<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, 1998
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
incorporation or organization) Identification No.)
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.
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Balance Sheets - September 30, 1998 and 1997. (Unaudited)
Statements of Operations for the three months and nine months ended September 30, 1998 and 1997. (Unaudited)
Statements of Changes in Net Assets for the nine months ended September 30, 1998 and 1997. (Unaudited)
Statements of Cash Flows for the nine months ended September 30, 1998 and 1997. (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
</TABLE>
<PAGE> 3
THE AMERICAS GROWTH FUND, INC.
BALANCE SHEETS
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Assets:
Investments at market or fair value:
Investments in U.S. Treasury Bills $ 3,482,400 $ 3,474,800
Investment in common stock -- 260,000
----------- -----------
Total investments (amortized cost of $3,743,600
and $3,806,700 for 1998 and 1997, respectively) 3,482,400 3,734,800
Cash and cash equivalents 924,700 913,900
Prepaid expenses 2,200 9,300
Deferred tax asset 1,500 4,900
Furniture and equipment, net 13,700 10,100
Organizational costs, net 1,500 3,100
Deposits 1,100 1,100
----------- -----------
4,427,100 4,677,200
----------- -----------
Liabilities:
Accounts payable 19,400 22,900
Accrued directors fees 9,100 6,900
Deferred tax liability 1,500 1,600
----------- -----------
30,000 31,400
----------- -----------
$ 4,397,100 $ 4,645,800
=========== ===========
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 (625,800) (479,000)
Realized gains on investments 146,400 38,300
Unrealized depreciation of investments (277,500) (67,500)
----------- -----------
(756,900) (508,200)
----------- -----------
Net assets applicable to outstanding common shares
(equivalent to $3.48 and $3.67 per share for 1998
and 1997, respectively, based on outstanding
common shares of 1,265,100) $ 4,397,100 $ 4,645,800
=========== ===========
</TABLE>
Read the accompanying notes.
<PAGE> 4
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------------- --------------------------------
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Revenues:
Interest $ 51,700 $ 53,600 $ 155,100 $ 151,100
Dividends -- -- -- 17,200
Other -- -- -- 10,000
----------- ----------- ----------- -----------
51,700 53,600 155,100 178,300
----------- ----------- ----------- -----------
Expenses:
Salaries 26,500 25,200 78,600 74,800
Professional fees 18,500 66,900 85,900 227,700
Board of Directors fees 3,500 3,500 10,500 10,500
Other 23,600 31,500 62,400 78,000
----------- ----------- ----------- -----------
72,100 127,100 237,400 391,000
----------- ----------- ----------- -----------
Investment loss before income tax (benefit) (20,400) (73,500) (82,300) (212,700)
Less income tax (benefit) -- -- -- --
----------- ----------- ----------- -----------
Net investment loss (20,400) (73,500) (82,300) (212,700)
----------- ----------- ----------- -----------
Realized gain (loss) on investments 114,600 (5,400) 158,000 15,100
Less income tax (benefit) applicable to
realized gain on investments -- -- -- --
----------- ----------- ----------- -----------
114,600 (5,400) 158,000 15,100
----------- ----------- ----------- -----------
Unrealized (depreciation) of investments (152,000) (7,700) (51,200) (21,900)
Less income tax (benefit) applicable
to unrealized depreciation of investments -- -- -- --
----------- ----------- ----------- -----------
(152,000) (7,700) (51,200) (21,900)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations $ (57,800) $ (86,600) $ 24,500 $ (219,500)
=========== =========== =========== ===========
Per-share amounts:
Net investment loss $ (0.02) $ (0.06) $ (0.07) $ (0.16)
Net realized gains on investments 0.09 -- 0.12 0.01
Net unrealized gains (losses) on investments (0.12) (0.01) (0.03) (0.02)
----------- ----------- ----------- -----------
$ (0.05) $ (0.07) $ 0.02 $ (0.17)
=========== =========== =========== ===========
Weighted average number of shares used
in per-share 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, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Net investment loss $ (82,300) $ (212,700)
Net realized gain on investments 158,000 15,100
Net increase in unrealized (depreciation)
of investments (51,200) (21,900)
----------- -----------
Net increase (decrease) in net assets resulting
from operations 24,500 (219,500)
Net assets at beginning of period 4,372,600 4,865,300
----------- -----------
Net assets at end of period
(includes undistributed net investment
loss of ($625,800) and ($479,000) at
September 30, 1998 and 1997, respectively) $ 4,397,100 $ 4,645,800
=========== ===========
</TABLE>
Read the accompanying notes.
