SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 FOR THE QUARTERLY PERIOD ENDED May 31, 2000
OR
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 from the transition period from ____ to _____
Commission File Number 0-9987
GLOBUS GROWTH GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 13-2949462
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
44 West 24th Street, New York, NY 10010
(Address of principal executive offices) (zip code)
(212) 243-1000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as the latest practicable date: 2,499,000 (including 151,743
held in treasury)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBUS GROWTH GROUP, INC.
CONDENSED BALANCE SHEETS
May 31, February 29,
2000 2000
----------- -----------
(Unaudited) (See Note 1)
ASSETS
Cash $ 11,000 $ 58,000
Investments in Securities (Note 3) $ 1,453,000 $ 1,863,000
Other Assets $ 10,000 $ 11,000
----------- -----------
TOTAL $ 1,474,000 $ 1,932,000
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 1,194,000 $ 1,178,000
Loans payable to officers/shareholders $ 246,000 $ 249,000
Demand loan payable to related party $ 322,000 $ 320,000
----------- -----------
Total Liabilities $ 1,762,000 $ 1,747,000
----------- -----------
Stockholders' equity (Note 2)
Preferred stock - $.10 par value, Authorized - 450,000 shares
None Issued
Series B convertible preferred stock - $.10 par value
Authorized - 50,000 shares, None issued
Common stock - $.01 par value, Authorized - 4,500,000
shares, Issued 2,499,000 shares at 5/31/00 $ 25,000 $ 25,000
Additional paid in capital $ 2,747,000 $ 2,747,000
Treasury Stock, 151,743 shares at 5/31/00 ($ 41,000) ($ 41,000)
Accumulated earnings (deficit) ($ 3,019,000) ($ 2,546,000)
----------- -----------
Total stockholders' equity ($ 288,000) $ 185,000
----------- -----------
TOTAL $ 1,474,000 $ 1,932,000
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(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months
Ended May 31,
2000 1999
----------- -----------
Gain (loss) on investments:
Realized $ 0 $ 0
Unrealized ($ 410,000) $ 125,000
----------- -----------
Total ($ 410,000) $ 125,000
Dividend Income $ 1,000 $ 1,000
Interest Income $ 0 $ 3,000
Consulting and other income $ 6,000 $ 3,000
----------- -----------
TOTAL ($ 403,000) $ 132,000
Expenses:
General and administrative $ 67,000 $ 70,000
Interest $ 3,000 $ 4,000
----------- -----------
TOTAL $ 70,000 $ 74,000
Income (loss) from operations before taxes ($ 473,000) $ 58,000
Benefit/(Provision) for taxes $ 0 $ 0
----------- -----------
Net earnings (loss) ($ 473,000) $ 58,000
----------- -----------
Net (Loss) per share of common stock ($ 0.20) $ 0.02
Weighted Average Number of shares of
Stock Outstanding 2,347,257 2,347,257
----------- -----------
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Three Months
Ended May 31,
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ($ 473,000) $ 58,000
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization $ 0 $ 0
Realized (gain) loss on investments $ 0 $ 0
Unrealized (gain) loss on investments $ 410,000 ($ 125,000)
Increase/(decrease) in accounts payable, accrued expenses and
accrued interest on loans $ 19,000 $ 19,000
(Increase) decrease in other assets $ 1,000 $ 2,000
--------- ---------
Net cash (used in ) operating activities ($ 43,000) ($ 46,000)
-------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments $ 0 ($ 200,000)
Issuance of demand loan receivable $ 0 $ 0
Proceeds from sale of investments $ 0 $ 0
--------- ---------
Net cash provided by (used in ) investing activities $ 0 ($ 200,000)
-------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable to officers/shareholders ($ 4,000) ($ 2,000)
Increase (decrease) in loans payable to officers/shareholders $ 0 $ 150,000
Purchase of treasury stock $ 0 $ 0
--------- ---------
Net cash provided by (used in) financing activities ($ 4,000) $ 148,000
-------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash ($ 47,000) ($ 98,000)
Cash - beginning of period $ 58,000 $ 233,000
Cash - end of period $ 11,000 $ 135,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 0 $ 0
Income Taxes $ 0 $ 0
Stock received for consulting services
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC. May 31, 2000
Notes to Condensed Financial Statements
(Unaudited)
Note 1 - Basis of Condensed Information
In the opinion of the Company, the accompanying unaudited condensed
financial statements contain all adjustments, consisting of only
normal recurring accruals, necessary to present fairly the financial
position as of May 31, 2000, the results of operations for the three
months ended May 31, 2000 and 1999, and statement of cash flows for
the three months ended May 31, 2000 and 1999.
