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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 12(g) OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NO. 0-24432
THE AMERICAS GROWTH FUND, INC.
MARYLAND 65-0504786
- ------------------------------- ---------------------------
(State or other jurisdiction of (IRS Employer Identifi-
incorporation of organization) cation No.)
701 Brickell Avenue, Suite 2000, Miami, Florida 33131
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code (305) 374-3575
--------------
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
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such
reports) and (2) has been subject to such filing requirement for the past 90
days.
Yes X No
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Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this Form, and no disclosure will be contained, to the
best of the Registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of February 12, 1996 (valued at the average of the closing bid
price of $2.625 and ask price of $3.00 on such date) was $2.8125.
The number of shares of Common Stock outstanding as of February 12, 1996:
1,265,100
Transitional Small Business Disclosure Format (check one):
Yes ; No X
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DOCUMENTS INCORPORATED BY REFERENCE: NONE
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INDEX
THE AMERICAS GROWTH FUND, INC.
PART I. GENERAL INFORMATION
Item 1. Description of Business
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II. FINANCIAL STATEMENTS:
Item 5. Market for Registrants' Common Equity and Related Stockholder Matters
Item 6. Management's' Discussion and Analysis or Plan of Operations
Item 7. Financial Statements
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
PART III. RELATED PARTIES:
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
PART IV. EXHIBITS:
Item 13. Exhibits and Reports on Form 8-K
Signatures
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
The Americas Growth Fund, Inc., (the "Company") is a non-diversified,
closed-end management investment company that has elected to be treated as a
business development company ("BDC") under the Investment Company Act of 1940
(the "1940 Act"). The Company's primary investment objective is to achieve
long-term capital appreciation of its assets, rather than current income, by
investing in equity and debt securities of and providing managerial assistance
to, emerging and established companies that management believes offer
significant potential opportunities for growth (individually, "portfolio
company", collectively, "portfolio companies"). The Company has and plans to
continue to invest primarily in United States-based portfolio companies
"strategically-linked" to the Caribbean and Latin America. The Company
considers companies to be strategically-linked to the Caribbean and Latin
America if they derive substantial revenue (at least 50%) from operations or
transactions in the Caribbean and Latin America or, if in the Company's view,
they are positioned to do so. The Company considers "Caribbean and Latin
American" countries to be Argentina, Aruba, the Bahamas, Barbados, Belize,
Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, Dominican Republic,
Ecuador, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Netherlands
Antilles, Nicaragua, Panama, Paraguay, Peru, the Commonwealth of Puerto Rico,
Trinidad and Tobago, Uruguay and Venezuela. The Company seeks to identify such
companies that it believes will benefit from economic and political
developments in these regions. United States law currently prohibits
investment in Cuba. Consistent with current United States law, and, as may be
permitted by changes in United States law, the Company plans to invest in
United States-based companies strategically-linked to Cuba.
The Company considers "emerging companies" to be those companies in
the early stages of development with little or no operating history, and
minimal revenue or profits, which the Company anticipates will increase revenue
and become profitable. The Company considers "established companies" to be
those with an existing revenue and profit base. To a lesser extent, certain of
the emerging and established companies in which the Company invests may be in
"turnaround" or other restructuring situations.
The Company's investment objective is intended to provide investors
with the opportunity to participate in investments which are generally not
available to the public and which typically require substantial financial
commitment. The Company believes, although there can be no assurance, that a
favorable risk/reward ratio is available to investors who provide capital and,
to a certain extent, managerial assistance, to companies requiring immediate
funding at a time when a public offering of securities is not practicable or
just prior to a public offering of securities. The Company believes that such
investments often produce a relatively high rate of return over a short period
of time due to the increased risk associated with these investments and that
there are a sufficient number of potential investment opportunities available
to the Company to enable it to achieve its investment objective.
The Company has placed and intends to place its emphasis on private
investments in restricted securities for which the Company is granted
registration rights and/or rights to participate in the sale of securities of a
portfolio company by other stockholders. Such investments may be private
investments in capital stock of privately-held companies that the Company
anticipates will engage in a public offering within one to three years after
the investment; private investments in capital stock of publicly-held
companies; or bridge loans which are convertible into common stock or preferred
stock of the issuer or issued together with equity participations such as
common stock, preferred stock or warrants to purchase such stock or a
combination thereof, or both, for privately-held companies which the Company
anticipates will complete a public offering, other financing or a merger or
acquisition transaction (other than a leveraged buy-out) within one to three
years from the date of investment. Although there can be no assurance, the
Company believes that such investments
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can result in significant capital appreciation upon liquidation of the
investment.
The Company intends to a lesser extent to invest in marketable
securities of companies whose securities are traded in the over-the-counter
market, which have a total market capitalization, at the time of investment by
the Company, of less than $100 million ("Small-Cap Companies"), and which the
Company's management believes have significant potential for price
appreciation. Investments in such Small-Cap Companies may be made in the form
of common stock, preferred stock and securities convertible into or
exchangeable for common stock or preferred stock of the Small-Cap Companies.
The Company has no fixed policy concerning the types of businesses or
industry groups in which it may invest or as to the amount of funds that it
will invest in any one issuer; however, the Company currently intends to limit
its investment in marketable securities of any single Small-Cap Company to 5%
of its net assets, at the time of investment, and to limit its investment in
any single private issuer to 15% of its net assets, at the time of investment.
The foregoing is not a fundamental policy of the Company and may be changed at
any time without stockholder approval.
The Company makes its investments primarily as a result of the
recommendations of investment bankers and other professionals known to members
of the Company's management through their business dealings and professional
relationships. Leonard J. Sokolow, the Company's President and Portfolio
Manager, has principal responsibility for selecting investments for the Company
and will analyze and act upon such recommendations. The Company has two
employees, both of whom are officers.
Following its initial investment, the Company has made and may in the
future make additional debt and equity investments in portfolio companies
("Additional Investments") in order to protect or enhance its initial
investment. The Company may, together with other investors, including
management and its affiliates, make direct or Additional Investments in a
number of other situations, including attempts to salvage insolvent or bankrupt
companies, the acquisitions of divisions of companies, the acquisition of
privately-held companies, or the acquisition of companies in order to spin-off
portions of their operations or assets into independent entities.
PRESENT PORTFOLIO - VENTURE CAPITAL INVESTMENTS
Set forth below is certain information concerning the Company's
present principal investments in portfolio companies, only one of which is
currently a publicly-held company. Information concerning the publicly-held
company has been derived from filings by the company with the Securities and
Exchange Commission (the "Commission"). The information below concerning the
privately-held companies has been obtained from those portfolio companies. The
Company's principal investment in portfolio companies constituted, as of
December 31, 1995, 3.3% of the Company's total portfolio investments.
Although the Company has not independently verified for purposes of
this Form 10-KSB, the information set forth in the documents filed by the
portfolio companies with the Commission, or otherwise obtained from the
portfolio companies, to the Company's knowledge the information provided below
concerning such portfolio companies is accurate.
