SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 -- For the fiscal year ended February 28, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-9987
GLOBUS GROWTH GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 13-2949462
(State of incorporation) (I.R.S Employer Identification No.)
44 West 24th Street, New York, NY 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (212) 243-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K (X)
The aggregate market value of the voting stock held by non-affiliates as at
April 23, 1999 was approximately $126,616 (506,465 shares at $.25 per share).
The number of shares of the Registrant's Common Stock outstanding as at April
23, 1999 was 2,347,257 (excluding 151,743 shares held in the Registrant's
treasury). Of the outstanding shares, a total of 1,840,792 are deemed to be held
by affiliates. The referred to market value was computed by reference to a bid
price of $.25 per share contained in the "Pink Sheets" published by the National
Quotation Bureau dated April 23, 1999 (there being no published price at which
the stock was sold, or any published offered prices of such stock as of such
date).
DOCUMENTS INCORPORATED BY REFERENCE - None
This report consists of 26 Pages
<PAGE>
PART I
Item 1. BUSINESS
General Background
The Company, a New York corporation, was organized on August 6, 1976 under
the name of Globuscope, Inc. On August 7, 1984, its name was changed to Globus
Growth Group, Inc., which is its present name.
On February 27, 1986, the stockholders of the Company approved the
divestiture and sale of those assets of the Company as pertained to its then
camera manufacturing and photography operations as well as the sale of certain
shares of stock in a photographic related company owned by it and its interest
in the Company's then owned premises. The sale was consummated as of February
28, 1986. After such divestiture, the Company's activities consisted of the
holding of interests in various companies and the seeking out of acquisition and
joint-venture opportunities in various fields of business endeavor. On May 31,
1988, the Company filed with the Securities and Exchange Commission a
notification of election to be treated as a "Business Development Company"
("BDC") as that term is defined in the Investment Company Act of 1940 (the "1940
Act"). For a summary description of certain restrictions imposed upon a BDC by
the 1940 Act, reference should be made to "Governmental Regulation" elsewhere
herein. For a summary description of the risk factors involved in an investment
in the securities of a BDC due to the nature of such a company's investment
portfolio, reference should be made to "Risk Factors Involved In Investing In A
BDC" elsewhere herein.
Investment Portfolio
As at February 28, 1999, the Company held investments in the following
investee companies: (investments listed include only those the value of which
have not been written down to zero).
(i) Catamount Brewing Company - a privately held beer brewing company located in
Windsor, Vermont. Operations of the brewery commenced on January 22, 1987. Sales
of the product are presently being made principally in Vermont, New Hampshire
and Massachusetts. A small secondary sales market for the product also occurs in
parts of Connecticut, New York, Rhode Island, New Jersey and Washington, D.C.
Richard D. Globus, an officer and director of the Company, is no longer a
director of Catamount, having resigned June 28, 1998. Various members of the
Globus family, two of whom are Directors of the Company, are also stockholders
of Catamount.
(ii) Interface Systems, Inc. - a publicly held company that provides interfacing
solutions for proprietary computer architectures (such as IBM mainframes) and
other peripheral devices such as printers, PC's, cash registers and open systems
computers. Its products consist of hardware and proprietary software; including
a laser printer product line and software that interfaces a Unix-based
workstation with an IBM mainframe. Various members of the Globus family, two of
whom are Directors of the Company, are also stockholders of Interface.
(iii) Kimeragen, Inc. - a privately held non-affiliated development stage
company founded in 1994 for the purpose of engaging in research and development
in the field of developing gene therapy products for the treatment of hereditary
and acquired diseases. Stephen E. Globus, an officer and director of the
Company, is a director of Kimeragen.
(iv) Repligen Corporation ("Repligen") - a publicly held research and
development corporation founded in 1981. Its field of activity is primarily
focused on the development of new therapies for chronic and acute inflammation
and immunosuppression and the development of enabling technologies for discovery
of new drugs by rapid screening of combinatorial chemical libraries. In March of
1996, Repligen acquired Glycan Pharmaceuticals ( a former investee of the
Company). As a result of that transaction, Repligen acquired a
<PAGE>
majority interest in Proscure, Inc. (another former investee of the Company).
Subsequently, the Company exchanged its interests in Proscure, Inc. and Glycan
Pharmaceuticals for an aggregate of 100,468 shares of Common Stock of Repligen.
For additional information concerning Proscure, Inc. reference is made to Item 1
of the Company's Form 10-K for its fiscal year ended February 29, 1996 and to
Note B of the Notes To Financial Statements contained in such Form 10-K, which
Item and Note are incorporated herein by reference.
(v) Genitope Corporation - a privately held research and development company
that holds proprietary technology having applications in the field of cancer
therapy. It focuses upon the development and production of custom cancer
vaccines for the treatment of Non-Hodgkin's Lymphoma.
(vi) Thermaphore Sciences, Inc. - a privately held, newly formed drug discovery
company dedicated to improving and accelerating the development and optimization
of small molecule drugs that target cell surface receptor proteins. Stephen E.
Globus, an officer and director of the Company, is a director of Thermaphore.
No representation is made by the Company that any or all of its investees:
(a) has, or will have in the immediate future, sufficient funds to continue to
carry on business activities; (b) will be able to achieve any of their
respective business objectives; (c) will be able to achieve or maintain
profitable operations; or (d) will not be obliged to attempt to obtain
additional funding.
For additional information concerning each of the above specified
investments, reference should be made to Note B of the Notes to Financial
Statements contained elsewhere herein.
Valuation of Investments
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. See also
Notes A and B of Notes To Financial Statements elsewhere herein.
The following table, and the footnotes thereto, set forth certain specified
information concerning the investments of the Company as at February 28, 1999,
and as to the valuations thereof, specified in dollars, ascribed to them by the
Board of Directors of the Company as at such date. For comparative purposes
only, the valuations (as applicable) ascribed as at February 28, 1998 are also
set forth. Investments listed in the table include only those the value of
which, as at February 28, 1999, had not, then or previously, been written down
to zero or disposed of. The table and notes should be read in conjunction with
Notes A and B of Notes To Financial Statements elsewhere herein. (Amounts are in
dollars and are rounded to the nearest thousand.)
