SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 -- For the fiscal year ended February 28, 2002
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-9987
GLOBUS GROWTH GROUP, INC.
(Exact name of registrant as specified in its charter)
New York 13-2949462
(State of incorporation) (I.R.S Employer Identification No.)
44 West 24th Street, New York, NY 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (212) 243-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K (X)
The number of shares of the Registrant's Common Stock outstanding as at May 1,
2002 was 2,347,257 (excluding 151,743 shares held in the Registrant's treasury).
Of the outstanding shares, a total of 1,840,792 are deemed to be held by
affiliates and 506,465 are held by non-affiliates. It is not possible to
calculate the aggregate market value of the shares held by non-affiliates as
there is no public trading market for the Common Stock of the Registrant. See
also Item 5 of this Report.
DOCUMENTS INCORPORATED BY REFERENCE - None
This report consists of 23 Pages
PART I
Item 1. BUSINESS
General Background
The Company, a New York corporation, was organized on August 6, 1976
underx the name of Globuscope, Inc. On August 7, 1984, its name was changed to
Globus Growth Group, Inc., which is its present name.
On February 27, 1986, the stockholders of the Company approved the
divestiture and sale of those assets of the Company as pertained to its then
camera manufacturing and photography operations as well as the sale of certain
shares of stock in a photographic related company owned by it and its interest
in the Company's then owned premises. The sale was consummated as of February
28, 1986. After such divestiture, the Company's activities consisted of the
holding of interests in various companies and the seeking out of acquisition and
joint-venture opportunities in various fields of business endeavor. On May 31,
1988, the Company filed with the Securities and Exchange Commission a
notification of election to be treated as a "Business Development Company"
("BDC") as that term is defined in the Investment Company Act of 1940 (the "1940
Act"). For a summary description of certain restrictions imposed upon a BDC by
the 1940 Act, reference should be made to "Governmental Regulation" elsewhere
herein. For a summary description of the risk factors involved in an investment
in the securities of a BDC due to the nature of such a company's investment
portfolio, reference should be made to "Risk Factors Involved In Investing In A
BDC" elsewhere herein.
Investment Portfolio
As at February 28, 2002, the Company held investments in the following
investee companies: (investments listed include only those the value of which
have not been written down to zero).
(i) Tumbleweed Communications, Inc. (formerly Interface Systems, Inc.)
("Tumbleweed") - a publicly held company that provides interfacing solutions for
proprietary computer architectures (such as IBM mainframes) and other peripheral
devices such as printers, PC's, cash registers and open systems computers. Its
products consist of hardware and proprietary software; including a laser printer
product line and software that interfaces a Unix-based workstation with an IBM
mainframe. Various members of the Globus family, two of whom are Directors of
the Company, are also stockholders of Tumbleweed.
(ii) ValiGen, N. V. (formerly Kimeragen, Inc.) ("ValiGen") - a privately held
non-affiliated development stage company founded in 1994 for the purpose of
engaging in research and development in the field of developing gene therapy
products for the treatment of hereditary and acquired diseases. In fiscal 2001,
Kimeragen, Inc. merged with ValiGene S.A. to form a European-American functional
genomics company called ValiGen, N. V.
(iii) Repligen Corporation ("Repligen") - a publicly held research and
development corporation founded in 1981. Its field of activity is primarily
focused on the development of new therapies for chronic and acute inflammation
and immunosuppression and the development of enabling technologies for discovery
of new drugs by rapid screening of combinatorial chemical libraries. In March of
1996, Repligen acquired Glycan Pharmaceuticals (a former investee of the
Company). As a result of that transaction, Repligen acquired a majority interest
in Proscure, Inc. (another former investee of the Company). Subsequently, the
Company exchanged its interests in Proscure, Inc. and Glycan Pharmaceuticals for
an aggregate of 100,468 shares of Common Stock of Repligen. For additional
information concerning Proscure, Inc. reference is made to Item 1
of the Company's Form 10-K for its fiscal year ended February 29, 1996 and to
Note B of the Notes To Financial Statements contained in such Form 10-K, which
Item and Note are incorporated herein by reference.
(iv) Genitope Corporation ("Genitope") - a privately held research and
development company that holds proprietary technology having applications in the
field of cancer therapy. It focuses upon the development and production of
custom cancer vaccines for the treatment of Non-Hodgkin's Lymphoma.
(v) Carta Proteomics, Inc. (formerly Thermaphore Sciences, Inc.) ("Carta") - a
privately held drug discovery company dedicated to improving and accelerating
the development and optimization of small molecule drugs that target cell
surface receptor proteins. Stephen E. Globus, an officer and director of the
Company, is a director of Carta.
No representation is made by the Company that any or all of its investees:
(a) has, or will have in the immediate future, sufficient funds to continue to
carry on business activities; (b) will be able to achieve any of their
respective business objectives; (c) will be able to achieve or maintain
profitable operations; or (d) will not be obliged to attempt to obtain
additional funding.
For additional information concerning each of the above specified
investments, reference should be made to Note B of the Notes to Financial
Statements contained elsewhere herein and to the following subcaption.
Valuation of Investments
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. See also
Notes A and B of Notes To Financial Statements elsewhere herein.
The following table, and the footnotes thereto, set forth certain
specified information concerning the investments of the Company as at February
28, 2002, and as to the valuations thereof, specified in dollars, ascribed to
them by the Board of Directors of the Company as at such date. For comparative
purposes only, the valuations (as applicable) ascribed as at February 28, 2001
are also set forth. Investments listed in the table include only those the value
of which, as at February 28, 2002, had not, then or previously, been written
down to zero or disposed of. The table and notes should be read in conjunction
with Notes A and B of Notes To Financial Statements elsewhere herein. (Amounts
are in dollars and are rounded to the nearest thousand.)