<PAGE> 6
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Source of cash:
Interest $ 29,000 $ 17,100
Income taxes -- 13,900
------------ ------------
29,000 31,000
Uses of cash:
Payroll 78,600 74,800
Operating expenses 143,400 356,300
------------ ------------
222,000 431,100
------------ ------------
Cash (used-in) operating activities (193,000) (400,100)
------------ ------------
Cash flows from investing activities:
Sources of cash:
Proceeds from sale of U.S. Treasury Bills 24,000,000 11,500,000
Proceeds from sale of common stock 782,300 515,400
------------ ------------
24,782,300 12,015,400
------------ ------------
Uses of cash:
Purchase of U.S. Treasury Bills 23,862,000 10,867,300
Purchase of common stock 625,000 250,000
Purchase of equipment 5,000 --
------------ ------------
24,492,000 11,117,300
------------ ------------
Cash provided by investing activities 290,300 898,100
------------ ------------
Increase in cash and cash equivalents 97,300 498,000
Cash and cash equivalents at beginning of period 827,400 415,900
------------ ------------
Cash and cash equivalents at end of period $ 924,700 $ 913,900
============ ============
</TABLE>
Read the accompanying notes.
<PAGE> 7
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Reconciliation of net increase (decrease) in net
assets resulting from operations to cash used-in
operating activities:
Net increase (decrease) in net assets resulting
from operations $ 24,500 $(219,500)
--------- ---------
Adjustments to reconcile net increase (decrease) in
net assets resulting from operations to cash (used-in)
operating activities:
Accretion of discount on U.S. Treasury Bills (126,100) (134,000)
Realized (gain) on investments (158,000) (20,500)
Loss on abandonment of equipment -- 5,400
Amortization and depreciation 2,200 2,200
Unrealized depreciation of investments 51,200 21,900
Stock dividends and stock compensation -- (27,200)
Changes in assets and liabilities:
Prepaid expenses (400) 12,900
Accounts payable 12,100 (44,600)
Accrued directors fees 1,500 3,300
--------- ---------
Total adjustments (217,500) (180,600)
--------- ---------
Cash (used-in) operating activities $(193,000) $(400,100)
========= =========
Schedule of non-cash investing activities:
Acquisition of common stock $ 10,000
Less amount received in exchange for consulting (10,000)
---------
$ --
=========
Acquisition of common stock $ 17,200
Less amount received as stock dividends (17,200)
---------
$ --
=========
</TABLE>
Read the accompanying notes.
<PAGE> 8
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 AND 1997
(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 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.
During 1998 and 1997 due to difficulties in locating quality portfolio
companies meeting the Company's investment objectives, the Company's
assets were primarily invested in U.S. Treasury bills. There can be no
assurance that the Company will be able to negotiate and complete
transactions with potential portfolio companies which meet the Company's
investment objectives.
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.
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 participation 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.
<PAGE> 9
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
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 based on the circumstances of each
individual case. Such valuations of restricted securities could be
based upon a multiple of earnings, a discount from market of a
similar freely traded security, yield to maturity with respect to
debt issues, or a combination of these and other methods determined
to be appropriate in good faith by the Board of Directors. Restricted
convertible securities are valued based on the closing bid price on
the last day of the year of the underlying securities, for which
quoted market prices are available, taking into account any
appropriate adjustments for dividend features, registration rights,
market discounts or other factors as deemed appropriate by the Board
of Directors. Warrants and options to acquire equity securities are
valued using an option pricing model. 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.
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
$6,000 and $4,500 at September 30, 1998 and 1997, respectively, and
are being amortized using the straight-line method over five years.
<PAGE> 10
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
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, 1998 and 1997 for federal income tax
purposes and financial reporting purposes was the same. The aggregate
net unrealized depreciation for the nine months ended September 30,
1998 and 1997 is $51,200 and $21,900 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.