Basis
2/28/99 2/28/98 Employed
------- ------- --------
Catamount Brewing Company $ 219,000 (1) $ 326,000 (1) Fair Value
Interface Systems, Inc. $ 2,000 (2) $ 3,000 (2) Market
Kimeragen, Inc. $ 294,000 (3) $ 805,000 (3) Fair Value
Repligen Corp. $ 157,000 (4) $ 116,000 (4) Market
Genitope Corp. $ 630,000 (5) $ 630,000 (5) Fair Value
Thermaphore Sciences, Inc. $ 112,000 (6) ---------- Fair Value
----------
$1,414,000 $1,880,000
---------- ----------
<PAGE>
Notes to Table:
(1) Represents equity investment - 23,215 common shares and 4,286 preferred
shares owned at each date. During the year,the Company loaned Catamount a
total of $105,000 on a demand loan basis.
(2) Represents equity investment - 775 shares owned at each date.
(3) Represents equity investment - 108,827 shares of Class A Common Stock and
35,000 shares of Class B Common Stock owned at each date. On May 1, 1999,
the Company purchased an additional 60,000 shares of Series A Preferred
Stock for $150,000. The funds for such purpose were loaned to the Company
by Messrs. Stephen E. and Richard D. Globus.
(4) Represents equity investment - 100,468 shares owned at each date.
(5) Represents equity investment - 420,858 shares of Series A Preferred and
332,992 shares Series B Preferred owned at each date.
(6) Represents equity investment - 8,333 shares of Common Stock and 66,667
shares of Series A Preferred Stock owned at 2/28/99. On March 5, 1999, the
Company purchased an additional 33,333 shares of Series A Preferred Stock
for $50,000.
Because of valuation factors, increases or decreases in the dollar amount of any
particular investment, business judgment, and other investment decision factors,
the amount of the Company's interest in any particular investee may vary from
time to time.
The preceding table does not include the Company's investment in Woodstock
Communications, Inc., which consisted of a Promissory Note of such entity in the
amount of $50,000 dated November 19, 1996 representing a loan to it by the
Company in such amount. The maturity date of such Note was the earlier to occur
of November 19, 1998 or the date of consummation of a corporate financing by
Woodstock in an amount exceeding $1,750,000. On the maturity date, the Company
would have had the right to elect to receive (by way of interest) either a cash
interest payment of 10% simple interest per annum, or, in lieu of cash interest,
a number of shares of Class A Common Stock of Woodstock equating to 1% ownership
interest in Woodstock on the date of the Note, subject to certain dilutive
effects of subsequent transactions. Woodstock's planned financing was not
completed and they have ceased operations effective February 1, 1998. Therefore,
the Company's management has written off this note and accrued interest as
uncollectible.
Governmental Regulation
The 1940 Act imposes many and varied restrictions on the activities of a
BDC, including restrictions on the nature of its investments. Some, but not all,
of the restrictions imposed on the activities of a BDC by such Act are described
in the following three paragraphs.
Generally speaking, the 1940 Act prohibits a BDC from investing in certain
types of companies, such as brokerage firms, insurance companies, investment
banking firms and investment companies. Moreover, the 1940 Act limits the type
of assets that a BDC may acquire to "qualifying assets" and certain assets
necessary for its operations (such as office furniture, equipment and
facilities) if, at the time of acquisition, less than 70% of the value of its
assets consist of qualifying assets. Qualifying assets include: (i) securities
of companies that were eligible portfolio companies (as defined in the 1940 Act)
at the time that the BDC acquired their securities; (ii) securities of bankrupt
or insolvent companies that are not otherwise eligible portfolio companies;
(iii) securities acquired as follow-on investments in companies that were
eligible at the time of the BDC's initial acquisition of their securities but
are no longer eligible, provided that the BDC has maintained a substantial
portion of its initial investment in those companies; (iv) securities received
in exchange for or distributed in or with respect to any of the foregoing; and
(v) cash items, Government securities and high-quality short-term debt. The 1940
Act also places restrictions on the nature of the transactions in which, and the
persons from whom, securities can be purchased in order for the securities to be
considered qualifying assets.
<PAGE>
A BDC is permitted, under specified conditions, to issue multiple classes
of senior debt and a single class of preferred stock if its asset coverage, as
defined in such Act, is at least 200% after the issuance of the debt or the
preferred stock.
A majority of the members of the Board of Directors of a BDC must not be
"interested persons" of the BDC as that term is defined in the 1940 Act. Most
transactions involving a BDC and its affiliates (as well as affiliates of those
affiliates) require the prior approval of a majority of the BDC's independent
directors and a majority of the directors having no financial interest in such
transactions. Some transactions involving certain closely affiliated persons of
the BDC, including its directors, officers and employees, still require the
prior approval of the Securities and Exchange Commission (the "Commission"). In
general, (a) any person who owns, controls, or holds with power to vote, more
than 5% of a BDC's outstanding Common Stock, (b) any director, executive officer
or general partner of that person, and (c) any person who directly or indirectly
controls, is controlled by, or is under common control with, that person, must
obtain the prior approval of the BDC's independent directors, and, in some
instances, the prior approval of the Commission, before engaging in certain
transactions involving the BDC or any company controlled by the BDC.
Risk Factors Involved In Investing In A BDC
Due to the nature of the usual investment portfolio of a BDC similar to the
limited size and scope of the Company, an investment in the securities of such a
BDC involves a degree of risk that exceeds the risks involved in investing in an
operating company. Since the Company has elected to become a BDC, such risks are
now applicable to the securities of the Company. The following, generally
speaking, includes some, but not all, of such risks:
(a) The usual principal business objective of a BDC is to seek long-term
capital appreciation by making venture capital investments primarily in new and
developing companies which management of the BDC believes offer significant long
term potential for capital appreciation.
(b) An investment in a development stage company or in a new and developing
company subjects the BDC to a number of the same risks to which such investee
entity is subject, namely: (i) the problems, expenses, difficulties,
complications and delays that can be expected to be encountered by such an
entity in connection with the attempted development of a commercially viable
product and bringing such product to market, (ii) possible need by such entity
of additional financing, (iii) competition encountered by such entity, including
competition from companies with greater financial resources, more extensive
development, manufacturing, marketing and service capabilities and a larger
number of qualified managerial and technical personnel.