Basis
2/28/02 2/28/01 Employed
------- ------- --------
Tumbleweed Communicatons Inc. $1,000(1) $1,000(1) Market
ValiGen, N.V $50,000(2) $444,000(2) Fair Value
Repligen Corp. $1,000(3) $124,000(3) Market
Genitope Corp. $1,508,000(4) $630,000(4) Fair Value
Carta Proteomics, Inc. $188,000(5) $188,000(5) Fair Value
-------- ----------
$1,748,000 $1,387,000
---------- ----------
Notes to Table:
(1) Represents equity investment - 204 shares of Tumbleweed Communications
owned at 2/28/02 and 2/28/01. On October 2, 2000, the Company surrendered
775 shares of Interface for 204 shares of Tumbleweed Communications Corp.
(2) Represents equity investment - 85,404 common shares owned at 2/28/02 and
2/28/01.
(3) Represents equity investment - 468 shares of common stock owned at 2/28/02
and 30,718 shares of common stock owned at 2/28/01. (30,250 shares were
sold during the past fiscal year. Sales proceeds totaled $75,031.)
(4) Represents equity investment - 420,858 shares of Series A Preferred and
332,992 shares Series B Preferred owned at each date.
(5) Represents equity investment - 33,333 shares of Common Stock, 100,000
shares of Series A Preferred Stock and 10,000 shares of Series B Preferred
Stock owned at each date.
Because of valuation factors, increases or decreases in the dollar amount of any
particular investment, business judgment, and other investment decision factors,
the amount of the Company's interest in any particular investee may vary from
time to time.
Governmental Regulation
The 1940 Act imposes many and varied restrictions on the activities of a
BDC, including restrictions on the nature of its investments. Some, but not all,
of the restrictions imposed on the activities of a BDC by such Act are described
in the following three paragraphs.
Generally speaking, the 1940 Act prohibits a BDC from investing in certain
types of companies, such as brokerage firms, insurance companies, investment
banking firms and investment companies. Moreover, the 1940 Act limits the type
of assets that a BDC may acquire to "qualifying assets" and certain assets
necessary for its operations (such as office furniture, equipment and
facilities) if, at the time of acquisition, less than 70% of the value of its
assets consist of qualifying assets. Qualifying assets include: (i) securities
of companies that were eligible portfolio companies (as defined in the 1940 Act)
at the time that the BDC acquired their securities; (ii) securities of bankrupt
or insolvent companies that are not otherwise eligible portfolio companies;
(iii) securities acquired as follow-on investments in companies that were
eligible at the time of the BDC's initial acquisition of their securities but
are no longer eligible, provided that the BDC has maintained a substantial
portion of its initial investment in those companies; (iv) securities received
in exchange for or distributed in or with respect to any of the foregoing; and
(v) cash items, Government securities and high-quality short-term debt. The 1940
Act also places restrictions on the nature of the transactions in which, and the
persons from whom, securities can be purchased in order for the securities to be
considered qualifying assets.
A BDC is permitted, under specified conditions, to issue multiple classes
of senior debt and a single class of preferred stock if its asset coverage, as
defined in such Act, is at least 200% after the issuance of the debt or the
preferred stock.
A majority of the members of the Board of Directors of a BDC must not be
"interested persons" of the BDC as that term is defined in the 1940 Act. Most
transactions involving a BDC and its affiliates (as well as affiliates of those
affiliates) require the prior approval of a majority of the BDC's independent
directors and a majority of the directors having no financial interest in such
transactions. Some transactions involving certain closely affiliated persons of
the BDC, including its directors, officers and employees, still require the
prior approval of the Securities and Exchange Commission (the "Commission"). In
general, (a) any person who owns, controls, or holds with power to vote, more
than 5% of a BDC's outstanding Common Stock, (b) any director, executive officer
or general partner of that person, and (c) any person who directly or indirectly
controls, is controlled by, or is under common control with, that person, must
obtain the prior approval of the BDC's independent directors, and, in some
instances, the prior approval of the Commission, before engaging in certain
transactions involving the BDC or any company controlled by the BDC.
Risk Factors Involved In Investing In A BDC
Due to the nature of the usual investment portfolio of a BDC similar to
the limited size and scope of the Company, an investment in the securities of
such a BDC involves a degree of risk that exceeds the risks involved in
investing in an operating company. Since the Company has elected to become a
BDC, such risks are now applicable to the securities of the Company. The
following, generally speaking, includes some, but not all, of such risks:
(a) The usual principal business objective of a BDC is to seek long-term
capital appreciation by making venture capital investments primarily in new and
developing companies which management of the BDC believes offer significant long
term potential for capital appreciation.
(b) An investment in a development stage company or in a new and
developing company subjects the BDC to a number of the same risks to which such
investee entity is subject, namely: (i) the problems, expenses, difficulties,
complications and delays that can be expected to be encountered by such an
entity in connection with the attempted development of a commercially viable
product and bringing such product to market, (ii) possible need by such entity
of additional financing, (iii) competition encountered by such entity, including
competition from companies with greater financial resources, more extensive
development, manufacturing, marketing and service capabilities and a larger
number of qualified managerial and technical personnel.
(c) Many of the securities acquired by a BDC are "restricted securities"
within the meaning of the Securities Act of 1933 ("Securities Act") and cannot
be resold without compliance with the Securities Act. Such restrictions on
resale will most likely adversely affect the liquidity and marketability of such
securities. Registration for sale of restricted securities under the Securities
Act is within the sole province of the issuer concerned. Such registration is
likely to be a time-consuming and expensive process and the BDC in certain cases
may have to bear the expense of such registration. In addition, a BDC always
bears the risk, because of the delays inherent in the registration process, that
it will be unable to resell the securities held by it, or that it will not be
able to obtain an attractive price for them. In the event the BDC is unable to
cause the securities to be registered for resale, it will have to seek to rely
upon an exemption from registration. Among other exemptions, Rule 144
promulgated under the Securities Act imposes a one-year holding period prior to
the sale of restricted securities and establishes volume limitations on the
amount of any restricted securities that can be sold within certain defined time
periods. Furthermore, there cannot be any assurance that there ever will be a
market for the securities held by a BDC; or if a market should develop, that
such market will be an established market and able to absorb the sale of a
sizable amount of securities.
