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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, 2003
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,
2003 was 2,335,757 (excluding 163,243 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 494,965 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.
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes No |X|
The common shares of the Company have not been publicly traded in four years.
The last transaction of common stock was a purchase of 11,500 shares of common
stock at $0.01 per share. Said price was determined by an existing shareholder
offering said stock to the Company for purchase into treasury. However, it is
the Company's opinion that it is not possible to accurately calculate the
aggregate market value as there is no trading market for the common stock.
DOCUMENTS INCORPORATED BY REFERENCE - None
This report consists of 28 Pages
PART I
Item 1. BUSINESS
General Background
The Company, a New York corporation, was organized on August 6, 1976 under
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 27,
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"). The decision to become a BDC was made primarily to better reflect the
Company's anticipated future business and development relationships. A BDC is an
investment company designed to assist eligible portfolio companies with capital
formation. 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 is made to "Risk Factors Involved In Investing In A BDC"
herein. Special attention should be paid to Note A (1) of the Notes to Financial
Statements contained herein with respect to a discussion of conditions which
raise substantial doubt about the Company's ability to continue as a going
concern.
Investment Portfolio
As at February 28, 2003, 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) 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. Genitope's
lead product, GTOP-99, is currently in a pivotal Phase 3 Trial and has completed
several Phase 2 trials. Genitope has a website at www.Genitope.com.
(ii) ExSar, Inc. (formerly Carta Proteomics, Inc.) ("ExSar") - 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. ExSAR states "ExSAR is a drug discovery company focused on the
rational design of optimized nuclear hormone receptor (NHR) modulators with
reduced receptor-mediated toxicity. ExSAR's proprietary discovery platform
enables intrinsic drug activity profiling at the molecular level by illuminating
the activation mechanism of drug compounds on their respective targets. ExSAR's
advanced hydrogen/deuterium-exchange technology empirically visualizes the
molecular mechanism of drug-target interactions and thereby affords rapid
structure/activity relationships." ExSAR has a website at www.ExSAR.com.
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 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 herein.
The following table, and the footnotes thereto, set forth certain
specified information concerning the investments of the Company as at February
28, 2003, 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, 2002
are also set forth. Investments listed in the table include only those, the
value of which, as at February 28, 2003, 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
2/28/03 2/28/02 Employed
------- ------- --------
Genitope Corp. $1,130,000(1) $1,508,000(1) Fair Value
ExSar, Inc. $ 188,000(2) $ 188,000(2) Fair Value
---------- ----------
$1,318,000 $1,696,000
---------- ----------
Notes to Table:
(1) Represents equity investment - 420,858 shares of Series A Preferred
and 332,992 shares Series B Preferred owned at each date.
(2) 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.
For further information regarding BDC governance, please consult with
www.SEC.gov.
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. As a BDC, such risks are 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 Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" 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.
(b) Holders. The number of holders of record of the Common Stock of the
Company as of February 28, 2003, was approximately 215.
(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 data set forth below is derived from our
audited financial statements. This selected financial data should be read in
conjunction with the section under Item 7, "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the financial statements
included in this annual report on Form 10-K:
Year Ended
2/28/03 2/28/02 2/28/01 2/29/00 2/28/99
------- ------- ------- ------- -------
Statement of Operations:
Gain (loss)
on investments ($428,000) $ 436,000 ($416,000) $ 403,000 ($578,000)
Interest and Dividend
Income -0- -0- $ 1,000 $ 11,000 $ 12,000
Consulting and other
income $ 32,000 $ 41,000 $ 32,000 $ 54,000 $ 67,000
Earnings (loss) ($749,000) $ 104,000 ($703,000) $ 46,000 ($814,000)
Per share:
Earnings (loss) ($0.32) $ 0.04 ($0.30) $ 0.02 ($0.35)
Cash dividends -0- -0- -0- -0- -0-
Balance sheet:
Total assets $ 1,333,000 $ 1,761,000 $ 1,419,000 $1,932,000 $ 1,795,000
Shareholders' equity
(capital deficiency) ($1,163,000) ($414,000) ($518,000) $ 185,000 $ 139,000
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Critical Accounting Policies - Note 1 to our financial statements included in
this report includes a summary of the significant accounting policies and
methods used in the preparation of our financial statements. The following is a
brief discussion of the more significant accounting policies and methods used by
us.
General. 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, disclosure of contingent assets and liabilities and the
reported amounts of revenues and expenses. Actual results could differ from
those estimates.
