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 August 31, 1995
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 121,690
held in treasury)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBUS GROWTH GROUP, INC.
CONDENSED BALANCE SHEETS
August 31, February 28,
1995 1995
----------- -----------
ASSETS (Unaudited) (See Note 1)
Cash $0 $6,000
Investments in Securities (Note 3) $1,638,000 $1,489,000
Due from Broker $2,000 $62,000
Other Assets $6,000 $11,000
----------- -----------
TOTAL $1,646,000 $1,568,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $764,000 $721,000
Loans payable to officers/shareholders $703,000 $762,000
Demand loan payable to related party $392,000 $384,000
Due to Broker $154,000 $0
----------- -----------
Total Liabilities $2,013,000 $1,867,000
----------- -----------
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 8/31/95 $25,000 $25,000
Additional paid in capital $2,747,000 $2,747,000
Treasury Stock, 121,690 shares at 8/31/95 ($35,000) ($34,000)
Accumulated earnings (deficit) ($3,104,000) ($3,037,000)
----------- -----------
Total stockholders' equity ($367,000) ($299,000)
----------- -----------
TOTAL $1,646,000 $1,568,000
=========== ===========
(See Accompanying Notes to Financial Statements)
1
GLOBUS GROWTH GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Six Months
Ended August 31, Ended August 31,
1995 1994 1995 1994
----------- ----------- ----------- -----------
Gain (loss) on investments:
Realized ($31,000) ($5,000) ($33,000) $2,000
Unrealized $240,000 $72,000 $86,000 $208,000
----------- ----------- ----------- -----------
Total $209,000 $67,000 $53,000 $210,000
Dividend Income $0 $2,000 $1,000 $6,000
Interest Income $0 $0 $0 $0
Consulting and other income $3,000 $8,000 $5,000 $13,000
----------- ----------- ----------- -----------
TOTAL $212,000 $77,000 $59,000 $229,000
Expenses:
General and administrative $41,000 $59,000 $99,000 $114,000
Interest $14,000 $13,000 $27,000 $26,000
----------- ----------- ----------- -----------
TOTAL $55,000 $72,000 $126,000 $140,000
Income (loss) from operations before taxes $157,000 $5,000 ($67,000) $89,000
Benefit/(Provision) for taxes $0 $0 $0 $0
----------- ----------- ----------- -----------
Net earnings (loss) $157,000 $5,000 ($67,000) $89,000
----------- ----------- ----------- -----------
Net (Loss) per share of common stock $0.07 $0.00 ($0.03) $0.04
Weighted Average Number of shares of
Stock Outstanding 2,377,310 2,395,048 2,383,199 2,396,429
----------- ----------- ----------- -----------
(See Accompanying Notes to Financial Statements)
2
GLOBUS GROWTH GROUP, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Six Months
Ended August 31,
1995 1994
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ($67,000) $89,000
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization $1,000 $1,000
Realized (gain) loss on investments $33,000 ($208,000)
Unrealized (gain) loss on investments ($86,000) ($2,000)
Increase in accounts payable, accrued expenses and accrued interest
on loans $65,000 $69,000
(Increase) decrease in prepaid assets $4,000 $22,000
--------- ---------
Net cash (used in) operating activities ($50,000) ($29,000)
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments ($185,000) ($135,000)
Purchase of property and equipment $0 $0
Proceeds from sale of investments $89,000 $208,000
--------- ---------
Net cash provided by (used in) investing activities ($96,000) $73,000
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable to officers/shareholders ($50,000) $0
Increase (decrease) in loans payable to officers/shareholders ($23,000) ($3,000)
Borrowing from broker $214,000 $0
Purchase of treasury stock ($1,000) $0
Borrowing from related party $0 ($20,000)
--------- ---------
Net cash provided by (used in) financing activities $140,000 ($23,000)
------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash ($6,000) $21,000
Cash - beginning of period $6,000 $0
Cash - end of period $0 $21,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $0 $0
Income Taxes $1,000 $1,000
(See Accompanying Notes to Financial Statements)
3
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements
(Unaudited) August 31, 1995
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 August 31, 1995, the results of operations for the three and six
months ended August 31, 1995 and 1994, and statement of cash flows for
the six months ended August 31, 1995 and 1994.
The results of operations for the six months ended August 31, 1995 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 28, 1995.
The balance sheet at February 28, 1995 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 28, 1995 and August 31, 1995, investments are carried at
value, which, for readily marketable securities are related to market
quotations. Investments in restricted securities and securities which
are not readily marketable are carried at fair value determined by the
Board of Directors.