(d) It may become necessary to make additional investments in investee
companies so as to protect a prior investment. Such follow-on investments may
limit the number of companies in which a small size BDC has the financial
ability to invest. Furthermore, a BDC with limited funds available may not have
sufficient funds to make as many follow-on investments as it deems necessary and
any follow-on investments which it makes may not be sufficient to protect its
prior investments in such entity, with the result that it may experience
significant losses in such investments. A decision not to make a particular
follow-on investment, or the financial inability to make it, may have a material
adverse impact on the investee.
(e) A BDC similar in size and scope to the Company is a "closed-end
non-diversified company" as that term is defined in the 1940 Act. Such small
size prevents it from being able to commit its funds to the acquisition of
securities of a large number of companies and prevents it from being able to
achieve the same type of diversification as larger entities engaged in venture
capital activities. Furthermore, such small size places it at a competitive
disadvantage with other venture capital investing entities that have far greater
financial resources available.
(f) The investment objective of a BDC similar in size and scope to the
Company is long-term capital appreciation. To the extent that any income is
derived from operations, it is likely that it will be used entirely to fund
additional investments and continuing working capital needs rather than be
distributed to stockholders.
(g) In order to increase its ability to invest in eligible portfolio
companies, a BDC similar in size and scope to the Company may borrow monies and
pay interest on such borrowings. Any investment gains made with the additional
monies in excess of interest paid will cause the net asset value of the BDC's
stock to rise faster than would otherwise be the case. On the other hand, if the
investment performance of the additional securities purchased fails to cover
their cost (including any interest paid on the money borrowed), the net asset
value of the BDC will decrease faster than would otherwise be the case. This is
known as "leveraging."
For further details concerning the financial condition of the Company and
its ability to make investments, reference should be made to "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
elsewhere herein.
Personnel
The Company presently employs three persons (including Messrs. Stephen and
Richard Globus) on a full-time basis.
Item 2. PROPERTIES
The Company continues to occupy office space at the premises formerly
owned by it (44 West 24th Street, New York, New York). While no formal lease was
ever entered into with Idex (now Globus Studios, Inc.) the Company is paying a
charge of $1,785 per month, which charge includes office space and electricity.
Item 3. LEGAL PROCEEDINGS
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCK HOLDER MATTERS.
(a) Market information. Prior to February 11, 1991, the Company's Common
Stock was traded in the over-the-counter market, but it is no longer traded in
that or any other "established public trading market" as that term is defined in
Securities & Exchange Commission regulations. On May 7, 2001 the National
Quotation Bureau advised the Company that the last bid price for the Common
Stock of the Company shown on its records was for $.25 on September 22, 1999.
Such bid price, however, does not represent an actual transaction. A data and
statistics search made by the Company on the Website of the National Quotation
Bureau on the Internet on May 5, 2001 showed "no results" for the Company and
"'gpix' security is not recognized" for a "symbol lookup" quote search.
Reference is also made to Item 5 of Registrant's Form 10-K for its fiscal year
ended February 29, 2000 which Item is incorporated herein by reference.
(b) Holders. The number of holders of record of the Common Stock of the
Company as of February 28, 2002, was approximately 216.
(c) Dividends. No dividends on the Common Stock have been paid since the
organization of the Company.
Item 6. SELECTED FINANCIAL DATA
The following selected financial information was abstracted from the
financial statements of the Company appearing elsewhere herein and reference
should be made to such statements for more details: (All figures are in dollars
and are rounded)
Year Ended
2/28/02 2/28/01 2/29/00 2/28/99 2/28/98
--------- --------- --------- --------- ---------
Statement of Operations:
Gain (loss)
on investments 436,000 (416,000) 403,000 (578,000) (270,000)
Interest and Dividend
Income -0- 1,000 11,000 12,000 14,000
Consulting and other
income 41,000 32,000 54,000 67,000 77,000
Earnings (loss) 104,000 (703,000) 46,000 (814,000) (518,000)
Per share:
Earnings (loss) 0.04 (0.30) 0.02 (0.35) (0.22)
Cash dividends -0- -0- -0- -0- -0-
Balance sheet:
Total assets 1,761,000 1,419,000 1,932,000 1,795,000 2,730,000
Shareholders' equity
(capital deficiency) (414,000) (518,000) 185,000 139,000 953,000
Item 7. 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 February 28, 2002, the Company had total assets of $1,761,000, compared
to $1,419,000 as at February 28, 2001 and $1,932,000 as at February 29, 2000.
Included in total assets at such dates were investments of $1,748,000 (2002),
$1,387,000 (2001) and $1,863,000 (2000). Shareholders' equity (deficiency) at
such dates was ($414,000) (2002), $(518,000) (2001) and $185,000 (2000). Gain
(loss) on investments for such periods amounted to $436,000 (2002), $(416,000)
(2001) and $403,000 (2000). Included in such gains (losses) were $18,000 of
realized gain on investments and $418,000 of change in unrealized gain (loss) on
investments for 2002; $56,000 of realized gain on investments and ($472,000) of
change in unrealized gain (loss) on investments for 2001; and $52,000 of
realized gain on investments and $351,000 of change in unrealized gain (loss) on
investments for 2000. The Company sold 30,250 shares of Repligen Corporation in
fiscal 2002 with sales proceeds of approximately $75,000 used to pay operating
expenses. The Board of Directors decided to write down the value of the ValiGen
stock due to the uncertain future of the company with the closing of their
American facilities. Another investment, Genitope Corporation, recently
completed a private placement and due to this strong showing the Board of
Directors deemed it appropriate to increase the fair value of the stock.
