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, 1999
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,
1999 1999
----------- -----------
<S> <C> <C>
ASSETS (Unaudited) (See Note 1)
Cash $ 135,000 $ 233,000
Investments in Securities (Note 3) $ 1,739,000 $ 1,414,000
Demand Loan Receivable $ 105,000 $ 105,000
Other Assets $ 41,000 $ 43,000
----------- -----------
TOTAL $ 2,020,000 $ 1,795,000
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 1,097,000 $ 1,082,000
Loans payable to officers/shareholders $ 370,000 $ 221,000
Demand loan payable to related party $ 356,000 $ 353,000
----------- -----------
Total Liabilities $ 1,823,000 $ 1,656,000
----------- -----------
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 5/31/99 $ 25,000 $ 25,000
Additional paid in capital $ 2,747,000 $ 2,747,000
Treasury Stock, 151,743 shares at 5/31/99 ($ 41,000) ($ 41,000)
Accumulated earnings (deficit) ($2,534,000) ($2,592,000)
----------- -----------
Total stockholders' equity $ 197,000 $ 139,000
----------- -----------
TOTAL $ 2,020,000 $ 1,795,000
----------- -----------
</TABLE>
(See Accompanying Notes to Financial Statements)
<PAGE>
STATEMENT OF OPERATIONS
(Unaudited)
Three Months
Ended May 31,
1999 1998
---------- ----------
Gain (loss) on investments:
Realized $ 0 $ 0
Unrealized $ 125,000 $ 78,000
---------- ----------
Total $ 125,000 $ 78,000
Dividend Income $ 1,000 $ 1,000
Interest Income $ 3,000 $ 0
Consulting and other income $ 3,000 $ 6,000
---------- ----------
TOTAL $ 132,000 $ 85,000
Expenses:
General and administrative $ 70,000 $ 79,000
Interest $ 4,000 $ 5,000
---------- ----------
TOTAL $ 74,000 $ 84,000
Income (loss) from operations before taxes $ 58,000 $ 1,000
Benefit/(Provision) for taxes $ 0 $ 0
---------- ----------
Net earnings (loss) $ 58,000 $ 1,000
---------- ----------
Net (Loss) per share of common stock $ 0.02 $ 0.00
Weighted Average Number of shares of
Stock Outstanding 2,347,257 2,347,257
---------- ----------
(See Accompanying Notes to Financial Statements)
<PAGE>
GLOBUS GROWTH GROUP, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended May 31,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 58,000 $ 1,000
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 $ 0
Unrealized (gain) loss on investments ($125,000) ($ 78,000)
Increase/(decrease) in accounts payable, accrued
expenses and accrued interest on loans $ 19,000 ($ 1,000)
(Increase) decrease in prepaid assets $ 2,000 $ 2,000
--------- ---------
Net cash (used in ) operating activities ($ 46,000) ($ 76,000)
---------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments ($200,000) $ 0
Issuance of demand loan receivable $ 0 ($ 25,000)
Proceeds from sale of investments $ 0 $ 0
--------- ---------
Net cash provided by (used in ) investing activities ($200,000) ($ 25,000)
---------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable to officers/shareholders ($ 2,000) $ 0
Increase (decrease) in loans payable to officers/shareholders $ 150,000 $ 0
Purchase of treasury stock $ 0 $ 0
--------- ---------
Net cash provided by (used in) financing activities $ 148,000 $ 0
---------------------------------------------------------------------------------
Net increase (decrease) in cash ($ 98,000) ($101,000)
Cash - beginning of period $ 233,000 $ 840,000
Cash - end of period $ 135,000 $ 739,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 0 $ 0
Income Taxes $ 0 $ 28,000
Stock received for consulting services
</TABLE>
(See Accompanying Notes to Financial Statements)
<PAGE>
GLOBUS GROWTH GROUP, INC.
Notes to Condensed Financial Statements May 31, 1999
(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, 1999, the results of operations for the three months ended May
31, 1999 and 1998, and statement of cash flows for the three months ended
May 31, 1999 and 1998.
The results of operations for the three months ended May 31, 1999 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, 1999.
The balance sheet at February 28, 1999 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, 1999 and May 31, 1999, 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,
1999 1999
--------------------------------- ---------------------------------
No. No.
