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, 1996
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 134,140
held in treasury)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBUS GROWTH GROUP, INC.
CONDENSED BALANCE SHEETS
November 30, February 29,
1996 1996
------------ ------------
ASSETS (Unaudited) (See Note 1)
Cash $ 653,000 $ 985,000
Investments in Securities (Note 3) $1,868,000 $1,690,000
Other Assets $ 9,000 $ 16,000
---------- ----------
TOTAL $2,530,000 $2,691,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $ 873,000 $ 808,000
Loans payable to officers/shareholders $ 557,000 $ 660,000
Demand loan payable to related party $ 406,000 $ 394,000
---------- ----------
Total Liabilities $1,836,000 $1,862,000
---------- ----------
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 11/30/96 $ 25,000 $ 25,000
Additional paid in capital $ 2,747,000 $ 2,747,000
Treasury Stock, 134,140 shares at 11/30/96 ($ 37,000) ($ 36,000)
Accumulated earnings (deficit) ($2,041,000) ($1,907,000)
----------- -----------
Total stockholders' equity $ 694,000 $ 829,000
----------- -----------
TOTAL $ 2,530,000 $ 2,691,000
=========== ===========
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended November 30, Ended November 30,
1996 1995 1996 1995
------------ ------------- ------------- ------------
Gain (loss) on investments:
Realized $ 0 $ 47,000 $ 0 $ 14,000
Unrealized ($299,000) ($ 12,000) ($ 3,000) $ 74,000
--------- --------- --------- ---------
Total ($299,000) $ 35,000 ($ 3,000) $ 88,000
Dividend Income $ 10,000 $ 0 $ 33,000 $ 1,000
Interest Income $ 0 $ 0 $ 0 $ 0
Consulting and other income $ 9,000 $ 23,000 $ 27,000 $ 28,000
--------- --------- --------- ---------
TOTAL ($280,000) $ 58,000 $ 57,000 $ 117,000
Expenses:
General and administrative $ 47,000 $ 39,000 $ 164,000 $ 138,000
Interest $ 8,000 $ 13,000 $ 27,000 $ 40,000
--------- --------- --------- ---------
TOTAL $ 55,000 $ 52,000 $ 191,000 $ 178,000
Income (loss) from operations before taxes ($335,000) $ 6,000 ($134,000) ($ 61,000)
Benefit/(Provision) for taxes $ 0 $ 0 $ 0 $ 0
--------- --------- --------- ---------
Net earnings (loss) ($335,000) $ 6,000 ($134,000) ($ 61,000)
--------- --------- --------- ---------
Net (Loss) per share of common stock ($ 0.14) $ 0.00 ($ 0.06) ($ 0.03)
Weighted Average Number of shares of
Stock Outstanding 2,364,860 2,377,310 2,364,998 2,381,250
--------- --------- --------- ---------
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months
Ended November 30,
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ($134,000) ($ 61,000)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization $ 1,000 $ 2,000
Realized (gain) loss on investments $ 0 ($ 14,000)
Unrealized (gain) loss on investments $ 3,000 ($ 74,000)
Increase in accounts payable, accrued expenses and accrued interest
on loans $ 92,000 $ 99,000
(Increase) decrease in prepaid assets $ 5,000 ($ 2,000)
--------- ---------
Net cash (used in ) operating activities ($ 33,000) ($ 50,000)
========================================================================================================================
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments ($180,000) ($185,000)
Purchase of property and equipment $ 0 $ 0
Proceeds from sale of investments $ 0 $ 141,000
--------- ---------
Net cash provided by (used in ) investing activities ($180,000) ($ 44,000)
========================================================================================================================
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable to officers/shareholders ($ 80,000) ($ 70,000)
Increase (decrease) in loans payable to officers/shareholders ($ 39,000) ($ 23,000)
Borrowing from broker $ 0 $ 150,000
Repayment to broker $ 0 ($ 28,000)
Payment from broker $ 0 $ 62,000
Purchase of treasury stock $ 0 ($ 1,000)
--------- ---------
Net cash provided by (used in) financing activities ($119,000) $ 90,000
========================================================================================================================
Net increase (decrease) in cash ($332,000) ($ 4,000)
Cash - beginning of period $ 985,000 $ 6,000
Cash - end of period $ 653,000 $ 2,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 0 $ 0
Income Taxes $ 12,000 $ 1,000
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements
(Unaudited)
November 30, 1996
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, 1996, the results of operations for the nine months ended
November 30, 1996 and 1995, and statement of cash flows for the nine months
ended November 30, 1996 and 1995.
The results of operations for the nine months ended November 30, 1996 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, 1996.
The balance sheet at February 29, 1996 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, 1996 and November 30, 1996, 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 the Board of
Directors, in the exercise of its judgment, after taking into consideration
various indications of value available to the Board.
(Continued on next page)
Note 3 - (Continued)
November 30, February 29,
1996 1996
----------- ------------
No. No.