(c) Many of the securities acquired by a BDC are "restricted securities"
within the meaning of the Securities Act of 1933 ("Securities Act") and cannot
be resold without compliance with the Securities Act. Such restrictions on
resale will most likely adversely affect the liquidity and marketability of such
securities. Registration for sale of restricted securities under the Securities
Act is within the sole province of the issuer concerned. Such registration is
likely to be a time-consuming and expensive process and the BDC in certain cases
may have to bear the expense of such registration. In addition, a BDC always
bears the risk, because of the delays inherent in the registration process, that
it will be unable to resell the securities held by it, or that it will not be
able to obtain an attractive price for them. In the event the BDC is unable to
cause the securities to be registered for resale, it will have to seek to rely
upon an exemption from registration. Among other exemptions, Rule 144
promulgated under the Securities Act imposes a one-year holding period prior to
the sale of restricted securities and establishes volume limitations on the
amount of any restricted securities that can be sold within certain defined time
periods. Furthermore, there cannot be any assurance that there ever will be a
market for the securities held by a BDC; or if a market should develop, that
such market will be an established market and able to absorb the sale of a
sizable amount of securities.
<PAGE>
(d) It may become necessary to make additional investments in investee
companies so as to protect a prior investment. Such follow-on investments may
limit the number of companies in which a small size BDC has the financial
ability to invest. Furthermore, a BDC with limited funds available may not have
sufficient funds to make as many follow-on investments as it deems necessary and
any follow-on investments which it makes may not be sufficient to protect its
prior investments in such entity, with the result that it may experience
significant losses in such investments. A decision not to make a particular
follow-on investment, or the financial inability to make it, may have a material
adverse impact on the investee.
(e) A BDC similar in size and scope to the Company is a "closed-end
non-diversified company" as that term is defined in the 1940 Act. Such small
size prevents it from being able to commit its funds to the acquisition of
securities of a large number of companies and prevents it from being able to
achieve the same type of diversification as larger entities engaged in venture
capital activities. Furthermore, such small size places it at a competitive
disadvantage with other venture capital investing entities that have far greater
financial resources available.
(f) The investment objective of a BDC similar in size and scope to the
Company is long-term capital appreciation. To the extent that any income is
derived from operations, it is likely that it will be used entirely to fund
additional investments and continuing working capital needs rather than be
distributed to stockholders.
(g) In order to increase its ability to invest in eligible portfolio
companies, a BDC similar in size and scope to the Company may borrow monies and
pay interest on such borrowings. Any investment gains made with the additional
monies in excess of interest paid will cause the net asset value of the BDC's
stock to rise faster than would otherwise be the case. On the other hand, if the
investment performance of the additional securities purchased fails to cover
their cost (including any interest paid on the money borrowed), the net asset
value of the BDC will decrease faster than would otherwise be the case. This is
known as "leveraging."
For further details concerning the financial condition of the Company and
its ability to make investments, reference should be made to "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
elsewhere herein.
Personnel
The Company presently employs three persons (including Messrs. Stephen and
Richard Globus) on a full-time basis.
Item 2. PROPERTIES
The Company continues to occupy office space at the premises formerly owned
by it (44 West 24th Street, New York, New York). While no formal lease was ever
entered into with Idex (now Globus Studios, Inc.) the Company is paying a charge
of $1,785 per month, which charge includes office space and electricity.
Item 3. LEGAL PROCEEDINGS
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK HOLDER MATTERS.
(a) Market information. The Company's Common Stock is traded in the
over-the-counter market. Prior to February 11, 1991, such Common Stock was
quoted by the National Association of Securities Dealers Automated Quotation
System (NASDAQ), but such quotation was discontinued on February 11, 1991. While
quotations are presently available from a dealer upon request, the market for
the Company's Common Stock would not appear to qualify as an "established public
trading market" as such term is defined in Securities and Exchange Commission
regulations. Management of the Company is not aware of high and low bid prices
for the Company's Common Stock for the quarterly periods within the past two
fiscal years except that: (i) the National Stock Summary Guide, published by the
National Quotation Bureau, publishes the range of quotations for the Company's
Common Stock on a monthly and semi-annual basis to the extent that same are
available; (ii) the "Pink Sheets" published by the National Quotation Bureau
(formerly published on a daily basis and since June, 1997 published on a weekly
basis) publishes quotations for the Company's Common Stock to the extent that
same are available; (iii) such "Pink Sheets" for the week ended March 10, 1997
indicate a bid price of $.125 per share but no asked price; (iv) such "Pink
Sheets" for the week ended February 27, 1998 indicate a closing bid of $.25 per
share but no asked price; (v) such "Pink Sheets" for the week ended February 26,
1999 indicate a bid price of $.25 per share but no asked price; (vi) such "Pink
Sheets" for the week ended April 23, 1999 indicate the same price as for the
week ended February 26, 1999; (vii) in April, 1996, the Company acquired in the
open market 1,000 shares of Common Stock for its Treasury at a cost of
approximately $.16 per share; (viii) in September, 1997, the Company acquired in
the open market 15,303 shares of its Common Stock for its Treasury at a cost of
approximately $.25 per share; and (ix) in December, 1997, the Company acquired
in the open market 2,300 shares of its Common Stock for its Treasury at a cost
of approximately $.25 per share. Generally speaking, the "Pink Sheets" reflect
inter-dealer prices, without retail mark-up, mark-down or commissions, and,
unless otherwise specified, do not represent actual transactions.
(b) Holders. The number of holders of record of the Common Stock of the
Company as of June 30, 1998, was approximately 216.
(c) Dividends. No dividends on the Common Stock have been paid since the
organization of the Company.