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.
Valuation of Deferred Tax Assets. We account for taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes," which requires the recognition of tax
benefits or expense on the temporary differences between the tax basis and book
basis of its assets and liabilities. Deferred tax assets and liabilities are
measured using the enacted tax rates expected to apply to taxable income in the
years in which those timing differences are expected to be recovered or settled.
Deferred tax amounts as of February 28, 2003, which consist principally of the
tax benefit of net operating loss carryforwards, a capital loss carryforward and
accrued expenses, amounts to $1,384,000. After consideration of all the
evidence, both positive and negative, especially the fact that we have sustained
operating losses during 2003, management has determined that a valuation
allowance at February 28, 2003 was necessary to fully offset the deferred tax
assets based on the likelihood of future realization.
Results of Operations --- The Company's principal activity is the making of
investments in other companies.
At February 28, 2003, the Company had total assets of $1,333,000, compared
to $1,761,000 as at February 28, 2002 and $1,419,000 as at February 28, 2001.
Included in total assets at such dates were investments of $1,318,000 (2003),
$1,748,000 (2002) and $1,387,000 (2001). Shareholders' equity (deficiency) at
such dates was ($1,163,000) (2003), $(414,000) (2002) and $(518,000) (2001).
Gain (loss) on investments for such periods amounted to $(428,000) (2003),
$436,000 (2002) and $(416,000) (2001). Included in such gains (losses) were
$(776,000) of realized loss on investments and $348,000 of change in unrealized
gain on investments for 2003; $18,000 of realized gain on investments and
$418,000 of change in unrealized gain on investments for 2002; and $56,000 of
realized gain on investments and $(472,000) of change in unrealized (loss) on
investments for 2001. The Company's net loss on investments of ($428,000) in
2003 is the result of 1) the write-off of the Company's investment in ValiGen
($50,000) due to the closing of ValiGen's American
facilities and uncertain future, and 2) the write-down of the Company's
investment in Genitope Corporation ($378,000), based on, among other things, a
recently completed private placement. The Company sold the remaining 468 shares
of Repligen Corporation in November 2002 and the remaining 204 shares of
Tumbleweed Communications Inc. in October 2002 for aggregate sales proceeds of
approximately $2,000. The sales proceeds were used to pay operating expenses.
Operating expenses, including interest charges, amounted to $362,000 for 2003;
$373,000 for 2002 and $320,000 for 2001. Included in operating expenses were
interest charges of $29,000 for 2003, $22,000 for 2002 and $15,000 for 2001.
Income (loss) from operations, after provision (benefit) for taxes, was
$(749,000) for 2003, $104,000 for 2002 and $(703,000) for 2001. Net earnings
(loss) per share were $(0.32) for 2003; $0.04 for 2002 and $(0.30) for 2001. The
weighted average number of shares of Common Stock outstanding was 2,345,335 for
2003, and 2,347,257 for 2002 and 2001.
Liquidity, Capital Resources and Other Matters Affecting Financial Condition
The Company's cash position as at February 28, 2003 is $0. Amounts owing
to members of the Globus family is approximately $2,402,000 as follows: (i) the
amount of loans payable at such date (including accrued interest) to Mr. Stephen
E. Globus (i.e., approximately $217,000); (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 $238,000);
(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
$520,000); and (v) the amount of accrued salary owing at such date to Stephen
and Richard Globus, aggregating approximately $1,427,000. SRG Capital
Partnership has periodically loaned the Company various amounts during the year:
$20,000 on March 14, 2002; $5,000 on April 18, 2002; $20,000 on May 22, 2002.
The principal loan balance at February 28, 2003 is $200,500, and accrues
interest at 7.75%. Mrs. Jane Globus has also periodically loaned the Company
various amounts during the year: $9,500 on May 1, 2002; $15,000 on June 18,
2002; $5,000 on June 20, 2002; $5,000 on July 18, 2002; $6,500 on July 31, 2002;
$3,500 on August 2, 2002; $5,000 on August 21, 2002; $8,000 on August 23, 2002;
$7,000 on August 26, 2002; $5,500 on September 5, 2002; $3,000 on September 17,
2002; $5,000 on September 27, 2002; $4,000 on October 2, 2002; $7,000 on October
17, 2002; $3,000 on October 23, 2002; $8,000 on November 18, 2002; $7,000 on
November 26, 2002; $5,000 on November 29, 2002; $5,000 on December 18, 2002;
$5,000 on December 30, 2002; $6,000 on January 21, 2003; $5,000 on January 29,
2003; $7,500 on February 13, 2003; $8,500 on February 18, 2003; $8,000 on
February 26, 2003. The principal loan balance at February 28, 2003 is
approximately $355,000, and accrues interest at 5.0%.
