<PAGE> 1
FORM 10-QSB.--QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(Last amended by 34-32231, eff 6/3/93.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
------------------
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period to
------------- -----------------
Commission File Number 0-24432
-------
THE AMERICAS GROWTH FUND, INC.
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
MARYLAND 65-0604786
--------------------- --------------------------
(State or other jurisdiction of (I.R. S. Employer Indentification No.)
incorporation or organization)
701 Brickell Avenue, Suite 2000, Miami, Florida 33131
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(305) 374-3575
- --------------------------------------------------------------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 requirements for the past 90 days. Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 of 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes No
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 1,265,100
---------
Transitional Small Business Disclosure Format (Check one): Yes ; No X
---- -----
<PAGE> 2
INDEX
THE AMERICAS GROWTH FUND, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - September 30, 1996 and 1995. (Unaudited)
Statements of Operations for the three months and nine months ended September
30, 1996 and 1995. (Unaudited)
Statements of Changes in Net Assets for the nine months ended September 30, 1996
and 1995. (Unaudited)
Statements of Cash Flows for the nine months ended September 30, 1996 and 1995.
(Unaudited)
Notes to Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations, Liquidity and Capital Resources.
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
Signature
<PAGE> 3
THE AMERICAS GROWTH FUND, INC.
BALANCE SHEETS
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
Assets ----------- -----------
<S> <C> <C>
Investments at market or fair value:
Investments in U.S. Treasury Bills $ 4,466,500 $ 4,438,000
Investments in common stock warrants -- 26,700
Investments in notes receivable -- 100,000
----------- -----------
Total investments (amortized cost of $4,496,900 4,466,500 4,564,700
and $4,516,500 in 1996 and 1995, respectively)
Cash and cash equivalents 466,700 600,300
Note receivable, less allowance for doubtful
collections (1995; $10,000) -- 12,600
Interest receivable -- 2,900
Prepaid expenses 16,100 1,700
Deferred tax asset 87,400 2,100
Furniture and equipment, net 15,500 10,800
Organizational costs, net 4,500 6,000
Deposits 1,100 1,100
----------- -----------
5,057,800 5,202,200
----------- -----------
Liabilities:
Accounts payable 9,700 7,400
Accrued directors fees 8,900 10,800
Deferred tax liability 2,700 5,400
----------- -----------
21,300 23,600
----------- -----------
$ 5,036,500 $ 5,178,600
=========== ===========
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) (111,100) (2,100)
Realized gains on investments 45,600 12,500
Unrealized (depreciation) appreciation
of investments (52,000) 14,200
----------- -----------
Net assets applicable to outstanding common shares (equivalent to $3.98 and
$4.09 per share for 1996 and 1995, respectively, based on outstanding
common shares of 1,265,100) $ 5,036,500 $ 5,178,600
=========== ===========
</TABLE>
Read the accompanying notes.