Reports, proxy statements and other information concerning the
publicly-held companies described below may be inspected at certain of the
Commission's offices or otherwise obtained from the Commission upon payment of
prescribed fees.
1. THE AMERICAS GROWTH PARTNERS, INC. ("AGP"). In 1995 the
Company for an initial investment of $22,608 acquired an 80%
ownership interest in and a 10% promissory note from AGP, a
publishing and consulting company. The first book which AGP
plans to publish is titled "Business Opportunities in a Free
Cuba," the rights to which AGP acquired.
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2. GOLF RESERVATIONS OF AMERICA, INC. ("GOLF"). In January 1995 the
Company invested $150,000 in Golf and was issued a $150,000 note
and was granted warrants to purchase 83,180 shares of Golf common
stock at $1.88 per share. Golf, a private company, has a system
to make advance golf reservations through a centralized
reservations network of participation golf courses, hotels,
resorts and other lodging properties, and provides ancillary
travel services, all of which can be accessed by calling a single,
toll-free phone number, 1-800-TEE TIME. The $150,000 note was
repaid in March 1995. Also in March 1995, the Company invested an
additional $50,000 and was issued a $50,000 note due the earlier
of April 1, 1996 or the closing of a firm underwritten public
offering and was granted additional warrants to acquire 27,726
shares of common stock at $1.88 per share. The common stock
underlying the 110,906 warrants have certain registration rights.
3. NEW WORLD FINANCIAL JOINT VENTURE. Approved Financial Corporation
(AFC) and the Company established a Joint Venture to be called
"New World Financial" to market commercial and/or residential
loans to Florida real estate owners of "qualified" businesses who
desire, or otherwise would only be able to obtain, real estate
based financing to fund the growth of such "qualified" businesses.
A "qualified" business is a United States business that derives,
or is in a position to derive, a substantial portion of its total
revenue from operations or transactions in the Caribbean or Latin
America with the proceeds of the loan being utilized to fund the
growth of such business. The Company provided a Credit Facility of
$200,000 to AFC of which AFC has drawn $100,000 in the fourth
quarter of 1995. During the term of this credit facility, Leonard
J. Sokolow, the Chairman of the Board and President of the
Company, has agreed to serve as a management consultant to AFC and
New World Financial. As consideration for the Credit Facility and
Mr. Sokolow's management consulting services, the Company will
receive 25% of New World Financial's total revenues (less direct
costs) received from mortgage loan fees, and an option to purchase
a 25% interest in New World Financial for $200,000, which option
expires upon the earlier of: (i) 5 days prior to the repayment in
full of the credit facility; and (ii) two years after the
execution of the credit facility.
COMPETITION
The Company encounters competition in its efforts to locate attractive
opportunities for the investment of its capital from other entities and
individuals having similar investment objectives. The primary competition for
desirable investments comes from investment companies, investment partnerships
and wealthy individuals. Some of the competing entities and individuals have
investment managers or advisors with significantly greater experience,
resources and managerial capabilities than the Company and are therefore in a
better position than the Company to obtain access to attractive investments.
To the extent that the Company can compete for such investments it may only be
able to do so on less favorable terms that those obtained by larger more
established investors.
RECENT EVENTS
On November 21, 1995, the Company entered into a non-binding letter of
intent with Tallard, a privately-held Dutch holding company, which through its
locations in the U.S., Brazil and Mexico is engaged in the sale and
distribution of computers, peripherals, software and services related to the
information processing industry. Tallard has a distribution agreement with
Apple Computer, Inc. ("Apple") and believes it is the largest distributor of
Apple products to independent resellers located in the Caribbean and Latin
America. Tallard recently acquired a 35.5% interest in Grupo Qualita, S.A. de
C.V., one of the largest value added resellers or "VAR" in Latin America for
Hewlett Packard, its primary vendor, and has distribution agreements with
various other significant vendors. Tallard also provides services in the areas
of installation, networking system integration and training.
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Under the terms of the letter of intent, the Company will acquire all
of the outstanding securities of Tallard in exchange for the issuance of
approximately 8,088,406 shares of Common Stock to the sole stockholder of
Tallard, a European charitable trust (the "Trust") or a company controlled
thereby. As part of the proposed transaction, a company owned by the Trust and
Leonard J. Sokolow, the Company's President, will invest approximately
$5,820,000 and $180,000, respectively, to purchase shares of the Company's
common stock at a purchase price of approximately $2.44 per share.
If this transaction is completed, Mr. Peder Wallenberg, a Swedish
investor, would serve as the Chairman of the Company. Mr. Sokolow and Antonio
Villamil, another current member of the Board, will also serve on the board of
the Company after the merger.
As part of the transaction, the Company presently intends to issue a
warrant ("Warrant") to each of its stockholders for each four shares of Common
Stock owned of record upon the closing of the merger. Each warrant will
entitle the holder to purchase one share of Common Stock at an exercise price
of $2.50 per share. The letter of intent also provides for the grant of stock
options ("Options") to purchase up to 500,000 shares of Common Stock to
Tallard's current management at an exercise price not less than $2.50 per share
and the grant of options to each of the current members of the Board (excluding
Mr. Sokolow) to purchase 5,000 shares of Common Stock at an exercise price of
$2.50 per share.
It is intended that the Warrants, Options, the shares of Common Stock
underlying the Warrants and the Common Stock issued to the Trust will be
registered for sale with the Commission. The Trust and Mr. Sokolow will
forfeit 50% of their Warrants if the Company does not realize $2,200,000 in
pre-tax earnings in 1996. In addition, the shares of Common Stock, Warrants
and Options issued to the Trust, Mr. Sokolow and Tallard's management will be
subject to a two year lock-up period during which such securities may not be
publicly sold.
The contemplated merger with Tallard is subject to the negotiation of
a definitive agreement and approval of the definitive terms and conditions of
the transactions by the stockholders of the Company and Tallard. As noted
above, management of the Company expects this matter to be submitted to
stockholders in the second quarter of 1996. There is no assurance that this
transaction will be completed or completed pursuant to the terms and conditions
described hereinabove.
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ITEM 2. DESCRIPTION OF PROPERTY
The Company maintains its principal executive office in Miami,
Florida, for which it pays only for administrative services and no rent.
ITEM 3. LEGAL PROCEEDINGS
The Company is not currently engaged in any material pending legal
proceeding.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of its stockholders
during the fourth quarter of the year ended December 31, 1995.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock has been quoted on the NASDAQ Small Cap
Market since August 22, 1994 under the symbol "AGRO". The following table sets
forth, for the periods indicated, the range of high and low bid quotations as
reported by NASDAQ. Such quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and do not necessarily represent actual
transactions. There presently is a limited public market for the Common Stock.