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) and Note C 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 $326,000 at February 28, 2001; approximately $405,000
at February 28, 2002 and approximately $455,000 at February 28, 2003. As at
April 30, 2003, such indebtedness aggregated approximately $457,000. As at April
30, 2003 the indebtedness owing by the Company to Ms. Jane Globus aggregated
approximately $556,000. As at April 30, 2003, unpaid salaries owing to Messrs.
Stephen E. and Richard D. Globus aggregated approximately $1,443,000; 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 $2,456,000.
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, 2003
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-9
(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:
Independent Auditors' Report F-1
Balance Sheets as at February 28, 2003 and February 28, 2002 F-2
Statements of Operations
For the Three Years Ended February 28, 2003 F-3
Statements of Changes in Shareholders' Equity (Capital Deficit)
For the Three Years Ended February 28, 2003 F-4
Statements of Cash Flows
For the Three Years Ended February 28, 2003 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.
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.
(the "Company") as of February 28, 2003 and 2002, 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, 2003. 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, 2003 and 2002, and the results of its operations and its cash flows
for each of the years in the three-year period ended February 28, 2003 in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note A[1] to the
financial statements, the Company has a capital deficit and is dependent upon
the sale of its investments in privately held securities to generate funds to
meet its obligations together with continued financial support from its
officers/shareholders, neither of which events are assured. These factors raise
substantial doubt about the ability of the Company to continue as a going
concern. Management's plans in regard to these matters are also described in
Note A[1]. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
As explained in Note B, the financial statements include securities valued at
$1,318,000 at February 28, 2003 (99% of assets) and at $1,746,000 at February
28, 2002 (99% 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
New York, New York
May 6, 2003
GLOBUS GROWTH GROUP, INC.
Balance Sheets (Note A)
February 28,
----------------------------
2003 2002
----------- -----------
ASSETS
Investments in securities, at fair value (cost of $818,000 in 2003 and
$1,596,000 in 2002) (Notes A[2] and B) $ 1,318,000 $ 1,748,000
Other assets 15,000 13,000
----------- -----------
$ 1,333,000 $ 1,761,000
=========== ===========
LIABILITIES
Cash overdraft $ 1,000 $ 15,000
Accounts payable and accrued expenses, including salaries due to officer/
shareholders of $1,427,000 in 2003 and $1,327,000 in 2002 1,520,000 1,417,000
Loans payable to officer/shareholders, including accrued interest of
$226,000 in 2003 and $209,000 in 2002 (Note C) 455,000 405,000
Loan payable to related party, including accrued interest of $164,000 in
2003 and $151,000 in 2002 (Note C) 520,000 338,000
----------- -----------
2,496,000 2,175,000
----------- -----------
CAPITAL DEFICIT (Note E)
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 (3,894,000) (3,145,000)
Treasury stock, at cost - 163,243 shares in 2003 and 151,743 shares in 2002 (41,000) (41,000)
----------- -----------
(1,163,000) (414,000)
----------- -----------
$ 1,333,000 $ 1,761,000
=========== ===========
See notes to financial statements F-2
GLOBUS GROWTH GROUP, INC.
Statements of Operations (Note A)
Year Ended February 28,
---------------------------------------------
2003 2002 2001
----------- ----------- -----------
Revenue:
Realized (loss) gain on investments $ (776,000) $ 18,000 $ 56,000
Change in unrealized gain (loss) on investments 348,000 418,000 (472,000)
----------- ----------- -----------
(428,000) 436,000 (416,000)
Interest and dividend income 1,000
Consulting and other income 32,000 41,000 32,000
----------- ----------- -----------
(396,000) 477,000 (383,000)
----------- ----------- -----------
Expenses:
General and administrative (Note G) 333,000 351,000 305,000
Interest 29,000 22,000 15,000
----------- ----------- -----------
362,000 373,000 320,000
----------- ----------- -----------
(Loss) income before income taxes (758,000) 104,000 (703,000)
Income tax (benefit) provision (9,000) 0 0
----------- ----------- -----------
Net (loss) income $ (749,000) $ 104,000 $ (703,000)
=========== =========== ===========
Net (loss) income per share - basic and diluted (Note F) $ (0.32) $ 0.04 $ (0.30)
=========== =========== ===========
Weighted average number of common shares- basic
and diluted 2,345,335 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 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)
Net loss (749,000) (749,000)
Purchase of Treasury Stock 11,500
---------- --------- ---------- ----------- ------- -------- -----------
Balance - February 28, 2003 2,499,000 $ 25,000 $2,747,000 $(3,894,000) 163,243 $(41,000) $(1,163,000)
========== ========= ========== =========== ======= ======== ===========
See notes to financial statements F-4
GLOBUS GROWTH GROUP, INC.