(Continued on next page)
4
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements
(Unaudited) August 31, 1995
Note 3 - (continued)
August 31, February 28,
1995 1995
---- ----
No. Shares Value Cost No. Shares Value Cost
----------- ---------- ---------- ---------- ---------- ----------
Common Stock
Catamount Brewing Co. 23,215 $176,000 $176,000 23,215 $176,000 $176,000
Interface Systems Inc. 775 $4,000 $7,000 14,775 $113,000 $128,000
Kimeragen, Inc. 414 $70,000 $70,000
Nematron Corp. 16,925 $57,000 $30,000 16,925 $27,000 $30,000
Globus Studios, Inc. 144,850 $4,000 $0 144,850 $4,000 $0
Energy Research, Inc. 86,000* $946,000 $100,000 86,000 $903,000 $100,000
Plasmaco, Inc. - Common 3,322 $1,000 $410,000 3,322 $1,000 $410,000
---------- ---------- ---------- ----------
Total Common Stock $1,258,000 $793,000 $1,224,000 $844,000
Preferred Stock
Kimeragen, Inc. Preferred A 113 $75,000 $75,000
Plasmaco, Inc. - Preferred Series A 228,178 $115,000 $40,000 228,178 $115,000 $40,000
Proscure, Inc. Series A Conv. Pfd. 61,000 $86,000 $86,000 61,000 $86,000 $86,000
Proscure, Inc. Series B Conv. Pfd. 53,334 $80,000 $80,000 26,667 $40,000 $40,000
---------- ---------- ---------- ----------
Total Preferred Stock $356,000 $281,000 $241,000 $166,000
Stock Purchase Warrant
Glycan Pharmaceuticals, Inc. 37,500 $17,000 $17,000 37,500 $17,000 $17,000
Proscure Inc. 75,000 $7,000 $7,000 75,000 $7,000 $7,000
---------- ---------- ---------- ----------
Total Warrants $24,000 $24,000 $24,000 $24,000
Total Investments - Fair value $1,638,000 $1,098,000 $1,489,000 $1,034,000
---------- ---------- ---------- ----------
*NOTE: As at August 31, 1995, 30,000 shares of Energy Research Corporation are
held as collateral for a loan at Loeb Partners.
5
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements
(Unaudited) August 31, 1995
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Analysis of 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 August 31, 1995, the Company had total assets of $1,646,000 compared to
total assets of $1,568,000 as at February 28, 1995. Included in total assets at
such dates were investments in securities of $1,638,000 for the six month period
ended August 31, 1995 and $1,489,000 for the year ended February 28, 1995.
Shareholders equity at such dates was ($367,000) for the six month period ended
August 31, 1995 and ($299,000) for the year ended February 28, 1995. Gain on
investments amounted to $53,000 for the six month period ended August 31, 1995
as compared to a gain of $210,000 for the six month period ended August 31,
1994. Included in such gains (losses) were ($33,000) of realized loss and
$86,000 of unrealized gain for the six month period ended August 31, 1995
compared to $2,000 of realized gain and $208,000 of unrealized gain for the six
month period ended August 31, 1994. Operating expenses, including interest
charges, amounted to $126,000 for the 1995 six month period and $140,000 for the
1994 six month period. Income (loss) from operations, both before and after
provision for taxes, was ($67,000) for the six month period ended August 31,
1995 compared to a gain of $89,000 for the six month period ended August 31,
1994. Net earnings (loss) per share were ($0.03) for the 1995 six month period
compared to a gain of $0.04 for the comparable 1994 period. The weighted average
number of shares of Common Stock outstanding at August 31, 1995 was 2,383,199
and 2,396,429 at August 31, 1994.
Analysis of Financial Condition
The Company's liquidity position has been eroded principally because of
adverse factors appertaining to certain of its investments. The near term
liquidity of the Company, as well as its near term capital resources position,
are presently principally dependent upon: (i) the market value and marketability
of its investment in Interface Systems, Inc. (which market value, as at August
31, 1995 had declined from book cost); (ii) the market value and future ability
of the Company to sell its position in Energy Research, Inc. and Nematron Corp.;
and (iii) 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 (chiefly Stephen E. Globus) to continue to make loans to the Company.
Thus, loans payable by the Company (including accrued interest) to Messrs.
Stephen E. and Richard D. Globus amounted to $703,000 at August 31, 1995, a
decrease of $59,000 from $762,000 at February 28, 1995. This decrease was due to
a $50,000 loan repayment to Stephen E. Globus, a $33,000 charge to the two
officers/shareholders loans for general and administrative costs and use by them
of the Company's office and personnel for the six month period (reference is
made to Note G of Form 10K for the year ended February 28, 1995), an increase of
$10,000 in loans, plus accrued interest of approximately $14,000. As at August
31, 1995, 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 $392,000, including accrued interest.
6
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements
(Unaudited) August 31, 1995
The Company has also pledged 30,000 shares of Energy Research Corporation
as collateral for a loan from Loeb Partners in the amount of $150,000, plus
approximately $5,200 in interest expense during the six month period ended
August 31, 1995.
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 possible sales of stock of Interface Systems, Inc.,
and of Energy Research, Inc. and of Nematron Corporation and 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 28, 1995, 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.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8K
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this Report is filed.
7
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: October 15, 1995
GLOBUS GROWTH GROUP, INC.
(Registrant)
STEPHEN E. GLOBUS
Chairman of the Board,
(Principal Executive Officer)
RICHARD D. GLOBUS
President, Director