<TABLE>
<CAPTION>
Price Per Share
High Low
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<S> <C> <C>
The period from inception (June 3, 1994)
through December 31, 1994:
Third Quarter (commencing August 22, 1994) 5 4 7/8
Fourth Quarter 5 4 1/8
Fiscal year ending December 31, 1995:
First Quarter 4.5 2
Second Quarter 2.75 2
Third Quarter 2.625 2
Fourth Quarter 2.625 2
Fiscal year ending December 31, 1996
First Quarter (ending January 15, 1996) 2.75 2.5
</TABLE>
As of January 17, 1996, there were approximately 99 holders of record
of the Company's Common Stock with 1,265,100 shares of Common Stock
outstanding. In addition, the Company believes that there are more than 1580
beneficial owners of Common Stock whose shares are held in "street" name as of
such date. On February 12, 1996, the closing bid and ask price of the Common
Stock were $2.625 and $3.00, respectively.
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The Company has never paid and does not currently intend to pay cash
dividends. In addition, the Company has never made, nor adopted any policies
with respect to, in-kind distributions, and has no present intention of
adopting any such policies or of making any such distributions. Furthermore,
there may also be substantial legal and contractual restrictions affecting the
timing of any such distributions by the Company or any such resales by
stockholders of distributed securities.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 ("FISCAL 1995") AS COMPARED TO PERIOD FROM
INCEPTION (JUNE 3, 1994) THROUGH DECEMBER 31, 1994 ("FISCAL 1994")
As a result of operations, net assets increased approximately $25,100
(approximately .5% of net assets) during Fiscal 1995 compared with an increase
in net assets of approximately $5,154,900 during Fiscal 1994 primarily from the
proceeds of the Company's initial public offering. The Company was inactive,
except for matters relating to its organization and registration under the 1940
Act, for the period from inception (June 3, 1994) through August 30, 1994. The
net increase in net assets resulting from operations for Fiscal 1995 primarily
resulted from an increase in realized gains from sales of investments of
$44,700 offset by unrealized depreciation on investments of $13,300 as a result
of the decline in fair value of the Company's investment in AGP as of December
31, 1995. These results compare with a net increase in net assets resulting
from operations in Fiscal 1994 of $900 which occurred primarily from net
investment income of $6,000 which was offset by unrealized depreciation on
investments of $5,100 as a result in the decline in the market value of certain
U.S. Treasury Bills as of December 31, 1994.
The Company recognized investment income (which consisted entirely of
interest income) of approximately $288,100 for Fiscal 1995 compared with
investment income (which consisted entirely of interest income) of
approximately $77,600 for Fiscal 1994.
Expenses aggregated approximately $296,000 during Fiscal 1995 which
included salaries, consulting fees, legal fees, accounting fees, consulting
fees, rent and administrative expenses as compared with expenses of $70,500
during Fiscal 1994 for salaries, consulting fees, legal fees, accounting fees,
rent and administrative expenses with the Company being inactive except for
organization and registration matters from June 3, 1994 through August 30,
1994. Professional fees increased $56,200 as most fees incurred during Fiscal
1994 were related to the Company's initial public offering and were
appropriately netted against capital in excess of par.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1995, the Company had cash and cash equivalents of
approximately $601,800 and U.S. Treasury Bills of approximately $4,424,800 as
compared to approximately $1,129,900 in cash and cash equivalents and
approximately $3,926,700 in Treasury Bills as of December 31, 1994. The
decrease of $30,000 in capital resources for Fiscal 1995 as compared to Fiscal
1994 was primarily due to the AGP loan of $22,600 and the purchase of $9,600 of
fixed assets. In the fourth quarter of 1995, the Company loaned an aggregate
of $100,00 to Approved Financial Corporation pursuant to a credit facility and
had a $50,000 loan to Golf Reservations of America, Inc. outstanding. As of
December 31, 1995, the Company had liabilities of approximately $33,200
compared with liabilities of $19,800 as of December 31, 1994.
ITEM 7. FINANCIAL STATEMENTS
See the financial statements included herein following page F-1
hereof.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following is a list of the executive officers and directors of the
Company. All directors of the Company are serving a current term of office
which continues until the next annual meeting of stockholders, and all officers
are serving a current term of office which continues until the next annual
meeting of directors:
<TABLE>
<CAPTION>
YEAR OF
NAME AND AGE OF DIRECTOR ELECTION POSITION
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<S> <C> <C>
Leonard J. Sokolow* 1994 Chairman of the Board,
39 President and Portfolio Manager
Hon. J. Antonio Villamil* 1994 Vice-Chairman International Strategy,
48 Secretary and Director
Sanford B. Cohen 1994 Director
39
Martin C. Engelmann 1994 Director
54
Neil R. Winter 1995 Director
42
</TABLE>
*Indicates "interested person" of the Company within the meaning of the 1940
Act.
Leonard J. Sokolow has been Chairman of the Board, President, Chief
Financial Officer and Portfolio Manager of the Company since inception. Since
August 1993, Mr. Sokolow has been President and Chief Executive Officer of
Genesis Partners, Inc. a privately-held corporation which provides domestic and
international investment banking and financial advisory services. From May
1988 to July 1993, Mr. Sokolow was employed by Windmere Corporation, a public
corporation engaged in the manufacture and distribution of personal care
products and small household appliances, most recently as its Executive Vice
President-Operations, Administration and Finance and General Counsel. Since
September 1992, Mr. Sokolow has been a director of Video Jukebox Network, Inc.
("Video Jukebox"), a public company in the entertainment industry. From
September 1992 until June 1995, he was with Video Jukebox Network International
Limited, a subsidiary of Video Jukebox. Since March 1990, Mr. Sokolow has
served as a director of Catalina Lighting, Inc., a public company engaged in
the import and distribution of commercial and residential electrical lighting.
Since April of 1995 Mr. Sokolow has been a director of Ezcony Interamerica,
Inc. a distributor of electronic products and CD Rom programming to Latin
America. Mr. Sokolow received a B.A. degree with majors in Economics and
Accounting from The University of Florida in 1977, a J.D. degree from The
University of Florida School of Law in 1980 and an L.L.M. (Taxation) degree
from The New York University Graduate School of Law in 1982. Mr. Sokolow is a
Certified Public Accountant.
Hon. J. Antonio Villamil has been Vice Chairman - International
Strategy, Secretary and a director of the Company since inception. Since
January 1993, Mr. Villamil has been President and Chief Executive Officer of
the Washington Economics Group, Inc., an economic, financial, and government
relations adviser.
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From April 1989 to January 1993, Mr. Villamil served as Chief Economist of the
United State Department of Commerce, and most recently as Under Secretary for
Economic Affairs. From January 1981 to April 1989, Mr. Villamil was employed
by Southeast Bank, N.A., most recently as Senior Vice President and Chief
Economist, Corporate Planning and Economics Department, Office of the Chairman
of the Board. From 1978 to 1981, Mr. Villamil was employed by Crocker National
Bank, most recently as its Vice President and Economist, Economics Department.
Mr. Villamil received a B.S. degree in Economics in 1968 and a Master of Arts
in Economics in 1971 from Louisiana State University.
Sanford B. Cohen has been a director of the Company since inception.