Operating expenses, including interest charges, amounted to $373,000 for 2002;
$320,000 for 2001 and $422,000 for 2000. Included in operating expenses were
interest charges of $22,000 for 2002, $15,000 for 2002 and $20,000 for 2000.
Income (loss) from operations, after provision for taxes, was $104,000 for 2002;
($703,000) for 2001 and $46,000 for 2000. Net earnings (loss) per share were
$0.04 for 2002; ($0.30) for 2001 and $0.02 for 2000. The weighted average number
of shares of Common Stock outstanding at such dates was 2,347,257 for 2002, 2001
and 2000.
Liquidity, Capital Resources and Other Matters Affecting Financial Condition
The Company's cash position as at February 28, 2002 (i.e., $0) is
offsetable by approximately $2,070,000 owing to members of the Globus family as
follows: (i) the amount of loans payable at such date (including accrued
interest) to Mr. Stephen E. Globus (i.e., approximately $215,000); (ii) the
amount of loans payable at such date (including accrued interest) to Mr. Richard
D. Globus (i.e., approximately $1,000) (iii) the amount of loans payable at such
date (including accrued interest) to SRG Capital Partnership, which Messrs.
Stephen E. and Richard D. Globus are the two sole partners, (i.e., approximately
$189,000); (iv) the amount of loans payable at such date (including accrued
interest) to Ms. Jane Globus, the mother of Stephen and Richard Globus (i.e.,
approximately $338,000); and (v) the amount of accrued salary owing at such date
to Stephen and Richard Globus, aggregating approximately $1,327,000. SRG Capital
Partnership has periodically loaned the Company various amounts during the year:
$10,000 on May 1, 2001; $10,000 on May 17, 2001; $10,000 on May 25, 2001;
$12,500 on July 2, 2001; $4,000 on August 24, 2001; $6,000 on September 14,
2001; $4,000 on October 9, 2001; $5,000 on November 30, 2001; and $5,000 on
February 19, 2002. The principal loan balance at February 28, 2002 is $167,000,
and accrues interest at 7.75%.
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 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 to continue to make loans to the
Company if necessary. See also Note A (1) of Notes to Financial Statements
elsewhere herein.
In connection with loans payable by the Company, including accrued
interest, to Messrs. Stephen E. and Richard D. Globus, such indebtedness
aggregated: approximately $249,000 at February 29, 2000; approximately $326,000
at February 28, 2001 and approximately $405,000 at February 28, 2002. As at
April 30, 2002, such indebtedness aggregated approximately $433,000. As at April
30, 2002 the indebtedness owing by the Company to Ms. Jane Globus aggregated
approximately $340,000. As at April 30, 2002, unpaid salaries owing to Messrs.
Stephen E. and Richard D. Globus aggregated approximately $1,343,000; so that as
at such date the total of monies owed to Messrs. Stephen E. Globus, Richard D.
Globus and Ms. Jane Globus aggregated approximately $2,116,000.
There are in fact presently no known events that can be considered certain
to occur which would materially change favorably or unfavorably 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 full or
substantially full repayment, 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 this Report to
which Item reference should be made.)
The nature and extent of the Company's investments as at February 28, 2002
are more fully discussed in Item 1 of this Report and in Notes A and B of Notes
to Financial Statements elsewhere herein and reference should be made to such
Item and such Note.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not Applicable.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by Item 8 appears at pages F-1 through F-10
(inclusive) of this Report, which pages follow Item 14 of this Report. The
following is an Index to the referred to Financial Statements and Supplementary
Data:
Report of Independent Auditors F-1
Balance Sheets as at February 28, 2002 and February 28, 2001 F-2
Statements of Operations
For the Three Years Ended February 28, 2002 F-3
Statement of Changes in Shareholders' Equity
For the Three Years Ended February 28, 2002 F-4
Statement of Cash Flows
For the Three Years Ended February 28, 2002 F-5
Notes to Financial Statements F-6
All schedules supporting financial statements are omitted because they are
not applicable or the required information is included in the financial
statements or notes thereto.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Stephen E. Globus Chairman of the Board
Richard D. Globus President and Director
Stanley Wunderlich Director
Ronald J. Frank Director
Joseph Mancuso Director
Lisa Vislocky Vice President
STEPHEN E. GLOBUS, age 55, has been an officer and director of the Company
since its organization in 1973, and is currently its Chairman of the Board and
Chief Executive Officer. He is a director of Carta Proteomics, Inc. He is also a
director of Nematron Corporation, a publicly held company, and Plasmaco, Inc., a
wholly-owned subsidiary of Matsushita (Panasonic).
RICHARD D. GLOBUS, age 55, as well as his brother referred to above, has
also been an officer and director of the Company since its organization in 1973,
and is currently its President and Chief Operating Officer. He is also a
director of Globus Studios, Inc. (formerly Idex, Inc.).
STANLEY WUNDERLICH, age 56, holds a BS degree from Brooklyn College and an
LL.B. degree from LaSalle Law School. He is presently, and has been since the
beginning of 1995, engaged in investment banking and financial consulting
activities for various organizations. From 1991 until 1994 he was the Managing
Director of the Institutional Services Department of Robert Todd Financial Corp.
(an investment banking firm). From 1977 until 1987, he was Managing Director of
Krieger, Wunderlich, Fialkov, Scheinman & Co. (a broker-dealer); and from 1972
until 1977 he was a Vice President of Blyth, Eastman, Dillon Union Securities (a
broker-dealer). He is a former member of the Arbitration Committee of the
American Stock Exchange and a former Vice President of the Long Island Forum of
Technology. Mr. Wunderlich is a director of C.P.I. Aerostructures Corp. and has
been a director of the Company since his election as such on December 3, 1992.