The results of operations for the three months ended May 31, 2000 are
not necessarily indicative of the results to be expected for the full
year.
Certain information and note disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's annual report
filed on Form 10-K for the year ended February 29, 2000.
The balance sheet at February 29, 2000 has been derived from the
Company's audited balance sheet included in its Annual Report on Form
10-K.
Note 2 - Earnings Per Share
Per share data are based on the weighted average number of common
shares outstanding during the period. Common equivalent shares
(options and warrants) would be anti-dilutive and are therefore
excluded from the calculations.
Note 3 - Investments
As of February 29, 2000 and May 31, 2000, investments are carried at
fair value, which, for readily marketable securities, represents the
last reported sales price or bid price on the valuation date.
Investments in restricted securities and securities which are not
readily marketable are carried at fair value as determined in good
faith by Management, in the case of interim financial statements, and
by the Board of Directors, in the case of year end financial
statements; in each instance, in the exercise of their respective
judgments, after taking into consideration various indications of
value available to them.
(Continued on next page)
Note 3 - (Continued)
May 31, February 29,
2000 2000
------- ------------
No. No.
Shares Value Cost Shares Value Cost
------- ---------- ---------- ------- ---------- ----------
Common Stock
Catamount Brewing Co. 23,215 $ 0 $ 176,000 23,215 $ 0 $ 176,000
Interface Systems Inc. 775 $ 5,000 $ 7,000 775 $ 25,000 $ 7,000
Kimeragen, Inc. Cl A 108,827 $ 219,000 $ 219,000 108,827 $ 219,000 $ 219,000
Kimeragen, Inc. Cl B 35,000 $ 75,000 $ 75,000 35,000 $ 75,000 $ 75,000
Repligen Corporation 46,218 $ 211,000 $ 87,000 46,218 $ 601,000 $ 87,000
Thermaphore Sciences, Inc. 33,333 $ 13,000 $ 13,000 33,333 $ 13,000 $ 13,000
---------- ---------- ---------- ----------
Total Common Stock $ 523,000 $ 577,000 $ 933,000 $ 577,000
---------- ---------- ---------- ----------
Preferred Stock
Catamount Brewing Co. Pfd 4,286 $ 0 $ 150,000 4,286 $ 0 $ 150,000
Genitope Corp. Series A Pfd 420,858 $ 210,000 $ 210,000 420,858 $ 210,000 $ 210,000
Genitope Corp. Series B Pfd 332,992 $ 420,000 $ 420,000 332,992 $ 420,000 $ 420,000
Kimeragen, Inc. Series A Pfd 60,000 $ 150,000 $ 150,000 60,000 $ 150,000 $ 150,000
Thermaphore Sciences, Inc. A Pfd 100,000 $ 150,000 $ 150,000 100,000 $ 150,000 $ 150,000
---------- ---------- ---------- ----------
Total Preferred Stock $ 930,000 $1,080,000 $ 930,000 $1,080,000
---------- ---------- ---------- ----------
Total Investments - Fair value $1,453,000 $1,657,000 $1,863,000 $1,657,000
---------- ---------- ---------- ----------
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Prior to fiscal 1987, the Company was engaged in the camera and photography
business. On February 28, 1986, the Company sold its operating business to an
affiliated company and since that date the Company's principal activity has been
the making of investments in other companies.
At May 31, 2000, the Company had total assets of $1,474,000 compared to
total assets of $1,932,000 at February 29, 2000. Included in total assets were
investments of $1,453,000 at May 31, 2000 and $1,863,000 at February 29, 2000.