<PAGE> 4
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- ---------------------------
SEPTEMBER 30, SEPTEMBER 30 SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income $ 60,500 $ 73,800 $ 187,200 $ 216,600
----------- ----------- ----------- -----------
Expenses:
Consulting fees, principally to affiliates 19,200 9,000 47,400 27,000
Salaries 24,000 22,900 71,300 67,900
Professional fees 56,100 12,200 156,500 42,700
Board of directors fees 3,500 2,500 10,800 11,100
Other 20,500 29,600 73,900 77,000
----------- ----------- ----------- -----------
123,300 76,200 359,900 225,700
----------- ----------- ----------- -----------
Investment loss before income taxes (62,800) (2,400) (172,700) (9,100)
Income tax benefit (expense) 26,200 (400) 61,900 1,000
----------- ----------- ----------- -----------
Net investment loss (36,600) (2,800) (110,800) (8,100)
----------- ----------- ----------- -----------
Realized gains on sales of investments 2,700 10,300 2,000 14,100
Income taxes applicable to sales of investments (1,100) (800) (1,000) (1,600)
----------- ----------- ----------- -----------
Net realized gain on sale of investments 1,600 9,500 1,000 12,500
----------- ----------- ----------- -----------
Unrealized (depreciation) appreciation of investments (27,500) (1,700) (55,800) 21,800
Income tax benefit (expense) applicable to
unrealized (depreciation) appreciation of investments 11,500 2,300 22,100 (2,500)
----------- ----------- ----------- -----------
Net unrealized (depreciation) appreciation
of investments (16,000) 600 (33,700) 19,300
----------- ----------- ----------- -----------
Net (decrease) increase in net assets
resulting from operations $ (51,000) $ 7,300 $ (143,500) $ 23,700
=========== =========== =========== ===========
Pershare amounts:
Net investment loss $ (0.03) $ -- $ (0.09) $ (0.01)
Net realized gain on sale of investments -- 0.01 -- 0.01
Net unrealized (depreciation) appreciation
of investments (0.01) -- (0.03) 0.02
----------- ----------- ----------- -----------
$ (0.04) $ 0.01 $ (0.12) $ 0.02
=========== =========== =========== ===========
Weighted average number of shares used
in pershare computations 1,265,100 1,265,100 1,265,100 1,265,100
=========== =========== =========== ===========
</TABLE>
Read the accompanying notes.
<PAGE> 5
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNADITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Net investment loss $ (110,800) $ (8,100)
Net realized gain on sale of investments 1,000 12,500
Net unrealized (depreciation)
appreciation of investments (33,700) 19,300
----------- -----------
Net (decrease) increase in net assets
resulting from operations (143,500) 23,700
Net assets at beginning of period 5,180,000 5,154,900
----------- -----------
Net assets at end of period $ 5,036,500 $ 5,178,600
=========== ===========
</TABLE>
Read the accompanying notes.
<PAGE> 6
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNADITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Sources of cash:
Interest $ 24,100 $ 24,000
----------- -----------
Uses of cash:
Payroll 71,300 67,900
Consulting fees, primarily to affiliate 47,400 27,000
Operating expenses 235,200 120,300
Income taxes 23,600
----------- -----------
377,500 215,200
----------- -----------
Cash (used in) operating activities (353,400) (191,200)
----------- -----------
Cash flows from investing activities:
Sources of cash:
Proceeds from sale of U.S. Treasury Bills 8,000,000 6,500,000
Proceeds from sale of common stock -- 101,600
Proceeds from note receivable 100,000 --
----------- -----------
8,100,000 6,601,600
----------- -----------
Uses of cash:
Purchase of furniture and equipment -- 3,400
Purchase of note with warrants -- 50,000
Purchase of U.S. Treasury Bills 7,881,700 6,814,000
Advances to notes receivable:
Related party -- 22,600
Other -- 50,000
----------- -----------
7,881,700 6,940,000
----------- -----------
Cash provided by (used in) investing
activities 218,300 (338,400)
----------- -----------
(Decrease) in cash and cash equivalents (135,100) (529,600)
Cash and cash equivalents at beginning of period 601,800 1,129,900
----------- -----------
Cash and cash equivalents at end of period $ 466,700 $ 600,300
=========== ===========
</TABLE>
Read the accompanying notes.
<PAGE> 7
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNADITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Reconciliation of net (decrease) increase in net assets resulting from
operations to cash (used in) operating activities:
Net (decrease) increase in net assets
resulting from operations $ (143,500) $ 23,700
----------- -----------
Adjustments to reconcile net (decrease) increase in net assets resulting from
operations to (cash used) in operating activities:
Accretion of discount on U.S. Treasury Bills (163,900) (189,700)
Allowance for doubtful collections, related party -- 10,000
Realized (gain) from sale of investments (2,000) (14,100)
Amortization and depreciation 2,400 1,900
Unrealized depreciation (appreciation) of investments 55,800 (21,800)
Provision for deferred income taxes (benefit) (83,000) 3,100
Changes in assets and liabilities:
Interest receivable 800 (2,900)
Prepaid expenses 7,300 (900)
Accounts payable (5,300) 100
Accrued payroll taxes -- (8,900)
Accrued directors fees 1,600 8,300
Income taxes payable (23,600) --
----------- -----------
Total adjustments (209,900) (214,900)
----------- -----------
Cash (used in) operating activities $ (353,400) $ (191,200)
=========== ===========
</TABLE>
Read the accompanying notes.
