<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number: 0-12444
THE ROCKIES FUND, INC.
______________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Nevada 84-0928022
_________________________________ _______________________
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
4465 Northpark Drive, Colorado Springs, Colorado 80907
________________________________________________ ___________________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (719) 590-4900
________________
N/A
_____________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
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 CORPORATE ISSUERS:
As of March 31, 1996, the Company had 640,256 shares of its $.01 par value
common stock outstanding. <PAGE>
<PAGE>
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Assets and Liabilities at March 31, 1996
(unaudited) and December 31, 1995 (audited)
Schedule of Investments and Restricted Securities
Statement of Operations for the Three Months Ended March 31,
1996 and March 31, 1995 (unaudited)
Statements of Stockholders' Equity Three Months Ended March
31, 1996 (unaudited), and Years Ended December 31, 1995 and
1994 (audited)
Statement of Changes in Net Assets as of March 31, 1996 and
March 31, 1995 (unaudited)
Notes to Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of Financial Conditions
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying Statements of Assets and Liabilities as of March 31,
1996, and December 31, 1995; Schedule of Investments as of March 31, 1996;
Statements of Operations for the three month period ended March 31, 1996 and
1995; Statement of Changes in Net Assets for the three month period ended March
31, 1996 and March 31, 1995; and Statements of Stockholders' Equity for three
months ended March 31, 1996, and years ended December 31, 1995 and 1994 reflect
all adjustments which are, in the opinion of management, necessary to a fair
statement of the financial position and results of operations for the interim
period presented.
<PAGE>
<PAGE>
THE ROCKIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
(unaudited) (audited)
___________ ____________
<S> <C> <C>
ASSETS
Investments in restricted and unrestricted
securities, at fair value
(See accompanying schedule): 1,236,429 1,400,374
Cash:
Cash & cash equivalents 16,352 1,193
Accrued interest receivable 2,255 2,130
Prepaid expenses and other assets 6,702 6,654
Accounts receivables from investees 30,322 61,518
Total Current Assets 1,292,060 1,471,869
__________ __________
Property & Equipment:
Land 102,775 102,775
Building 558,959 558,959
Leasehold improvements 83,200 83,200
Equipment 1,484 1,484
Furniture and fixtures 13,461 13,461
___________ ___________
Less Accumulated Depreciation (51,577) (44,961)
Property & Equipment - Net 708,302 714,918
__________ ___________
TOTAL ASSETS 2,000,362 2,186,787
========= =========
</TABLE>
(Continued)
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<PAGE>
THE ROCKIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996 AND DECEMBER 31, 1995
(Continued)
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
(unaudited) (audited)
___________ ____________
<S> <C> <C>
CURRENT LIABILITIES
Cash overdraft -0- 8,653
Accounts payable 67,749 55,994
Accrued interest payable 20,982 19,588
Other accrued liabilities 40,473 39,697
Notes payable
Related parties 63,247 71,278
Other 100,191 120,349
_________ _________
163,438 191,627
Current portion of long-term debt 40,586 39,785
Borrowings under line of credit 102,899 103,086
Total Current Liabilities 436,127 458,430
_________ _________
Long-term debt, less current portion: 343,263 351,831
Other Liabilities
Security deposits 6,737 6,462
Other liabilities 60,000 62,500
Total Liabilities 846,126 879,223
_________ _________
NET ASSETS and STOCKHOLDER'S EQUITY 1,154,235 1,307,564
(Equivalent to $1.80 per share at March 31, ========= =========
1996 and $2.04 per share at Dec. 31, 1995)
COMPONENTS OF NET ASSETS:
Common Stock, $.01 par value,
Authorized 5,000,000 shares;
640,256 issued and outstanding on
Dec. 31, 1995 and March 31, 1996 : 6,403 6,403
Additional paid-in capital 2,901,243 2,901,243
Accumulated deficit:
Accumulated net investment loss (1,531,984) (1,464,614)
Accumulated net realized gain (losses)
from sales and permanent write-downs
of securities (115,293) (212,485)
Unrealized net appreciation of investments (106,134) 77,017
___________ ___________
TOTAL ACCUMULATED DEFICIT: (1,753,411) (1,600,082)
__________ ___________
NET ASSETS 1,154,235 1,307,564
========= =========
/TABLE
<PAGE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE ROCKIES FUND, INC.
