<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO 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 Registrant as Specified in its Charter)
Maryland 65-0604786
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R. S. Employer Identification 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
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 as of March 31, 1998 and 1997. (Unaudited)
Statements of Operations for the three months ended March 31, 1998 and 1997.
(Unaudited)
Statements of Changes in Net Assets for the three months ended March 31, 1998
and 1997. (Unaudited)
Statements of Cash Flows for the three months ended March 31, 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.
<PAGE> 3
Part I, Item 1 - Financial Statements
THE AMERICAS GROWTH FUND, INC.
BALANCE SHEETS
MARCH 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
ASSETS:
Investments at market or fair value:
Investments in U.S. Treasury Bills $ 3,492,500 $ 3,968,900
Investment in preferred stock -- 467,300
Investment in common stock 50,000 260,000
Investment in warrant -- 1,100
----------- -----------
Total investments (amortized cost of $3,774,800
and $4,785,100 for 1998 and 1997, respectively) 3,542,500 4,697,300
Cash and cash equivalents 824,300 20,600
Dividends receivable -- 11,200
Prepaid expenses 1,700 1,000
Income tax refund -- 21,000
Deferred tax asset 1,500 6,000
Furniture and equipment, net 9,500 16,100
Organizational costs, net 2,300 3,800
Deposits 1,100 1,100
----------- -----------
4,382,900 4,778,100
----------- -----------
LIABILITIES:
Accounts payable 13,700 41,800
Accrued directors fees 2,900 2,600
Deferred tax liability 1,500 2,700
----------- -----------
18,100 47,100
----------- -----------
$ 4,364,800 $ 4,731,000
=========== ===========
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 (549,600) (365,200)
Realized gains (losses) on investments (11,600) 25,500
Unrealized depreciation of investments (228,000) (83,300)
----------- -----------
(789,200) (423,000)
----------- -----------
Net assets applicable to outstanding common
shares (equivalent to $3.45 and $3.74
per share for 1998 and 1997, respectively,
based on outstanding common shares of 1,265,100) $ 4,364,800 $ 4,731,000
=========== ===========
</TABLE>
READ THE ACCOMPANYING NOTES.
<PAGE> 4
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
1998 1997
----------- -----------
REVENUES:
Interest $ 52,000 $ 49,500
Dividends -- 11,200
Other -- 10,000
----------- -----------
52,000 70,700
----------- -----------
EXPENSES:
Salaries 26,000 24,800
Professional fees 14,300 122,700
Board of Directors fees 3,500 3,500
Other 14,300 18,500
----------- -----------
58,100 169,500
----------- -----------
Investment loss before income tax (benefit) (6,100) (98,800)
Less income tax (benefit) -- --
----------- -----------
Net investment loss (6,100) (98,800)
----------- -----------
Realized gain on investments -- 2,200
Less income tax (benefit) applicable to
realized (loss) on investments -- --
----------- -----------
-- 2,200
----------- -----------
Unrealized depreciation of investments (1,700) (37,700)
Less income tax (benefit) applicable
to unrealized depreciation of investments -- --
----------- -----------
(1,700) (37,700)
----------- -----------
Net (decrease) in net assets
resulting from operations $ (7,800) $ (134,300)
=========== ===========
PER-SHARE AMOUNTS:
Net investment loss $ (0.01) $ (0.08)
Net realized losses on investments -- --
Net unrealized losses on investments -- (0.03)
----------- -----------
$ (0.01) $ (0.11)
=========== ===========
Weighted average number of shares used
in per-share computations 1,265,100 1,265,100
=========== ===========
READ THE ACCOMPANYING NOTES.
<PAGE> 5
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
1998 1997
----------- -----------
Net investment loss $ (6,100) $ (98,00)
Net realized gain on investments -- 2,200
Net increase in unrealized (depreciation)
of investments (1,700) (37,700)
----------- -----------
Net (decrease) in net assets resulting
from operations (7,800) (134,300)
Net assets at beginning of period 4,372,600 4,865,300
----------- -----------
Net assets at end of period
(includes undistributed net investment
loss of ($549,600) and ($365,200) at
March 31, 1998 and 1997, respectively) $ 4,364,800 $ 4,731,000
=========== ===========
READ THE ACCOMPANYING NOTES.