<PAGE> 8
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
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
non-diversified, 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 invests 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 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
revenues 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 period. 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 such valuations, the 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.
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.
<PAGE> 9
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
2. Significant accounting policies (continued):
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
$2,600 and $1,100 at September 30, 1996 and 1995, 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 September 30, 1996 and 1995 for federal income tax
purposes and financial reporting purposes was the same. The
aggregate gross unrealized (depreciation) appreciation for the nine
months ended September 30, 1996 and 1995 is ($1,700) and $21,800,
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
period.
Reclassification:
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year's presentation.
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 exceeded 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.
<PAGE> 10
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
4. Investments:
Investments include the following at September 30, 1996 and 1995:
<TABLE>
<CAPTION>
Value Value
Principal Type of Issue and September 30, September 30,
Amount Name of Issuer 1996 1995
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury bills (88.7%
and 85.7% of net assets at
September 30, 1996 and 1995,
respectively)
$ 493,755 U.S. Treasury bill,
$500,000 face value,
matures November 30, 1995 $ - $ 495,400
$ 1,974,605 U.S. Treasury bill,
$2,000,000 face value,
matures December 7, 1995 - 1,979,600
$ 471,030 U.S. Treasury bill,
$500,000 face value,
matures January 11, 1996 - 492,300
$ 1,415,780 U.S. Treasury bill,
$1,500,000 face value,
matures February 8, 1996 - 1,470,700
$ 1,976,400 U.S. Treasury bill,
$2,000,000 face value,
matures November 7, 1996 1,988,800 -
$ 1,975,500 U.S. Treasury bill,
$2,000,000 face value,
matures December 5, 1996 1,981,000 -
$ 476,030 U.S. Treasury bill,
$500,000 face value,
matures November 14, 1996 496,700 -
----------- -----------
Total U.S. Treasury bills $ 4,466,500 $ 4,438,000
=========== ===========
</TABLE>
<PAGE> 11
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
4. Investments (continued):
<TABLE>
<CAPTION>
Number of Number of
Shares Shares Type of Issue Value Value
September 30, September 30, and name of September 30, September 30,
1996 1995 Issuer 1996 1995
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks (0.0% and 0.0% of net
assets at September 30, 1996 and
1995, respectively:
Majority owned (restricted):
80 - Americas Growth
Partners, Inc. $ - $ -
============ ==========
</TABLE>
<TABLE>
<CAPTION>
Number of Number of
Shares Shares Type of Issue Value Value
September 30, September 30, and name of September 30, September 30,
1996 1995 Issuer 1996 1995
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock warrants:
(0.0% and 0.5% of net
assets at September 30, 1996
and 1995, respectively)
Restricted:
1 1 Greg Manning
Auctions, Inc. $ - $ 26,700
========== =========
Golf Reservations
of America, Inc.
2 2 Class A $ - $ -
2 2 Class B $ - $ -
========== =========
</TABLE>
<PAGE> 12
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
4. Investments (continued):
<TABLE>
<CAPTION>
Principal Amount Value Value
of Notes Type of Issue and September 30, September 30,
September 30, 1996 Name of Issuer 1996 1995
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Notes (0.0% and 1.9% of
net assets at September 30,
1996 and 1995, respectively)
$ 50,000 Golf Reservations of
America, Inc. $ - $ 50,000
$ - Approved Financial
Corporation - 50,000
------------ ----------
$ - $ 100,000
============ ==========
</TABLE>
In November 1994, in a private placement, the Company purchased 50,000
shares of restricted common stock and a warrant in Greg Manning
Auctions, Inc. ("Manning"). The warrant entitled the Company 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 stock 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. At September 30, 1996 and 1995 the outstanding balance
was $50,000. The note is in default as of September 30, 1996 and the
Board of Directors has valued the note at $-0- as of that date. As of
September 30, 1995 the note was valued at $50,000. 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 September 30, 1996 and 1995, the Board of Directors has
valued the warrants at $-0- and $26,700, respectively.