In 1985, Mr. Cohen co-founded Prescott Valley Broadcasting Co., Inc., owner of
KIHX-FM and KQNA-AM radio stations in Prescott Valley, Arizona, and has been
its President since its inception. From 1982 to 1984, Mr. Cohen was Vice
President of National Phonecasting Co., a joint venture with Gannett
Broadcasting Corp., a private company engaged in telephone broadcasting of
financial information, Mr. Cohen received his B.A. degree in Economics in 1979
from Michigan State University.
Martin C. Engelmann has been a director of the Company since
inception. In 1984, Mr. Engelmann co-founded Diamed-Caribbean, Inc. (formerly
Dale-Mar Associates, Inc.), a management consulting firm specializing in
companies in the health care industry with distribution in the Caribbean, and
has been its President since its inception. Since November 1988, Mr. Engelmann
has been a director of Miller Industries, Inc., a public company engaged in
manufacturing and marketing of glass doors. Mr. Engelmann received a B.S.
degree in Business Administration from The University of Florida in 1963.
Neil R. Winter has been a director of the Company since February,
1995. Since June 1985, Mr. Winter was a shareholder in the CPA firm of Winter,
Scheifley & Associates, P.C.. He received a Bachelor of Science degree from
Boston University in 1974 and is licensed as a Certified Public Accountant in
the states of Colorado and Florida. Mr. Winter is also a member of the
Colorado Society of Certified Public Accounts and the American Institute of
Certified Public Accountants.
The Board of Directors is classified into three classes, each with a
term of three years, with only one class of directors standing for election by
the stockholders in any year. Officers are elected to serve, subject to the
discretion of the Board of Directors, until their successors are appointed.
Messrs. Cohen and Engelmann serve as Class I directors, Messrs.
Villamil and Winter serve as Class II directors and Mr. Sokolow serves as a
Class III director. The terms of the Class I, Class II and Class III directors
will expire on the dates of the 1995, 1996 and 1997 annual stockholders
meeting, respectively, or until the next applicable stockholders meeting.
CERTAIN FILINGS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own more than 10% of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership in the Common Stock. Executive officers, directors and
persons who own more than 10% of a registered class of the Company's equity
securities are required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms they file with the SEC.
To the Company's knowledge, based on copies of such reports furnished
to the Company and representations by persons that would be required to file
such forms, all of such executive officers, directors and persons who own more
than 10% of a registered class of the Company's equity securities complied with
all Section 16(a) filing requirements.
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ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information for the year ended December 31,
1995, the respective compensation earned by the Chief Executive Officer of the
Company and the other executive officer who earned in excess of $100,000 (of
which there were none), (the "Named Executive") in all capacities in which he
served.
<TABLE>
<CAPTION>
Annual Compensation
-------------------
Name and Principal
Position Year Salary Bonus Plan
------------------ ---- ------ ----------
<S> <C> <C> <C>
Leonard J. Sokolow, 1995 $91,500 $2,700
Chairman of the Board 1994 $33,115 -0-
President, Chief Executive
Officer & Portfolio Manager
</TABLE>
The Company has implemented an employee profit sharing plan (the
"Plan") which provides for payment of a performance fee in an amount equal to
20% of net income after taxes in each fiscal year, computed from the end of the
last fiscal year in respect of which performance fees were paid ("Plan
Income"). Such performance fee shall be payable regardless of the amount of
net income. Pursuant to his employment agreement, Mr. Sokolow will receive 10%
of Plan Income, if any; provided, however, that the amount so distributable to
Mr. Sokolow in any given year shall not exceed 50% of all amounts eligible to
be distributed under the Plan.
Directors, other than Mr. Sokolow, will receive an annual fee of
$2,500 for serving on the Board of Directors plus $250 and out-of-pocket
expenses for each meeting attended.
Other than the Plan, the Company does not have any stock option,
annuity, retirement, pension, deferred or incentive compensation plan or
arrangement under which any executive officers or directors are entitled to
benefits, nor does the Company have any long-term incentive plan pursuant to
which performance units or other forms of compensation are paid.
In September 1995 the Company entered into a month to month consulting
agreement with the Washington Economics Group, Inc. ("WEG"), of which Hon. J.
Antonio Villamil, Vice Chairman - International Strategy and a director of the
Company, is President and Chief Executive Officer. Pursuant to the consulting
agreement, WEG will receive a monthly retainer of $3,000 in exchange for
providing up to 20 hours of consulting services per month. WEG shall receive
additional compensation of $200 per hour for any consulting services provided
in excess of 60 hours per three month period. In its capacity as a consultant,
WEG shall consult with the Portfolio Manager in analyzing investments, assist
management in investor relations and, as requested, prepare formal
presentations to the Board of Directors and the Advisory Board on market
developments in Latin America and the Caribbean.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 12, 1996, the
beneficial ownership of the Common Stock of the Company of (i) each person who
is known by the Company to beneficially own more than 5% of the Common Stock of
the Company, (ii) each director (including the Named Executive) of the Company,
and (iii) all directors and executive officers of the Company as a group (based
upon information furnished by such persons). Under the rules of the
Commission, a person is deemed to be a beneficial owner of a security if he has
or shares the power to vote or direct the voting of such security or the power
to dispose or direct the disposition of such security. Accordingly, more than
one person may be deemed to be a beneficial owner of the same securities. A
person is also deemed to be a beneficial owner of any securities of which that
person has the
11
<PAGE> 12
right to acquire beneficial ownership within 60 days.
<TABLE>
<CAPTION>
Number of Shares
Name and Address Beneficially Percentage
of Beneficial Owner (1) Owned (2) of Class
- ----------------------- --------- --------
<S> <C> <C>
Leonard J. Sokolow(3) 100 *
Hon. J. Antonio Villamil -0- *
Neil R. Winter -0- *
Sanford B. Cohen -0- *
Martin C. Engelmann -0- *
* Less than 1%
</TABLE>
(1) The business address for purposes hereof of all of the Company's
directors and executive officers is in care of the Company.
(2) Unless otherwise noted, the Company believes that all persons in the
table have sole voting and disposition power with respect to all shares of
Common Stock beneficially owned by them.
(3) Additionally represents all officers and directors as a group
(5 persons).
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1995 the Company has entered into a month to month
consulting agreement with the Washington Economics Group, Inc. ("WEG"), of
which Hon. J. Antonio Villamil, Vice Chairman - International Strategy and a
director of the Company, is President and Chief Executive Officer. Pursuant to
the consulting agreement, WEG will receive a monthly retainer of $3,000 in
exchange for providing up to 20 hours of consulting services per month. WEG
shall receive additional compensation of $200 per hour for any consulting
services provided in excess of 60 hours per three month period. In its
capacity as a consultant, WEG shall consult with the Portfolio Manager in
analyzing investments, assist management in investor relations and, as
requested, prepare formal presentations to the Board of Directors and the
Advisory Board on market developments in Latin America and the Caribbean. See
"Executive Compensation".
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Certificate of Incorporation - incorporated by reference to
Exhibit 3.1 to the Company's Registration Statement on Form N-2 (No. 33-80424)
filed with the Securities and Exchange Commission on June 17, 1994.
