<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 June 30, 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-D
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 June 30, 1996, the Company had 640,256 shares of its $.01 par value
common stock outstanding.
<PAGE>
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Assets and Liabilities at June 30, 1996
(unaudited) and December 31, 1995 (audited)
Schedule of Investments and Restricted Securities
Statement of Operations for the Three Months Ended June 30,
1996 and June 30, 1995 (unaudited)
Statement of Operations for the Six Months Ended June 30, 1996
and June 30, 1995 (unaudited)
Statements of Stockholders' Equity Six Months Ended June 30,
1996 (unaudited), and Years Ended December 31, 1995 and 1994
(audited)
Statement of Changes in Net Assets as of June 30, 1996 and
June 30, 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>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying Statements of Assets and Liabilities as of June 30,
1996; Schedule of Investments as of June 30, 1996; Statement of Operations for
the three month period ended June 30, 1996 and June 30, 1995; Statement of
Operations for the six month period ended June 30, 1996 and 1995; Statement of
Changes in Net Assets for the six month period ended June 30, 1996 and June 30,
1995; and Statements of Stockholders' Equity for six months ended June 30, 1996
are unaudited but 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
JUNE 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(unaudited) (audited)
___________ ____________
<S> <C> <C>
ASSETS
Investments in restricted and unrestricted
securities, at fair value
(See accompanying schedule): 2,686,264 1,400,374
Cash:
Cash & cash equivalents -0- 1,193
Accrued interest receivable 328 2,130
Prepaid expenses and other assets 6,175 6,654
Accounts receivables from investees 26,813 61,518
----------- -----------
Total Current Assets 2,719,580 1,471,869
----------- -----------
Property & Equipment:
Land 102,775 102,775
Building 633,497 558,959
Leasehold improvements 83,200 83,200
Equipment 1,484 1,484
Furniture and fixtures 13,461 13,461
----------- -----------
Less Accumulated Depreciation (58,193) (44,961)
Property & Equipment - Net 776,225 714,918
----------- -----------
TOTAL ASSETS 3,495,804 2,186,787
========= =========
</TABLE>
(Continued)
<PAGE>
<PAGE>
THE ROCKIES FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1996 AND DECEMBER 31, 1995
(Continued)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(unaudited) (audited)
___________ ____________
<S> <C> <C>
CURRENT LIABILITIES
Cash overdraft 105 8,653
Accounts payable 67,489 55,994
Accrued interest payable 23,094 19,588
Other accrued liabilities 36,204 39,697
Notes payable
Related parties 59,550 71,278
Other 112,995 120,349
----------- -----------
172,545 191,627
Current portion of long-term debt 41,404 39,785
Borrowings under line of credit 167,899 103,086
Total Current Liabilities 508,740 458,430
----------- -----------
Long-term debt, less current portion: 332,599 351,831
Other Liabilities
Security deposits 6,137 6,462
Other liabilities 57,500 62,500
Total Liabilities 904,976 879,223
----------- -----------
NET ASSETS and STOCKHOLDER'S EQUITY 2,590,828 1,307,564
(Equivalent to $4.05 per share at June 30, ========= =========
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 out-
standing on Dec. 31, 1995 and June, 1996 : 6,403 6,403
Additional paid-in capital 2,901,243 2,901,243
Accumulated deficit:
Accumulated net investment loss (1,628,185) (1,464,614)
Accumulated net realized gain (losses)
from sales and permanent write-downs
of securities (78,700) (212,485)
Unrealized net appreciation of investments 1,390,067 77,017
----------- -----------
TOTAL ACCUMULATED DEFICIT: (316,818) (1,600,082)
----------- -----------
NET ASSETS 2,590,828 1,307,564
========= =========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE ROCKIES FUND, INC.