<PAGE> 13
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
4. Investments (continued):
On July 6, 1995, the Company entered into 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 and 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. On July 24, 1996,
the outstanding credit facility was repaid in full and the joint
venture was terminated.
5. Cash and cash equivalents:
<TABLE>
<CAPTION>
Number of Number of Cost and Cost and
Shares Shares Type of Issue Value Value
September 30, September 30, and Name of September 30, September 30,
1996 1995 Issuer 1996 1995
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
465,900 487,400 Money market fund,
Cortland Trust, Inc. $ 465,900 $ 487,400
- 102,800 Money market fund,
Smith Barney - 102,800
- - Checking account
with bank 800 10,100
--------- ----------
Total cash and cash
equivalents (9.3
% and 11.6% of net
assets at September
30, 1996 and 1995,
respectively) $ 466,700 $ 600,300
========= ==========
</TABLE>
<PAGE> 14
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
6. Furniture and equipment:
Furniture and equipment consists of the following at September 30, 1996
and 1995:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Furniture and fixtures $ 1,500 $ 1,500
Computer equipment 16,400 10,200
----------- -----------
17,900 11,700
Less accumulated depreciation 2,400 (900)
----------- -----------
$ 15,500 $ 10,800
=========== ===========
</TABLE>
7. 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 unrealized
appreciation (depreciation) on investments and the use of accelerated
depreciation methods for income tax purposes.
The significant components of deferred tax assets and liabilities on
the balance sheet at September 30, 1996 and 1995 are:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Deferred tax asset:
Net operating loss and Section 179
carryover $ 68,600 $ 100
Unrealized depreciation of investments 18,800 --
Allowance for doubtful collections -- 2,000
----------- -----------
87,400 2,100
----------- -----------
Deferred tax liability:
Depreciation 2,700 1,600
Unrealized appreciation of investments -- 3,800
----------- -----------
2,700 5,400
----------- -----------
Net deferred tax asset (liability) $ 84,700 $ (3,300)
=========== ===========
</TABLE>
<PAGE> 15
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
7. Income taxes (continued):
Significant components of the provision for income taxes (benefits)
attributable to continuing operations in 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Current:
Federal $ -- $ --
State -- --
----------- -----------
-- --
----------- -----------
Deferred:
Federal (benefit) (70,500) 2,700
State (benefit) (12,500) 400
----------- -----------
(83,000) 3,100
----------- -----------
Provision for income
taxes (benefit) $ (83,000) $ 3,100
=========== ===========
</TABLE>
8. Related party transactions:
The Company has entered into one year renewable consulting agreements
with an entity of which a director of the Company was Chairman and
President. The agreement terminates in July, 1997. The Company paid
$27,000 during each of the periods ended September 30, 1996 and 1995.
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 of the Company is "of counsel". Rent expense for the
period ended September 30, 1995 was approximately $14,800. The Company
paid the law firm legal fees of approximately $63,500 in the nine
months ended September 30, 1996.
<PAGE> 16
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
8. Related party transactions (continued):
The Company entered into a three year employment agreement with the
president of the Company. The agreement expires in July, 1997. The
agreement provides for compensation of $90,000 per year plus cost of
living increases. The Company paid the president $71,300 and $67,900
pursuant to this agreement for the nine months ended September 30, 1996
and 1995, respectively.
9. 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 September 30, 1996 and 1995, there was no accrual in
connection with the Plan.