RONALD J. FRANK, age 51, is presently, and has been since June 1990, a
private investor. From January 1989 to June 1990, he was associated with Profit
Concepts, Ltd., which was a general partner of an investment partnership and
from March 1987 to January 1989 he was a private financial consultant. Mr. Frank
has been a director of the Company since his election as such on December 3,
1992.
JOSEPH MANCUSO, age 61, holds an Electrical Engineering degree from
Worcester Polytechnic Institute in Massachusetts, an MBA from the Harvard
Business School and a Ph.D. in Educational Administration from Boston
University. He has been Chairman of the Management Department at Worcester
Polytechnic Institute and is presently the head of the Center for
Entrepreneurial Management, Inc. and of the Chief Executive Officers Club in New
York City. Mr. Mancuso is the author of a number of books which have been
published by Simon & Schuster. Mr. Mancuso is a director of TEAM Mucho, Inc. and
has been a director of the Company since his election as such on December 3,
1992.
LISA VISLOCKY, age 44, is a Certified Public Accountant and holds an MBA
in Federal Taxation from Fairleigh Dickinson University. She has been employed
by the Company, on a full-time basis, since March 1986. From September 1983
until February 1986, she was employed by Weiner and Company, Certified Public
Accountants and from 1979 to May 1983 she was an internal auditor for
International Telephone & Telegraph Co., Inc.
Messrs. Wunderlich, Frank and Mancuso are considered to be the members of
the Board of Directors of the Company who are the "independent directors" as
required by the Investment Company Act of 1940. (See the caption "Governmental
Regulation" in Item 1 above.)
Directors are elected at the annual meeting of stockholders and hold
office until the following annual meeting. The most recent annual meeting of
stockholders was held on December 3, 1992. The terms of all officers expire at
the annual meeting of directors following the annual stockholders meeting.
Subject to their contract rights to compensation, if any, officers may be
removed at any time by the Board of Directors.
Item 11. EXECUTIVE COMPENSATION
(a)(b) Summary Compensation Table:
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities All
Annual Stock underlying other
Name and Compen- Award(s) Options/ LTIP Compen-
Principal Year Salary Bonus sation SAR's Payouts sation
Position Ended ($) ($) ($) ($) ($) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
Stephen E
Globus,
CEO 2/28/02 50,000 -- -- -- -- -- --
2/28/01 50,000 -- -- -- -- -- --
2/29/00 50,000 -- -- -- -- -- --
(c) Option/SAR Grants Table -- Not Applicable.
(d) Aggregated Option/SAR Exercises and Fiscal Year-End Option/SAR Value Table
-- Not Applicable.
(e) Long-Term Incentive Plan ("LTIP") Awards Table -- Not Applicable.
(f) Defined Benefit or Actuarial Plan Disclosure -- Not Applicable.
(g) Compensation of Directors -- There are presently no arrangements pursuant
to which Directors of the Company are compensated for any services
provided as a director, including any amounts payable for committee
participation or special assignments.
(h) Employment Contracts and Termination of Employment and Change-In-Control
Arrangements -- Not Applicable.
(i) Report on Repricing of Options/SAR's -- Not Applicable.
(j) Compensation Committee Interlocks and Insider Participation -- The Board
of Directors of the Company did not have any compensation committee or
board committee performing equivalent functions during the last completed
fiscal year. Messrs. Stephen E. and Richard D. Globus participated in all
deliberations and decisions of the Board of Directors of the Company
during its last completed fiscal year.
(k) Board Compensation Committee Report on Executive Compensation -- Not
Applicable.
(l) Performance Graph -- Not Applicable.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 29, 2002,
regarding each person known by the Company to own beneficially more than 5% of
the Company's Common Stock, each director of the Company who owns shares of
Common Stock, and all directors and officers as a group.
Approximate
Amount and Nature of Percent
Name Beneficial Ownership (1) of Class (2)
--------- ------------------------ ------------
Stephen E. Globus * 514,750(3) 22
Richard D. Globus * 513,750 22
Ronald P. Globus * 500,000 22
Ronald J. Frank 1,000 (4)
Stanley Wunderlich none --
Joseph Mancuso none --
All Directors and Officers
as a Group (7 persons) 1,048,200 44(2)
Jane Globus
201 Crandon Blvd.
Key Biscayne, FL 33149 312,292(5) 13
* 44 West 24th Street, New York, NY 10010
(1) Unless otherwise indicated, all shares are directly owned, and the sole
investment and voting power is held, by the persons named. Information in table
has been supplied by the persons concerned or has been obtained from Company
records.
(2) Approximate percent of class has been computed on the basis of the number of
shares of Common Stock outstanding as of March 29, 2002, (2,347,257).
(3) Includes 1,000 shares held for benefit of son.
(4) Less than 1%.
(5) 16,500 shares are held of record and beneficially and the remainder are
beneficially owned. Mrs. Globus is the mother of the three Globus brothers who
disclaim any beneficial ownership of the shares owned by her.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From time to time Messrs. Stephen E. and Richard D. Globus have made loans
to the Company. For details as to amounts owed to them by the Company, reference
should be made to the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" elsewhere herein. Commencing March 1, 1988,
loans owing to Mr. Stephen E. Globus (the principal amount of which was
approximately $215,000 at such date) accrued interest at the rate of 5% per
annum, and commencing May 14, 1999, loans owing to SRG Capital Partnership (the
principal amount of which was approximately $150,000 at such date) accrued
interest at the rate of 7.75% per annum. The Company is also indebted to Messrs.