Shares Value Cost 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 $ 7,000 775 $ 12,000 $ 7,000
Nematron Corp. 16,925 $ 123,000 $ 30,000 16,925 $ 127,000 $ 30,000
Energy Research, Inc. 81,000 $ 901,000 $ 94,000 81,000 $ 891,000 $ 94,000
Kimeragen, Inc. 414 $ 70,000 $ 70,000
Kimeragen, Inc. Cl A 53,827 $ 70,000 $ 70,000
Kimeragen, Inc. Cl A 55,000 $ 149,000 $ 149,000 55,000 $ 149,000 $ 149,000
---------- ----------
Kimeragen, Inc. Cl B 35,000 $ 75,000 $ 75,000
---------- ----------
Total Common Stock $1,498,000 $ 601,000 $1,425,000 $ 526,000
Preferred Stock
- ---------------
Kimeragen, Inc. Preferred 113 $ 75,000 $ 75,000
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 53,334 $ 80,000 $ 80,000
---------- ----------
Genitope Corp. Series A Pfd 260,000 $ 130,000 $ 130,000
---------- ----------
Total Preferred Stock $ 296,000 $ 296,000 $ 241,000 $ 241,000
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
Other
- -----
Woodstock Communications Inc. $ 50,000 $ 50,000
----------- ----------
Total Investments - Fair value $1,868,000 $ 971,000 $1,690,000 $ 791,000
---------- ---------- ---------- ----------
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, 1996, the Company had total assets of $2,530,000 compared
to total assets of $2,691,000 as at February 29, 1996. Included in total assets
at such dates were investments in securities of $1,868,000 for the nine month
period ended November 30, 1996 and $1,690,000 for the year ended February 29,
1996. Shareholders equity at such dates was $694,000 for the nine month period
ended November 30, 1996 and $829,000 for the year ended February 29, 1996. Gain
(loss) on investments amounted to ($3,000) for the nine month period ended
November 30, 1996 as compared to a gain of $88,000 for the nine month period
ended November 30, 1995. Included in such gains (losses) were no realized gain
or loss and ($3,000) of unrealized loss for the nine month period ended November
30, 1996 compared to $14,000 of realized gain and $74,000 of unrealized gain for
the nine month period ended November 30, 1995. Operating expenses, including
interest charges, amounted to $191,000 for the 1996 nine month period and
$178,000 for the 1995 nine month period. Income (loss) from operations, both
before and after provision for taxes, was ($134,000) for the nine month period
ended November 30, 1996 compared to ($61,000) for the nine month period ended
November 30, 1995. Net earnings (loss) per share were ($0.06) for the 1996 nine
month period compared to a loss of ($0.03) for the comparable 1995 period. The
weighted average number of shares of Common Stock outstanding at November 30,
1996 was 2,364,998 and 2,381,250 at November 30, 1995.
Analysis of Financial Condition
The Company's cash position as at November 30, 1996 (i.e., $653,000) is
offsetable by the indebtedness that is owing to members of the Globus family
described below. 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) 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 Messrs. Stephen E. and Richard D. Globus
amounted to $557,000 at November 30, 1996, a decrease of $103,000 from $660,000
at February 29, 1996. This decrease was due to a $80,000 loan repayment to
Stephen E. and Richard D. 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 29, 1996); which decrease
was somewhat offset by an increase of $11,000 in such loans, plus accrued
interest of approximately $15,000. As at November 30, 1996, 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 $406,000, including
accrued interest. As at November 30, 1996, unpaid salaries owing to Messrs.
Stephen E. and Richard D. Globus aggregated $837,000; so that at such date the
total of monies owed to Messrs. Stephen E. Globus, Richard D. Globus and Ms.
Jane Globus aggregated approximately $1,800,000.
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 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 29, 1996 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.
It should also be noted that in the three month period ended November 30,
1996, the Company: (i) acquired 260,000 shares of Series A Preferred Stock of
Genitope Corporation ("Genitope") for $130,000; and (ii) acquired a $50,000
Promissory Note of Woodstock Communications, Inc. ("Woodstock") for $50,000
(which note carries the right on the part of the Company to convert interest
payable to it into equity of Woodstock).
Genitope is a privately held research and development company that holds
proprietary technology having applications in the field of cancer therapy. It
intends to initially focus upon the development and production of custom cancer
vaccines for the treatment of "B Cell" and "T Cell" Non-Hodgkin's Lymphoma. It
is probable that Genitope will find it necessary to attempt to obtain additional
funding at some future date.
Woodstock is a privately held company that claims certain trademark rights
to the name "Woodstock" for radio and television broadcasting. It presently
intends to create and acquire music, talk and information programming and to
pursue three main business areas--local radio, the Internet and Merchandising
and Licensing. Woodstock will necessarily have to attempt to obtain additional
funding.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8K
(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: January 15, 1997
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