Shares Value Cost Shares Value Cost
------ ----- ---- ------ ----- ----
<S> <C> <C> <C> <C> <C> <C>
Common Stock
Catamount Brewing Co. (1) 23,215 $ 118,000 $ 176,000 23,215 $ 118,000 $ 176,000
Interface Systems Inc. 775 $ 2,000 $ 7,000 775 $ 2,000 $ 7,000
Kimeragen, Inc. Cl A 108,827 $ 219,000 $ 219,000 108,827 $ 219,000 $ 219,000
Kimeragen, Inc. Cl B 35,000 $ 75,000 $ 75,000 35,000 $ 75,000 $ 75,000
Repligen Corporation 100,468 $ 282,000 $ 190,000 100,468 $ 157,000 $ 190,000
Thermaphore Sciences, Inc. 8,333 $ 12,000 $ 12,000 8,333 $ 12,000 $ 12,000
---------- ---------- ---------- ----------
Total Common Stock $ 708,000 $ 679,000 $ 583,000 $ 679,000
---------- ---------- ---------- ----------
Preferred Stock
Catamount Brewing Co. Pfd (1) 4,286 $ 101,000 $ 150,000 4,286 $ 101,000 $ 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
Kimeragen, Inc. Series A Pfd (2) 60,000 $ 150,000 $ 150,000
Thermaphore Sciences, Inc. A Pfd (3) 100,000 $ 150,000 $ 150,000 66,667 $ 100,000 $ 100,000
---------- ---------- ---------- ----------
Total Preferred Stock $1,031,000 $1,080,000 $ 831,000 $ 880,000
---------- ---------- ---------- ----------
Total Investments - Fair value $1,739,000 $1,759,000 $1,414,000 $1,559,000
---------- ---------- ---------- ----------
</TABLE>
Notes:
(1) The Company also loaned $105,000 to Catamount Brewing Company on a demand
loan basis during 1998.
(2) The Company purchased 60,000 Series A Preferred shares for $150,000 of
Kimeragen, Inc. on May 1, 1999.
(3) The Company purchased 33,333 Series A Preferred share for $50,000 of
Thermaphore Sciences, Inc. on March 5, 1999.
<PAGE>
Item 2. 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 May 31, 1999, the Company had total assets of $2,020,000 compared to
total assets of $1,795,000 as at February 28, 1999. Included in total assets at
such dates were investments of $1,739,000 for the three month period ended May
31, 1999 and $1,414,000 for the year ended February 28, 1999. Shareholders
equity at such dates was $197,000 for the three month period ended May 31, 1999
and $139,000 for the year ended February 28, 1999. Gain on investments amounted
to $125,000 for the three month period ended May 31, 1999 as compared to a gain
of $78,000 for the three month period ended May 31, 1998. Included in such gains
were no realized gain or loss and unrealized gain of $125,000 for the three
month period ended May 31, 1999 compared to no realized gain or loss and $78,000
of unrealized gain for the three month period ended May 31, 1998. Operating
expenses, including interest charges, amounted to $74,000 for the 1999 three
month period and $84,000 for the 1998 three month period. Income from
operations, both before and after provision for taxes, was $58,000 for the three
month period ended May 31, 1999 compared to $1,000 for the three month period
ended May 31, 1998. Net earnings per share was $0.02 for the 1999 three month
period compared to $0.00 for the comparable 1998 period. The weighted average
number of shares of Common Stock outstanding at May 31, 1999 and at May 31, 1998
is 2,347,257.
Liquidity, Capital Resources and Other Matters Affecting Financial Condition
The Company's cash position as at May 31, 1999 (i.e., $135,000) 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 Mr. Stephen E. Globus amounted to $220,000 at May 31, 1999,
a decrease of $1,000 from $221,000 at February 28, 1999. This decrease was due
to a loan repayment to Stephen E. Globus of approximately $1,800, and an
increase in accrued interest of approximately $500. Loans payable to Messrs.
Stephen E. and Richard D. Globus at May 31, 1999 increased by $150,000, plus
accrued interest of approximately $600, for the purpose of purchasing Kimeragen.
All loans payable plus accrued interest to Mr. Richard D. Globus were reduced to
zero as at February 28, 1999. As at May 31, 1999, 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 $356,000, including accrued
interest. As at May 31, 1999, unpaid salary owing to Mr. Stephen E. Globus was
$542,000, and unpaid salary owing to Mr. Richard D. Globus was $511,000; so that
at such date the total of monies owed to Messrs. Stephen E. Globus, Richard D.
Globus and Ms. Jane Globus aggregated approximately $1,779,000.
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
<PAGE>
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, 1999 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 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 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, 1999
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, 1999 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-29-2000
<PERIOD-END> MAY-31-1999
<CASH> 135,000
<SECURITIES> 1,739,000
<RECEIVABLES> 105,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 40,000
<PP&E> 25,000
<DEPRECIATION> (24,000)
<TOTAL-ASSETS> 2,020,000
<CURRENT-LIABILITIES> 1,823,000
<BONDS> 0
25,000
0
<COMMON> 0
<OTHER-SE> 172,000
<TOTAL-LIABILITY-AND-EQUITY> 2,020,000
<SALES> 0
<TOTAL-REVENUES> 132,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 70,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,000
<INCOME-PRETAX> 58,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 58,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,000
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
