SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 August 31, 1998
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from the transition period from ____ to _____
Commission File Number 0-9987
GLOBUS GROWTH GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 13-2949462
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
44 West 24th Street, New York, NY 10010
(Address of principal executive offices) (zip code)
(212) 243-1000
(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 ____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes ____ No ____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as the latest practicable date: 2,499,000(including 151,743
held in treasury)
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBUS GROWTH GROUP, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
August 31, February 28,
1998 1998
------------- -------------
(Unaudited) (See Note 1)
<S> <C> <C>
ASSETS
Cash $ 526,000 $ 840,000
Investments in Securities (Note 3) $2,039,000 $1,880,000
Demand Loan Receivable $ 75,000 $ 0
Other Assets $ 9,000 $ 10,000
------------- -------------
TOTAL $2,649,000 $2,730,000
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $1,055,000 $1,028,000
Loans payable to officers/shareholders $ 357,000 $ 364,000
Demand loan payable to related party $ 391,000 $ 385,000
------------- -------------
Total Liabilities $1,803,000 $1,777,000
------------- -------------
Stockholders' equity (Note 2)
Preferred stock - $.10 par value, Authorized - 450,000 shares
None Issued
Series B convertible preferred stock - $.10 par value
Authorized - 50,000 shares, None issued
Common stock - $.01 par value, Authorized - 4,500,000
shares, Issued 2,499,000 shares at 8/31/98 $ 25,000 $ 25,000
Additional paid in capital $ 2,747,000 $ 2,747,000
Treasury Stock, 151,743 shares at 8/31/98 ($ 41,000) ($ 41,000)
Accumulated earnings (deficit) ($1,885,000) ($1,778,000)
------------- -------------
Total stockholders' equity $ 846,000 $ 953,000
------------- -------------
TOTAL $ 2,649,000 $2,730,000
------------- -------------
</TABLE>
(See Accompanying Notes to Financial Statements)
<PAGE>
GLOBUS GROWTH GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended August 31, Ended August 31,
1998 1997 1998 1997
----------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Gain (loss) on investments:
Realized $ 0 $73,000 $ 0 $ 95,000
Unrealized ($32,000) ($12,000) $46,000 ($154,000)
----------- ------------- ------------- ------------
Total ($32,000) $61,000 $46,000 ($59,000)
Dividend Income $2,000 $2,000 $3,000 $8,000
Interest Income $0 $4,000 $0 $5,000
Consulting and other income $6,000 $9,000 $12,000 $18,000
----------- ------------- ------------- ------------
TOTAL ($24,000) $76,000 $61,000 ($28,000)
Expenses:
General and administrative $78,000 $44,000 $157,000 $96,000
Interest $6,000 $7,000 $11,000 $15,000
----------- ------------- ------------- ------------
TOTAL $84,000 $51,000 $168,000 $111,000
Income (loss) from operations before taxes ($108,000) $25,000 ($107,000) ($139,000)
Benefit/(Provision) for taxes $0 $0 $0 $0
----------- ------------- ------------- ------------
Net earnings (loss) ($108,000) $25,000 ($107,000) ($139,000)
----------- ------------- ------------- ------------
Net (Loss) per share of common stock ($0.05) $0.01 ($0.05) ($0.06)
Weighted Average Number of shares of
Stock Outstanding 2,347,257 2,364,860 2,347,257 2,364,860
----------- ------------- ------------- ------------
</TABLE>
(See Accompanying Notes to Financial Statements)
<PAGE>
GLOBUS GROWTH GROUP, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months
Ended August 31,
1998 1997
------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ($107,000) ($139,000)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization $0 $0
Realized (gain) loss on investments $0 ($95,000)
Unrealized (gain) loss on investments ($46,000) $154,000
Increase/(decrease) in accounts payable, accrued expenses and
accrued interest on loans $38,000 $53,000
(Increase) decrease in prepaid assets $0 ($2,000)
------------- ---------------
Net cash (used in ) operating activities ($115,000) ($29,000)
--------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments ($113,000) ($500,000)
Issuance of demand loan receivable ($75,000)
Proceeds from sale of investments $0 $128,000
------------- ---------------
Net cash provided by (used in ) investing activities ($188,000) ($372,000)
--------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable to officers/shareholders ($11,000) ($94,000)
Increase (decrease) in loans payable to officers/shareholders $0 $30,000
------------- ---------------
Net cash provided by (used in) financing activities ($11,000) ($64,000)
--------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash ($314,000) ($465,000)
Cash - beginning of period $840,000 $512,000
Cash - end of period $526,000 $47,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $0 $0
Income Taxes $6,000 $3,000
Stock received for consulting services $13,000 $0
</TABLE>
(See Accompanying Notes to Financial Statements)
<PAGE>
GLOBUS GROWTH GROUP, INC. August 31, 1998
Notes to Condensed
Financial Statements
(Unaudited)
Note 1 - Basis of Condensed Information
In the opinion of the Company, the accompanying unaudited
condensed financial statements contain all adjustments,
consisting of only normal recurring accruals, necessary to
present fairly the financial position as of August 31, 1998, the
results of operations for the three and six months ended August
31, 1998 and 1997, and statement of cash flows for the six months
ended August 31, 1998 and 1997.