Stephen E. and Richard D. Globus for unpaid salaries owed to them and is
indebted to Ms. Jane Globus for monies loaned to it by her. For details as to
amounts owed reference should be made to the caption "Management's Discussion
and Analysis of Financial Condition and Results of Operations" elsewhere herein.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1)(2) Financial Statements and Financial Statement Schedules
A list of the Financial Statements and Financial Statement Schedules filed
as a part of this Report is set forth in Item 8 of this Report, which list is
incorporated herein by reference.
(a)(3) Exhibits
3(a) Articles of Incorporation and Amendments Thereto (Incorporated by
reference to Exhibits 2(a), 2(b) and 2(c) filed with Registrant's
Form S-18 Registration Statement, File # 2-72220 NY and to Exhibit
3-1 filed with Registrant's Form 8-K for event of August 7, 1984,
File #0-9987).
3(b) By-Laws (Incorporated by reference to Exhibit 2(d) filed with
Registrant's Form S- 18 Registration Statement, File # 2-72220 NY).
10 Sale of Assets Agreement between Registrant and Idex, Inc. dated
December 11, 1985 (Incorporated by reference to Exhibit 1 to
Registrant's Form 8-K for event of February 27, 1986).
11 Statement re computation of per share earnings. (Included in Note F
of Notes To Financial Statements filed as part of this Report).
(b) Reports on Form 8-K
During the last quarter of the period covered by this Report, no reports
on Form 8-K were filed.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
GLOBUS GROWTH GROUP, INC.
By /s/ Stephen E. Globus
------------------------------
Stephen E. Globus
Chairman of the Board
Dated: New York, NY
June 13, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dated indicated:
Signature Title Date
--------- ----- ----
/s/ Stephen E. Globus
- --------------------------- Chairman of the Board,
Stephen E. Globus (Principal Executive Officer) June 13, 2002
/s/ Richard D. Globus
- --------------------------- President, Director June 13, 2002
Richard D. Globus
/s/ Lisa Vislocky
- --------------------------- Vice President June 13, 2002
Lisa Vislocky
- --------------------------- Director June 13, 2002
Stanley Wunderlich
- --------------------------- Director June 13, 2002
Ronald J. Frank
- --------------------------- Director June 13, 2002
Joseph Mancuso
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Globus Growth Group, Inc.
New York, New York
We have audited the accompanying balance sheets of Globus Growth Group, Inc. as
of February 28, 2002 and 2001, and the related statements of operations, changes
in shareholders' equity (capital deficit) and cash flows for each of the years
in the three-year period ended February 28, 2002. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly, in all
material respects, the financial position of Globus Growth Group, Inc. as of
February 28, 2002 and 2001, and the results of its operations and its cash flows
for each of the years in the three-year period ended February 28, 2002 in
conformity with accounting principles generally accepted in the United States of
America.
As explained in Note B, the financial statements include securities valued at
$1,746,000 at February 28, 2002 (99% of assets) and at $1,262,000 at February
29, 2001 (89% of assets), whose values have been estimated by the Board of
Directors. Those estimated values may differ significantly from the values that
ultimately would be realized.
Eisner LLP
(formerly Richard A. Eisner & Company, LLP)
New York, New York
April 29, 2002
F-1
GLOBUS GROWTH GROUP, INC.
Balance Sheets (Note A)
February 28, February 28,
2002 2001
----------- -----------
ASSETS
Cash $ 21,000
Investments in securities, at fair value (cost of $1,596,000 in 2002 and
$1,653,000 in 2001) (Notes A[2] and B) $ 1,748,000 1,387,000
Other assets 13,000 11,000
----------- -----------
$ 1,761,000 $ 1,419,000
=========== ===========
LIABILITIES
Cash overdraft $ 15,000
Accounts payable and accrued expenses, including salaries due to officer/
shareholders of $1,327,000 in 2002 and $1,227,000 in 2001 1,417,000 $ 1,282,000
Loans payable to officer/shareholders, including accrued interest of
$209,000 in 2002 and $197,000 in 2001 (Note D) 405,000 326,000
Loan payable to related party, including accrued interest of $151,000 in
2002 and $142,000 in 2001 (Note D) 338,000 329,000
----------- -----------
2,175,000 1,937,000
----------- -----------
CAPITAL DEFICIT (Note F)
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 25,000 25,000
Additional paid-in capital 2,747,000 2,747,000
Accumulated deficit (3,145,000) (3,249,000)
Treasury stock, at cost - 151,743 shares (41,000) (41,000)
----------- -----------
(414,000) (518,000)
----------- -----------
$ 1,761,000 $ 1,419,000
=========== ===========
See notes to financial statements F-2
GLOBUS GROWTH GROUP, INC.
Statements of Operations (Note A)
Year Ended
----------------------------------------
February 28, February 28, February 29,
2002 2001 2000
----------- ----------- ----------
Revenue:
Realized gain on investments $ 18,000 $ 56,000 $ 52,000
Change in unrealized gain (loss) on investments 418,000 (472,000) 351,000
----------- ----------- ----------
436,000 (416,000) 403,000
Interest and dividend income 1,000 11,000
Consulting and other income (including approximately $41,000
in 2002, $30,000 in 2001 and $42,000 in 2000 from related
parties) 41,000 32,000 54,000
----------- ----------- ----------
477,000 (383,000) 468,000
----------- ----------- ----------
Expenses:
General and administrative (Note H) 351,000 305,000 288,000
Interest 22,000 15,000 20,000
Write off of uncollectible note receivable and accrued
interest (Note C) 114,000
----------- ----------- ----------
373,000 320,000 422,000
----------- ----------- ----------
Income (loss) before income taxes 104,000 (703,000) 46,000
Income tax provision (benefit)
----------- ----------- ----------
Net income (loss) 104,000 $ (703,000) $ 46,000
=========== =========== ==========
Net income (loss) per share - basic and diluted (Note G) $ 0.04 $ (0.30) $ 0.02
=========== =========== ==========
Weighted average number of common shares- basic
and diluted 2,347,257 2,347,257 2,347,257
=========== =========== ==========
See notes to financial statements F-3
GLOBUS GROWTH GROUP, INC.