Schedules of Investments
June 30, 1996 and December 31, 1995
________________________________________________________________________________________________________
FAIR FAIR
INITIAL ** COST AT VALUE AT VALUE AT
INVESTMENT JUNE 30, JUNE 30, DECEMBER 31,
COMPANY POSITION DATE 1996 1996 1995
________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
RESTRICTED SECURITIES:
- ---------------------
Bear Star, LLC 5% partnership interest Nov-94 0.00 30,000.00 30,000.00
BMPI Liquidating Trust 166,680 common stock Mar-85 57,782.00 19,514.89 19,514.89
333,360 common stock Nov-85 115,563.00 38,905.78 38,905.78
-------------------------------------------
173,345.00 58,420.67 58,420.67
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 Mgt 5,000 units of a limited Mar-84 0.00 10,000.00 10,000.00
Equity Fund I, Ltd. partnership
Newport Firstfax, Ltd. 3.55% limited partnership May-85 133,333.00 20,000.00 20,000.00
Optimax Industries, Inc.* 135,024 common stock Jun-94 162,229.20 244,966.09 253,483.12
15,833 common stock Jun-94 - - 29,686.88
12,500 warrants Sep-93 0.00 7,812.50 8,575.00
-------------------------------------------
162,229.20 252,778.59 291,745.00
Palo Verde Group Partnership interest Mar-95 - - 7,000.00
Premier Concepts, Inc.*** 188 common stock May-93 0.00 94.00 82.25
112,500 common stock Mar-94 112,500.00 56,250.00 49,218.75
**** 25,000 common stock Jun-94 27,500.00 12,500.00 10,937.50
60,000 common stock Oct-94 60,000.00 30,000.00 26,250.00
**** 25,000 common stock Dec-94 25,000.00 12,500.00 10,937.50
8,500 common stock Sep-95 6,375.00 4,250.00 3,718.75
200,000 common stock Sep-95 50,000.00 100,000.00 87,500.00
5,000 common stock Jan-96 3,517.50 2,500.00 2,187.50
10,000 common stock Feb-96 4,687.50 5,000.00 4,375.00
15,000 common stock Apr-96 7,971.10 7,500.00 -
-------------------------------------------
297,551.10 230,594.00 195,207.25
Redwood Broadcasting, 26,250 common stock Jul-93 - - 39,375.00
Inc. 14,072 common stock Jan-95 - - 21,108.00
-------------------------------------------
0.00 0.00 60,483.00
Shiva Corporation 23,679 common stock Jun-96 85,656.33 1,792,476.62 348,723.96
Southshore Corporation 7,400 common stock Mar-94 11,770.44 2,775.00 3,700.00
10,000 common stock Dec-95 3,200.00 3,750.00 5,000.00
-------------------------------------------
14,970.44 6,525.00 8,700.00
Total Restricted Securities
- ---------------------------
UNRESTRICTED SECURITIES:
- -----------------------
American Diversified 70,000 common stock Mar-96 - - 9,800.00
Group
Creative Programming & 26,500 common stock Dec-95 20,251.88 5,803.50 14,071.50
Technology Ventures
Discovery Technologies, 1,000 common stock Sep-93 1,730.00 1,063.00 937.00
Inc. 5,000 common stock Sep-93 - - 4,685.00
10,000 common stock Mar-94 17,300.00 10,630.00 9,370.00
1,500 common stock Apr-94 2,595.00 1,594.50 1,405.50
3,000 common stock Jun-94 10.50 3,189.00 2,811.00
5,000 common stock Feb-96 5,625.00 5,300.00 4,685.00
-------------------------------------------
27,260.50 21,776.50 23,893.50
Flanigan's Enterprises 2,000 common stock Mar-96 - - 9,500.00
Good Times Restaurants, 12,500 warrants Mar-94 4,687.50 775.00 775.00
Inc.
Global Casinos, Inc.* 38,000 common stock Nov-93 76,000.00 28,500.00 13,072.00
43,309 common stock Jan-94 50,068.21 32,481.75 14,898.30
17,241 common stock Jan-94 19,931.79 12,930.75 5,930.90
12,500 common stock Feb-94 25,000.00 9,375.00 4,300.00
750 common stock Mar-94 0.00 562.50 258.00
5,000 common stock Oct-94 10,000.00 3,750.00 1,720.00
50,000 common stock Feb-96 17,207.50 37,500.00 17,200.00
10,000 common stock Mar-96 3,125.00 7,500.00 3,440.00
17,500 warrants Nov-93 0.00 0.00 0.00
-------------------------------------------
201,332.50 132,600.00 60,819.20
Harlyn Products, Inc. 500 common stock Jan-96 632.75 469.00 531.50
400 common stock Feb-96 506.67 375.20 425.20
2,100 common stock Feb-96 2,429.28 1,969.80 2,232.30
2,000 common stock Feb-96 - - 2,126.00
3,568.70 2,814.00 5,315.00
Healthwatch, Inc. 7,500 common stock Jan-96 - - 3,750.00
115,000 warrants Jun-95 0.00 0.00 8,550.00
-------------------------------------------
0.00 0.00 12,300.00
Image Matrix 10,000 units Jun-96 57,500.00 50,000.00 -
Laser Recording Systems, 100,000 common stock Jun-95 5,050.00 2,000.00 2,000.00
Inc.