<PAGE> 6
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Sources of cash:
Interest $ 9,000 $ 2,100
----------- -----------
Uses of cash:
Payroll 26,000 24,600
Operating expenses 29,700 170,500
----------- -----------
55,700 195,100
----------- -----------
Cash (used-in) operating activities (46,700) (193,000)
----------- -----------
Cash flows from investing activities:
Sources of cash:
Proceeds from sale of U.S. Treasury Bills 3,500,000 4,000,000
----------- -----------
Uses of cash:
Purchase of U.S. Treasury Bills 3,456,400 3,952,300
Purchase of common stock -- 250,000
----------- -----------
3,456,400 4,202,300
----------- -----------
Cash provided by (used-in) investing activities 43,600 (202,300)
----------- -----------
Decrease in cash and cash equivalents (3,100) (395,300)
Cash and cash equivalents at beginning of period 827,400 415,900
----------- -----------
Cash and cash equivalents at end of period $ 824,300 $ 20,600
=========== ===========
</TABLE>
READ THE ACCOMPANYING NOTES.
8
<PAGE> 7
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
1998 1997
---------- ----------
Reconciliation of net (decrease) in net
assets resulting from operations to cash
used-in operating activities:
Net (decrease) in net assets resulting
from operations $ (7,800) $(134,300)
---------- ----------
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 (43,000) (47,400)
Realized (gain) on investments -- (2,200)
Amortization and depreciation 600 900
Unrealized depreciation of investments 1,700 37,700
Changes in assets and liabilities:
Investments -- (10,000)
Dividend receivable -- (11,200)
Prepaid expenses 100 200
Accounts payable 6,400 (25,700)
Accrued directors fees (4,700) (1,000)
---------- ----------
Total adjustments (38,900) (58,700)
---------- ----------
Cash (used-in) operating activities $ (46,700) $(193,000)
========== ==========
Schedule of non-cash investing activities:
Acquisition of common stock $ 10,000
less amount received in exchange for consulting (10,000)
----------
$ --
==========
Read the accompanying notes.
<PAGE> 8
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 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.
<PAGE> 9
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 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
$5,200 and $3,700 at March 31, 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)
MARCH 31, 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 March 31, 1998 and 1997 for federal income tax purposes
and financial reporting purposes was the same. The aggregate net
unrealized (depreciation) for the three months ended March 31, 1998
and 1997 is ($1,700) and ($37,700) 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)
MARCH 31, 1998 AND 1997
(UNAUDITED)
4. INVESTMENTS:
Investments include the following at March 31, 1998 and 1997:
<TABLE>
<CAPTION>
VALUE VALUE
PRINCIPAL TYPE OF ISSUE AND MARCH 31, MARCH 31,
AMOUNTS NAME OF ISSUER 1998 1997
-------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury bills (80.0%
and 83.9% of net assets at
March 31, 1998 and 1997,
respectively):
$ 1,976,325 U.S. Treasury bill,
$2,000,000 face value,
matures May 8, 1997 $ -- $ 1,987,700
$ 494,102 U.S. Treasury bill,
$500,000 face value,
matures May 15, 1997 -- 496,400
$ 1,481,892 U.S. Treasury bill,
$1,500,000 face value,
matures June 5, 1997 -- 1,484,800
$ 2,962,295 U.S. Treasury bill,
$3,000,000 face value,
matures April 9, 1998 2,994,500 --
$ 494,025 U.S. Treasury bill,
$500,000 face value,
matures April 23, 1998 $ 498,000 --
---------- -----------
Total U.S. Treasury bills $3,492,500 $ 3,968,900
========== ===========
</TABLE>
<PAGE> 12
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
(UNAUDITED)
4. INVESTMENTS (CONTINUED):
NUMBER OF NUMBER OF
SHARES SHARES TYPE OF ISSUE VALUE VALUE
MARCH 31, MARCH 31, AND NAME OF MARCH 31, MARCH 31,
1998 1997 ISSUER 1998 1997
-----------------------------------------------------------------------------
Common stocks (1.1% and
5.5% of net assets at
March 31, 1998 and
1997, respectively):
The Americas Group, Inc.