3.2 By-laws - incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form N-2 (No. 33-80424) filed with the
Securities and Exchange Commission on June 17, 1994.
10.1 Employment Agreement dated August 30, 1994, between the Company
and Leonard J. Sokolow - incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form N-2 (No. 33-80424) filed with the
Securities and Exchange Commission on July 28, 1994.
10.2 Profit Sharing Plan - incorporated by reference to Exhibit 10.2
to the Company's Registration Statement on Form N-2 (No. 33-80424) filed with
the Securities and Exchange Commission on July 28, 1994.
10.4 Consulting Agreement between the Company and The Washington
Economics Group, Inc. dated June 2, 1994 - incorporated by reference to Exhibit
10.4 to the Company's Registration Statement on Form N-2 (No. 33-80424) filed
with the Securities and Exchange Commission on July 28, 1994.
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed with the Securities and
Exchange Commission during 1995.
12
<PAGE> 13
ANNUAL REPORT ON FORM 10-KSB
ITEM 7, ITEM 13(a)(1)
LIST OF FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995 AND
FROM INCEPTION (JUNE 3, 1994) THROUGH DECEMBER 31, 1994
THE AMERICAS GROWTH FUND, INC.
MIAMI, FLORIDA
<PAGE> 14
FORM 10-KSB - ITEM 13(a)(1)
THE AMERICAS GROWTH FUND, INC.
LIST OF FINANCIAL STATEMENTS
The following financial statements of The Americas Growth Fund, Inc. are
included in Item 7:
Balance Sheets - December 31, 1995 and 1994
Statements of Operations - Year ended December 31, 1995 and from inception
(June 3, 1994) through December 31, 1994
Statements of Changes in Net Assets - Year ended December 31, 1995 and from
inception (June 3, 1994) through December 31, 1994
Statements of Cash Flows - Year ended December 31, 1995 and from inception
(June 3, 1994) through December 31, 1994
Notes to Financial Statements
F-1
<PAGE> 15
Report of Independent Certified Public Accountants
Board of Directors and Shareholders
The Americas Growth Fund, Inc.
We have audited the accompanying balance sheets of The Americas Growth Fund,
Inc. as of December 31, 1995 and 1994 and the related statements of operations,
changes in net assets and cash flows for the year ended December 31, 1995 and
for the period from inception (June 3, 1994) through December 31, 1994. 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. Our
procedures included observation of securities held by the Company or
confirmation of other securities owned by correspondence with the custodian and
broker as of December 31, 1995 and 1994. 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 referred to above present fairly, in
all material respects, the financial position of The Americas Growth Fund, Inc.
at December 31, 1995 and 1994, the results of its operations, the changes in
its net assets and its cash flows for the year ended December 31, 1995 and for
the period from inception (June 3, 1994) through December 31, 1994, in
conformity with generally accepted accounting principles.
As explained in Note 5, the financial statements as of December 31, 1995 and
1994, include securities valued at $150,000 (2.9% of net assets) and $100,000
(1.9% of net assets), respectively, 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
their 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.
ERNST & YOUNG LLP
Jacksonville, Florida
January 12, 1996
F-2
<PAGE> 16
THE AMERICAS GROWTH FUND, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
Assets: ------------ ------------
<S> <C> <C>
Investments at market or fair value:
Investments in U.S. Treasury Bills $ 4,424,800 $ 3,926,700
Investments in common stock - 100,000
Investments in notes receivable 150,700 -
----------- -----------
Total investments (amortized cost of $4,597,400
and $4,032,700 for 1995 and 1994, respectively) 4,575,500 4,026,700
Cash and cash equivalents 601,800 1,129,900
Prepaid expenses 8,000 800
Deferred tax asset 4,400 900
Furniture and equipment, net 16,700 8,100
Organizational costs, net 5,700 7,200
Deposits 1,100 1,100
----------- -----------
5,213,200 5,174,700
----------- -----------
Liabilities:
Accounts payable 15,000 7,300
Accrued payroll taxes - 8,900
Accrued directors fees 4,600 2,500
Accrued profit sharing liability 2,700 -
Income taxes payable 7,700 -
Deferred tax liability 3,200 1,100
----------- -----------
33,200 19,800
----------- -----------
$ 5,180,000 $ 5,154,900
=========== ===========
Net assets:
Preferred stock, $.01 par value, 2,000,000
shares authorized, no shares issued $ - $ -
Common stock, $.01 par value, 10,000,000 shares
authorized, 1,265,100 shares issued and outstanding 12,700 12,700
Capital in excess of par 5,141,300 5,141,300
Undistributed operating income (loss) and investment
gains (losses):
Accumulated operating (losses) income (300) 6,000
Realized gains on investments 44,700 -
Unrealized depreciation of investments (18,400) (5,100)
----------- -----------
26,000 900
Net assets applicable to outstanding common shares ----------- -----------
(equivalent to $4.09 and $4.07 per share for 1995
and 1994, respectively, based on outstanding
common shares of 1,265,100) $ 5,180,000 $ 5,154,900
=========== ===========
</TABLE>
Read the accompanying notes.
F-3
<PAGE> 17
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995 AND
FROM INCEPTION (JUNE 3, 1994) THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Interest income $ 288,100 $ 77,600
------------ ------------
Expenses:
Consulting fees to affiliate 36,000 12,000
Salaries 99,700 36,100
Professional fees 62,800 6,600
Board of Directors fees 13,400 2,500
Rent 16,400 5,200
Other 67,700 8,100
------------ ------------
296,000 70,500
------------ ------------
Investment (loss) income before income
tax expense (7,900) 7,100
Less income tax (benefit) expense (1,600) 1,100
------------ ------------
Net investment (loss) income (6,300) 6,000
Realized gain from sales of investments 55,800 -
Less income tax expense applicable to
realized gain from sales of investments 11,100 -
------------ ------------
44,700 -
Unrealized depreciation of investments (16,600) (6,000)
Less income tax benefit applicable
to unrealized depreciation of investments (3,300) (900)
------------ ------------
(13,300) (5,100)
------------ ------------
Net increase in net assets resulting
from operations $ 25,100 $ 900
============ ============
Per-share amounts:
Net investment (loss) income $ (0.01) $ 0.01
Net realized gains on investments 0.04 -
Net unrealized losses on investments (0.01) (0.01)
------------ ------------
$ 0.02 $ -
============ ============
Weighted average number of shares used
in per-share computations 1,265,100 722,883
============ ============
</TABLE>
Read the accompanying notes.
F-4
<PAGE> 18
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1995 AND
FROM INCEPTION (JUNE 3, 1994) THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ --------------
<S> <C> <C>
Net investment income (loss) $ (6,300) $ 6,000
Net realized gains from sales
of investments 44,700 -
Net increase in unrealized depreciation
of investments (13,300) (5,100)
----------- -------------
Net increase in net assets resulting
from operations 25,100 900
Capital share transactions:
Net proceeds from public offering - 5,153,500
Proceeds from initial capitalization
of Company - 500
----------- -------------
Total capital share transactions - 5,154,000
----------- -------------
Increase in net assets 25,100 5,154,900
Net assets at beginning of period 5,154,900 -
----------- -------------
Net assets at end of period
(includes undistributed net investment
(loss) income of ($300) and $6,000 at
December 31, 1995 and 1994, respectively) $ 5,180,000 $ 5,154,900
=========== =============
</TABLE>
Read the accompanying notes.