Schedules of Investments
March 31, 1996 and December 31, 1995
________________________________________________________________________________________________________
FAIR FAIR
INITIAL ** COST AT VALUE AT VALUE AT
INVESTMENT MARCH 31, MARCH 31, DECEMBER 31,
COMPANY POSITION DATE 1996 1996 1995
________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
RESTRICTED SECURITIES:
Airsoft 166,667 common stock Jun-93 25,000.00 130,000.26 130,000.00
83,333 common stock Sep-93 25,000.00 64,999.74 65,000.00
35,417 common stock Sep-93 10,625.00 27,625.26 27,625.00
83,333 common stock Oct-93 25,000.00 64,999.74 65,000.00
78,332 common stock Dec-93 31.33 61,098.96 61,099.00
__________ __________ __________
85,656.33 348,723.96 348,724.00
Bear Star, LLC* 5% partnership Nov-94 0.00 30,000.00 30,000.00
interest
BMPI Liquidating Trust 166,680 common stock Mar-85 57,782.00 19,514.89 19,515.00
333,360 common stock Nov-85 115,563.00 38,905.78 38,906.00
__________ __________ __________
173,345.00 58,420.67 58,421.00
Capital 2000, Inc.* 20,000 common stock Feb-93 5,000.00 5,000.00 5,000.00
6,000 common stock Feb-95 1,500.00 1,500.00 1,500.00
24,000 common stock Apr-95 6,000.00 6,000.00 6,000.00
__________ __________ __________
12,500.00 12,500.00 12,500.00
Colorado Venture 5,000 units of a Mar-84 0.00 10,000.00 10,000.00
Management Equity limited partnership
Fund I, Ltd.
Newport Firstfax, Ltd. 3.55% limited May-85 133,333.00 20,000.00 20,000.00
partnership
Optimax Industries, 151,024 common stock Jun-94 181,228.80 283,170.00 320,926.00
Inc.* 11,500 common stock Jun-94 - - 24,437.50
12,500 warrants Sep-93 0.00 8,575.00 9,375.00
__________ __________ __________
181,228.80 291,745.00 354,738.50
Palo Verde Group* Partnership interest Mar-95 7,000.00 7,000.00 7,000.00
Premier Concepts, Inc.*** 500 common stock Oct-92 - - 312.50
62 common stock May-93 - - 38.75
188 common stock May-93 0.00 82.25 117.50
112,500 common stock Mar-94 112,500.00 49,218.75 70,313.00
25,000 common stock Jun-94 27,500.00 10,937.50 15,625.00
60,000 common stock Oct-94 60,000.00 26,250.00 37,500.00
25,000 common stock Dec-94 25,000.00 10,937.50 15,625.00
8,500 common stock Sep-95 6,375.00 3,718.75 5,313.00
200,000 common stock Sep-95 50,000.00 87,500.00 125,000.00
5,000 common stock Jan-96 3,517.50 2,187.50 -
10,000 common stock Feb-96 4,687.50 4,375.00 -
__________ __________ __________
289,580.00 195,207.25 269,844.75
Redwood Broadcasting* 26,250 common stock Jul-93 17,500.00 39,375.00 39,375.00
14,072 common stock Jan-95 18,408.79 21,108.00 21,107.00
__________ __________ __________
35,908.79 60,483.00 60,482.00
Southshore Corporation 7,400 common stock Mar-94 11,770.44 3,700.00 3,815.44
5,000 common stock Mar-94 - - 2,578.31
10,000 common stock Dec-95 3,200.00 5,000.00 5,156.00
__________ __________ __________
14,970.44 8,700.00 11,549.75
Total Restricted Securities 933,522.36 1,042,779.88 1,183,260.00
__________ __________ __________
UNRESTRICTED SECURITIES:
American Diversified 70,000 common stock Mar-96 20,250.00 9,800.00 -
Group
Creative Programming 26,500 common stock Dec-95 20,251.88 14,071.50 19,875.00
Technology Ventures 7,500 common stock Dec-95 - - 5,625.00
__________ __________ __________
20,251.88 14,071.50 25,500.00
Discovery Technologies, 3,750 common stock Mar-92 - - 3,047.00
Inc.* 7,000 common stock Sep-93 - - 5,687.50
6,000 common stock Sep-93 10,380.00 5,622.00 4,875.00
10,000 common stock Mar-94 17,300.00 9,370.00 8,125.00
1,500 common stock Apr-94 2,595.00 1,405.50 1,219.00
3,000 common stock Jun-94 10.50 2,811.00 2,438.00
10,000 common stock Dec-95 - - 8,124.00
5,000 common stock Feb-96 5,625.00 4,685.00 -
__________ __________ __________
Subtotal 35,910.50 23,893.50 33,515.50
EMC 3,577 common stock Dec-95 - - 54,996.00
Flanigan's Enterprises 2,000 common stock Mar-96 8,835.00 9,500.00 -
Good Times Restaurants, 12,500 warrants Mar-94 4,687.50 775.00 375.00
Inc.