Item 6. SELECTED FINANCIAL DATA
The following selected financial information was abstracted from the
financial statements of the Company appearing elsewhere herein and reference
should be made to such statements for more details: (All figures are in dollars
and are rounded)
<TABLE>
<CAPTION>
Year Ended
2/28/99 2/28/98 2/28/97 2/29/96 2/28/95
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Statement of Operations:
Gain (loss)
on investments (578,000) (270,000) 819,000 1,304,000 225,000
Interest and Dividend
Income 12,000 14,000 42,000 8,000 8,000
Consulting and other
income 67,000 77,000 50,000 68,000 25,000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Earnings (loss) (814,000) (518,000) 647,000 1,130,000 (29,000)
Per share:
Earnings (loss) (0.35) (0.22) .27 .47 (.01)
Cash dividends -0- -0- -0- -0- -0-
Balance sheet:
Total assets 1,795,000 2,730,000 3,318,000 2,691,000 1,568,000
Shareholders' equity
(capital deficiency) 139,000 953,000 1,475,000 829,000 (299,000)
</TABLE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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 February 28, 1999, the Company had total assets of $1,795,000, compared
to $2,730,000 as at February 28, 1998 and $3,318,000 as at February 28, 1997.
Included in total assets at such dates were investments of $1,414,000 (1999),
$1,880,000 (1998) and $2,737,000 (1997). Shareholders' equity at such dates was
$139,000 (1999), $953,000 (1998) and $1,475,000 (1997). Gain (loss) on
investments for such periods amounted to ($578,000) (1999), ($270,000) (1998)
and $819,000 (1997). Included in such gains (losses) were no realized gain on
investments and ($578,000) of change in unrealized gain (loss) on investments
for 1999; $969,000 of realized gain on investments and ($1,239,000) of change in
unrealized gain (loss) on investments for 1998; and $46,000 of realized gain on
investments and $773,000 of change in unrealized gain (loss) on investments for
1997. Operating expenses, including interest charges, amounted to $328,000 for
1999; $309,000 for 1998 and $264,000 for 1997. Included in operating expenses
were interest charges of $19,000 for 1999, $28,000 for 1998 and $35,000 for
1997. Included in expenses at February 28, 1998 is $51,000 of promissory note
and accrued interest written off as uncollectible (see Note C of Notes to
Financial Statements). Income (loss) from operations, after provision for taxes,
was ($814,000) for 1999; ($518,000) for 1998 and $647,000 for 1997. Net earnings
(loss) per share were ($0.35) for 1999; ($0.22) for 1998 and $0.27 for 1997. The
weighted average number of shares of Common Stock outstanding at such dates was
2,347,257 for 1999, 2,358,014 for 1998 and 2,364,964 for 1997.
Liquidity, Capital Resources and Other Matters Affecting Financial Condition
The Company's cash position as at February 28, 1999 (i.e., $233,000) is
offsetable by approximately $1,603,000 owing to members of the Globus family as
follows: (i) the amount of loans payable at such date (including accrued
interest) to Mr. Stephen E. Globus (i.e., approximately $221,000); (ii) the
amount of loans payable at such date (including accrued interest) to Ms. Jane
Globus, the mother of Stephen and Richard Globus (i.e., approximately $353,000);
and (iii) the amount of accrued salary owing at such date to Stephen and Richard
Globus, aggregating approximately $1,029,000. During the past fiscal year Mr.
Stephen Globus' loan account was reduced by payments to him of $99,000 and Mr.
Richard Globus' loan account was reduced to zero by payments to him of $10,000,
plus $40,000 of accrued interest. Mr. Richard Globus also received $26,000 of
accrued salary.
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 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 to continue to make loans to the Company if
necessary. See also Note A (1) of Notes to Financial Statements elsewhere
herein.
<PAGE>
In connection with loans payable by the Company, including accrued
interest, to Messrs. Stephen E. and Richard D. Globus, such indebtedness
aggregated: approximately $528,000 at February 28, 1997; approximately $364,000
at February 28, 1998 and approximately $221,000 at February 28, 1999. As at
April 30, 1999, such indebtedness aggregated approximately $220,000, which
amount was owed to Stephen E. Globus. As at April 30, 1999 the indebtedness
owing by the Company to Ms. Jane Globus aggregated approximately $355,000. As at
April 30, 1999, unpaid salaries owing to Messrs. Stephen E. and Richard D.
Globus aggregated approximately $1,045,000; so that as at such date the total of
monies owed to Messrs. Stephen E. Globus, Richard D. Globus and Ms. Jane Globus
aggregated approximately $1,620,000. In May 1999, Messrs. Stephen E. and Richard
D. Globus loaned the Company an additional $150,000 for the purpose of
purchasing an additional equity investment in Kimeragen.
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 full or substantially full repayment, 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 this
Report to which Item reference should be made.)
The nature and extent of the Company's investments as at February 28, 1999
are more fully discussed in Item 1 of this Report and in Note B of Notes to
Financial Statements elsewhere herein and reference should be made to such Item
and such Note.
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 all 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. Furthermore, such responses should not be
construed to indicate that any investee is in fact immune to business problems
and market conditions related to Y2K matters that may be faced by entities, if
any, that may do business with any particular investee.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not Applicable.
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 appears at pages F-1 through F-10
(inclusive) of this Report, which pages follow Item 14 of this Report. The
following is an Index to the referred to Financial Statements and Supplementary
Data:
Report of Independent Auditors
((Richard A. Eisner & Company, LLP) F-1
Balance Sheets as at February 28, 1999 and February 28, 1998 F-2
Statements of Operations
For the Three Years Ended February 28, 1999 F-3
Statement of Changes in Shareholders' Equity
For the Three Years Ended February 28, 1999 F-4
Statement of Cash Flows
For the Three Years Ended February 28, 1999 F-5
Notes to Financial Statements F-6
All schedules supporting financial statements are omitted because they are
not applicable or the required information is included in the financial
statements or notes thereto.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
<PAGE>
EISNER Richard A. Eisner & Company, LLP
Accountants and Consultants
575 Madison Avenue
New York, NY 10022-2597
Tel 212.355.1700 Fax 212.355.2414
www.rae.com
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Globus Growth Group, Inc.
