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, 2002
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 151,743
held in treasury)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBUS GROWTH GROUP, INC.
CONDENSED BALANCE SHEETS
November 30, February 28,
2002 2002
------------ ------------
ASSETS (Unaudited) (See Note 1)
Investments in Securities (Note 3) $ 1,696,000 $ 1,748,000
Other Assets $ 16,000 $ 13,000
----------- -----------
TOTAL $ 1,712,000 $ 1,761,000
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Cash overdraft $ 15,000
Accounts payable and accrued expenses $ 1,472,000 $ 1,417,000
Loans payable to officers/shareholders $ 463,000 $ 405,000
Demand loan payable to related party $ 459,000 $ 338,000
----------- -----------
Total Liabilities $ 2,394,000 $ 2,175,000
----------- -----------
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 $ 25,000 $ 25,000
Additional paid in capital $ 2,747,000 $ 2,747,000
Treasury Stock, 151,743 shares ($ 41,000) ($ 41,000)
Accumulated deficit ($3,413,000) ($3,145,000)
----------- -----------
Total stockholders' deficiency ($ 682,000) ($ 414,000)
----------- -----------
TOTAL $ 1,712,000 $ 1,761,000
----------- -----------
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENT OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended November 30, Ended November 30,
2002 2001 2002 2001
----------- ----------- ----------- -----------
Gain (loss) on investments:
Realized ($56,000) $ 1,000 ($56,000) $ 14,000
Unrealized $ 6,000 $ 4,000 $ 5,000 ($63,000)
----------- ----------- ----------- -----------
Total ($50,000) $ 5,000 ($51,000) ($49,000)
Dividend Income $ 0 $ 0 $ 0 $ 0
Consulting to related party and other income $ 0 $ 0 $ 32,000 $ 26,000
----------- ----------- ----------- -----------
TOTAL ($50,000) $ 5,000 ($19,000) ($23,000)
Expenses:
General and administrative $ 90,000 $ 72,000 $ 236,000 $ 230,000
Interest $ 8,000 $ 6,000 $ 22,000 $ 16,000
----------- ----------- ----------- -----------
TOTAL $ 98,000 $ 78,000 $ 258,000 $ 246,000
(Loss) from operations before taxes ($148,000) ($73,000) ($277,000) ($269,000)
(Benefit)/Provision for taxes ($9,000) $ 0 ($9,000) $ 0
----------- ----------- ----------- -----------
Net (Loss) ($139,000) ($73,000) ($268,000) ($269,000)
----------- ----------- ----------- -----------
Net (Loss) per share of common
stock - basic and diluted ($0.06) ($0.03) ($0.11) ($0.11)
Weighted Average Number of shares of
Stock Outstanding - basic and diluted 2,347,257 2,347,257 $ 2,347,257 2,347,257
----------- ----------- ----------- -----------
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months
Ended November 30,
2002 2001
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ($268,000) ($269,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Realized loss/ (gain) on investments $ 56,000 ($14,000)
Unrealized (gain)/ loss on investments ($5,000) $ 63,000
Increase in accounts payable, accrued expenses and
accrued interest on loans $ 76,000 $ 82,000
(Increase) in other assets ($3,000) ($4,000)
--------- ---------
Net cash used in operating activities ($144,000) ($142,000)
---------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of investments $ 2,000 $ 59,000
--------- ---------
Net cash provided by investing activities $ 2,000 $ 59,000
---------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) in cash overdraft ($15,000)
Repayment of loans payable to officers/shareholders $ 0
Increase in loans payable to officers/shareholders $ 157,000 $ 62,000
--------- ---------
Net cash provided by financing activities $ 142,000 $ 62,000
---------------------------------------------------------------------------------
Net increase in cash $ 0 ($21,000)
Cash - beginning of period $ 0 $ 21,000
--------- ---------
Cash - end of period $ 0 $ 0
--------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 0 $ 0
Income Taxes $ 0 $ 0
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC. Notes to Condensed Financial Statements
(Unaudited) November 30, 2002
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, 2002, the results of operations for the three and nine months ended
November 30, 2002 and 2001, and statements of cash flows for the nine months
ended November 30, 2002 and 2001.
