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 May 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>
May 31, February 28,
1998 1998
----------- -----------
ASSETS (Unaudited) (See Note 1)
<S> <C> <C>
Cash $739,000 $840,000
Investments in Securities (Note 3) $1,958,000 $1,880,000
Demand Loan Receivable $25,000 $0
Other Assets $8,000 $10,000
----------- -----------
TOTAL $2,730,000 $2,730,000
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $1,023,000 $1,028,000
Loans payable to officers/shareholders $365,000 $364,000
Demand loan payable to related party $388,000 $385,000
----------- -----------
Total Liabilities $1,776,000 $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 5/31/98 $25,000 $25,000
Additional paid in capital $2,747,000 $2,747,000
Treasury Stock, 151,743 shares at 5/31/98 ($41,000) ($41,000)
Accumulated earnings (deficit) ($1,777,000) ($1,778,000)
----------- -----------
Total stockholders' equity $954,000 $953,000
----------- -----------
TOTAL $2,730,000 $2,730,000
----------- -----------
</TABLE>
(See Accompanying Notes to Financial Statements)
<PAGE>
GLOBUS GROWTH GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended May 31,
1998 1997
------------ ------------
<S> <C> <C>
Gain (loss) on investments:
Realized $0 $22,000
Unrealized $78,000 ($142,000)
----------- -----------
Total $78,000 ($120,000)
Dividend Income $1,000 $6,000
Interest Income $0 $1,000
Consulting and other income $6,000 $9,000
----------- -----------
TOTAL $85,000 ($104,000)
Expenses:
General and administrative $79,000 $52,000
Interest $5,000 $8,000
----------- -----------
TOTAL $84,000 $60,000
Income (loss) from operations before taxes $1,000 ($164,000)
Benefit/(Provision) for taxes $0 $0
----------- -----------
Net earnings (loss) $1,000 ($164,000)
----------- -----------
Net (Loss) per share of common stock $0.00 ($0.07)
Weighted Average Number of shares of
Stock Outstanding 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>
Three Months
Ended May 31,
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income (loss) $1,000 ($164,000)
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 ($22,000)
Unrealized (gain) loss on investments ($78,000) $142,000
Increase/(decrease) in accounts payable, accrued expenses and
accrued interest on loans ($1,000) $30,000
(Increase) decrease in prepaid assets $2,000 $2,000
----------- -----------
Net cash (used in ) operating activities ($76,000) ($12,000)
-------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Issuance of demand loan receivable ($25,000) $0
Proceeds from sale of investments $0 $24,000
----------- -----------
Net cash provided by (used in ) investing activities ($25,000) $24,000
-------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable to officers/shareholders $0 ($60,000)
Increase (decrease) in loans payable to officers/shareholders $0 ($16,000)
----------- -----------
Net cash provided by (used in) financing activities $0 ($76,000)
-------------------------------------------------------------------------------------------------
Net increase (decrease) in cash ($101,000) ($64,000)
Cash - beginning of period $840,000 $512,000
Cash - end of period $739,000 $448,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $0 $0
Income Taxes $28,000 $2,625
(See Accompanying Notes to Financial Statements)
</TABLE>
<PAGE>
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements May 31, 1998
(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 May 31, 1998, the results of operations for the three
months ended May 31, 1998 and 1997, and statement of cash flows for
the three months ended May 31, 1998 and 1997.
The results of operations for the three months ended May 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 May 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>
May 31, February 28,
1998 1998
---- ----
No. No.
Shares Value Cost Shares Value Cost
------ ----- ---- ------ ----- ----
Common Stock
- ------------
<S> <C> <C> <C> <C> <C> <C>
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 $195,000 $190,000 100,468 $116,000 $190,000
---------- ---------- ---------- ----------
Total Common Stock $1,178,000 $667,000 $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
---------- ---------- ---------- ----------
Total Preferred Stock $780,000 $780,000 $780,000 $780,000
---------- ---------- ---------- ----------
Total Investments - Fair value $1,958,000 $1,447,000 $1,880,000 $1,447,000
---------- ---------- ---------- ----------
</TABLE>
- ---------------------------------------------------------------------
<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 May 31, 1998, the Company had total assets of $2,730,000 compared to
total assets of $2,730,000 as at February 28, 1998. Included in total assets at
such dates were investments of $1,958,000 for the three month period ended May
31, 1998 and $1,880,000 for the year ended February 28, 1998. Shareholders
equity at such dates was $954,000 for the three month period ended May 31, 1998
and $953,000 for the year ended February 28, 1998. Gain on investments amounted
to $78,000 for the three month period ended May 31, 1998 as compared to a loss
of ($120,000) for the three month period ended May 31, 1997. Included in such
gains (losses) were no realized gain or loss and unrealized gain of $78,000 for
the three month period ended May 31, 1998 compared to $22,000 of realized gain
and ($142,000) of unrealized loss for the three month period ended May 31, 1997.
Operating expenses, including interest charges, amounted to $84,000 for the 1998
three month period and $60,000 for the 1997 three month period. Gain (loss) from
operations, both before and after provision for taxes, was $1,000 for the three
month period ended May 31, 1998 compared to ($164,000) for the three month
period ended May 31, 1997. Net gain (loss) per share was $0.00 for the 1998
three month period compared to ($0.07) for the comparable 1997 period. The
weighted average number of shares of Common Stock outstanding at May 31, 1998
was 2,347,257 and 2,364,860 at May 31, 1997.
Analysis of Financial Condition
The Company's cash position as at May 31, 1998 (i.e., $739,000) 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
$365,000 at May 31, 1998, an increase of $1,000 from $364,000 at February 28,
1998. This increase was due in part to an increase in accrued interest of
approximately $1,800, which was somewhat offset by a $500 loan repayment to
Stephen E. and Richard D. Globus. As at May 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 $388,000, including accrued
interest. As at May 31, 1998, unpaid salaries owing to Messrs. Stephen E. and
Richard D. Globus aggregated $979,000; so that at such date the total of monies
owed to Messrs. Stephen E. Globus, Richard D. Globus and Ms. Jane Globus
aggregated approximately $1,732,000.
<PAGE>
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 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.
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: July 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 May 31, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Feb-28-1999
<PERIOD-END> May-31-1998
<CASH> 739,000
<SECURITIES> 1,958,000
<RECEIVABLES> 25,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,000
<PP&E> 25,000
<DEPRECIATION> (23,000)
<TOTAL-ASSETS> 2,730,000
<CURRENT-LIABILITIES> 1,776,000
<BONDS> 0
25,000
0
<COMMON> 0
<OTHER-SE> 929,000
<TOTAL-LIABILITY-AND-EQUITY> 2,730,000
<SALES> 0
<TOTAL-REVENUES> 85,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 79,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,000
<INCOME-PRETAX> 1,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,000
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