F-5
<PAGE> 19
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995 AND
FROM INCEPTION (JUNE 3, 1994) THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
1995 1994
Cash flows from operating activities: ------------ ------------
<S> <C> <C>
Sources of cash:
Interest $ 34,300 $ 16,300
----------- -----------
Uses of cash:
Payroll 105,900 27,200
Consulting fees to affiliate 36,000 12,000
Operating expenses 153,900 17,900
----------- -----------
295,800 57,100
----------- -----------
Cash used in operating activities (261,500) (40,800)
Cash flows from investing activities: ----------- -----------
Sources of cash:
Proceeds from sale of U.S. Treasury Bills 9,000,000 2,000,000
Proceeds from notes receivable 100,000 -
Proceeds from sale of common stock 242,800 -
----------- -----------
9,342,800 2,000,000
Uses of cash: ----------- -----------
Purchase of furniture and equipment 9,600 8,300
Payment of security deposits - 1,100
Payment of organizational costs - 2,500
Purchase of U.S. Treasury Bills 9,239,500 5,871,400
Purchase of common stock 87,700 100,000
Purchase of notes receivable:
Related party 22,600 -
Other 250,000 -
----------- -----------
9,609,400 5,983,300
----------- -----------
Cash used in investing activities (266,600) (3,983,300)
Cash flows from financing activities: ----------- -----------
Sources of cash:
Advance from shareholder - 115,100
Proceeds from sale of common stock - 5,502,800
Proceeds from initial capitalization of Company - 500
----------- -----------
- 5,618,400
Uses of cash: ----------- -----------
Payment of advance from shareholder - 115,100
Payment of stock issuance costs - 349,300
----------- -----------
- 464,400
----------- -----------
Cash provided by financing activities - 5,154,000
----------- -----------
(Decrease) increase in cash and cash equivalents (528,100) 1,129,900
Cash and cash equivalents at beginning of period 1,129,900 -
----------- -----------
Cash and cash equivalents at end of period $ 601,800 $ 1,129,900
=========== ===========
</TABLE>
F-6
<PAGE> 20
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
YEAR ENDED DECEMBER 31, 1995 AND
FROM INCEPTION (JUNE 3, 1994) THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Reconciliation of net increase in net assets
resulting from operations to cash used in
operating activities:
Net increase in net assets resulting from operations $ 25,100 $ 900
----------- -----------
Adjustments to reconcile net increase in net assets
resulting from operations to cash used in operating
activities:
Accretion of discount on U.S. Treasury Bills (251,900) (61,300)
Realized gain from sale of investments (55,800) -
Amortization and depreciation 2,500 500
Unrealized depreciation of investments 16,600 6,000
Provision for deferred income taxes (benefit) (1,400) 200
Changes in assets and liabilities:
Prepaid expenses (7,200) (800)
Interest receivable (700) -
Accounts payable 7,700 2,300
Accrued payroll taxes (8,900) 8,900
Accrued profit sharing liability 2,700 -
Accrued directors fees 2,100 2,500
Income taxes payable 7,700 -
----------- -----------
Total adjustments (286,600) (41,700)
----------- -----------
$ (261,500) $ (40,800)
Cash used in operating activities =========== ===========
</TABLE>
Read the accompanying notes
F-7
<PAGE> 21
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. ORGANIZATION AND NATURE OF OPERATIONS:
The Americas Growth Fund, Inc. (the "Company") was incorporated under
the laws of the State of Maryland on June 3, 1994. The Company is a
nondiversified, closed-end management investment company and has filed
with the Securities and Exchange Commission ("SEC") a notification of
election to be treated as a "business development company" as that
term is defined in the Investment Company Act of 1940, as amended.
The Company's primary investment objective is to achieve long-term
capital appreciation of its assets, rather than current income, by
investing in equity and debt securities of and providing managerial
assistance to, emerging and established companies that management
believes offer significant potential opportunities for growth
(individually, "portfolio company", collectively, "portfolio
companies"). The Company has and plans to continue to invest
primarily in United States based portfolio companies
"strategically-linked" to the Caribbean and Latin America. The
Company considers companies to be strategically-linked to the
Caribbean and Latin America if they derive substantial revenue (at
lease 50%) from operations or transactions in the Caribbean and Latin
America or, if in the Company's view, they are positioned to do so.
The Company considers "Caribbean and Latin American" countries to be
Argentina, Aruba, the Bahamas, Barbados, Belize, Bolivia, Brazil,
Chile, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El
Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Netherlands
Antilles, Nicaragua, Panama, Paraguay, Peru, the Commonwealth of
Puerto Rico, Trinidad and Tobago, Uruguay and Venezuela.
The Company considers "emerging companies" to be those companies in
the early stages of development with little or no operating history,
and minimal revenue or profits, which the Company anticipates will
increase revenue and become profitable. The Company considers
"established companies" to be those with an existing revenue and
profit base. To a lesser extent, certain of the emerging and
established companies in which the Company invests may be in
"turnaround" or other restructuring situations.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
Investments in unrestricted securities that are traded in the
over-the-counter market are generally valued at the closing bid
price on the last day of the year. U.S. Treasury bills are valued
at market value. Restricted securities are valued at fair value as
determined by the Board of Directors. 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.
F-8
<PAGE> 22
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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 amounts reported in
the financial statements and accompanying notes. Actual results
could differ from those estimates.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid investments purchased with
original maturities of three months or less to be cash equivalents.
FURNITURE AND EQUIPMENT:
Furniture and equipment are stated at cost less accumulated
depreciation. Depreciation is computed using the straight-line
method over the estimated useful lives of the related assets.
ORGANIZATIONAL COSTS:
Organizational costs are stated net of accumulated amortization of
$1,800 and $300 at December 31, 1995 and 1994, respectively, and
are being amortized using the straight-line method over five years.
INCOME TAXES:
The Company is not entitled to the special treatment available to
regulated investment companies and is taxed as a regular
corporation for federal and state income tax purposes. The
aggregate cost of securities at December 31, 1995 and 1994 for
federal income tax purposes and financial reporting purposes was
the same. The aggregate gross and net unrealized depreciation for
all securities held at December 31, 1995 and 1994 is $22,600 and
$6,000, respectively.
PER SHARE AMOUNTS:
Per share amounts are computed by dividing the net investment
income (loss) and net realized and unrealized gains (losses) on
investments by the weighted average number of shares outstanding
throughout the year.
RECLASSIFICATION:
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year's presentation.