North American Resorts 15,000 common stock May-96 2,850.00 1,800.00 -
Nutrition for Life, Inc. 1,000 common stock Mar-96 - - 21,750.00
1,000 common stock Apr-96 14,314.85 14,750.00 -
-------------------------------------------
14,314.85 14,750.00 21,750.00
S2 Golf, Inc. 5,000 common stock May-96 7,690.00 6,250.00 -
Tampa Bay Corporation 2,000 common stock May-96 6,063.40 5,000.00 -
TVG Technologies, Ltd. 1,000 A warrants Aug-93 0.00 875.00 625.00
26,600 A warrants Oct-93 62,837.50 23,275.00 16,625.00
10,000 A warrants Oct-93 - - 6,250.00
4,000 A warrants Mar-94 6,800.00 3,500.00 2,500.00
2,000 A warrants Jun-94 2,580.50 1,750.00 1,250.00
-------------------------------------------
72,218.00 29,400.00 27,250.00
Total Unrestricted Securities 422,787.33 272,969.00 187,474.20
- -----------------------------
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 1,302,372.40 2,692,438.88 1,236,429.08
- ----------------- ============ ============ ============
* 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.
**** At June 30, 1996, the Company has agreements to receive 42,500 of the indicated securities but had not
yet received certificates representing the shares.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<PAGE>
THE ROCKIES FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Three Months
Ended Ended
June 30, 1996 June 30, 1995
(Unaudited) (Unaudited)
___________________ ____________________
<S> <C> <C>
INVESTMENT INCOME:
Rental income 38,913 38,101
Interest income & dividends 148 188
Other (4,457) 6,705
----------- -----------
Total Income/Revenue 34,605 44,994
Expenses:
Legal and professional fees 19,498 23,588
Wages and salaries 41,456 38,451
Interest 6,114 1,946
Travel and entertainment 2,714 3,481
Office 20,715 14,075
Bad Debts 7,997 -0-
Building expenses and costs 29,168 27,269
Investment expenses 3,143 -0-
----------- -----------
Total Expenses 130,806 108,811
NET INVESTMENT (LOSS) (96,201) (63,817)
----------- -----------
NET REALIZED GAIN (LOSS) FROM
SALES AND PERMANENT WRITE-DOWNS
OF INVESTMENTS 36,593 (61,440)
----------- -----------
UNREALIZED APPRECIATION
(DEPRECIATION) IN VALUE OF
INVESTMENTS
Beginning of Period
March 31, 1996 and 1995 (106,134) 177,450
End of Period
June 30, 1996 and 1995 1,390,067 24,713
UNREALIZED APPRECIATION OF
INVESTMENTS $1,496,201 $(152,737)
========= ==========
</TABLE>
<PAGE>
<PAGE>
THE ROCKIES FUND, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Six Months For the Six Months
Ended Ended
June 30, 1996 June 30, 1995
(Unaudited) (Unaudited)
___________________ ____________________
<S> <C> <C>
INVESTMENT INCOME:
Rental income 76,829 38,101
Interest income & dividends 329 502
Other 1,244 12,080
----------- -----------
Total Income/Revenue 78,402 91,004
Expenses:
Legal and professional fees 24,664 33,690
Wages and salaries 84,522 77,340
Interest 9,432 3,765
Travel and entertainment 6,895 (3,841)
Office 32,634 26,941
Bad Debt 7,997 -0-
Building expenses and costs 62,092 58,697
Investment expenses 3,736 -0-
----------- -----------
Total Expenses 241,972 196,591
NET INVESTMENT (LOSS) (163,571) (105,587)
----------- -----------
NET REALIZED GAIN (LOSS) FROM
SALES AND PERMANENT WRITE-DOWNS
OF INVESTMENTS 133,783 (29,730)
----------- -----------
UNREALIZED APPRECIATION
(DEPRECIATION) IN VALUE OF
INVESTMENTS
Beginning of Period
December 31, 1995 and 1994 77,017 249,439
End of Period
June 30, 1996 and 1995 1,390,067 24,713
UNREALIZED APPRECIATION OF
INVESTMENTS $1,313,050 $(224,726)
========== ==========
</TABLE>
<PAGE>
<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
Stock Capital Loss Of Securities Investments Assets
______ __________ ___________ _____________ ______________ ___________
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT
DECEMBER 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
DECEMBER 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
DECEMBER 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