The results of operations for the nine months ended November 30, 2002 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 accounting principles generally accepted
in the United States of America 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, 2002.
The balance sheet at February 28, 2002 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.
Note 3 - Investments
As of February 28, 2002 and November 30, 2002, 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 Management, in the case of
interim financial statements, and by the Board of Directors, in the case of year
end financial statements; in each instance, in the exercise of their respective
judgments, after taking into consideration various indications of value
available to them.
(Continued on next page)
GLOBUS GROWTH GROUP, INC. November 30, 2002
Notes to Condensed Financial Statements
(Unaudited)
Note 3 - Investments (Continued)
November 30, February 28,
2002 2002
---- ----
No. No.
Shares Value Cost Shares Value Cost
------ ----- ---- ------ ----- ----
Common Stock
Catamount Brewing Co. 23,215 $ 176,000 23,215 $ 176,000
Tumbleweed Communications Corp. 0 $ 0 $ 0 204 $ 1,000 $ 7,000
ValiGen, N.V 85,404 $ 0 $ 444,000 85,404 $ 50,000 $ 444,000
Repligen Corporation 0 $ 0 $ 0 468 $ 1,000 $ 1,000
ExSAR Corp. * 33,333 $ 13,000 $ 13,000 33,333 $ 13,000 $ 13,000
---------- ---------- ---------- ----------
Total Common Stock $ 13,000 $ 633,000 $ 65,000 $ 641,000
---------- ---------- ---------- ----------
Preferred Stock
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 $ 842,000 $ 210,000
Genitope Corp. Series B Pfd. 332,992 $ 666,000 $ 420,000 332,992 $ 666,000 $ 420,000
ExSAR Corp. Series A Pfd.* 100,000 $ 150,000 $ 150,000 100,000 $ 150,000 $ 150,000
ExSAR Corp. Series B Pfd. * 10,000 $ 25,000 $ 25,000 10,000 $ 25,000 $ 25,000
---------- ---------- ---------- ----------
Total Preferred Stock $1,683,000 $ 955,000 $1,683,000 $ 955,000
---------- ---------- ---------- ----------
Total Investments $1,696,000 $1,588,000 $1,748,000 $1,596,000
---------- ---------- ---------- ----------
*Note: Carta Proteomics, Inc. changed its name to ExSAR Corp. in
September, 2002.
Item 2. 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 November 30, 2002, the Company had total assets of $1,712,000 compared
to total assets of $1,761,000 at February 28, 2002. Included in total assets
were investments of $1,696,000 at November 30, 2002 and $1,748,000 at February
28, 2002. Shareholders deficiency was ($682,000) at November 30, 2002 and
($414,000) at February 28, 2002. Loss on investments amounted to ($51,000) for
the nine month period ended November 30, 2002 compared to a loss of ($49,000)
for the nine month period ended November 30, 2001. Included in such losses were
($56,000) of realized loss and $5,000 of unrealized gain for the nine month
period ended November 30, 2002 and $14,000 of realized gain and ($63,000) of
unrealized loss for the nine month period ended November 30, 2001. Included in
such gains and losses were ($56,000) of realized loss and $6,000 of unrealized
gain for the three month period ended November 30, 2002 compared to realized
gain of $1,000 and $4,000 of unrealized gain for the three month period ended
November 30, 2001. Operating expenses, including interest charges, amounted to
$258,000 for the 2002 nine month period and $246,000 for the 2001 nine month
period. Operating expenses, including interest charges, amounted to $98,000 for
the three months ended November 30, 2002 compared to $78,000 for the three
months ended November 30, 2001. (Loss) from operations before taxes was
($277,000) and after benefit of tax refund of $9,000, net (loss) after taxes was
($268,000) for the nine month period ended November 30, 2002 compared to
($269,000) for the nine month period ended November 30, 2001. (Loss) from
operations before taxes was ($148,000) and after benefit of tax refund of
$9,000, net (loss) after taxes was ($139,000) for the three months ended
November 30, 2002 compared to ($73,000) for the three months ended November 30,
2001. Net (loss) per share was ($0.11) for the 2002 nine month period compared
to ($0.11) for the comparable 2001 period. Net (loss) per share was ($0.06) for
the three months ended November 30, 2002 compared to ($0.03) for the three
months ended November 30, 2001. The weighted average number of shares of Common
Stock outstanding at November 30, 2002 and 2001 is 2,347,257.