130,000 130,000 (unrestricted) $ 50,000 $ 260,000
========== ==========
8% convertible, redeemable
preferred stock (0.0% and
9.9% of net assets at
March 31, 1998 and 1997,
respectively) (restricted):
14,953 Globalink, Inc. $ -- $ 467,300
========== ==========
NUMBER OF NUMBER OF
WARRANTS WARRANTS TYPE OF ISSUE VALUE VALUE
MARCH 31, MARCH 31, AND NAME OF MARCH 31, MARCH 31,
1998 1997 ISSUER 1998 1997
-----------------------------------------------------------------------------
Common stocks warrants:
(0.0% and 0.0% of net
assets at March 31, 1998
and 1997, respectively):
Restricted:
1 1 Globalink, Inc. $ -- $ 1,100
======== ==========
Golf Reservations of
America, Inc.
-- 2 Class A $ -- $ --
-- 2 Class B $ -- $ --
======== ==========
<PAGE> 13
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 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. At
March 31, 1998, the Company holds a warrant for which the Board of
Directors has valued at $0.
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 March 31, 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 March 31, 1998, the Board of
Directors has also deemed the warrants as worthless.
5. CASH AND CASH EQUIVALENTS:
NUMBER OF NUMBER OF COST AND COST AND
SHARES SHARES TYPE OF ISSUE VALUE VALUE
MARCH 31, MARCH 31, AND NAME OF MARCH 31, MARCH 31,
1998 1997 ISSUER 1998 1997
-----------------------------------------------------------------------------
813,600 19,600 Money market fund,
Cortland Trust, Inc. $ 813,600 $ 19,600
-- -- Checking account
with bank 10,700 1,000
---------- ---------
Total cash and cash
equivalents (18.9% and
0.04% of net assets
at March 31, 1998 and
1997, respectively) $ 824,300 $ 20,600
========== =========
<PAGE> 14
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998 AND 1997
(UNAUDITED)
6. FURNITURE AND EQUIPMENT:
Furniture and equipment are comprised of the following at March 31, 1998
and 1997:
1998 1997
------------ ----------
Furniture and fixtures $ 1,500 $ 1,500
Computer equipment 10,900 17,900
------------ ----------
12,400 19,400
Less accumulated depreciation (2,900) (3,300)
------------ ----------
$ 9,500 $ 16,100
============ ==========
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 March 31, 1998 and 1997 are:
Deferred tax assets:
Net operating loss $ 79,900 $ 75,900
Unrealized depreciation of investments 70,400 17,300
------------ ----------
150,300 93,200
Less valuation allowance 148,800 87,200
------------ ----------
1,500 6,000
Deferred tax liability:
Depreciation 1,500 2,700
------------ ----------
Net deferred tax asset $ -- $ 3,300
============ ==========
<PAGE> 15
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 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) (400) (26,200)
State (benefit) (100) (6,300)
--------- ---------
(500) (32,500)
Increase in valuation allowances 500 32,500
--------- ---------
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 $ (1,200) $ (20,500)
State tax, net of federal effect (200) (6,800)
Valuation allowance 500 32,500
Other 900 (5,200)
--------- ----------
$ -- $ --
========= ==========
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 $148,900 valuation allowance at March
31, 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
three months ended March 31, 1998, is $500. At March 31, 1998, the Company has
available net operating loss carryforwards of $533,000 which expire in the years
2010 through 2013.
<PAGE> 16
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 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 $3,900 and $20,300 in the three months
ended March 31, 1998 and 1997, respectively.