MARCH 31, 1996 $6,403 $2,901,243 $(1,531,984) $(115,293) $(106,134) $1,154,235
====== ========== ============ ========== ========== ==========
Net Investment Loss -- -- (96,201) -- -- (96,201)
Net Realized Gain
on Sale of Investments -- -- -- 36,593 - 36,593
Unrealized Appreciation
of Investments -- -- -- -- 1,496,201 1,496,201
------ ---------- ------------ ---------- -------- ----------
BALANCES AT JUNE 30,
1996 $6,403 $2,901,243 $(1,628,185 $(78,700) $1,390,067 $2,590,828
====== ========== ============ ========= ========== ==========
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
<PAGE>
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): (163,571) 23,013
Net realized gain (loss) from
sales and permanent write-downs
of investments: 133,783 (27,987)
----------- -----------
Unrealized net appreciation
(depreciation): 1,313,052 (67,609)
Net increase (decrease) in
net assets resulting
from operations: 1,283,264 (72,583)
Net Assets:
Beginning of period
December 31, 1995 and 1994: 1,307,564 1,057,008
End of period
June 30, 1996 and 1995: 2,590,828 1,180,110
</TABLE>
<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
____________________
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 June 30, 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.
CAPITAL 2000, INC. (fka OTC CAPITAL CORPORATION)
The Company, at June 30, 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 June 30, 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.
<PAGE>
<PAGE>
CREATIVE PROGRAMMING AND TECHNOLOGY VENTURES
At June 30, 1996 the Company held 26,500 shares of CPTV common stock,
which shares are unrestricted as to sale, non-income producing, and are valued
at their quoted market price of $.2190 per share or $5,804.
DISCOVERY TECHNOLOGIES, INC.
The Company, at June 30, 1996, held 20,500 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 $1.06 per
share or $21,162.
GLOBAL CASINOS, INC.
The Company, at June 30, 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
$.75 per share, or $132,600. 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 June 30, 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 June 30, 1996, held 3,000 shares of Harlyn Products common
stock, which shares are unrestricted as to sale, non-income producing, and have
been valued at their quoted price of $.9380 per share or $2,814.
IMAGE MATRIX
The Company, at June 30, 1996 held 10,000 units of Image Matrix Corp.
which shares are unrestricted as to sale, non-income producing, and have been
valued at their quoted market price of $5.00 per share or $50,000.
LASER RECORDING SYSTEMS, INC.
At June 30, 1996, the Company held 100,000 shares of Laser Recording
Systems, Inc. common stock which shares are unrestricted as to sale, non-income
producing, and have 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.<PAGE>
<PAGE>
NUTRITION FOR LIFE, INC.
The Company, at June 30, 1996, held 1,000 shares of Nutrition for Life
common stock, which shares are unrestricted as to sale, non-income producing,
and have been valued at their quoted market price of $14.75 per share or
$14,750.
OPTIMAX INDUSTRIES, INC. (fka PLANTS FOR TOMORROW, INC.)
At June 30, 1996, the Company held 135,191 shares of Optimax Industries,
Inc. common stock, which shares are restricted as to sale, are non-income
producing, and have been valued at their quoted market price of $1.8120 per
share or $244,966. The Company also holds warrants to purchase an additional
12,500 shares of Optimax Industries, Inc. common stock, which warrants are
valued at their quoted market price of $.625 each or $7,813.
PREMIER CONCEPTS, INC. (fka SILVER STATE CASINOS, INC.)
The Company, at June 30, 1996, held 461,188 shares of Premier Concepts,
Inc. common stock, which shares are restricted as to sale, non-income
producing, and have been valued at their quoted market price of $.50 per share,
or $230,594. Of the shares held, 42,500 are subject to agreements to deliver
to the Company, but at June 30, 1996 certificates had not been received.