Statements of Changes in Shareholders' Equity (Capital Deficit)
Common Stock Treasury Stock
----------------------- Additional -------------------
Number of Paid-in Accumulated Number of
Shares Amount Capital Deficit Shares Cost Total
---------- --------- ---------- ----------- ------- -------- ---------
Balance - February 28, 1999 2,499,000 $ 25,000 $2,747,000 $(2,592,000) 151,743 $(41,000) $ 139,000
Net income 46,000 46,000
---------- --------- ---------- ----------- ------- -------- ---------
Balance - February 29, 2000 2,499,000 25,000 2,747,000 (2,546,000) 151,743 (41,000) 185,000
Net loss (703,000) (703,000)
---------- --------- ---------- ----------- ------- -------- ---------
Balance - February 28, 2001 2,499,000 25,000 2,747,000 (3,249,000) 151,743 (41,000) (518,000)
Net income 104,000 104,000
---------- --------- ---------- ----------- ------- -------- ---------
Balance - February 28, 2002 2,499,000 $ 25,000 $2,747,000 $(3,145,000) 151,743 $(41,000) $(414,000)
========== ========= ========== =========== ======= ======== =========
See notes to financial statements F-4
GLOBUS GROWTH GROUP, INC.
Statements of Cash Flows
Year Ended
---------------------------------------
February 28, February 28, February 29,
2002 2001 2000
--------- --------- ---------
Cash flows from operating activities:
Net income (loss) $ 104,000 $(703,000) $ 46,000
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Realized gain on investments (18,000) (56,000) (52,000)
Unrealized (gain) loss on investments (418,000) 472,000 (351,000)
Write off of uncollectible promissory note receivable
and accrued interest 110,000
Changes in:
Other assets (2,000) 29,000
Accounts payable, accrued expenses and
accrued interest on loans 156,000 119,000 114,000
--------- --------- ---------
Net cash used in operating activities (178,000) (168,000) (104,000)
--------- --------- ---------
Cash flows from investing activities:
Purchase of investments (25,000) (200,000)
Proceeds from sale of investments 75,000 85,000
Loans receivable 154,000
--------- --------- ---------
Net cash provided by (used in) investing activities 75,000 60,000 (46,000)
--------- --------- ---------
Cash flows from financing activities:
Cash overdraft 15,000
Repayments of loans to related party (45,000)
Increase in loans payable to officer/shareholders 67,000 75,000 25,000
Repayment of loans payable to officer/shareholders (4,000) (5,000)
--------- --------- ---------
Net cash provided by (used in) financing activities 82,000 71,000 (25,000)
--------- --------- ---------
Net decrease in cash (21,000) (37,000) (175,000)
Cash - beginning of year 21,000 58,000 233,000
--------- --------- ---------
Cash - end of year $ 0 $ 21,000 $ 58,000
========= ========= =========
See notes to financial statements F-5
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 2002 and 2001
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
[1] The Company:
The Company's principal activity is investing in other companies.
Effective May 27, 1988, the Company elected to be treated as a Business
Development Company.
The Company's principal assets are its investments, which unless sold, do
not generate any cash flow. As a result, the Company has been dependent
upon advances from its officer/shareholders in order to meet its
obligations. The Company's ability to continue to meet its obligations is
dependent upon a ready market for its investments or upon the continued
financial support of the officer/shareholders including their willingness
to refrain from demanding amounts due them, which such
officer/shareholders have agreed to do through March 1, 2003.
[2] Security valuation:
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 including the financial condition and operating results of the
issuer, the nature of the investment and prices paid in private sales of
such securities and capital market conditions. These values may differ
significantly from the values that ultimately would be realized.
[3] Use of estimates:
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
F-6
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 2002 and 2001
NOTE B - INVESTMENTS
February 28, February 28,
2002 2001
-------------------------------------- -----------------------------------
Number of Fair Number of Fair
Security Shares Value Cost Shares Value Cost
- ------------------------------------------------------ ---------- ------------ ---------- --------- ----------- ----------
Common stock - 3.72% in 2002 and 42.00% in 2001:
Catamount Brewing Co. (1) 23,215 $ 176,000 23,215 $ 176,000
Tumbleweed Communications Corp. 204 $ 1,000 7,000 204 $ 1,000 7,000
Valigen, N.V. * 85,404 50,000 444,000 85,404 444,000 444,000
Repligen Corporation 468 1,000 1,000 30,718 124,000 58,000
Carta Proteomics, Inc. 33,333 13,000 13,000 33,333 13,000 13,000
------------ ---------- ----------- ----------
Total common stock 65,000 641,000 582,000 698,000
------------ ---------- ----------- ----------
Preferred stock - 96.28% in 2002 and 58.00% in 2001:
Catamount Brewing Co. Series A Pfd. 4,286 150,000 4,286 150,000
Genitope Corp. Series A Pfd. 420,858 842,000 210,000 420,858 210,000 210,000
Genitope Corp. Series B Pfd. 332,992 666,000 420,000 332,992 420,000 420,000
Carta Proteomics, Inc. Series A Pfd 100,000 150,000 150,000 100,000 150,000 150,000
Carta Proteomics, Inc. Series B Pfd 10,000 25,000 25,000 10,000 25,000 25,000
------------ ---------- ----------- ----------
Total preferred stock 1,683,000 955,000 805,000 955,000
------------ ---------- ----------- ----------
Total investments $ 1,748,000 $1,596,000 $ 1,387,000 $1,653,000
============ ========== =========== ==========
Restricted and not readily marketable securities were valued at a total fair
value of $1,746,000 at February 28, 2002 and 2001, respectively as determined by
the Board of Directors. Such investments consisted of all securities except
Tumbleweed Communications Corp. and Repligen Corporation for which values are
based on quoted market values ($1,000 and $1,000, respectively, at February 28,
2002 and $1,000 and $124,000, respectively, as of February 28, 2001).