Shareholders equity was ($288,000) at May 31, 2000 and $185,000 at February 29,
2000. Loss on investments amounted to ($410,000) for the three month period
ended May 31, 2000, compared to a gain of $125,000 for the three month period
ended May 31, 1999. Included in such losses were no realized gain or loss and
unrealized loss of ($410,000) for the three month period ended May 31, 2000
compared to no realized gain or loss and $125,000 of unrealized gain for the
three month period ended May 31, 1999. Operating expenses, including interest
charges, amounted to $70,000 for the 2000 three month period and $74,000 for the
1999 three month period. Income (loss) from operations, both before and after
provision for taxes, was ($473,000) for the three month period ended May 31,
2000 compared to $58,000 for the three month period ended May 31, 1999. Net
earnings (loss) per share was ($0.20) for the 2000 three month period compared
to $0.02 for the comparable 1999 period. The weighted average number of shares
of Common Stock outstanding at May 31, 2000 and at May 31, 1999 is 2,347,257.
Liquidity, Capital Resources and Other Matters Affecting Financial Condition
The near term liquidity of the Company, as well as its near term capital
resources position, are presently dependent upon the continued willingness, as
to which there can be no assurance whatsoever, of the members of the Globus
family who have made loans to the Company not to demand full or substantially
full repayment of such loans and to continue to make loans to the Company, if
necessary. Thus, loans payable by the Company (including accrued interest) to
Mr. Stephen E. Globus amounted to $214,000 at May 31, 2000, a decrease of $4,000
from $218,000 at February 29, 2000. This decrease was due to a loan repayment to
Stephen E. Globus of approximately $4,000, and an increase in accrued interest
of approximately $383. Loans payable to Messrs. Stephen E. and Richard D. Globus
(including accrued interest) amounted to $32,000 at May 31, 2000 and February
29, 2000, and an increase in accrued interest of approximately $488. As at May
31, 2000, loans payable to another member of the Globus family, to wit: Ms. Jane
Globus (the mother of Stephen E. and Richard D. Globus), amounted to
approximately $322,000, including accrued interest. As at May 31, 2000, unpaid
salary owing to Mr. Stephen E. Globus was $592,000, and unpaid salary owing to
Mr. Richard D. Globus was $561,000; so that at such date the total of monies
owed to Messrs. Stephen E. Globus, Richard D. Globus and Ms. Jane Globus
aggregated approximately $1,721,000.
There are in fact presently no known events that can be considered
reasonably certain to occur which would materially change favorably either the
short term or long term liquidity (i.e., ability of the Company to generate
adequate amounts of cash to meet its needs for cash) or capital resources
position (i.e., source of funds) of the Company from that in which it presently
finds itself, and, absent continuation of the presently existing loans without
call for payment, or additional loans, from the Globus family, the present
liquidity and capital resources position of the Company necessarily adversely
affects the financial condition of the Company and its ability to make new
investments. In such connection it must be noted that: the profitability of a
BDC, like the Company, is largely dependent upon its ability to make investments
and upon increases in the value of its investments; and a
BDC is also subject to a number of risks which are not generally present in an
operating company, and which are discussed generally in Item 1 of the Company's
10K Report for its fiscal year ended February 29, 2000 to which Item reference
is hereby made. Reference is also hereby made to Item 1 and Item 7 of such
Report and to the Financial Statements and notes thereto contained in such
Report for information concerning the Company's investments and its financial
condition.
The Year 2000 Problem
The fact that most existing and unmodified computer systems may not be able
to distinguish the year 2000 from the year 1900 has created what is generally
known as the "Year 2000 Problem" (hereinafter "Y2K"). The full extent of the Y2K
problem has not been known, and it is generally agreed that if not timely
corrected, it could adversely affect many businesses.
The Company's own internal systems have not been materially affected by the
Y2K problem. While there can be no assurance that: (a) the computer systems and
applications of the Company's various investees were in fact converted timely,
or, (b) that a failure to so correct by one or more material investees would not
have a material adverse effect on the Company's financial condition, the Company
is not aware of any adverse effects suffered by any of its investees.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this Report is filed.
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.
Date: July 15, 2000
GLOBUS GROWTH GROUP, INC.
(Registrant)
/s/ Stephen E. Globus
--------------------------------
STEPHEN E. GLOBUS
Chairman of the Board,
(Principal Executive Officer)
/s/ Richard D. Globus
--------------------------------
RICHARD D. GLOBUS
President, Director