S2 GOLF, INC.
The Company, at June 30, 1996 held 5,000 shares of S2 Golf (Square Two
Golf), which shares are unrestricted as to sale, non-income producing and have
been valued at their quoted market price of $1.25 per share or $6,250.
SHIVA CORPORATION (fka AIRSOFT, INC.)
The Company received 23,679 shares of Shiva Corporation common stock in
exchange for the Company's 447,082 shares of Airsoft, Inc. The shares are
restricted as to sale, non-income producing, and have been valued by the Board
of Directors at $75.70 per share or $1,792,477. The Company is entitled to
receive up to 2,631 additional shares contingent upon Airsoft meeting certain
performance targets at year end 1996.
SOUTHSHORE CORPORATION
At June 30, 1996, the Company held 17,400 shares of Southshore Corporation
common stock, which shares are restricted as to sale, non-income producing, and
have been valued at their quoted market price of $.375 per share or $6,525.
TAMPA BAY CORPORATION
The Company, at June 30, 1996, held 2,000 shares of Tampa Bay Corporation
common stock, which shares are unrestricted as to sale, non-income producing,
and have been valued at their quoted market price of $2.50 per share or $5,000.
TVG TECHNOLOGIES, INC.
The Company, at June 30, 1996, held common stock purchase warrants
exercisable to acquire up to 33,600 shares of common stock, which warrants are
unrestricted as to sale, non-income producing, and have been valued at their
quoted market price of $.875 per share or $29,400.
<PAGE>
<PAGE>
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.
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 - JUNE 30, 1996 COMPARED TO DECEMBER 31, 1995
During the three months ended June 30, 1996, the Company liquidated
certain securities, including 70,000 shares of AM Diversified Group; 5,000
shares of Discovery; 2,000 shares of Flanigans Ent.; 2,000 shares of Harlyn
Products; 7,500 shares of Healthwatch; 1,000 shares of Nutrition for Life;
40,322 shares of Redwood Broadcasting; partnership interest in Palo Verde
Group; and 10,000 shares of TVG warrants. The Company purchased and
subsequently sold several securities within the three months ended June 30,
1996 for a total realized gain of $8,251. 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 June 30, 1996, the Company acquired 10,000
shares of Image Matrix common stock, for a total investment of $57,500; 1,000
shares of Nutrition for Life common stock, for a total investment of $14,315;
15,000 shares of North American Resorts common stock, for a total investment of
$2,850; 15,000 shares of Premier Concepts common stock, for a total investment
of $7,971; 5,000 shares of S2 Golf (Square Two Golf) common stock, for a total
investment of $7,690; and 2,000 shares of Tampa Bay common stock, for a total
investment of 6,063.
Sixty-seven percent of the June 30, 1996 market value of restricted and
unrestricted securities is comprised of the newly acquired Shiva Corporation
(fka Airsoft, Inc.). During the three months ended June 30, 1996, the
Company's shares of Airsoft, Inc. had been acquired and subsequently exchanged
for shares of Shiva Corp. common stock with a June 30, 1996 market value of
$1,792,477. Airsoft's investment value at December 31, 1995 was $348,724, an
increase of $1,443,753 or 414%. Global Casinos, Inc. provided the Company with
a significant market return of 168% due to an increased market value from
$32,704 as of December 31, 1996 to $87,500 (less current year purchases) as of
June 30, 1996. Primarily due to the aforementioned, investments in restricted
and unrestricted securities increased from $1,400,374 as of December 31, 1995
to $2,686,264 as of June 30, 1996, an increase of $1,285,890 or 92%.
Cash and cash equivalents decreased from $1,193 as of December 31, 1995 to
$0.00 as of June 30, 1996, due to the overpayment of expenditures by the end of
the period. As a result, there was a decrease in accounts receivable of $34,705
or 56% from $61,518 as of December 31, 1995 to 26,813 as of March 31, 1996.
Total current assets increased from $1,471,864 at December 31, 1995 to
$2,719,580 on June 30, 1996, an increase of $1,247,711 or 85% due to the value
of investments in restricted and unrestricted securities as of June 30, 1996.