Global Casinos, Inc.* 38,000 common stock Nov-93 76,000.00 13,072.00 10,640.00
43,309 common stock Jan-94 50,068.21 14,898.30 12,127.00
17,241 common stock Jan-94 19,931.79 5,930.90 4,827.00
12,500 common stock Feb-94 25,000.00 4,300.00 3,500.00
750 common stock Mar-94 0.00 258.00 210.00
5,000 common stock Oct-94 10,000.00 1,720.00 1,400.00
50,000 common stock Feb-96 17,207.50 17,200.00 -
10,000 common stock Mar-96 3,125.00 3,440.00 -
17,500 warrants Nov-93 0.00 0.00 0.00
__________ __________ __________
201,332.50 60,819.20 32,704.00
Harlyn Products, Inc. 500 common stock Jan-96 632.75 531.50 -
4,500 common stock Feb-96 5,249.65 4,783.50 -
__________ __________ __________
5,882.40 5,315.00 0.00
Healthwatch, Inc. 35,000 common stock Jun-95 - - 17,500.00
7,500 common stock Jan-96 2,887.50 3,750.00 -
115,000 warrnts Jun-95 0.00 8,550.00 8,550.00
__________ __________ __________
2,887.50 12,300.00 26,050.00
Laser Recording Systems, 100,000 common stock Jun-95 5,050.00 2,000.00 2,000.00
Inc.
Nutrition for Life, Inc. 1,000 common stock Mar-96 19,560.00 21,750.00 -
Realty Refund Trust 2,000 common stock Dec-95 - - 11,250.00
TVG Technologies, Ltd. 1,000 A warrants Aug-93 0.00 625.00 563.00
36,600 A warrants Oct-93 75,012.50 22,875.00 20,606.00
4,000 A warrants Mar-94 6,800.00 2,500.00 2,252.00
2,000 A warrants Jun-94 2,580.50 1,250.00 1,126.00
__________ __________ __________
84,393.00 27,250.00 24,547.00
Total Unrestricted Securities 409,040.28 187,474.20 210,937.50
OTHER SECURITIES:
Columbine Home Sales, Note Receivable, 10% Dec-95 0.00 6,175.00 6,175.00
LLC*
Total Other Securities 0.00 6,175.00 6,175.00
TOTAL INVESTMENTS 1,342,562.64 1,236,429.08 1,400,372.50
============ ============ ============
* These entities are considered to be affiliated companies as a result of the Company's investment and/or
position on the entity's Board of Directors during 1996.
** After permanent write-downs.
*** Certain shares are free trading either under Rule 144 of the Securities Act of 1933 or as a result of
demand registration rights held by the Company.
See accompanying notes to financial statements.