New York, New York
We have audited the accompanying balance sheets of Globus Growth Group, Inc. as
of February 28, 1999 and 1998, and the related statements of operations, changes
in shareholders' equity and cash flows for each of the years in the three-year
period ended February 28, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Globus Growth Group, Inc. at
February 28, 1999 and 1998, and the results of its operations and its cash flows
for each of the years in the three-year period ended February 28, 1999 in
conformity with generally accepted accounting principles.
As explained in Note B, the financial statements include securities valued at
$1,255,000 at February 28, 1999 (70% of assets) and $1,761,000 at February 28,
1998 (65% of assets), whose values have been estimated by the Board of Directors
in the absence of readily ascertainable market values. We have reviewed the
procedures used by the Board of Directors in arriving at its estimate of value
of such securities and have inspected underlying documentation, and, in the
circumstances, we believe the procedures are reasonable and the documentation
appropriate. However, because of the inherent uncertainty of valuation, those
estimated values may differ significantly from the values that would have been
used had a ready market for the securities existed, and the differences could be
material.
/s/ Richard A. Eisner & Company, LLP
New York, New York
April 22, 1999
F-1
<PAGE>
GLOBUS GROWTH GROUP, INC.
Balance Sheets (Note A)
<TABLE>
<CAPTION>
February 28,
------------------------------
1999 1998
------------- -------------
<S> <C> <C>
ASSETS
Cash $ 233,000 $ 840,000
Investments in securities (Notes A[2] and B) 1,414,000 1,880,000
Promissory note receivable 105,000
Other assets 43,000 10,000
------------- -------------
$ 1,795,000 $ 2,730,000
============= =============
LIABILITIES
Accounts payable and accrued expenses, including salary due to officer/
shareholders of $1,029,000 in 1999 and $954,000 in 1998 $ 1,082,000 $ 1,028,000
Loans payable to officer/shareholders, including accrued interest of
$183,000 in 1999 and $217,000 in 1998 (Note D) 221,000 364,000
Loan payable to related party, including accrued interest of $121,000 in
1999 and $108,000 in 1998 (Note D) 353,000 385,000
------------- -------------
1,656,000 1,777,000
SHAREHOLDERS' EQUITY (Note F)
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 25,000 25,000
Additional paid-in capital 2,747,000 2,747,000
Accumulated deficit (2,592,000) (1,778,000)
Treasury stock, at cost - 151,743 shares (41,000) (41,000)
------------- -------------
139,000 953,000
------------- -------------
$ 1,795,000 $ 2,730,000
============= =============
</TABLE>
See notes to financial statements F-2
<PAGE>
GLOBUS GROWTH GROUP, INC.
Statements of Operations (Note A)
<TABLE>
<CAPTION>
Year Ended February 28,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Revenue:
Realized gain on investments $ 969,000 $ 46,000
Change in unrealized gain (loss) on investments $ (578,000) (1,239,000) 773,000
----------- ----------- -----------
(578,000) (270,000) 819,000
Interest and dividend income 12,000 14,000 42,000
Consulting and other income (including approximately $42,000 in
1999, $44,000 in 1998 and $14,000 in 1997 from related parties) 67,000 77,000 50,000
----------- ----------- -----------
(499,000) (179,000) 911,000
----------- ----------- -----------
Expenses:
General and administrative (Note H) 309,000 230,000 229,000
Interest 19,000 28,000 35,000
Write off of uncollectible note receivable and accrued
interest (Note C) 51,000
----------- ----------- -----------
328,000 309,000 264,000
----------- ----------- -----------
Income (loss) before income taxes (827,000) (488,000) 647,000
Income tax benefit (expense) 13,000 (30,000)
----------- ----------- -----------
Net income (loss) $ (814,000) $ (518,000) $ 647,000
=========== =========== ===========
Net income (loss) per share (Note G) $ (0.35) $ (.22) $ .27
=========== =========== ===========
Weighted average number of common shares 2,347,257 2,358,014 2,364,964
=========== =========== ===========
</TABLE>
F-3
<PAGE>
GLOBUS GROWTH GROUP, INC.
Statements of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
Common Stock Additional Treasury Stock
-------------------------- -------------------------
Number of Paid-in Accumulated Number of
Shares Amount Capital Deficit Shares Cost
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance - February 29, 1996 2,499,000 $ 25,000 $ 2,747,000 $(1,907,000) 133,140 $ 36,000
Net income 647,000
Acquisition of treasury shares, $.16 per share 1,000 1,000
----------- ----------- ----------- ----------- ----------- -----------
Balance - February 28, 1997 2,499,000 25,000 2,747,000 (1,260,000) 134,140 37,000
Net loss (518,000)
Acquisition of treasury shares, $.25 per share 17,603 4,000
----------- ----------- ----------- ----------- ----------- -----------
Balance - February 28, 1998 2,499,000 25,000 2,747,000 (1,778,000) 151,743 41,000
Net loss (814,000)
Balance - February 28, 1999 2,499,000 $ 25,000 $ 2,747,000 $(2,592,000) 151,743 $ 41,000
=========== =========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements F-4
<PAGE>
GLOBUS GROWTH GROUP, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
Year Ended February 28,
-----------------------------------------
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (814,000) $ (518,000) $ 647,000
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 1,000 1,000
Realized gain on investments (969,000) (46,000)
Unrealized (gain) loss on investments 578,000 1,239,000 (773,000)
Write off of uncollectible promissory note
and accrued interest 51,000
Changes in:
Other assets (33,000) 9,000 (3,000)
Accounts payable, accrued expenses and
accrued interest on loans 33,000 144,000 137,000
----------- ----------- -----------
Net cash used in operating activities (236,000) (43,000) (37,000)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of investments (112,000) (500,000) (280,000)
Proceeds from sale of investments 1,088,000 52,000
Loans receivable (105,000) (50,000)
----------- ----------- -----------
Net cash (used in) provided by investing activities (217,000) 588,000 (278,000)
----------- ----------- -----------
Cash flows from financing activities:
Purchase of treasury stock (4,000) (1,000)
Repayments of loans to related party (45,000) (36,000) (5,000)
Increase in loans payable to officer/shareholders 60,000 11,000
Repayment of loans payable to officer/shareholders (109,000) (237,000) (163,000)
----------- ----------- -----------
Net cash used in financing activities (154,000) (217,000) (158,000)
----------- ----------- -----------
Net increase (decrease) in cash (607,000) 328,000 (473,000)
Cash - beginning of year 840,000 512,000 985,000
----------- ----------- -----------
Cash - end of year $ 233,000 $ 840,000 $ 512,000
=========== =========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes $ 34,000 $ 7,000 $ 11,000
Interest $ 40,000
</TABLE>
See notes to financial statements F-5
<PAGE>
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 1999 and 1998
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
[1] The Company:
The Company's principal activity is investing in other companies. Effective
May 27, 1988, the Company elected to be treated as a Business Development
Company.