Statements of Cash Flows
Year Ended February 28,
---------------------------------------
2003 2002 2001
--------- --------- ---------
Cash flows from operating activities:
Net (loss) income $(749,000) $ 104,000 $(703,000)
Adjustments to reconcile net (loss) income to net cash
used in operating activities:
Realized loss (gain) on investments 776,000 (18,000) (56,000)
Unrealized (gain) loss on investments (348,000) (418,000) 472,000
Changes in:
Other assets (2,000) (2,000)
Accounts payable, accrued expenses and
accrued interest on loans 133,000 156,000 119,000
--------- --------- ---------
Net cash used in operating activities (190,000) (178,000) (168,000)
--------- --------- ---------
Cash flows from investing activities:
Purchase of investments (25,000)
Proceeds from sale of investments 2,000 75,000 85,000
--------- --------- ---------
Net cash provided by investing activities 2,000 75,000 60,000
--------- --------- ---------
Cash flows from financing activities:
Cash overdraft (14,000) 15,000
Increase in loans payable to officer/shareholders 202,000 67,000 75,000
Repayment of loans payable to officer/shareholders (4,000)
--------- --------- ---------
Net cash provided by financing activities 188,000 82,000 71,000
--------- --------- ---------
Net decrease in cash 0 (21,000) (37,000)
Cash - beginning of year 0 21,000 58,000
--------- --------- ---------
Cash - end of year $ 0 $ 0 $ 21,000
========= ========= =========
See notes to financial statements F-5
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 2003 and 2002
NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES
[1] The Company and basis of presentation:
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 accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The Company's principal assets
are its investments, which unless sold, do not generate any cash flow. At
February 28, 2003, the Company has a capital deficit of $1,163,000. 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. This raises substantial doubt about the Company's
ability to continue as a going concern. Management intends to closely
monitor its investments for events and circumstances which lead to a sale
of such positions. Ultimately, if a liquidity event does not occur,
management will consider other alternatives including filing for
bankruptcy or entering into a transaction to take the Company private. The
financial statements do not include any adjustment relating to
recoverability of recorded assets or the amount of liabilities that might
be necessary as a result of this uncertainty.
[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, 2003 and 2002
NOTE B - INVESTMENTS
February 28,
--------------------------------------------------------------------------
2003 2002
--------------------------------- ---------------------------------------
Number of Fair Number of Fair
Security Shares Value Cost Shares Value Cost
- ------------------------------------------------------ ---------- ---------- -------- --------- ---------- ----------
Common stock - .99% in 2003 and 3.72% in 2002:
Catamount Brewing Co.* 23,215 $ 176,000
Tumbleweed Communications Corp. 204 $ 1,000 7,000
Valigen, N.V. * 85,404 50,000 444,000
Repligen Corporation 468 1,000 1,000
ExSAR Corporation (formerly Carta Proteomics, Inc.) 33,333 $ 13,000 $ 13,000 33,333 13,000 13,000
---------- -------- ---------- ----------
Total common stock 13,000 13,000 65,000 641,000
---------- -------- ---------- ----------
Preferred stock - 99.01% in 2003 and 96.28% in 2002:
Catamount Brewing Co. Series A Pfd.* 4,286 150,000
Genitope Corp. Series A Pfd. 420,858 631,000 210,000 420,858 842,000 210,000
Genitope Corp. Series B Pfd. 332,992 499,000 420,000 332,992 666,000 420,000
ExSAR Corporation (formerly Carta Proteomics, Inc.)
Series A Pfd. 100,000 150,000 150,000 100,000 150,000 150,000
ExSAR Corporation (formerly Carta Proteomics, Inc.)