F-9
<PAGE> 23
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
3. CONCENTRATION OF CREDIT RISK:
Financial instruments that potentially subject the Company to
concentration of credit risk consist principally of cash and cash
equivalents. During the year the Company had deposits with financial
institutions which exceed the $100,000 limit covered by the Federal
Deposit Insurance Corporation. Management regularly monitors their
balances and attempts to keep this potential risk to a minimum by
maintaining their accounts with financial institutions they believe
are of good quality.
4. INITIAL PUBLIC OFFERING:
On August 30, 1994, in connection with the Registration Statement on
Form N-2 which became effective with the Securities and Exchange
Commission on August 19, 1994, the Company completed its initial
public offering of 1,100,000 shares of common stock at $5 per share
resulting in net proceeds before issuance costs to the Company of
approximately $4,785,000.
On September 21, 1994, the underwriters of the Company's initial
public offering exercised their overallotment option to purchase
165,000 shares of common stock at $5 per share resulting in additional
net proceeds before issuance costs to the Company of approximately
$717,800.
A summary of the proceeds from the initial public offering and the
exercise of the overallotment option is as follows:
<TABLE>
<S> <C> <C>
Gross offering proceeds $ 5,500,000
Less:
Underwriting discounts and commissions $ 550,000
Non-accountable expense allowance 165,000 715,000
----------- -----------
Net offering proceeds 4,785,000
-----------
Add overallotment option proceeds:
Gross overallotment proceeds $ 825,000
Less:
Underwriting discounts and commissions $ 82,500
Non-accountable expense allowance 24,700 107,200
----------- -----------
Net overallotment option proceeds 717,800
-----------
Net proceeds from Underwriter 5,502,800
Printing, legal and other offering costs 349,300
-----------
Net proceeds from initial public offering $ 5,153,500
===========
</TABLE>
F-10
<PAGE> 24
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
5. INVESTMENTS:
INVESTMENTS INCLUDE THE FOLLOWING AT DECEMBER 31, 1995 AND 1994:
<TABLE>
<CAPTION>
VALUE VALUE
PRINCIPAL TYPE OF ISSUE AND DECEMBER 31, DECEMBER 31,
AMOUNT NAME OF ISSUER 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury bills (85.4%
and 76.2% of net assets at
December 31, 1995 and 1994,
respectively)
$ 1,952,754 U.S. Treasury bill,
$2,000,000 face value,
matures March 2, 1995 $ - $ 1,981,600
$ 1,940,449 U.S. Treasury bill,
$2,000,000 face value,
matures June 8, 1995 - 1,945,100
$ 471,030 U.S. Treasury bill,
$500,000 face value,
matures January 11, 1996 499,300 -
$ 1,415,780 U.S. Treasury bill,
$1,500,000 face value,
matures February 8, 1996 1,492,000 -
$ 1,949,545 U.S. Treasury bill,
$2,000,000 face value,
matures June 6, 1996 1,955,600 -
$ 476,030 U.S. Treasury bill,
$500,000 face value,
matures November 14, 1996 477,900 -
----------- -----------
Total U.S. Treasury bills $ 4,424,800 $ 3,926,700
=========== ===========
</TABLE>
F-11
<PAGE> 25
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
5. INVESTMENTS (CONTINUED):
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES VALUE VALUE
DECEMBER 31, DECEMBER 31, TYPE OF ISSUE AND DECEMBER 31, DECEMBER 31,
1995 1994 NAME OF ISSUER 1995 1994
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks (0.0% and
1.9% of net assets at
December 31, 1995 and
1994, respectively:
Majority owned (restricted):
80 - Americas Growth
Partners, Inc. $ - $ -
Restricted:
- 50,000 Greg Manning
Auctions, Inc. - 100,000
=========== =========
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
WARRANTS WARRANTS VALUE VALUE
DECEMBER 31, DECEMBER 31, TYPE OF ISSUE AND DECEMBER 31, DECEMBER 31,
1995 1994 NAME OF ISSUER 1995 1994
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks warrants:
Restricted:
- 1 Greg Manning
Auctions, Inc. - -
=========== ===========
Golf Reservations
of America, Inc.
2 - Class A - -
2 - Class B - -
=========== ===========
</TABLE>
F-12
<PAGE> 26
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
5. INVESTMENTS (CONTINUED):
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE
OF NOTES TYPE OF ISSUE AND DECEMBER 31,
DECEMBER 31, 1995 NAME OF ISSUER 1995
-----------------------------------------------------------------------------------------
<S> <C> <C>
Notes (2.9% net assets
at December 31, 1995)
$ 50,000 Golf Reservations of
America, Inc. $ 50,000
$ 100,000 Approved Financial
Corporation (including
accrued interest of $700) 100,700
$ 22,608 Americas Growth
Partners, Inc. -
----------
$ 150,700
==========
</TABLE>
In November 1994, the Company purchased in a private placement for an
aggregate consideration of $100,000, 50,000 shares of Greg Manning
Auctions, Inc. ("Manning") restricted common stock and a warrant
entitling the holder to purchase 50,000 shares of Manning restricted
common stock at $2.25 per share through November 3, 1995.
Subsequently, the number of common shares obtainable upon exercise was
increased to 56,500 and the exercise price was decreased to $1.55.
The Company received certain registration rights with respect to the
common stock and the common stock underlying the warrant. The Company
exercised the warrant and purchased the common stock on November 1,
1995. On November 16, 1995 the Company sold the common stock of Greg
Manning Auctions, Inc. for $141,200 which resulted in a realized gain
of approximately $53,500.
The Company agreed to loan up to $200,000 to Golf Reservations of
America, Inc. ("Golf") pursuant to two 10% promissory notes in January
and March, 1995. As of December 31, 1995, the outstanding balance was
$50,000 whick is due the earlier of April 1, 1996 or upon the closing
of Golf's firm underwritten public offering. In connection with the
notes, the Company received warrants to purchase an aggregate 110,907
shares of Golf's common stock at an exercise price of $1.88 per share.
As of December 31, 1995, the Board of Directors has valued the note at
$50,000 and the warrants at $0.
F-13
<PAGE> 27
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
5. INVESTMENTS (CONTINUED):
On July 6, 1995, the Company entered in to a joint venture agreement
with Approved Financial Corporation (Approved) to market commercial
loans to businesses that derive, or are in a position to derive, a
substantial portion of their revenue from the Caribbean or Latin
America. The loans are to be secured by qualified first or second
mortgages. On August 1, 1995, the Company provided Approved with a
$200,000 credit facility bearing interest at prime. As of December
31, 1995, $100,000 has been advanced to Approved under the credit
facility. In consideration for providing the credit facility and for
its management consulting services, the Company will receive a
twenty-five percent (25%) interest in the joint venture's revenue
received from points on applicable loans and an option to purchase
twenty five percent (25%) of the joint venture for $200,000. As of
December 31, 1995, the Company had not exercised this option. As of
December 31, 1995, the Board of Directors has valued the outstanding
credit facility at $100,000 and the option at $0.