The Company's principal assets are its investments which, unless sold, do
not generate any cash flow. As a result, the Company has been dependent
upon advances from its officer/shareholders in order to meet its
obligations. The Company's ability to continue to meet its obligations is
dependent upon a ready market for its investments or upon the continued
financial support of the officer/shareholders including their willingness
to refrain from demanding amounts due them.
[2] Security valuation:
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.
[3] Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
[4] Fair value of financial instruments:
Financial instruments include cash, investments, loans payable, trade
payables and accrued expenses, the carrying value of which approximates
fair market value.
[5] Reclassification:
Certain amounts for the year ended February 28, 1998 have been reclassified
to conform to the current year's presentation.
F-6
<PAGE>
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 1999 and 1998
NOTE B - INVESTMENTS
<TABLE>
<CAPTION>
February 28,
------------------------------------------------------------------------
1999 1998
---------------------------------- ----------------------------------
Number of Fair Number of Fair
Security Shares Value Cost Shares Value Cost
- ---------------------------------------------------- --------- ---------- ---------- --------- ---------- ----------
Common stock - 41.2% in 1999 and 58.5% in 1998:
<S> <C> <C> <C> <C> <C> <C>
Catamount Brewing Co. (1) 23,215 $ 118,000 $ 176,000 23,215 $ 176,000 $ 176,000
Interface Systems Inc. 775 2,000 7,000 775 3,000 7,000
Kimeragen, Inc. Class A 108,827 219,000 219,000 108,827 609,000 219,000
Kimeragen, Inc. Class B 35,000 75,000 75,000 35,000 196,000 75,000
Repligen Corporation 100,468 157,000 190,000 100,468 116,000 190,000
Thermaphore Sciences, Inc. 8,333 12,000 12,000
---------- ---------- --------- ----------
Total common stock 583,000 679,000 1,100,000 667,000
---------- ----------- --------- ----------
Preferred stock - 58.8% in 1999 and 41.5% in 1998:
Catamount Brewing Co. - preferred 4,286 101,000 150,000 4,286 150,000 150,000
Genitope Corp. - Series A preferred 420,858 210,000 210,000 420,858 210,000 210,000
Genitope Corp. - Series B preferred 332,992 420,000 420,000 332,992 420,000 420,000
Thermaphore Sciences, Inc. Series A preferred 66,667 100,000 100,000
---------- ---------- ---------- ----------
Total preferred stock 831,000 880,000 780,000 780,000
---------- ---------- ---------- ----------
Total investments $1,414,000 $1,559,000 $1,880,000 $1,447,000
========== ========== ========== ==========
</TABLE>
Restricted and not readily marketable securities were valued at a total fair
value of $1,255,000 and $1,761,000 at February 28, 1999 and 1998, respectively,
as determined by the Board of Directors. Such investments consisted of all
securities except Interface Systems Inc. and Repligen Corp. for which values are
based on quoted market values.
The Company invests in biotechnology, computer technology and beverage
companies. At February 28, 1999 - 84.37%, 0.14% and 15.49%, respectively. At
February 28, 1998 - 82.5%, 0.2% and 17.3%, respectively. All investments are in
U.S. companies and are non income producing.
(1) Represents in excess of 5% of outstanding voting securities of investee.
F-7
<PAGE>
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 1999 and 1998
NOTE B - INVESTMENTS (CONTINUED)
The unrealized appreciation and depreciation is as follows:
February 28,
-----------------------
1999 1998
---------- ----------
Unrealized appreciation $ 511,000
Unrealized depreciation $ (145,000) (78,000)
---------- ----------
Net (depreciation) appreciation $ (145,000) $ 433,000
========== ==========
NOTE C - PROMISSORY NOTE RECEIVABLE
During the year, the Company loaned $105,000 to Catamount Brewing Co. The loans
are payable on demand and bear interest at 12% on $75,000 of principal and 8.5%
on the balance.
NOTE D - LOANS PAYABLE
Loans from officer/shareholders and a relative of theirs are due on demand and
bear annual interest at 5%.
The estimated fair value of these financial instruments is not readily
determinable due to the nature of the relationship of the parties. The amounts
presented are not necessarily indicative of the amounts that could be realized
in a current market exchange.
NOTE E - INCOME TAXES
The Company accounts for income taxes under the provision of FASB Statement No.
109, "Accounting for Income Taxes," which requires the Company to recognize
deferred tax assets and liabilities for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. In addition, FASB
Statement No. 109 requires the recognition of future tax benefits, such as net
operating loss ("NOL") carryforwards, to the extent that realization of such
benefits is more likely than not.
At February 28, 1999, the Company had available NOL carryforwards for regular
federal income tax purposes of approximately $220,000, which expire at various
dates through 2012.