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 were not 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> 11
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
4. INVESTMENTS:
Investments include the following at September 30, 1998 and 1997:
<TABLE>
<CAPTION>
VALUE VALUE
PRINCIPAL TYPE OF ISSUE AND SEPTEMBER 30, SEPTEMBER 30,
AMOUNT NAME OF ISSUER 1998 1997
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury bills (79.2%
and 74.8% of net assets at
September 30, 1998 and 1997,
respectively):
$ 1,481,400 U.S. Treasury bill,
$1,500,000 face value,
matures November 6, 1997 $ -- $ 1,491,900
$ 493,900 U.S. Treasury bill,
$500,000 face value,
matures November 13, 1997 -- 496,800
$ 1,481,900 U.S. Treasury bill,
$1,500,000 face value,
matures December 4, 1997 -- 1,486,100
$ 498,300 U.S. Treasury bill,
$500,000 face value,
matures October 22, 1998 498,600 --
$ 2,982,700 U.S. Treasury bill,
$3,000,000 face value,
matures November 12, 1998 2,983,800 --
------------ -----------
Total U.S. Treasury bills $ 3,482,400 $ 3,474,800
============ ===========
</TABLE>
<PAGE> 12
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
4. INVESTMENTS (CONTINUED):
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES TYPE OF ISSUE VALUE VALUE
SEPT. 30, SEPT. 30, AND NAME OF SEPT. 30, SEPT. 30,
1998 1997 ISSUER 1998 1997
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks (0.0% and
5.6% of net assets at
September 30, 1998 and
1997, respectively):
The Americas Group, Inc.
130,000 130,000 (unrestricted) $ -- $ 260,000
Majority owned (restricted):
Americas Growth
-- 80 Partners, Inc. -- --
------- ---------
$ -- $ 260,000
======= =========
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
WARRANTS WARRANTS TYPE OF ISSUE VALUE VALUE
SEPT. 30, SEPT. 30, AND NAME OF SEPT. 30, SEPT. 30,
1998 1997 ISSUER 1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stock warrants:
(0.0% and 0.0% of net
assets at September 30, 1998
and 1997, respectively):
Restricted:
-- 1 Globalink, Inc. $ -- $ --
======== ========
Golf Reservations of
America, Inc.
-- 2 Class A $ -- $ --
-- 2 Class B $ -- $ --
======== ========
</TABLE>
<PAGE> 13
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
4. INVESTMENTS (CONTINUED):
In January, 1997, the Company invested $250,000 in The Americas Group,
Inc. (TAG), an unaffiliated company, pursuant to a private placement
under Rule 504 of Regulation D of the Securities Act of 1933. The
Company received 125,000 shares of TAG common stock. In addition, the
Company also received 5,000 shares of common stock in consideration of
the Company's chairman serving on TAG's board of advisors.
In December 1996, the Company purchased in a private placement for an
aggregate consideration of $500,000, 14,953 shares of Globalink, Inc.
(Globalink), 8% convertible, redeemable preferred stock and a warrant
entitling the holder to purchase 192,894 shares of Globalink common
stock at a revised price of $3.24 per share through December 20, 2001.
Each share of preferred stock is convertible into ten shares of
Globalink common stock at the original purchase price of the preferred
stock, subject to adjustment should certain events occur. During May
1997, the Company converted and sold all of its shares of Globalink.
During June, 1998, the Company exercised the warrant and purchased
70,000 shares of Globalink. During July, 1998 the Company exercised the
remainder of the warrant and sold all of the common shares.
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 September 30, 1998, they were deemed worthless by
the Board. In connection with the notes, the Company received warrants
to purchase an aggregate 110,906 shares of Golf's common stock at an
exercise price of $1.88 per share. As of September 30, 1998, the Board
of Directors has also deemed the warrants as worthless.