10. Pending merger:
The Company had entered into a non-binding letter of intent with
Tallard Technologies, B.V. (Tallard), a privately held company. The
contemplated merger with Tallard was terminated prior to June 30, 1996.
On June 15, 1996, the Company entered into an Agreement and Plan of
Merger with Advanced Electronic Support Products, Inc. (AESP), a
privately held company engaged in the manufacturing and international
distribution of computer connectivity and networking products. We refer
you to Part II, Item 5, Other Information which more fully describes
the proposed transaction. Subsequent to September 30, 1996, the
contemplated merger with Advanced Electronics Support Products, Inc.
was terminated.
<PAGE> 17
PART I - FINANCIAL INFORMATION (continued)
Item 2. Management's Discussion and Analysis of
Results of Operations and Liquidity
Results of Operations
Three Months Ended September 30, 1996
As a result of operations, net assets decreased approximately $51,000
(or approximately .01% of net assets) during the quarter ended September 30,
1996. For the comparable period in 1995, net assets increased approximately
$7,3000 during the quarter. The net decrease in net assets resulting from
operations for the quarter ended September 30, 1996 primarily resulted from a
net investment loss of $36,600 and an increase in unrealized depreciation of
investments of $16,000.
The Company recognized investment income (which consisted entirely of
interest income) of approximately $60,500 for the quarter ended September 30,
1996 as compared to $73,800 for the quarter ended September 30, 1995.
The lower investment income resulted primarily from lower interest rates.
Expenses aggregated approximately $123,300 during the quarter ended
September 30, 1996 which included salaries, accounting fees, consulting fees,
legal fees, rent and administrative expenses. Expenses for the quarter ended
September 30, 1995 were approximately $76,200. The increased expenses for the
quarter ended September 30, 1996 resulted primarily from higher legal and
consulting fees associated with the merger transaction with Advanced Electronic
Support Services, Inc. which was terminated November 8, 1996. See Part II, Item
5 Other Information.
Nine Months Ended September 30, 1996
As a result of operations, net assets decreased approximately $143,500 (or
approximately 3% of net assets) during the nine months ended September 30, 1996.
For the comparable period in 1995, net assets increased $23,700. The decrease in
net assets resulting from operations for the nine months ended September 30,
1996 primarily resulted from a net investment loss of $110,800 and an increase
in unrealized depreciation of investments of $33,700.
The Company recognized investment income (which consisted entirely of interest
income) of approximately $187,200 for the nine months ended September 30, 1996
as compared to 216,600 for the nine months ended September 30, 1995. The lower
investment income resulted primarily from lower interest rates.
Liquidity and Capital Resources
As of September 30, 1996, the Company had cash and cash equivalents of
approximately $466,700 and US Treasury Bills of approximately $4,466,500. The
decrease in capital resources for the nine months ended September 30, 1996 was
primarily due to a net investment loss of $110,800. As of September 30, 1996,
the Company had liabilities of approximately $21,300.
<PAGE> 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any material pending legal proceedings.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the quarter covered
by this report.
Item 5. Other Information.
Termination of Proposed Merger with AESP
As disclosed in the Company's Report on Form 10-QSB for the Quarterly
Period Ended June 30, 1996, the Company executed an Agreement and Plan of Merger
with Advanced Electronic Support Products, Inc. ("AESP") on July 15, 1996 with
respect to a proposed merger between the parties. On November 8, 1996, the
Company and AESP mutually agreed to terminate the proposed merger and release
each other from any liability related thereto, pursuant to a Mutual Termination
and Release.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27 Financial Data Schedule (for SEC purposes only)
(b) Reports on Form 8-K
None
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE AMERICAS GROWTH FUND, INC.
By: /s/ LEONARD J. SOKOLOW
---------------------------
Leonard J. Sokolow
Chairman of the Board, President and
Chief Financial Officer
(Principal Executive, Financial and
Accounting Officer)
Date: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AMERICAN GROWTH FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 4,477,900
<INVESTMENTS-AT-VALUE> 4,466,500
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