The purchase of the Company's Building increased by $74,538 as of June 30,
1996 as the Company sold a promissory note to a party entitled to one-half
interest in the Building and to certain real property and improvements of the
Company's Building. Total Assets, therefore, had a significant increase of 60%
from $2,186,787 on December 31, 1995 to $3,495,804 on June 30, 1996.
Current liabilities increased $50,310 or 11% during the six months ended
June 30, 1996. Cash overdraft is at $105 for June 30, 1996 as was at $8,653
for December 31, 1995. Accounts payable increased $11,495 or 21% mainly due to
an increase of payables and accrued expenses by the first half of 1996. Notes
payable decreased from $191,627 at December 31, 1995, to $172,545 at June 30,
1996 a decrease of 19,082 or 10%.
<PAGE>
<PAGE>
As of June 30, 1996 the Company had two borrowings under line of credit
outstanding which include a $100,000 line with an outstanding balance of
$90,000 that accrued interest at prime plus 2% (10.25%) secured by the
Company's Building; and an outstanding $75,000 line that accrues interest at
9.5% secured by the Company's Optimax Industries, Inc. investment. Other
liabilities decreased by 8% due to the amortization of tenant leasehold
improvements.
As a result, total liabilities increased during the six months ended June
30, 1996, from $879,223 at December 31, 1995, to $904,976, an increase of
$25,773, or 3%.
Based on the foregoing, Net Asset Value increased during the six months
ended June 30, 1996, from $1,307,564 at December 31, 1995, to $2,590,828 on
June 30, 1996, an increase of $1,283,264 or nearly 98%. Net assets per common
share increased from $2.04 per share at December 31, 1995, to $4.05 per share
on June 30, 1996, an increase of $2.01.
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 JUNE 30, 1996 COMPARED TO THREE MONTHS
ENDED JUNE 30, 1995.
The Company's investment income for the three months ended June 30, 1996,
was $34,605, a decrease of $10,389 compared with the same period in 1995. This
decrease in revenue is primarily the result of a correction to a broker
statement error. Expenses increased from $108,811 in 1995 to $130,806 for the
quarter ended June 30, 1996, an increase of $21,995 or nearly 20%.
Contributing to the increase in expenses was an increase in interest expenses
of 214%, wages and salaries of 8%, and a $7,997 bad debt expense accounted for
during the three months ended June 30, 1996.
Based on the foregoing, the Company reported a net investment loss for the
quarter of $(96,201), a loss increase of 53% compared to the net investment
loss of (63,817) for the three months ended June 30, 1995.
For the three months ended June 30, 1996, the Company's net realized gain
from sales of investments was $36,593, compared to a net realize loss of
$(61,440) during the same period in 1995, a gain of 160%. During the three
months ended June 30, 1996, the unrealized appreciation in the value of the
Company's investments was $1,496,201 compared to an unrealized depreciation of
$(152,737) as of June 30, 1995, a gain of approximately 1,080%. This increase
in unrealized appreciation is due mainly to the significant increase in value
of the Company's remaining portfolio securities, primarily Shiva Corp. and
Global Casino's Inc., during the three month period ended June 30, 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>
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 June 30, 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>
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: August 19, 1996 By: /s/ Stephen G. Calandrella
___________________ ----------------------------------------
Stephen G. Calandrella, President
Dated: August 19, 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, Schedule of Investments, Statement of
Operations on pages 4-11 and Statement of Changes in Net Assets on page 13 of the
Company's Form 10-QSB for the six months ended June 30, 1996, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 1,302,372
<INVESTMENTS-AT-VALUE> 2,692,439
<RECEIVABLES> 27,141
<ASSETS-OTHER> 834,418
<OTHER-ITEMS-ASSETS> (58,193)
<TOTAL-ASSETS> 3,495,804
<PAYABLE-FOR-SECURITIES> 467,336
<SENIOR-LONG-TERM-DEBT> 374,003
<OTHER-ITEMS-LIABILITIES> 63,637
<TOTAL-LIABILITIES> 904,976
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,907,646
<SHARES-COMMON-STOCK> 640,256
<SHARES-COMMON-PRIOR> 640,256
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<NET-INVESTMENT-INCOME> (163,571)
<REALIZED-GAINS-CURRENT> 133,783
<APPREC-INCREASE-CURRENT> 1,313,050
<NET-CHANGE-FROM-OPS> (96,201)
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</TABLE>