</TABLE>
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<PAGE>
THE ROCKIES FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Three
Months
Ended Ended
March 31, 1996 March 31, 1995
(Unaudited) (Unaudited)
___________________
____________________
<S> <C> <C>
INVESTMENT INCOME:
Rental income 37,916 40,321
Interest income & dividends 181 314
Other 5,700 5,375
_________ _________
Total Income/Revenue 43,797 46,010
Expenses:
Legal and professional fees 15,166 11,667
Wages and salaries 43,066 38,889
Interest 12,968 10,326
Travel and entertainment 4,181 (7,323)
Office 11,919 11,302
Building expenses and costs 23,273 22,920
Investment expenses 594 -0-
_________ _________
Total Expenses 111,167 87,781
NET INVESTMENT (LOSS) (67,370) (41,770)
__________ __________
NET REALIZED GAIN (LOSS) FROM SALES AND
PERMANENT WRITE-DOWNS OF INVESTMENTS 97,190 31,710
__________ __________
UNREALIZED APPRECIATION
(DEPRECIATION) IN VALUE OF INVESTMENTS
Beginning of Period
December 31, 1995 and 1994 77,017 249,439
End of Period
March 31, 1996 and 1995 (106,134) 177,450
UNREALIZED APRECIATION OF INVESTMENTS $ (183,151) $ (71,989)
=========== ==========
/TABLE
<PAGE>
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<PAGE>
THE ROCKIES FUND, INC.
Statements of Stockholders' Equity
Three Months Ended March 31, 1996 and
Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
Accumulated
Net Realized
Losses From (Depreciation
Accumulated Sales And Unrealized Net
Additional Net Permanent Appreciation
Common Paid-In Investment Write-Downs (Depreciation) Net
Assets Stock Capital Loss Of Securities Investments Assets
______ __________ ___________ _____________ ______________ ___________
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT
DEC. 31, 1993 $6,403 $2,901,243 $(810,523) $(436,951) $21,414 $1,651,586
Net Investment Gain -- -- (365,149) -- -- (365,149)
Net Realized Gain
on Investments -- -- -- 192,577 -- 192,577
Unrealized Appreciation
of Investments -- -- -- -- 228,025 288,025
_____ _________ _________ _________ _______ _______
BALANCES AT
DEC. 31, 1994 $6,403 $2,901,243 $(1,205,672) $(244,374) $249,439 $1,707,039
Net Investment Loss -- -- (258,942) -- -- (258,942)
Net Realized Gain on
Sale of Investments -- -- -- 31,889 -- 31,889
Unrealized Appreciation
of Investments -- -- -- -- (172,422) (172,422)
_____ _________ _________ _________ _______ _______
BALANCES AT
DEC. 31, 1995 $6,403 $2,901,243 $(1,464,614) $(212,485) $77,017 1,307,564
====== ========== ============ ========== ======= =========
Net Investment Loss -- -- (67,370) -- -- (67,370)
Net Realized Gain on
Sale of Investments -- -- -- 97,190 - 97,190
Unrealized Appreciation
of Investments -- -- -- -- (183,149) (183,149)
_____ _________ _________ _________ _______ _______
BALANCES AT
MAR. 31, 1995 $6,403 $2,901,243 $(1,531,984) $(115,293) $(106,134) $1,154,235
====== ========== ============ ========== ========== ==========
See Accompanying Notes to Financial Statements
/TABLE
<PAGE>
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THE ROCKIES FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended March 31, 1996 Ended March 31, 1995
(Unaudited) (Unaudited)
____________________ ____________________
<S> <C> <C>
From Investment Activities:
Net investment gain (loss): (67,370) (41,770)
Net realized gain (loss) from
sales and permanent write-downs
of investments: 97,190 31,710
Unrealized net appreciation
(depreciation): (183,149) (71,989)
_________ ________
Net increase (decrease) in
net assets resulting from
operations: (153,329) (82,049)
Net Assets:
Beginning of period
December 31, 1995 and 1994: 1,307,564 1,707,039
End of period
March 31, 1996 and 1995: 1,154,235 1,624,990
</TABLE>
<PAGE>
<PAGE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
(a) Organization.
The Rockies Fund, Inc. (the "Company") was incorporated in Nevada on
August 2, 1983, for the principal purpose of making venture capital investments
in developing companies located primarily in the Rocky Mountain Region of the
United States. The Company is registered under the Investment Company Act of
1940 as a business development company.
(b) Valuation of Investments.
Investments in restricted securities are carried at fair value as
determined in good faith by the Board of directors.