Series B Pfd. 10,000 25,000 25,000 10,000 25,000 25,000
---------- -------- ---------- ----------
Total preferred stock 1,305,000 805,000 1,683,000 955,000
---------- -------- ---------- ----------
Total investments $1,318,000 $818,000 $1,748,000 $1,596,000
========== ======== ========== ==========
Restricted and not readily marketable securities were valued at a total fair
value of $1,318,000 and $1,746,000 at February 28, 2003 and 2002, respectively,
as determined by the Board of Directors. At February 28, 2002, the values of
Tumbleweed Communications Corp. and Repligen Corporation are based on quoted
market values (both at $1,000).
The Company invests in biotechnology, and computer technology, at February 28,
2003 - 100% in biotechnology, at February 28, 2002 - 99.9%, and 0.1%,
respectively. All investments are in U.S. companies and are non-income
producing.
* In fiscal 2003, the Company wrote off its investment in Valigen, N.V. and
Catamount Brewing Co. and recognized a realized loss of approximately
$444,000 and $326,000, respectively.
F-7
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 2003 and 2002
NOTE B - INVESTMENTS (CONTINUED)
The unrealized appreciation and depreciation at the end of the Company's fiscal
year end is as follows:
February 28,
----------------------
2003 2002
-------- ---------
Unrealized appreciation $500,000 $ 878,000
Unrealized depreciation 0 (726,000)
-------- ---------
Net appreciation $500,000 $ 152,000
======== =========
NOTE C - 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 D - 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, 2003, the Company has available NOL carryforwards for regular
federal income tax purposes of approximately $801,000, which expire at various
dates through 2023. In addition, the Company has available a capital loss
carryforward of approximately $893,000 which expires in 2008.
The components of the deferred income tax assets and liabilities were as follows
as at:
February 28,
----------------------------
2003 2002
----------- -----------
Deferred tax assets (liabilities):
Net operating loss carryforwards $ 368,000 $ 332,000
Capital loss carryforward 411,000 0
Accrued expenses not deductible
for income tax purposes 835,000 776,000
Unrealized (gain) on investments (230,000) (70,000)
----------- -----------
1,384,000 1,038,000
Less valuation allowance 1,384,000 1,038,000
----------- -----------
$ 0 $ 0
=========== ===========
F-8
GLOBUS GROWTH GROUP, INC.
Notes to Financial Statements
February 28, 2003 and 2002
NOTE D - INCOME TAXES (CONTINUED)
The amounts of income taxes (benefit) provided varied from the amounts, which
would be "expected" provided at the statutory federal income tax rates in effect
for the following reasons:
February 28,
--------------------------------------
2003 2002 2001
--------- -------- ---------
(Benefit) tax computed based on statutory
federal tax rate $(258,000) $ 36,000 $(239,000)
State and local income tax, net of federal income
tax effect (90,000) 12,000 (84,000)
Other 2,000
Tax refund resulting from law change (9,000)
Change in valuation allowance 346,000 (48,000) 323,000
--------- -------- ---------
$ (9,000) $ 0 $ 0
========= ======== =========
NOTE E - 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.
During 2003, the Company repurchased 11,500 shares of its common stock at $.01
per share.
NOTE F - PER SHARE DATA
Per share data is based on the weighted average number of shares of common stock
outstanding.
NOTE G - RELATED PARTY TRANSACTIONS
The Company incurred approximately $21,000 for rent to a company affiliated with
a shareholder for each of the years ended February 28, 2003, 2002 and 2001.
NOTE H - SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
Fiscal 2003 Fiscal 2002
------------------------------------------------------ ----------------------------------------------
First Second Third Fourth First Second Third Fourth
Quarter Quarter Quarter Quarter Quarter Quarter Quarter Quarter
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Gain (loss) on
investments $ (1,000) $ (50,000) $ (377,000) $(32,000) $(22,000) $ 5,000 $485,000
Consulting and
other income $ 32,000 15,000 11,000 15,000
---------- ---------- ---------- ---------- -------- -------- ---------- --------
Total $ 32,000 $ (1,000) $ (50,000) $ (377,000) $(17,000) $(11,000) $ 5,000 $500,000
========== ========== ========== ========== ======= ======== ========== =======
Net (loss) income $ (48,000) $ (81,000) $ (139,000) $ (481,000) $(94,000) $(102,000) $ (73,000) $373,000
========== ========== ========== ========== ======= ======== ========== =======
(Loss) earnings per
share - basic and
Diluted $ (0.02) $ (0.03) $ (0.06) $ (0.21) $ (0.04) $ (0.04) $ (0.03) $ 0.16
========== ========== ========== ========== ======= ======== ========== =======
F-9
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 56, 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 Nematron Corporation, a publicly
held company, and Plasmaco, Inc., a wholly-owned subsidiary of Matsushita
(Panasonic).