During 1995, the Company has advanced funds to Americas Growth
Partners, Inc. (AGP) aggregating $22,608 pursuant to a 10% promissory
note. In addition, the Company received 80 shares of AGP common
stock, representing an 80% interest, in connection with the promissory
note. AGP is a publishing and consulting business which began
operations in January 1995. The Board of Directors has valued the
common stock and note at $0 as of December 31, 1995 and accordingly, a
reserve of $22,608 is included in the accompanying balance sheet as of
December 31, 1995. AGP's operating results for 1995 were not
significant.
6. CASH AND CASH EQUIVALENTS:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF COST AND COST AND
SHARES SHARES VALUE VALUE
DECEMBER 31, DECEMBER 31, TYPE OF ISSUE AND DECEMBER 31, DECEMBER 31,
1995 1994 NAME OF ISSUER 1995 1994
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
600,600 1,118,500 Money market fund,
Cortland Trust, Inc. $ 600,600 $ 1,118,500
- - Checking account
with bank 1,200 11,400
--------- ------------
Total cash and cash
equivalents (11.6 %
and 21.9% of net
assets at December 31,
1995 and 1994, respectively) $ 601,800 $ 1,129,900
========= ============
</TABLE>
F-14
<PAGE> 28
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
7. FURNITURE AND EQUIPMENT:
Furniture and equipment are comprised of the following at December 31,
1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Furniture and fixtures $ 1,500 $ 1,500
Computer equipment 16,400 6,800
--------- ---------
17,900 8,300
Less accumulated depreciation (1,200) (200)
--------- ---------
$ 16,700 $ 8,100
========= =========
</TABLE>
8. INCOME TAXES:
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes. The deferred tax liability is the result of an unrealized
appreciation on investments and using accelerated depreciation methods
for income tax purposes.
The significant components of deferred tax assets and liabilities on
the balance sheet at December 31, 1995 and 1994 are:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Deferred tax assets:
Unrealized depreciation of investments $ 4,300 $ 900
Section 179 expense carryover 100 -
--------- --------
4,400 900
Deferred tax liability:
Depreciation 3,200 1,100
--------- --------
Net deferred tax asset (liability) $ 1,200 $ (200)
========= ========
</TABLE>
F-15
<PAGE> 29
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
8. INCOME TAXES (CONTINUED):
Significant components of the provision for income taxes attributable
to continuing operations in 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Current:
Federal $ 5,800 $ -
State 1,900 -
--------- --------
7,700 -
--------- --------
Deferred:
Federal (benefit) (1,100) 200
State (benefit) (400) -
--------- --------
(1,500) 200
--------- --------
Provision for income taxes $ 6,200 $ 200
========= ========
</TABLE>
9. RELATED PARTY TRANSACTIONS:
A Shareholder of the Company had advanced approximately $115,100, for
initial public offering costs. The Shareholder was repaid in full
prior to December 31, 1994.
The Company entered into a one year consulting agreement with an
entity of which a director of the Company was Chairman and President.
The agreement terminates in July, 1996. During 1995 and 1994, the
Company paid $36,000 and $12,000, respectively, under this agreement.
The Company is committed to pay $24,000 under this agreement during
1996.
The Company leased its office space pursuant to a noncancelable
operating lease which expired in September, 1995. Commencing in
October 1995, the Company is provided with free office space by a law
firm with which the Chairman is "of counsel". Rent expense for the
periods ended December 31, 1995 and 1994 amounted to approximately
$16,400 and $5,200, respectively. In addition, the Company paid the
law firm legal fees of approximately $13,000 in 1995.
F-16
<PAGE> 30
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995 AND 1994
9. RELATED PARTY TRANSACTIONS (CONTINUED):
The Company entered into an employment agreement with the president of
the Company. The agreement is for three years expiring in July, 1997.
Compensation is $90,000 per year with cost of living increases each
year. The Company paid the president $91,500 and $33,000 pursuant to
this agreement during 1995 and 1994, respectively.
10. PROFIT SHARING PLAN:
The Company provides an employee profit sharing plan (the Plan) which
provides for a performance fee equal to twenty percent (20%) of net
income. As of December 31, 1995 and 1994, approximately $2,700 and
$0, respectively, was accrued in connection with the Plan. In 1995
and 1994 no fees were paid in connection with the Plan.
11. PENDING MERGER:
On November 21, 1995, the Company entered into a non-binding letter of
intent with Tallard Technologies B.V. (Tallard), a privately-held
company engaged in the sale and distribution of computers,
peripherals, software and services related to the information
processing industry. Under the terms of the letter of intent, the
Company will acquire all of the outstanding securities of Tallard in
exchange for the issuance of approximately 8,088,406 shares of stock
of the Company to the sole stockholder of Tallard. The contemplated
merger with Tallard is subject to the negotiation of a definitive
agreement and approval of definitive terms and conditions of the
transactions by the stockholders of the Company and Tallard, neither
of which has occurred as of December 31, 1995.
F-17
<PAGE> 31
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.
The Americas Growth Fund, Inc.
Dated: February 16, 1996 By: /s/ Leonard J. Sokolow
------------------------------------
Leonard J. Sokolow, President
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, this report has been signed by the following persons on
behalf of the Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Leonard J. Sokolow Chairman of the Board February 16, 1996
- -------------------------- and President
Leonard J. Sokolow (Principal Executive
Officer and Principal
Accounting Officer)
/s/ J. Antonio Villamil Vice Chairman of the February 16, 1996
- -------------------------- Board and Director
Hon. J. Antonio Villamil
/s/ Sanford B. Cohen Director February 16, 1996
- --------------------------
Sanford B. Cohen
/s/ Martin C. Engelmann Director February 16, 1996
- --------------------------
Martin C. Engelmann
/s/ Neil R. Winter Director February 16, 1996
- --------------------------
Neil R. Winter
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE AMERICAS GROWTH FUND, INC. FOR THE YEAR ENDED
DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4,485,000
<INVESTMENTS-AT-VALUE> 4,575,500
<RECEIVABLES> 0
<ASSETS-OTHER> 637,700
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5,213,200
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 33,200
<TOTAL-LIABILITIES> 33,200
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,141,300
<SHARES-COMMON-STOCK> 1,265,100
<SHARES-COMMON-PRIOR> 1,265,100
<ACCUMULATED-NII-CURRENT> (300)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 44,700
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (18,400)
<NET-ASSETS> 5,180,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 288,100
<OTHER-INCOME> 0
<EXPENSES-NET> 294,400
<NET-INVESTMENT-INCOME> (6,300)
<REALIZED-GAINS-CURRENT> 44,700
<APPREC-INCREASE-CURRENT> (13,300)
<NET-CHANGE-FROM-OPS> 25,100
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 25,100
<ACCUMULATED-NII-PRIOR> 6,000
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 36,000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 302,200
<AVERAGE-NET-ASSETS> 5,167,500
<PER-SHARE-NAV-BEGIN> 4.07
<PER-SHARE-NII> (.01)
<PER-SHARE-GAIN-APPREC> .03
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.09
<EXPENSE-RATIO> 5.8
<AVG-DEBT-OUTSTANDING> 26,500
<AVG-DEBT-PER-SHARE> .02
</TABLE>