(c) Income Taxes.
As a business development company, the Company is subject to Federal
and State income taxes at the applicable corporate rates. Deferred income
taxes are provided for timing differences between the reporting of income for
financial statement and tax return purposes, principally realized and
unrealized gains on investments. For Federal and State income tax purposes,
the investments have the same cost basis as shown in the financial statements.
2. PORTFOLIO SECURITIES
____________________
AIRSOFT, INC.
The Company, at March 31, 1996, held 447,082 shares of AirSoft, Inc.
common stock, which stock is restricted as to sale, is non-income producing,
and has been valued by the Board of Directors at $.78 per share, or $348,724
based on the price of the Company's most recent financing.
AMERICAN DIVERSIFIED GROUP
The Company, at March 31, 1996, owned 70,000 share of American Diversified
Group, which shares are unrestricted as to sale, non-income producing, and have
been valued at their quoted market price of $.14 per share or $9,800.
BEAR STAR (fka COLUMBINE HOME SALES, LLC.)
The Company has invested in Bear Star, which investment is restricted as
to sale, non-income producing, and has been valued by the Board of Directors at
$30,000 based on the Company's 5% ownership. The Company also holds a note
receivable from Columbine Homes in the amount of $6,175 which note pays
interest at the rate of 10% per year.
BMPI LIQUIDATING TRUST
At March 31 1996, the Company held 500,040 shares of BMPI Liquidating
Trust, which stock is restricted as to sale, non-income producing, and has been
valued by the Board of Directors at $.1168 per share or $58,421.
<PAGE>
<PAGE>
CAPITAL 2000, INC. (fka OTC CAPITAL CORPORATION)
The Company, at March 31, 1996, held 50,000 shares of Capital 2000, Inc.
(fka OTC Capital Corporation) common stock, which stock is restricted as to
sale, non-income producing, and has been valued by the Board of Directors at
its cost of $12,500.
COLORADO VENTURE MANAGEMENT EQUITY FUND I, LTD. ("CVM I")
As of March 31, 1996, the Company held 2.29% interest in CVM I, which was
valued by the Board of Directors at $10,000. CVM I is a venture partnership
which represents a broad spectrum of investments in Rocky Mountain based
venture capital companies. In the fourth quarter of 1995 the Company received
a stock distribution of 3,577 shares of EMC from CVM I.
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES
At March 31, 1996 the Company held 26,500 shares of CPTV which shares are
non-restricted as to sale, non-income producing, and are valued at their quoted
market price of $.5310 per share or $14,072.
DISCOVERY TECHNOLOGIES, INC.
The Company, at March 31, 1996, held 25,500 shares of Discovery
Technologies, Inc. common stock, which stock is unrestricted as to sale, non-
income producing, and has been valued at its quoted market price of $.937 per
share or $23,894.
FLANIGAN'S ENTERPRISES, INC.
The Company, at March 31, 1996, held 2,000 shares of Flanigan's
Enterprises, which shares are unrestricted as to sale, non-income producing,
and have been valued at their quoted price of $4.75 per share or $9,500.
GLOBAL CASINOS, INC.
The Company, at March 31, 1996, held 176,800 shares of Global Casinos,
Inc. common stock, which shares are unrestricted as to sale , non-income
producing, and have been valued by the Board of Directors at their quoted
market price of $.344 per share, or $60,819.20. The Company also holds common
stock purchase warrants exercisable to purchase up to 17,500 shares of common
stock of Global Casinos, Inc., at an exercise price of $2.00 per share, which
warrants are also restricted as to sale, non-income producing, and have been
valued by the Board of Directors at $0.00, based on the fact that the exercise
price of the warrants exceeds the current market price of the underlying common
stock. Global Casinos, Inc. is engaged in the operation of gaming properties,
both domestically and internationally.
GOOD TIMES RESTAURANTS, INC.
At March 31, 1996, the Company held common stock purchase warrants
exercisable to acquire up to 12,500 shares of common stock of Good Times
Restaurants. The warrants are unrestricted as to sale, non-income producing,
and have been valued at their quoted market price of $.062, or $775.
