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, 1997
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 149,443
held in treasury)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBUS GROWTH GROUP, INC.
CONDENSED BALANCE SHEETS
November 30, February 28,
1997 1997
----------- -----------
ASSETS (Unaudited) (See Note 1)
Cash $949,000 $512,000
Investments in Securities (Note 3) $2,244,000 $2,737,000
Promissory Note Receivable $50,000 $50,000
Other Assets $17,000 $19,000
----------- -----------
TOTAL $3,260,000 $3,318,000
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable and accrued expenses $966,000 $910,000
Loans payable to officers/shareholders $439,000 $528,000
Demand loan payable to related party $417,000 $405,000
----------- -----------
Total Liabilities $1,822,000 $1,843,000
----------- -----------
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 11/30/97 $25,000 $25,000
Additional paid in capital $2,747,000 $2,747,000
Treasury Stock, 149,443 shares at 11/30/97 ($40,000) ($37,000)
Accumulated earnings (deficit) ($1,294,000) ($1,260,000)
----------- -----------
Total stockholders' equity $1,438,000 $1,475,000
----------- -----------
TOTAL $3,260,000 $3,318,000
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(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended November 30, Ended November 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
Gain (loss) on investments:
Realized $100,000 $0 $94,000 $0
Unrealized $1,000 ($299,000) $1,000 ($3,000)
----------- ----------- ----------- -----------
Total $101,000 ($299,000) $95,000 ($3,000)
Dividend Income $2,000 $10,000 $10,000 $33,000
Interest Income $1,000 $0 $6,000 $0
Consulting and other income $9,000 $9,000 $27,000 $27,000
----------- ----------- ----------- -----------
TOTAL $113,000 ($280,000) $138,000 $57,000
Expenses:
General and administrative $54,000 $47,000 $150,000 $164,000
Interest $7,000 $8,000 $22,000 $27,000
----------- ----------- ----------- -----------
TOTAL $61,000 $55,000 $172,000 $191,000
Income (loss) from operations before taxes $52,000 ($335,000) ($34,000) ($134,000)
Benefit/(Provision) for taxes $0 $0 $0 $0
----------- ----------- ----------- -----------
Net earnings (loss) $52,000 ($335,000) ($34,000) ($134,000)
----------- ----------- ----------- -----------
Net (Loss) per share of common stock $0.02 ($0.14) ($0.01) ($0.06)
Weighted Average Number of shares of
Stock Outstanding 2,354,602 2,364,860 2,361,466 2,364,998
----------- ----------- ----------- -----------
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
Nine Months
Ended November 30,
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) ($34,000) ($134,000)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization $2,000 $1,000
Realized (gain) loss on investments ($94,000) $0
Unrealized (gain) loss on investments ($1,000) $3,000
Increase in accounts payable, accrued expenses and accrued interest
on loans $77,000 $92,000
(Increase) decrease in prepaid assets $2,000 $5,000
----------- -----------
Net cash (used in) operating activities ($48,000) ($33,000)
----------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments ($500,000) ($180,000)
Purchase of property and equipment $0 $0
Proceeds from sale of investments $1,088,000 $0
----------- -----------
Net cash provided by (used in ) investing activities $588,000 ($180,000)
----------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of loans payable to officers/shareholders ($106,000) ($80,000)
Increase (decrease) in loans payable to officers/shareholders $7,000 ($39,000)
Purchase of treasury stock ($4,000) $0
----------- -----------
Net cash provided by (used in) financing activities ($103,000) ($119,000)
----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash $437,000 ($332,000)
Cash - beginning of period $512,000 $985,000
Cash - end of period $949,000 $653,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $0 $0
Income Taxes $3,000 $12,000
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC. November 30, 1997
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 November 30,
1997, the results of operations for the three and nine
months ended November 30, 1997 and 1996, and statement of
cash flows for the nine months ended November 30, 1997 and
1996.
The results of operations for the nine months ended
November 30, 1997 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, as amended, for the year ended February
28, 1997.
The balance sheet at February 28, 1997 has been derived
from the Company's audited balance sheet included in its
Annual Report on Form 10-K, as amended.
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, 1997 and November 30, 1997, 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 28,
1997 1997
---- ----
No. No.