5. CASH AND CASH EQUIVALENTS:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF COST AND COST AND
SHARES SHARES TYPE OF ISSUE VALUE VALUE
SEPT. 30, SEPT. 30, AND NAME OF SEPT. 30, SEPT. 30,
1998 1997 ISSUER 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
923,400 907,700 Money market fund,
Cortland Trust, Inc. $ 923,400 $ 907,700
-- -- Checking account
with bank 1,300 6,200
--------- ---------
Total cash and cash
equivalents (21.0% and
19.7% of net assets
at September 30, 1998 and
1997, respectively) $ 924,700 $ 913,900
========= =========
</TABLE>
<PAGE> 14
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
6. FURNITURE AND EQUIPMENT:
Furniture and equipment are comprised of the following at September 30,
1998 and 1997:
1998 1997
-------- --------
Furniture and fixtures $ 1,500 $ 1,500
Computer equipment 15,900 10,900
-------- --------
17,400 12,400
Less accumulated depreciation (3,600) (2,300)
-------- --------
$ 13,700 $ 10,100
======== ========
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, 1998 and 1997 are:
Deferred tax assets:
Net operating loss $109,900 $ 87,000
Unrealized depreciation of investments 51,300 14,100
-------- --------
161,200 101,100
Less valuation allowance 159,700 96,200
-------- --------
1,500 4,900
Deferred tax liability:
Depreciation 1,500 1,600
-------- --------
Net deferred tax asset $ -- $ 3,300
======== ========
<PAGE> 15
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
7. INCOME TAXES (CONTINUED):
Significant components of the provision for income taxes (benefits)
attributable to continuing operations in 1998 and 1997 are as follows:
1998 1997
-------- -------
Current:
Federal $ -- $ --
State -- --
-------- -------
-- --
-------- -------
Deferred:
Federal (benefit) (8,100) (27,700)
State (benefit) (3,200) (10,700)
-------- -------
(11,300) (38,400)
Increase in valuation allowance 11,300 38,400
-------- -------
Provision for income tax benefits $ -- $ --
======== =======
The provision for income taxes at the Company's effective tax rate differed from
the provision for income taxes at the statutory rate (15%) as follows:
Computed tax expense (benefit)
at the expected statutory rate $ 3,700 $(32,900)
State tax, net of federal effect 1,100 (10,300)
Valuation allowance 11,300 38,400
Other (16,100) 4,800
-------- --------
$ -- $ --
======== ========
SFAS 109, ACCOUNTING FOR INCOME TAXES, requires a valuation allowance to
reduce the deferred tax assets reported if, based on the weight of the
evidence, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. After consideration of all the
evidence, both positive and negative, management has determined that a
$159,700 valuation allowance at September 30, 1998 is necessary to
reduce the deferred tax assets to the amount that will more likely than
not be realized. The change in the valuation allowance for the nine
months ended September 30, 1998, is $11,300. At September 30, 1998, the
Company has available net operating loss carryforwards of $559,100 which
expire in the years 2010 through 2013.
<PAGE> 16
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
8. RELATED PARTY TRANSACTIONS:
The Company is provided with free office space by a law firm with which
the Chairman is "of counsel". The Company paid and accrued the law firm
legal fees of approximately $20,500 and $67,100 in the nine months ended
September 30, 1998 and 1997, respectively.
The Company entered into an employment agreement with the president of
the Company. The agreement currently terminates on August 30, 2001,
unless extended in accordance with its terms. Compensation is $90,000
per year with cost of living increases each year. The Company paid the
president $78,600 and $74,800 pursuant to this agreement for the nine
months ended September 30, 1998 and 1997, 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, 1998 and 1997, there was no accrual in
connection with the Plan.
10. MERGER ACTIVITY:
In September 1997, JW Charles Financial Services, Inc. ("JW Charles")
completed its offer to exchange (the "Exchange Offer") shares of its
common stock, par value $.001 per share ("JW Charles Shares"), for any
and all (but not less than 51%) of the outstanding shares of common
stock, par value $.01 per share ("Company Shares"), of the Company. At
that time, JW Charles reported that a total of approximately 822,938
Company Shares (including approximately 16,380 Company Shares tendered
subject to Notices of Guaranteed Delivery) were validly tendered and not
withdrawn pursuant to the Exchange Offer and were accepted by JW Charles
for exchange in accordance with the terms of the Exchange Offer on the
basis of 0.431 of a JW Charles Share for each Company Share. As a result
of the Exchange Offer, JW Charles reported that it beneficially owned
1,149,488 Company Shares, representing approximately 90.9% of the
outstanding Company Shares.
Since JW Charles owned more than 90% of the outstanding Company Shares,
under Maryland General Corporation Law and the Florida Business
Corporation Act, JW Charles advised the Company that it intended to
merge the Company with and into JW Charles without a vote of the
Company's shareholders. Because the merger could have been deemed to
involve the purchase of property of the Company by JW Charles, the
merger might have been prohibited under Section 57(a)(2) of the
Investment Company Act of 1940 (the "1940 Act") in the absence of
exemptive relief from the Securities and Exchange Commission (the
"Commission"). Accordingly, in December 1997, an Application for an
Order to exempt the merger from Section 57(a)(2) of the 1940 Act was
filed with the Commission. On May 20, 1998, the Commission issued the
requested order. In June 1998, JW Charles combined with Genesis Merchant
Group Securities, LCC to form a new entity, JWGenesis Financial Corp.
("JWGenesis"). JWGenesis has advised the Company that it intends to
proceed with the "short-form" merger of the Company with and into a
wholly-owned subsidiary of JWGenesis. If the contemplated merger is
completed, the shareholders of the Company will receive 0.431 of a share
of common stock of JWGenesis for each Company Share owned by each
shareholder.