HARLYN PRODUCTS
The Company, at March 31, 1996, held 5,000 shares of Harlyn Products,
which share are unrestricted as to sale, non-income producing, and have been
valued at their quoted price of $1.062 per share or $5,315.
<PAGE>
<PAGE>
HEALTHWATCH, INC.
At March 31, 1996, the Company held 7,500 shares of common stock of
Healthwatch, Inc., which shares are unrestricted as to sale, are non-income
producing, and have been valued by the Board of Directors at $.50 per share, or
$3,750. The Company also held common stock purchase warrants exercisable to
purchase up to an additional 115,000 shares of Healthwatch common stock. The
warrants are also unrestricted as to sale, non-income producing, and have been
valued by the Board of Directors at $.074 each, or $8,550.
LASER RECORDING SYSTEMS, INC.
At March 31, 1996, the Company held 100,000 shares of Laser Recording
Systems, Inc. common stock which stock is unrestricted as to sale, non-income
producing, and has been valued at their quoted market value of $.02 per share
or $2,000.
NEWPORT FIRSTFAX, LTD. (fka NEWPORT ASSOCIATES, LTD. / NEWPORT RATELINE,
LTD.)
The Company currently owns a 3.55% equity interest in Newport FirstFax,
Ltd., which investment is restricted as to sale. Newport FirstFax, Ltd. is the
surviving entity following the combination of Newport Associates, Newport
Rateline and Newport Quoteline. The combined company was sold in the fourth
quarter of 1993 and the partners' interests are being acquired over a five (5)
year period. The Board of Directors continues to value the investment at
$20,000 based on the estimated cash the Company will receive as a result of the
sale.
NUTRITION FOR LIFE, INC.
The Company, at March 31, 1996, held 1,000 share of Nutrition for Life,
which shares are unrestricted as to sale, non-income producing, and have been
valued at their quoted market price of $21.75 per share or $21,750.
OPTIMAX INDUSTRIES, INC. (fka PLANTS FOR TOMORROW, INC.)
At March 31, 1996, the Company held 151,024 shares of common stock of
Optimax Industries, Inc., which shares are restricted as to sale, are non-
income producing, and have been valued at their quoted market price of $1.875
per share or $283,170. The Company also holds warrants to purchase an
additional 12,500 shares of Optimax Industries, Inc. common stock, which
warrants are currently valued at their quoted market price of $.69 each or
$8,575.
PALO VERDE GROUP
The Company, at March 31, 1996, owns a partnership interest in Palo Verde
Group which investment is restricted to sale, non-income producing and has been
valued by the Board of Directors at $7,000 based on the original investment
amount.
PREMIER CONCEPTS, INC. (fka SILVER STATE CASINOS, INC.)
The Company, at March 31, 1996, held 446,188 shares of Premier Concepts,
Inc. common stock, which stock is restricted as to sale, non-income producing,
and has been valued at $.375 per share, or $195,207.
<PAGE>
<PAGE>
REDWOOD BROADCASTING, INC.(fka INTELLIGENT FINANCIAL HOLDING CORPORATION)
At March 31, 1996, the Company held 40,322 shares of Redwood Broadcasting,
Inc. common stock which stock is restricted as to sale, non-income producing,
and has been valued by the Board of Directors at $1.50 per share, or $60,483.
SOUTHSHORE CORPORATION
At March 31, 1996, the Company held 17,400 share of Southshore Corporation
common stock, which shares are restricted as to sale, non-income producing, and
have been valued by the Board of Directors at $.50 per share or $8,700.
Southshore Corporation is a publicly-traded family entertainment company.
TVG TECHNOLOGIES, INC.
The Company, at March 31, 1996, held common stock purchase warrants
exercisable to acquire up to 43,600 shares of common stock, which warrants are
unrestricted as to sale, non-income producing, and have been valued at their
quoted market price of $.625 per share or $27,250.
REAL ESTATE OPERATIONS
During the third quarter of fiscal 1993 the Company purchased a 26,500
square foot office building located in Colorado Springs, Colorado (the
"Building"). The Building was acquired primarily to provide office space for
the Company and as a potential source of income. The Company currently
occupies approximately ten percent (10%) of the Building and leases the
remaining space to eleven (11) other unrelated parties under varying,
noncancelable, operating leases expiring in various years through 2002. The
Building is currently 88% occupied.
