Contribution Payout as of March 31, 2005 is $1,688 per Units
    
99
%
  
1
%
 
II.
    
After Contribution Payout and until the value of the aggregate distributions for each Unit equals $5,000 (“Final Payout”)
 
  
80
%
  
20
%