<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, 1998 Compared to Three Months Ended September
30, 1997
As a result of operations, net assets decreased approximately $57,800
(or approximately 1.3% of net assets) during the quarter ended September 30,
1998. For the comparable period in 1997, net assets decreased approximately
$86,600. The net increase in net assets resulting from operations for the
quarter ended September 30, 1998 was primarily due to a net investment loss of
$20,400 and an increase in unrealized depreciation of investments of $152,000.
The Company recognized investment income (which consisted entirely of
interest income) of approximately $51,700 for the quarter ended September 30,
1998 as compared to $53,600 for the quarter ended September 30, 1997. The lower
investment income resulted primarily from the lack of dividends.
Expenses aggregated approximately $72,100 during the quarter ended
September 30, 1998 which included salaries, accounting fees, consulting fees,
legal fees and administrative expenses. Expenses for the quarter ended September
30, 1997 were approximately $127,100.
Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30,
1997
As a result of operations, net assets increased $24,500 (or
approximately 0.6% of net assets) during the nine months ended September 30,
1998. For the comparable period in 1997, net assets decreased approximately
$219,500. The increase in net assets resulting from operations for the nine
months ended September 30, 1998 was primarily due to a net investment gain of
$158,000 and an offset by an investment loss of $82,300 and unrealized
depreciation on investments of $51,200.
The Company recognized investment income (which consisted primarily of
interest income) of approximately $155,100 for the nine months ended September
30, 1998 as compared to $178,300 for the nine months ended September 30, 1997.
The lower investment income resulted primarily from the lack of dividends and
other income.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, the Company had cash and cash equivalents of
approximately $924,700 and U.S. Treasury Bills of approximately $3,482,400 as
compared to cash and cash equivalents of approximately $913,900 and U.S.
Treasury Bills of approximately $3,474,800 at June 30, 1997. The increase in
capital resources for the nine months ended September 30, 1998 of $34,900 was
primarily due to a realized gain on investments of $158,000 as compared to the
decrease in capital resources for the nine months ended September 30, 1997 which
was primarily due to a net investment loss of $212,700. As of September 30,
1998, the company had liabilities of approximately $30,000.
<PAGE> 18
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
Not applicable.
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.
In September 1997, JW Charles Financial Services, Inc. ("JW Charles") completed
its offer to exchange (the "Exchange Offer") shares of its common stock, par
value $.001 per share ("JW Charles Shares"), for any and all (but not less than
51%) of the outstanding shares of common stock, par value $.01 per share
("Company Shares") of the Company. At that time, JW Charles reported that a
total of approximately 822,938 Company Shares (including approximately 16,380
Company Shares tendered subject to Notices of Guaranteed Delivery) were validly
tendered and not withdrawn pursuant to the Exchange Offer and were accepted by
JW Charles for exchange in accordance with the terms of the Exchange Offer on
the basis of 0.431 of a JW Charles Share for each Company Share. As a result of
the Exchange Offer, JW Charles reported that it beneficially owned 1,149,488
Company Shares, representing approximately 90.9% of the outstanding Company
Shares.
Since JW Charles owned more than 90% of the outstanding Company Shares, under
Maryland General Corporation Law and the Florida Business Corporation Act, JW
Charles advised the Company that it intended to merge the Company with and into
JW Charles without a vote of the Company's shareholders. Because the merger
could have been deemed to involve the purchase of property of the Company by JW
Charles, the merger might have been prohibited under Section 57(a)(2) of the
Investment Company Act of 1940 (the "1940 Act") in the absence of exemptive
relief from the Securities and Exchange Commission (the "Commission").
Accordingly, in December 1997, an Application for an Order to exempt the merger
from Section 57(a)(2) of the 1940 Act was filed with the Commission. On May 20,
1998, the Commission issued the requested order. In June 1998, JW Charles
combined with Genesis Merchant Group Securities, LLC to form a new entity,
JWGenesis Financial Corp. ("JWGenesis"). JWGenesis has advised the Company that
it intends to proceed with the "short-form" merger of the Company with and into
a wholly-owned subsidiary of JWGenesis. If the contemplated merger is completed,
the shareholders of the Company will receive 0.431 of a share of common stock of
JWGenesis for each Company Share owned by each shareholder.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27 Financial Data Schedule (for SEC use only)
None
(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: October 26, 1998
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 3,743,600
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