The Company's employees are responsible for management and leasing of the
Building, and currently spend between 10% and 15% of their time attending to
such activities. The balance of their time is devoted to the Company's other
investment and venture capital activities.
Aside from ownership and operation of the Building, it is not the
intention of the Company to actively participate in the commercial real estate
industry, and the Company presently does not anticipate or have plans to
acquire additional rental real estate. However, the Company may, in the
future, consider other real estate investment opportunities which the Company's
Board of Directors believe are likely to produce a reasonable return on
investment. In making this decision, the Board will consider the prospects of
capital appreciation, cash flow from rental operations and reinvestment
thereof, the risks of the particular property and the rental market conditions
existing at the time of purchase. Additional investments in rental real estate
must also be made in compliance with the provisions of the Act and must not
jeopardize the Company's status as a business development company under the
Act.
The commercial real estate market in Colorado Springs, Colorado, although
steadily improving over the last several years, still remains very competitive.
While the Board does not believe that a single firm or group dominates the
commercial real estate industry in Colorado Springs, many of the participants
are well-established and possess far greater financial and market resources
than the Company.
<PAGE>
<PAGE>
<PAGE>
3. INCOME TAXES
For federal income tax purposes, the Company has net operating loss and
capital loss carry-forwards and for financial statement purposes, the Company
has loss carry-forwards. The net operating losses expire through the year 2006
and the capital loss carry-forwards expire through the end of this year.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this report.
LIQUIDITY AND CAPITAL RESOURCES - MARCH 31, 1996 COMPARED TO DECEMBER 31, 1995
During the three months ended March 31, 1996, the Company liquidated
certain investments, including 11,500 shares of Optimax; 562 shares of Premier
Concepts to account for a 1:4 reverse split, 5,000 shares of Southshore; 7,500
shares of Creative Programming and Technology Venture; 20,750 shares of
Discovery Technologies; 3,577 shares of EMC; 35,000 shares of Healthwatch,
Inc.; and 2,000 shares of Realty Refund Trust. The funds received from the
liquidation of these securities allowed the Company to add a limited number of
new investments to the Company's portfolio, including the following:
During the three months ended March 31, 1996, the Company acquired
15,000 shares of Premier Concepts common stock, for a total investment of
$8,205.00; 70,000 shares of American Diversified Group common stock, for a
total investment of $20,250.00; 2,000 shares of Flanigan's Enterprises common
stock for a total investment of $8,835.00; 60,000 shares of Global Casino's
common stock for a total investment of $20,332.50; 5,000 shares of Harlyn
Products common stock for a total investment of $5,882.40; 7,500 shares of
Healthwatch common stock for a total investment of $2,887.50; and 1,000 shares
of Nutrition for Life common stock for a total investment of 19,560.00.
Due in part to a decrease in the existing portfolio's value of
investments principally Optimax and Premier Concepts, the fair market value of
the Company's investments in restricted and unrestricted securities fell from
$1,400,374 on December 31, 1995, to $1,236,429 on March 31, 1996, a decrease of
$163,945 or nearly 12%. Cash and cash equivalents increased from $1,193 to
$16,352, an increase of $15,159 or 13%, due to the collection of short term
loans from various related parties. As a result, there was a decrease in
accounts receivable of $31,196 or 51% from $61,518 as of December 31, 1995 to
30,322 as of March 31, 1996. Total current assets decreased from $1,471,864 at
December 31, 1995 to $1,292,060 on March 31, 1996, a decrease of $179,809 or
12% primarily due to the decrease in the portfolio evaluations for during the
three months ended March 31, 1996. Total Assets, therefore, had a decrease of
9% from $2,186,787 on December 31, 1995 to $2,000,362 on March 31, 1996.