TheCompany invests in biotechnology, and computer technology. At February 28,
2002 - 99.9%, and 0.1%, respectively. At February 28, 2001 - 99.9%, and 0.1%,
respectively. All investments are in U.S. companies and are non-income
producing.
(1) Represents in excess of 5% of outstanding voting securities of investee.
* In fiscal 2001, Valigen, N.V. merged with Kimeragen, Inc. and the
Company's shares of Kimeragen, Inc. common and preferred stock has been
exchanged for Valigen, N.V. common stock on the basis of .419 shares of
Valigen, N.V. for 1 share of Kimeragen, Inc.
F-7
GLOBUS GROWTH GROUP, INC.
NOTE B - INVESTMENTS (CONTINUED)
The unrealized appreciation and depreciation at the end of the Company's fiscal
year end is as follows:
February 28, February 28,
2002 2001
--------- ---------
Unrealized appreciation $ 878,000 $ 66,000
Unrealized depreciation (726,000) (332,000)
--------- ---------
Net appreciation (depreciat $ 152,00 $(266,000)
========= =========
NOTE C - PROMISSORY NOTE RECEIVABLE
During the year ended February 1999, the Company loaned $105,000 to Catamount
Brewing Co. The loans were payable on demand and bore interest at 12% on $75,000
of principal and 8.5% on the balance. During fiscal 2000, management determined
that the carrying value of the loans and related interest was impaired and wrote
off the principal of $105,000 and accrued interest of $9,000. In addition, the
Company wrote down its investment in Catamount Brewing Co. common and preferred
stock to zero.
NOTE D - LOANS PAYABLE
Loans from officer/shareholders and a relative of theirs are due on demand and
bear annual interest at 5% - 7.75% (see Note A[1]).
The estimated fair value of these financial instruments approximates their
carrying amount. However, due to the nature of the relationship of the parties,
the amounts are not necessarily indicative of the amounts that could be realized
in a current market exchange.
NOTE E - INCOME TAXES
The Company accounts for income taxes under the provision of Financial
Accounting Standards Board ("FASB") Statement No. 109, "Accounting for Income
Taxes," which requires the Company to recognize deferred tax assets and
liabilities for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. In addition, FASB Statement No. 109 requires the
recognition of future tax benefits, such as net operating loss ("NOL")
carryforwards, to the extent that realization of such benefits is more likely
than not.
At February 28, 2002, the Company had available NOL carryforwards for regular
federal income tax purposes of approximately $605,000, which expire at various
dates through 2022.
F-8
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 2002
NOTE E - INCOME TAXES (CONTINUED)
The components of the deferred income tax assets and liabilities were as follows
as at:
February 28, February 28,
2002 2001
----------- ----------
Deferred tax assets (liabilities):
NOLs and accrued expenses not deductible
for income tax purposes $ 1,108,000 $ 964,000
Unrealized (gain) loss on investments (70,000) 122,000
----------- ----------
1,038,000 1,086,000
Less valuation allowance 1,038,000 1,086,000
----------- ----------
$ 0 $ 0
=========== ==========
The amounts of income taxes provided varied from the amounts which would be
"expected" to be provided at the statutory federal income tax rates in effect
for the following reasons:
February 28, February 28, February 29,
2002 2001 2000
-------- --------- --------
Tax (benefit) computed based on statutory
federal tax rate $ 36,000 $(239,000) $ 16,000
State and local income tax, net of federal income
tax effect 12,000 (84,000) 5,000
Change in valuation allowance (48,000) 323,000 (21,000)
-------- --------- --------
$ 0 $ 0 $ 0
======== ========= ========
NOTE F - SHAREHOLDERS' EQUITY
The Board of Directors has authorized the future sale of up to 300,000 shares of
the Company's authorized, but unissued, common stock at a price of $.50 per
share to individuals to be determined at the discretion of the Board. No such
shares have been issued.
NOTE G - PER SHARE DATA
Per share data is based on the weighted average number of shares of common stock
outstanding.
NOTE H - RELATED PARTY TRANSACTIONS
The Company paid approximately $21,000, $21,000 and $21,000 for rent to a
company affiliated with a shareholder for each of the years ended February 28,
2002, February 28, 2001 and February 29, 2000, respectively.
F-9
NOTE I - SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
Fiscal 2002 Fiscal 2001
--------------------------------------------------- ----------------------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Gain (loss) on
investments $ (32,000) $ (22,000) $ 5,000 $ 485,000 $ (410,000) $ 144,000 $ (148,000) $ (2,000)
Consulting and
other income 15,000 11,000 15,000 7,000 3,000 10,000 13,000
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Total $ (17,000) $ (11,000) $ 5,000 $ 500,000 $ (403,000) $ 147,000 $ (138,000) $ 11,000
=========== =========== =========== =========== =========== ============ =========== ===========
Net (loss) income $ (94,000) $ (102,000) $ (73,000) $ 373,000 $ (473,000) $ 74,000 $ (215,000) $ (89,000)
=========== =========== =========== =========== =========== ============ =========== ===========
(Loss) earnings per
share - basic and
diluted $(0.04) $(0.04) $(0.03) $0.16 $(0.20) $0.03 $(0.09) $(0.04)
===== ====== ====== ===== ====== ===== ====== ======
F-10