Shares Value Cost Shares Value Cost
------ ----- ---- ------ ----- ----
Common Stock
Catamount Brewing Co. 23,215 $569,000 $176,000 23,215 $569,000 $176,000
Interface Systems Inc. 775 $2,000 $7,000 775 $4,000 $7,000
Nematron Corp.* 16,925 $110,000 $30,000
Energy Research Corp.** 76,000 $883,000 $88,000
Kimeragen, Inc. Cl A 108,827 $609,000 $219,000 108,827 $609,000 $219,000
Kimeragen, Inc. Cl B 35,000 $196,000 $75,000 35,000 $196,000 $75,000
Repligen Corporation 100,468 $88,000 $190,000 100,468 $86,000 $190,000
----------- ----------- ---------- -----------
Total Common Stock $1,464,000 $667,000 $2,457,000 $785,000
----------- ----------- ---------- -----------
Preferred Stock
Catamount Brewing Co. - Pfd 4,286 $150,000 $150,000 4,286 $150,000 $150,000
Genitope Corp. Series A Pfd 420,858 $210,000 $210,000 260,000 $130,000 $130,000
---------- -----------
Genitope Corp. Series B Pfd 332,992 $420,000 $420,000
----------- -----------
Total Preferred Stock $780,000 $780,000 $280,000 $280,000
----------- ----------- ---------- -----------
Promissory Note
Woodstock Communications Inc. $50,000 $50,000 $50,000 $50,000
----------- ----------- ---------- -----------
Total Investments - Fair value $2,294,000 $1,497,000 $2,787,000 $1,115,000
----------- ----------- ---------- -----------
- -----------
*16,925 shares sold in June 1997 for $102,919 net.
**2,000 shares sold March 1997 for $24,648 net; and 74,000 shares sold September
1997 for $960,116 net.
Item 2. 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, 1997, the Company had total assets of $3,260,000 compared
to total assets of $3,318,000 as at February 28, 1997. Included in total assets
at such dates were investments and notes of $2,294,000 for the nine month period
ended November 30, 1997 and $2,787,000 for the year ended February 28, 1997.
Shareholders equity at such dates was $1,438,000 for the nine month period ended
November 30, 1997 and $1,475,000 for the year ended February 28, 1997. Gain on
investments amounted to $95,000 for the nine month period ended November 30,
1997 as compared to a loss of ($3,000) for the nine month period ended November
30, 1996. Included in such gains (losses) were realized gain of $94,000 and
unrealized gain of $1,000 for the nine month period ended November 30, 1997
compared to ($3,000) of unrealized loss and no realized gain or loss for the
nine month period ended November 30, 1996. Operating expenses, including
interest charges, amounted to $172,000 for the 1997 nine month period and
$191,000 for the 1996 nine month period. Loss from operations, both before and
after provision for taxes, was ($34,000) for the nine month period ended
November 30, 1997 compared to ($134,000) for the nine month period ended
November 30, 1996. Net loss per share was ($0.01) for the 1997 nine month period
compared to ($0.06) for the comparable 1996 period. The weighted average number
of shares of Common Stock outstanding at November 30, 1997 was 2,361,466 and
2,364,998 at November 30, 1996.
Analysis of Financial Condition
The Company's cash position as at November 30, 1997 (i.e., $949,000) 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 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 Messrs. Stephen E. and Richard D. Globus amounted to
$439,000 at November 30, 1997, a decrease of $89,000 from $528,000 at February
28, 1997. This decrease was due in part to a $106,000 (total) loan repayment to
Stephen E. and Richard D. Globus. A $50,000 charge was made 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 H of Form 10K, as amended, for the year ended February 28, 1997);
which decrease was somewhat offset by an increase in loans of approximately
$57,000 and an increase in accrued interest of approximately $10,000. As at
November 30, 1997, 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 $417,000, including accrued interest. As at November 30, 1997,
unpaid salaries owing to Messrs. Stephen E. and Richard D. Globus aggregated
$935,000; so that at such date the total of monies owed to Messrs. Stephen E.
Globus, Richard D. Globus and Ms. Jane Globus aggregated approximately
$1,791,000.
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, as amended,
for its fiscal year ended February 28, 1997 to which Item reference is hereby
made. Reference is also hereby made to Item 1 and Item 7 of such Report, as
amended, and to the Financial Statements and notes thereto contained in such
Report, as amended, for information concerning the Company's investments and its
financial condition.
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: January 15, 1998
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