Current liabilities decreased $22,303 or 5% during the three months ended
March 31, 1996. Cash overdraft is at $0.00 for March 31, 1996 as was at $8,653
for December 31, 1995. Accounts payable increased $16,755 or 17% mainly due to
an increase of payables and accrued expenses by the end of the quarter. Notes
payable decreased from $191,627 at December 31, 1995, to $163,438 at March 31,
1996 a decrease of 28,198 or 15%. Borrowing under lines of credit remain
outstanding as of March 31, 1996 which includes a $100,000 line of credit that
accrues interest at the rate of prime plus 2% (10.25% at March 31, 1996)
secured by the Company's office building. Other liabilities decreased by 4% as
was offset against leasehold improvement expense.
As a result, total liabilities decreased during the three months ended
March 31, 1996, from $879,223 at December 31, 1995, to $846,126, a decrease of
$33,097, or 4%.
Based on the foregoing, Net Asset Value decreased during the three months
ended March 31, 1996, from $1,307,564 at December 31, 1995, to $1,154,235 on
March 31, 1996, a decrease of $153,329 or nearly 12%. Net assets per common
share decreased
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<PAGE>
<PAGE>
from $2.04 per share at December 31, 1995, to $1.80 per share on March 31,
1996, a decrease of $.24.
Other than the foregoing, Management knows of no trends or demands,
commitments, events or uncertainties which will result in the Company's
liquidity or capital resources materially increasing or decreasing.
RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1995.
The Company's investment income for the three months ended March 31, 1996,
was $43,797, a decrease of $2,213 compared with the same period in 1995. This
decrease in revenue is primarily the result of decreased building rental
income. Expenses increased from $87,781 in 1995 to $111,167 for the quarter
ended March 31, 1996, an increase of $23,386 or nearly 27%. Contributing to
the increase in expenses was an increase in legal and professional fees of 30%,
interest expenses of 26%, and wages and salaries of 11%.
Based on the foregoing, the Company reported a net investment loss for the
quarter of $(67,370), a loss increase of 61% compared to the net investment
loss of (41,770) for the three months ended September 31, 1995.
For the three (3) months ended March 31, 1996, the Company's net realized
gain from sales of investments was $97,190, a 206% increase from $31,710
realized during the same period in 1995. In the three months ended March 31,
1996, the unrealized appreciation/(depreciation) in the value of the Company's
investments increased from a depreciation of $(71,989) to $(183,151), an
increase of $111,162 or approximately 154%. This increase in unrealized
depreciation is due mainly to the decrease in value of the Company's remaining
portfolio securities during the three month period ended March 31, 1996.
Other than the foregoing, Management knows of no trends or uncertainties
that will have any material impact on the income or expenses of the Company.
<PAGE>
<PAGE>
<PAGE>
PART 1. OTHER INFORMATION
Item 1. Legal Proceedings
During 1996, the Company received requests for information from the United
States Securities and Exchange Commission ("SEC") related to an investigation
begun by the SEC during 1994 into various matters, including the administrative
and record keeping practices of the Company, its securities trading activities
and those of one of its officers. As of March 15, 1996, neither management of
the Company nor the Company's legal counsel have been informed of the results,
if any, of the SEC's investigation or of any timetable for the SEC to complete
its investigation. There can be no assurance of the outcome of this matter or
the ultimate effect on the Company's financial position.
Item 2. Changes in Securities
None.
Item 3. Default Upon Senior Securities
There have been no defaults on any securities. The Company has no
obligations with regard to dividends and no preferred stock is outstanding.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
<PAGE>
<PAGE>
<PAGE>
SIGNATURE
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 hereunto duly authorized.
THE ROCKIES FUND, INC.
Dated: May 14, 1996 By: /s/ Stephen G. Calandrella
________________ ________________________________
Stephen G. Calandrella, President
Dated: May 14, 1996 By: /s/ Craig T. Rogers
________________ ________________________________
Craig T. Rogers, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF ASSETS & LIABILITIES, STATEMENT OF OPERATIONS, SCHEDULE OF
INVESTMENTS AND STATEMENT OF CHANGES IN NET ASSETS ON PAGES 4 - 11 OF THE
COMPANY'S FORM 10-QSB FOR THE THREE MONTHS ENDED MARCH 31, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 1,342,563
<INVESTMENTS-AT-VALUE> 1,236,429
<RECEIVABLES> 39,279
<ASSETS-OTHER> 776,231
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