The results of operations for the six months ended August 31,
1998 are not necessarily indicative of the results to be expected
for the full year.
Certain information and note disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
These condensed financial statements should be read in
conjunction with the financial statements and notes thereto
included in the Company's annual report filed on Form 10-K for
the year ended February 28, 1998.
The balance sheet at February 28, 1998 has been derived from the
Company's audited balance sheet included in its Annual Report on
Form 10-K.
Note 2 - Earnings Per Share
Per share data are based on the weighted average number of common
shares outstanding during the period. Common equivalent shares
(options and warrants) would be anti-dilutive and are therefore
excluded from the calculations.
Note 3 - Investments
As of February 28, 1998 and August 31, 1998, investments are
carried at fair value, which, for readily marketable securities,
represents the last reported sales price or bid price on the
valuation date. Investments in restricted securities and
securities which are not readily marketable are carried at fair
value as determined in good faith by the Board of Directors, in
the exercise of its judgment, after taking into consideration
various indications of value available to the Board.
(Continued on next page)
<PAGE>
Note 3 - (Continued)
<TABLE>
<CAPTION>
August 31, February 28,
1998 1998
No. No.
Shares Value Cost Shares Value Cost
------ ----- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C> <C>
Common Stock
Catamount Brewing Co.* 23,215 $ 176,000 $ 176,000 23,215 $ 176,000 $ 176,000
Interface Systems Inc. 775 $ 2,000 $ 7,000 775 $ 3,000 $ 7,000
Kimeragen, Inc. Cl A 108,827 $ 609,000 $ 219,000 108,827 $ 609,000 $ 219,000
Kimeragen, Inc. Cl B 35,000 $ 196,000 $ 75,000 35,000 $ 196,000 $ 75,000
Repligen Corporation 100,468 $ 163,000 $ 190,000 100,468 $ 116,000 $ 190,000
Thermaphore Sciences, Inc. 8,333 $ 13,000 $ 13,000 ---------- ----------
---------- ----------
Total Common Stock $1,159,000 $ 680,000 $1,100,000 $ 667,000
---------- ---------- ---------- ----------
Preferred Stock
Catamount Brewing Co.* - Pfd 4,286 $ 150,000 $ 150,000 4,286 $ 150,000 $ 150,000
Genitope Corp. Series A Pfd 420,858 $ 210,000 $ 210,000 420,858 $ 210,000 $ 210,000
Genitope Corp. Series B Pfd 332,992 $ 420,000 $ 420,000 332,992 $ 420,000 $ 420,000
Thermaphore Sciences, Inc. A Pfd 66,667 $ 100,000 $ 100,000 ---------- ----------
---------- ----------
Total Preferred Stock $ 880,000 $ 880,000 $ 780,000 $ 780,000
---------- ---------- ---------- ----------
Total Investments - Fair value $2,039,000 $1,560,000 $1,880,000 $1,447,000
---------- ---------- ---------- ----------
</TABLE>
- --------------------------------------------------------------------------------
*Note: The Company also loaned $75,000 to Catamount Brewing Company on a demand
loan basis during April and June, 1998.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Analysis of Results of Operations
Prior to fiscal 1987, the Company was engaged in the camera and photography
business. On February 28, 1986, the Company sold its operating business to an
affiliated company and since that date the Company's principal activity has been
the making of investments in other companies.
At August 31, 1998, the Company had total assets of $2,649,000 compared to
total assets of $2,730,000 as at February 28, 1998. Included in total assets at
such dates were investments of $2,039,000 for the six month period ended August
31, 1998 and $1,880,000 for the year ended February 28, 1998. Shareholders
equity at such dates was $846,000 for the six month period ended August 31, 1998
and $953,000 for the year ended February 28, 1998. Gain on investments amounted
to $46,000 for the six month period ended August 31, 1998 as compared to a loss
of ($59,000) for the six month period ended August 31, 1997. Included in such
gains (losses) were no realized gain or loss and unrealized gain of $46,000 for
the six month period ended August 31, 1998 compared to $95,000 of realized gain
and ($154,000) of unrealized loss for the six month period ended August 31,
1997. Operating expenses, including interest charges, amounted to $168,000 for
the 1998 six month period and $111,000 for the 1997 six month period. (Loss)
from operations, both before and after provision for taxes, was ($107,000) for
the six month period ended August 31, 1998 compared to ($139,000) for the six
month period ended August 31, 1997. Net (loss) per share was ($0.05) for the
1998 six month period compared to ($0.06) for the comparable 1997 period. The
weighted average number of shares of Common Stock outstanding at August 31, 1998
was 2,347,257 and 2,364,860 at August 31, 1997.