The Company entered into an employment agreement with the president of
the Company. The agreement currently terminates on August 30, 2000,
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 $26,000 and $24,800 pursuant to this agreement for the three
months ended March 31, 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 March 31, 1998 and 1997, there was no accrual in
connection with the Plan.
10. MERGER ACTIVITY:
On September 23, 1997, the shareholders of the Company consummated an
exchange of the Company's shares of common stock for shares of JW
Charles Financial Services, Inc. (JW Charles) (the Exchange Offer). As
a result of the Exchange Offer JW Charles beneficially owns 1,149,488
Company shares representing approximately 90.9% of the outstanding
Company shares at March 31, 1998. Since JW Charles owns more than 90%
of the outstanding Company shares, the Company understands that JW
Charles presently intends to merge the Company with and into JW Charles
without a note of the Company's shareholders.
<PAGE> 17
PART I - FINANCIAL STATEMENTS (continued)
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND LIQUIDITY
RESULTS OF OPERATIONS
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
As a result of operations, net assets decreased approximately $7,800
(or approximately .18% of net assets) during the quarter ended March 31, 1998.
For the comparable period in 1997, net assets decreased approximately $134,300
during the quarter. The net decrease in net assets resulting from operations for
the quarter ended March 31, 1998 primarily resulted from a net investment loss
of $6,100 and an increase in unrealized depreciation of investments of
approximately $1,700. These results compare with a net decrease in net assets
resulting from operations for the quarter ended March 31, 1997 which occurred
primarily from a net investment loss of $98,800, an increase in unrealized
depreciation of investments of $37,700 and a realized gain from sales of
investments of approximately $2,200.
The Company recognized investment income of approximately $52,000
(which consisted entirely of interest income) for the quarter ended March 31,
1998 as compared to $70,700 in investment income (which consisted of interest
income of $49,500, dividend income of $11,200 and other income of $10,000) for
the quarter ended March 31, 1997. The lower investment income for the quarter
ending March 31, 1998 resulted primarily from having no dividend and other
income.
Expenses aggregated approximately $58,100 during the quarter ended
March 31, 1998 which included salaries, accounting fees, Board of Directors
fees, legal fees, rent and administrative expenses as compared with expenses of
$169,500 for the quarter ended March 31, 1997. Professional fees decreased to
$14,300 as compared to $122,700 for the comparable quarter in 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1998, the Company had cash and cash equivalents of
approximately $824,300 and US Treasury Bills of approximately $3,492,500 as
compared to approximately $20,600 in cash and cash equivalents and approximately
$3,968,900 in Treasury Bills at March 31, 1997. The decrease in capital
resources for the three months ended March 31, 1998 was primarily due to a net
investment loss of $6,100 as compared to the decrease in capital resources for
the quarter ending March 31, 1997 primarily due to an investment of $250,000 in
The Americas Group, Inc. and a net investment loss of $98,800. As of March 31,
1998, the Company had liabilities of approximately $ 18,100 compared with
liabilities of $47,100 as of March 31, 1997.
<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 owns more than 90% of the outstanding Company Shares, under
Maryland General Corporation Law and the Florida Business Corporation Act, the
Company understands that JW Charles presently intends to merge the Company with
and into JW Charles without a vote of the Company's shareholders. Because the
merger may be deemed to involve the purchase of property of the Company by JW
Charles, the merger may be 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, JW Charles and the Company filed with the Commission an Application for an
Order to exempt the merger from Section 57(a)(2) of the 1940 Act. Under Section
57(c) of the 1940 Act, the Commission may grant such an Order if, among other
things, the terms of the merger are reasonable and fair, the merger is
consistent with the policies of the Florida Business Corporation Act, and the
merger is consistent with the purposes of the 1940 Act. The Commission published
a public notice regarding the Application on April 23, 1998. JW Charles and the
Company anticipate that, barring unforseen circumstances, the Commission will
grant the requested Order on or about May 20, 1998. If the requested Order is
granted, and the contemplated merger is completed, the Company understands that
shareholders of the Company will receive 0.431 of a JW Charles Share for each
Company Shares owned by each shareholder.
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