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 November 30, 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
November 30, February 28,
1995 1995
------------ ------------
ASSETS (Unaudited) (See Note 1)
Cash $2,000 $6,000
Investments in Securities (Note 3) $1,621,000 $1,489,000
Due from Broker $0 $62,000
Other Assets $11,000 $11,000
----------- -----------
TOTAL $1,634,000 $1,568,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $780,000 $721,000
Loans payable to officers/shareholders $689,000 $762,000
Demand loan payable to related party $396,000 $384,000
Due to Broker $130,000 $0
----------- -----------
Total Liabilities $1,995,000 $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 11/30/95 $25,000 $25,000
Additional paid in capital $2,747,000 $2,747,000
Treasury Stock, 121,690 shares at 11/30/95 ($35,000) ($34,000)
Accumulated earnings (deficit) ($3,098,000) ($3,037,000)
----------- -----------
Total stockholders' equity ($361,000) ($299,000)
----------- -----------
TOTAL $1,634,000 $1,568,000
=========== ===========
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended November 30, Ended November 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
Gain (loss) on investments:
Realized $47,000 $8,000 $14,000 $10,000
Unrealized ($12,000) ($13,000) $74,000 $195,000
----------- ----------- ----------- -----------
Total $35,000 ($5,000) $88,000 $205,000
Dividend Income $0 $1,000 $1,000 $7,000
Interest Income $0 $0 $0 $0
Consulting and other income $23,000 $2,000 $28,000 $15,000
----------- ----------- ----------- -----------
TOTAL $58,000 ($2,000) $117,000 $227,000
Expenses:
General and administrative $39,000 $56,000 $138,000 $170,000
Interest $13,000 $12,000 $40,000 $38,000
----------- ----------- ----------- -----------
TOTAL $52,000 $68,000 $178,000 $208,000
Income (loss) from operations before taxes $6,000 ($70,000) ($61,000) $19,000
Benefit/(Provision) for taxes $0 $0 $0 $0
----------- ----------- ----------- -----------
Net earnings (loss) $6,000 ($70,000) ($61,000) $19,000
----------- ----------- ----------- -----------
Net (Loss) per share of common stock $0.00 ($0.03) ($0.03) $0.01
Weighted Average Number of shares of
Stock Outstanding 2,377,310 2,394,510 2,381,250 2,395,794
----------- ----------- ----------- -----------
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months
Ended November 30,
1995 1994
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ($61,000) $19,000
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization $2,000 $2,000
Realized (gain) loss on investments ($14,000) ($195,000)
Unrealized (gain) loss on investments ($74,000) ($10,000)
Increase in accounts payable, accrued expenses and accrued interest
on loans from officers/shareholders and broker $99,000 $106,000
(Increase) decrease in prepaid assets ($2,000) $23,000
--------- ---------
Net cash (used in ) operating activities ($50,000) ($55,000)
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments ($185,000) ($135,000)
Purchase of property and equipment $0 $0
Proceeds from sale of investments $141,000 $282,000
--------- ---------
Net cash provided by (used in ) investing activities ($44,000) $147,000
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable to officers/shareholders ($70,000) $0
Increase (decrease) in loans payable to officers/shareholders ($23,000) ($56,000)
Borrowing from broker $150,000 $0
Repayment to broker ($28,000) $0
Payment from broker $62,000 $0
Purchase of treasury stock ($1,000) $0
Borrowing from related party $0 ($20,000)
--------- ---------
Net cash provided by (used in) financing activities $90,000 ($76,000)
------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash ($4,000) $16,000
Cash - beginning of period $6,000 $0
Cash - end of period $2,000 $16,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $0 $0
Income Taxes $729 $729
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements (Unaudited)
November 30, 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 November 30, 1995, the results of operations for the
three and nine months ended November 30, 1995 and 1994, and statement
of cash flows for the nine months ended November 30, 1995 and 1994.
The results of operations for the nine months ended November 30, 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 November 30, 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)
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements (Unaudited)
November 30, 1995
Note 3 - (continued)
November 30, 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 $5,000 $7,000 14,775 $113,000 $128,000
Kimeragen, Inc. 414 $70,000 $70,000
Nematron Corp. 16,925 $74,000 $30,000 16,925 $27,000 $30,000
Globus Studios, Inc. 144,850 $4,000 $0 144,850 $4,000 $0
Energy Research, Inc. 81,000* $911,000 $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 $1,241,000 $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 $1,621,000 $1,098,000 $1,489,000 $1,034,000
---------- ---------- ---------- ----------
*NOTE: As at November 30, 1995, 30,000 shares of Energy Research Corporation are held as collateral for a loan at Loeb Partners.
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 November 30, 1995, the Company had total assets of $1,634,000 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 $1,621,000 for the nine month
period ended November 30, 1995 and $1,489,000 for the year ended February 28,
1995. Shareholders equity at such dates was ($361,000) for the nine month period
ended November 30, 1995 and ($299,000) for the year ended February 28, 1995.
Gain on investments amounted to $88,000 for the nine month period ended November
30, 1995 as compared to a gain of $205,000 for the nine month period ended
November 30, 1994. Included in such gains (losses) were $14,000 of realized gain
and $74,000 of unrealized gain for the nine month period ended November 30, 1995
compared to $10,000 of realized gain and $195,000 of unrealized gain for the
nine month period ended November 30, 1994. Operating expenses, including
interest charges, amounted to $178,000 for the 1995 nine month period and
$208,000 for the 1994 nine month period. Income (loss) from operations, both
before and after provision for taxes, was ($61,000) for the nine month period
ended November 30, 1995 compared to $19,000 for the nine month period ended
November 30, 1994. Net earnings (loss) per share were ($0.03) for the 1995 nine
month period compared to a gain of $0.01 for the comparable 1994 period. The
weighted average number of shares of Common Stock outstanding at November 30,
1995 was 2,381,250 and 2,395,794 at November 30, 1994.
Analysis of Financial Condition
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 future ability of the Company to sell its position in Energy Research,
Inc. and Nematron Corp.; and (ii) 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 $689,000 at November 30,
1995, a decrease of $73,000 from $762,000 at February 28, 1995. This decrease
was due to a $70,000 loan repayment to Stephen E. Globus, a $49,500 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 nine month period
(reference is made to Note G of Form 10K for the year ended February 28, 1995);
which decrease was somewhat offset by an increase of $27,000 in such loans, plus
accrued interest of approximately $20,000. As at November 30, 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 $396,000,
including accrued interest. An additional factor affecting the Company's
liquidity position during the nine-month period ending November 30, 1995 was the
purchase of new and the making of additional investments (i.e., Kimeragen, Inc.
and Proscure, Inc.).
The Company pledged 20,000 shares of Energy Research Corporation in March
1995 and an additional 10,000 shares in May 1995 as collateral for a loan from
Loeb Partners in the amount of $150,000, plus approximately $8,000 for interest
expense during the nine month period ended November 30, 1995. This loan was
reduced by approximately $28,000 of sales proceeds of Energy Research
Corporation in September 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 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.
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: January 15, 1996
GLOBUS GROWTH GROUP, INC.
(Registrant)
STEPHEN E. GLOBUS
Chairman of the Board,
(Principal Executive Officer)
RICHARD D. GLOBUS
President, Director