Analysis of Financial Condition
The Company's cash position as at August 31, 1998 (i.e., $526,000) is
offsetable by the indebtedness that is owing to members of the Globus family
described below. The near term liquidity of the Company, as well as its near
term capital resources position, are presently principally dependent upon the
continued willingness, as to which there can be no assurance whatsoever, of the
members of the Globus family who have made loans to the Company not to demand
full or substantially full repayment of such loans and to continue to make loans
to the Company, if necessary. Thus, loans payable by the Company (including
accrued interest) to Messrs. Stephen E. and Richard D. Globus amounted to
$357,000 at August 31, 1998, a decrease of $7,000 from $364,000 at February 28,
1998. This decrease was due to a loan repayment to Stephen E. and Richard D.
Globus of approximately $11,000, which was somewhat offset by a $4,000 increase
in accrued interest. As at August 31, 1998, loans payable to another member of
the Globus family, to wit: Ms. Jane Globus (the mother of Stephen E. and Richard
D. Globus), amounted to approximately $391,000, including accrued interest. As
at August 31, 1998, unpaid salaries owing to Messrs. Stephen E. and Richard D.
Globus aggregated $1,004,000; so that at such date the total of monies owed to
Messrs. Stephen E. Globus, Richard D. Globus and Ms. Jane Globus aggregated
approximately $1,752,000.
There are in fact presently no known events that can be considered
reasonably certain to occur which would materially change favorably either the
short term or long term liquidity (i.e., ability of the Company to generate
adequate amounts of cash to meet its needs for cash) or capital resources
position (i.e., source of funds) of the Company from that in which it presently
finds itself, and, absent continuation of the presently existing loans without
call for payment, or additional loans, from the Globus family, the present
liquidity and capital resources position of the Company necessarily adversely
affects the financial condition of the Company and its ability to make new
investments. In such connection it must be noted that: the profitability of a
BDC, like the Company, is largely dependent upon its ability to make investments
and upon increases in the value of its investments; and a
<PAGE>
BDC is also subject to a number of risks which are not generally present in an
operating company, and which are discussed generally in Item 1 of the Company's
10K Report for its fiscal year ended February 28, 1998 to which Item reference
is hereby made. Reference is also hereby made to Item 1 and Item 7 of such
Report and to the Financial Statements and notes thereto contained in such
Report for information concerning the Company's investments and its financial
condition.
The Year 2000 Problem
The fact that most existing and unmodified computer systems may not be able
to distinguish the year 2000 from the year 1900 has created what is generally
known as the "Year 2000 Problem" (hereinafter "Y2K"). The full extent of the Y2K
problem is not yet known, and it is generally agreed that if not timely
corrected, it could adversely affect many businesses.
While the Company does not believe that its own internal systems will be
materially affected by the Y2K problem, there can be no assurance that: (a) the
computer systems and applications of the Company's various investees will be
converted timely, or, (b) that a failure to so correct by one or more material
investees would not have a material adverse effect on the Company's financial
condition.
The Company is making what it believes, under the circumstances, to be
diligent inquiry of its investees in an attempt to ascertain: (i) the opinion of
each investee as to whether any of its business or results of operations or
financial condition, is or will be, or could be, affected by a Y2K problem; and
(ii) the extent, if any, of related Y2K matters.
As of the date hereof the Company has received responses from three of its
investees which responses answer inquiry "(i)" above in the negative.
Necessarily, the Company cannot make any representation as to the accuracy of
any of the responses it receives.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this Report is filed.
<PAGE>
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.
Date: October 15, 1998
GLOBUS GROWTH GROUP, INC.
(Registrant)
s/ Stephen E. Globus
-----------------------------
STEPHEN E. GLOBUS
Chairman of the Board,
(Principal Executive Officer)
/s/ Richard D. Globus
-----------------------------
RICHARD D. GLOBUS
President, Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10Q at
August 31, 1998 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> Feb-28-1999
<PERIOD-END> Aug-31-1998
<CASH> 526,000
<SECURITIES> 2,039,000
<RECEIVABLES> 75,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,000
<PP&E> 25,000
<DEPRECIATION> (23,000)
<TOTAL-ASSETS> 2,649,000
<CURRENT-LIABILITIES> 1,803,000
<BONDS> 0
25,000
0
<COMMON> 0
<OTHER-SE> 821,000
<TOTAL-LIABILITY-AND-EQUITY> 2,649,000
<SALES> 0
<TOTAL-REVENUES> 61,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 168,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (107,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (107,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (107,000)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