F-8
<PAGE>
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 1999 and 1998
NOTE E - INCOME TAXES (CONTINUED)
The components of the deferred income tax assets and liabilities were as follows
as at:
<TABLE>
<CAPTION>
February 28,
------------------------------------------
1999 1998 1997
----------- ------------ ------------
<S> <C> <C> <C>
Deferred tax assets:
NOLs and accrued expenses not deductible
for income tax purposes $ 681,000 $ 603,000 $ 934,000
Deferred tax liabilities:
Unrealized gain on investments (200,000) (769,000)
----------- ------------ ------------
681,000 403,000 165,000
Less valuation allowance 681,000 403,000 165,000
----------- ------------ ------------
$ 0 $ 0 $ 0
=========== ============ ============
</TABLE>
The amounts of income taxes provided varied from the amounts which would be
"expected" to be provided at the statutory federal income tax rates in effect
for the following reasons:
<TABLE>
<CAPTION>
February 28,
------------------------------------------
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Tax computed based on statutory federal tax rate $ (281,000) $ (172,000) $ 220,000
NOLs 65,000 (276,000)
Accrued expenses not deductible 18,000 42,000 46,000
Unrealized (gains) loss on investments 196,000 421,000 (263,000)
State and local income tax, net of federal income
tax benefit (8,000) 13,000
Other (3,000) 2,000 (3,000)
------------ ------------ ------------
$ (13,000) $ 30,000 $ 0
============ ============ ============
</TABLE>
NOTE F - SHAREHOLDERS' EQUITY
The Board of Directors has authorized the future sale of up to 300,000 shares of
the Company's authorized, but unissued, common stock at a price of $.50 per
share to individuals to be determined at the discretion of the Board. No such
shares have been issued.
NOTE G - PER SHARE DATA
Per share data is based on the weighted average number of shares of common stock
outstanding.
F-9
<PAGE>
NOTE H - RELATED PARTY TRANSACTIONS
The Company paid approximately $21,000, $14,000 and $14,000 for rent to a
related party for each of the years ended February 28, 1999, 1998 and 1997,
respectively.
The Company charged two officer/shareholders $66,000 as reimbursement for
general and administrative costs and for their use of the Company's office and
personnel during each of the years ended February 28, 1998 and 1997. There was
no charge for the year ended February 28, 1999.
F-10
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Stephen E. Globus Chairman of the Board
Richard D. Globus President and Director
Stanley Wunderlich Director
Ronald J. Frank Director
Joseph Mancuso Director
Lisa Vislocky Vice President
Note: The office of Secretary of the Company does not have any policy-making
function, and accordingly, Mr. Harry Balterman, who is the Secretary, is not an
Executive Officer of the Company.
STEPHEN E. GLOBUS, age 52, has been an officer and director of the Company
since its organization in 1973, and is currently its Chairman of the Board and
Chief Executive Officer. He is a director of Kimeragen, Inc. and Thermaphore
Sciences, Inc. He is also a director of Nematron Corporation, a publicly held
company, and Plasmaco, Inc., a wholly-owned subsidiary of Matsushita
(Panasonic).
RICHARD D. GLOBUS, age 52, as well as his brother referred to above, has
also been an officer and director of the Company since its organization in 1973,
and is currently its President and Chief Operating Officer. He is also a
director of Globus Studios, Inc. (formerly Idex, Inc.).
STANLEY WUNDERLICH, age 53, holds a BS degree from Brooklyn College and an
LL.B. degree from LaSalle Law School. He is presently, and has been since the
beginning of 1995, engaged in investment banking and financial consulting
activities for various organizations. From 1991 until 1994 he was the Managing
Director of the Institutional Services Department of Robert Todd Financial Corp.
(an investment banking firm). From 1977 until 1987, he was Managing Director of
Krieger, Wunderlich, Fialkov, Scheinman & Co. (a broker-dealer); and from 1972
until 1977 he was a Vice President of Blyth, Eastman, Dillon Union Securities (a
broker-dealer). He is a former member of the Arbitration Committee of the
American Stock Exchange and a former Vice President of the Long Island Forum of
Technology. Mr. Wunderlich is a director of C.P.I. Aerostructures Corp. and has
been a director of the Company since his election as such on December 3, 1992.
RONALD J. FRANK, age 48, is presently, and has been since June 1990, a
private investor. From January 1989 to June 1990, he was associated with Profit
Concepts, Ltd., which was a general partner of an investment partnership and
from March 1987 to January 1989 he was a private financial consultant. Mr. Frank
has been a director of the Company since his election as such on December 3,
1992.
JOSEPH MANCUSO, age 59, holds an Electrical Engineering degree from
Worcester Polytechnic Institute in Massachusetts, an MBA from the Harvard
Business School and a Ph.D. in Educational Administration from Boston
University. He has been Chairman of the Management Department at Worcester
Polytechnic Institute and is presently the head of the Center for
Entrepreneurial Management, Inc. and of the Chief Executive Officers Club in New
York City. Mr. Mancuso is the author of a number of books which have been
published by Simon & Schuster. Mr. Mancuso is a director of Interscience Corp.
and has been a director of the Company since his election as such on December 3,
1992.
LISA VISLOCKY, age 41, is a Certified Public Accountant and has been
employed by the Company, on a full-time basis, since March 1986. From September
1983 until February 1986, she was employed by Weiner and Company, Certified
Public Accountants and from 1979 to May 1983 she was an internal auditor for
International Telephone & Telegraph Co., Inc.
<PAGE>
Messrs. Wunderlich, Frank and Mancuso are considered to be the members of
the Board of Directors of the Company who are the "independent directors" as
required by the Investment Company Act of 1940. (See the caption "Governmental
Regulation" in Item 1 above.)
Directors are elected at the annual meeting of stockholders and hold office
until the following annual meeting. The most recent annual meeting of
stockholders was held on December 3, 1992. The terms of all officers expire at
the annual meeting of directors following the annual stockholders meeting.
Subject to their contract rights to compensation, if any, officers may be
removed at any time by the Board of Directors.
<TABLE>
<CAPTION>
Item 11. EXECUTIVE COMPENSATION
(a)(b) Summary Compensation Table:
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities All
Annual Stock underlying other
Name and Compen- Award(s) Options/ LTIP Compen-
Principal Year Salary Bonus sation SAR's Payouts sation
Position Ended ($) ($) ($) ($) ($) ($) ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stephen E.
Globus,
CEO 2/28/99 50,000 -- -- -- -- -- --
2/28/98 50,000 -- -- -- -- -- --
2/28/97 50,000 -- -- -- -- -- --
</TABLE>
(c) Option/SAR Grants Table -- Not Applicable.
(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
- -- Not Applicable.
(e) Long-Term Incentive Plan ("LTIP") Awards Table -- Not Applicable.
(f) Defined Benefit or Actuarial Plan Disclosure -- Not Applicable.