RICHARD D. GLOBUS, age 56, 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 57, is currently managing director of KSCA, a
global Public Relations company. Stanley Wunderlich is the former founding
partner of Consulting For Strategic Growth, Ltd., an investor relations firm and
The Renaissance Group, Ltd., and Krieger Wunderlich, Fialkov, Scheinman &
Company; two investment banking firms. Mr. Wunderlich was in charge of corporate
development for clients within the above-mentioned firms. In addition, he was
responsible for activities including initial public offerings, private
placements of equities and institutional private equity offerings. He holds a
law degree from LaSalle Law School. He has been a director of the Company since
his election as such on December 3, 1992.
RONALD J. FRANK, age 52, 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 62, 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 45, 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 Securities
Annual Restricted underlying other All
Name and Compen- Stock Options/ LTIP Compen-
Principal Year Salary Bonus sation Award(s) SAR's Payouts sation
Position Ended ($) ($) ($) ($) ($) ($) ($)
- -------------------------------------------------------------------------------------------------------------------
Stephen E.
Globus,
CEO 2/28/03 50,000 -- -- -- -- -- --
2/28/02 50,000 -- -- -- -- -- --
2/28/01 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 fiscal year ended February
28, 2003. Messrs. Stephen E. and Richard D. Globus participated in all
deliberations and decisions of the Board of Directors of the Company during that
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 April 30, 2003,
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 21
Ronald J. Frank 1,000 (4)
Stanley Wunderlich none --
Joseph Mancuso none --
Jane Globus* 312,292(5) 13
All Directors and Officers
as a Group(6 persons) 1,044,500 45(2)
* 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 April 30, 2003, (2,335,757).
(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 Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" herein. Commencing March 1, 1988, loans
owing to Stephen E. Globus (the principal amount of which was approximately
$215,000 at such date) with 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 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 Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" herein.
Item 14. CONTROLS AND PROCEDURES.
Within the 90-day period prior to the filing of this annual report, an
evaluation of the effectiveness of our disclosure controls and procedures was
made under the supervision and with the participation of our management,
including our chief executive officer and principal accounting officer. Based on
that evaluation, the chief executive officer and principal accounting officer
have concluded that our current disclosure controls and procedures, as designed
and implemented, were effective to ensure that information required to be
disclosed by us in reports that we file or submit under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in Securities and Exchange Commission rules and forms.
Subsequent to the date of their evaluation, there were no significant changes in
our internal controls. There were no significant material weaknesses identified
in the course of such review and evaluation and therefore no corrective measures
were taken by the Company.
PART IV
Item 15. 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
Exhibit A
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).
99 Certification pursuant to Section 906 of Sarbanes-Oxley Act of
2002
(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.
Exhibit A
June 12, 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-K. 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 Vislocky
Lisa Vislocky
Principal Accounting Officer
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 12, 2003
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 12, 2003
/s/ Richard D. Globus
- ----------------------
Richard D. Globus President, Director June 12, 2003
/s/ Lisa Vislocky
- ----------------------
Lisa Vislocky Vice President June 12, 2003
/s/ Stanley Wunderlich
- ----------------------
Stanley Wunderlich Director June 12, 2003
/s/ Ronald J. Frank
- ----------------------
Ronald J. Frank Director June 12, 2003
- ----------------------
Joseph Mancuso Director June 12, 2003
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Stephen E. Globus, Chief Executive officer, certify that:
1. I have reviewed this annual report on Form 10-K of Globus Growth
Group, Inc.;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 annual
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 annual 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 annual 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.
June 12, 2003 /s/ Stephen E. Globus
-----------------------
Stephen E. Globus
Chief Executive Officer
CERTIFICATION PURSUANT TO RULE 13A-14 OR 15D-14 OF THE SECURITIES EXCHANGE ACT
OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002.
I, Lisa Vislocky, Principal Accounting Officer, certify that:
1. I have reviewed this annual report on Form 10-K of Globus Growth
Group, Inc.;
2. Based on my knowledge, this annual 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 annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 annual
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 annual 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 annual 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.
June 12, 2003 /s/ Lisa Vislocky
----------------------------
Lisa Vislocky
Principal Accounting Officer