The Company sold its entire position in both Repligen Corporation and
Tumbleweed Communications Inc., the only two publicly traded investments. All
468 shares of Repligen Corporation were sold on November 26, 2002 for $1,375.23
and all 204 shares of Tumbleweed Communications Inc. were sold on October 18,
2002 for $171.96.
Liquidity, Capital Resources and Other Matters Affecting Financial Condition
The near term liquidity of the Company, as well as its near term capital
resources position, are presently 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
Mr. Stephen E. Globus (his individual account) amounted to $216,000 at November
30, 2002, an increase of $1,000 from February 28, 2002. This increase is due to
an increase in accrued interest. Loans payable by the Company, including
interest, to Mr. Richard D. Globus (his individual account) remained the same at
$1,000 as at February 28, 2002. Loans payable to Messrs. Stephen E. and Richard
D. Globus (a separate joint account), including accrued interest, amounted to
$246,000 at November 30, 2002, an increase of $57,000 from $189,000 at February
28, 2002. This increase was due to an increase in principal of $45,000, and an
increase in accrued interest of approximately $12,000. As at November 30, 2002,
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 $459,000, including accrued interest. As at November
30, 2002, unpaid salary owing to Mr. Stephen E. Globus was $716,000, and unpaid
salary owing to Mr. Richard D. Globus and his designee was $685,000; so that at
such date the total of monies owed to Messrs. Stephen E. Globus, Richard D.
Globus and Ms. Jane Globus aggregated approximately $2,323,000.
There are in fact presently no known events that can be considered 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 for its fiscal year ended
February 28, 2002 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 4. Controls and Procedures
As of January 7, 2003, an evaluation was performed under the
supervision and with the participation of the Company's management, including
the Chief Executive Officer and Principal Accounting Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based on that evaluation, the Company's management, including
the Chief Executive Officer and Principal Accounting Officer, concluded that the
Company's disclosure controls and procedures were effective as of January 7,
2003. There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to January 7, 2003.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit A (next page)
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for which
this Report is filed.
Exhibit A
January 14, 2003
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Globus Growth Group, Inc.
File No. 0-9987
Dear Sirs,
We refer to the accompanying periodic report on Form 10-Q. To the best of
the knowledge of each of the undersigned, this report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
The information contained in this report fairly presents in all material
respects the Registrant's financial condition and results of operations as of
the periods stated.
Very truly yours,
S/Stephen E. Globus
Stephen E. Globus
Chief Executive Officer
S/Lisa M. Vislocky
Lisa M. Vislocky
Principal Accounting Officer
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 14, 2003
GLOBUS GROWTH GROUP, INC.
(Registrant)
s/Stephen E. Globus
STEPHEN E. GLOBUS
Chairman of the Board,
(Principal Executive Officer)
s/Lisa M. Vislocky
LISA M. VISLOCKY
Vice President
(Principal Accounting Officer)
I, Stephen E. Globus, Chief Executive Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Globus Growth
Group, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
January 14, 2003 s/Stephen E. Globus
--------------------
Stephen E. Globus
Chief Executive Officer
I, Lisa M. Vislocky, Principal Accounting Officer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Globus Growth
Group, Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect
to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented
in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and we have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within
90 days prior to the filing date of this quarterly
report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors
and the audit committee of the registrant's board of directors (or
persons performing the equivalent function):
a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes
in internal controls or in other factors that could significantly
affect internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
January 14, 2003 S/Lisa M. Vislocky
------------------
Lisa M. Vislocky
Principal Accounting Officer