(g) Compensation of Directors -- There are presently no arrangements pursuant to
which Directors of the Company are compensated for any services provided as a
director, including any amounts payable for committee participation or special
assignments.
(h) Employment Contracts and Termination of Employment and Change-In-Control
Arrangements -- Not Applicable.
(i) Report on Repricing of Options/SAR's -- Not Applicable.
(j) Compensation Committee Interlocks and Insider Participation -- The Board of
Directors of the Company did not have any compensation committee or board
committee performing equivalent functions during the last completed fiscal year.
Messrs. Stephen E. and Richard D. Globus participated in all deliberations and
decisions of the Board of Directors of the Company during its last completed
fiscal year.
(k) Board Compensation Committee Report on Executive Compensation -- Not
Applicable.
(l) Performance Graph -- Not Applicable.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 15, 1999,
regarding each person known by the Company to own beneficially more than 5% of
the Company's Common Stock, each director of the Company who owns shares of
Common Stock, and all directors and officers as a group.
<PAGE>
Approximate
Amount and Nature of Percent
Name Beneficial Ownership (1) of Class (2)
-------- ---------------------------- -------------
Stephen E. Globus * 514,750 (3) 22
Richard D. Globus * 513,750 22
Ronald P. Globus * 500,000 22
Ronald J. Frank 1,000 (4)
Stanley Wunderlich none --
Joseph Mancuso none --
All Directors and Officers
as a Group (7 persons) 1,048,200 44 (2)
Jane Globus
201 Crandon Blvd.
Key Biscayne, FL 33149 312,292 (5) 13
* 44 West 24th Street, New York, NY 10010
(1) Unless otherwise indicated, all shares are directly owned, and the sole
investment and voting power is held, by the persons named. Information in table
has been supplied by the persons concerned or has been obtained from Company
records.
(2) Approximate percent of class has been computed on the basis of the number of
shares of Common Stock outstanding as of March 15, 1999, (2,347,257).
(3) Includes 1,000 shares held for benefit of minor son.
(4) Less than 1%.
(5) 16,500 shares are held of record and beneficially and the remainder are
beneficially owned. Mrs. Globus is the mother of the three Globus brothers who
disclaim any beneficial ownership of the shares owned by her.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(i) From time to time Messrs. Stephen E. and Richard D. Globus have made loans
to the Company. For details as to amounts owed to them by the Company, reference
should be made to the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" elsewhere herein. Commencing March 1, 1988,
loans owing to Mr. Stephen E. Globus (the principal amount of which was
approximately $215,000 at such date) accrued interest at the rate of 5% per
annum (which is the same rate of interest paid on loans owing to Mr. Richard D.
Globus). The Company is also indebted to Messrs. Stephen E. and Richard D.
Globus for unpaid salaries owed to them and is indebted to Ms. Jane Globus for
monies loaned to it by her. For details as to amounts owed reference should be
made to the caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" elsewhere herein.
(ii) During the previous fiscal year Messrs. Stephen E. and Richard D. Globus,
as applicable, agreed to offset a total of $66,000 of monies owed to one or both
of them by the Company in return for the personal use by one or both of such two
persons of facilities, personnel and other services of the Company. This past
year there was no offset of expenses.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1)(2) Financial Statements and Financial Statement Schedules
<PAGE>
A list of the Financial Statements and Financial Statement Schedules filed
as a part of this Report is set forth in Item 8 of this Report, which list is
incorporated herein by reference.
(a)(3) Exhibits
3(a) Articles of Incorporation and Amendments Thereto (Incorporated by
reference to Exhibits 2(a), 2(b) and 2(c) filed with Registrant's Form
S-18 Registration Statement, File # 2-72220 NY and to Exhibit 3-1
filed with Registrant's Form 8-K for event of August 7, 1984, File
#0-9987.
3(b) By-Laws (Incorporated by reference to Exhibit 2(d) filed with
Registrant's Form S- 18 Registration Statement, File # 2-72220 NY.
10 Sale of Assets Agreement between Registrant and Idex, Inc. dated
December 11, 1985 (Incorporated by reference to Exhibit 1 to
Registrant's Form 8-K for event of February 27, 1986).
11 Statement re computation of per share earnings. (Included in Note F of
Notes To Financial Statements filed as part of this Report).
27 Financial Data Schedule
(b) Reports on Form 8-K
During the last quarter of the period covered by this Report, no reports on
Form 8-K were filed.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GLOBUS GROWTH GROUP, INC.
By /s/ Stephen E. Globus
------------------------------
Stephen E. Globus
Chairman of the Board
Dated: New York, NY
June 9, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dated indicated:
Signature Title Date
- ---------------------- --------------------------------- ------------
/s/Stephen E. Globus Chairman of the Board,
- ---------------------- (Principal Executive Officer) June 9, 1999
Stephen E. Globus
/s/Richard D. Globus President, Director
- ----------------------
Richard D. Globus June 9, 1999
/s/Lisa Vislocky Vice President
- ----------------------
Lisa Vislocky June 9, 1999
/s/Stanley Wunderlich Director
- ----------------------
Stanley Wunderlich June 9, 1999
/s/Ronald J. Frank Director
- ----------------------
Ronald J. Frank June 9, 1999
/s/Joseph Mancuso Director
- ----------------------
Joseph Mancuso June 9, 1999
S-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10K at
February 28, 1999 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1999
<PERIOD-END> FEB-28-1999
<CASH> 233,000
<SECURITIES> 1,414,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 147,000
<PP&E> 25,000
<DEPRECIATION> 24,000
<TOTAL-ASSETS> 1,795,000
<CURRENT-LIABILITIES> 1,656,000
<BONDS> 0
0
0
<COMMON> 25,000
<OTHER-SE> 114,000
<TOTAL-LIABILITY-AND-EQUITY> 1,795,000
<SALES> 0
<TOTAL-REVENUES> (499,000)
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 309,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,000
<INCOME-PRETAX> (827,000)
<INCOME-TAX> 13,000
<INCOME-CONTINUING> (814,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (814,000)
<EPS-BASIC> (0.35)
<EPS-DILUTED> (0.35)
</TABLE>
