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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 May 31, 2003
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 |_|
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
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 163,243
held in treasury)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBUS GROWTH GROUP, INC.
CONDENSED BALANCE SHEETS
May 31, February 28,
2003 2003
----------- ------------
ASSETS (Unaudited) (See Note 1)
Cash $ 1,000
Investments in Securities (Note 3) $ 1,318,000 $ 1,318,000
Other Assets $ 18,000 $ 15,000
----------- -----------
TOTAL $ 1,337,000 $ 1,333,000
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Cash overdraft $ 0 $ 1,000
Accounts payable and accrued expenses $ 1,527,000 $ 1,520,000
Loans payable to officers/shareholders $ 458,000 $ 455,000
Demand loan payable to related party $ 596,000 $ 520,000
----------- -----------
Total Liabilities $ 2,581,000 $ 2,496,000
----------- -----------
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, 163,243 shares ($ 41,000) ($ 41,000)
Accumulated deficit ($3,975,000) ($3,894,000)
----------- -----------
Total stockholders' deficiency ($1,244,000) ($1,163,000)
----------- -----------
TOTAL $ 1,337,000 $ 1,333,000
----------- -----------
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months
Ended May 31,
2003 2002
----------- -----------
Consulting and other income - related party $0 $32,000
----------- -----------
TOTAL $0 $32,000
----------- -----------
Expenses:
General and administrative $73,000 $73,000
Interest $8,000 $7,000
----------- -----------
TOTAL $81,000 $80,000
Loss from operations before taxes ($81,000) ($48,000)
Benefit/(Provision) for taxes $0 $0
----------- -----------
Net Loss ($81,000) ($48,000)
----------- -----------
Net Loss per share of common stock -
Basic and diluted (Note 2) ($0.03) ($0.02)
Weighted Average Number of shares of
Stock Outstanding - Basic and diluted
(Note 2) 2,335,757 2,347,257
----------- -----------
(See Accompanying Notes to Financial Statements)
GLOBUS GROWTH GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months
Ended May 31,
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ($81,000) ($48,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Increase in accounts payable, accrued expenses and
accrued interest on loans $14,000 $10,000
(Increase) in other assets ($3,000) ($1,000)
-------- --------
Net cash used in operating activities ($70,000) ($39,000)
------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Decrease) in cash overdraft ($1,000) ($15,000)
Increase in loans payable to shareholders $72,000 $10,000
Increase in loans payable to officers/shareholders $45,000
-------- --------
Net cash provided by financing activities $71,000 $40,000
------------------------------------------------------------------------------
Net increase in cash $1,000 $1,000
Cash - beginning of period $0 $0
-------- --------
Cash - end of period $1,000 $1,000
-------- --------
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) May 31, 2003
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 May
31, 2003, the results of operations for the three months ended May 31, 2003 and
2002, and statements of cash flows for the three months ended May 31, 2003 and
2002.
The results of operations for the three months ended May 31, 2003 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, 2003.
The balance sheet at February 28, 2003 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 date are based on the weighted average number of common shares
outstanding during the period.
Note 3 - Investments
As of February 28, 2003 and May 31, 2003, 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)
Note 3 - Investments (Continued)
May 31, February 28,
2003 2003
---- ----
No. No.
Shares Value Cost Shares Value Cost
------ ----- ---- ------ ----- ----
Common Stock
ExSAR Corp. 33,333 $ 13,000 $ 13,000 33,333 $ 13,000 $ 13,000
---------- -------- ---------- --------
Total Common Stock $ 13,000 $ 13,000 $ 13,000 $ 13,000
---------- -------- ---------- --------
Preferred Stock
Genitope Corp. Series A Pfd. 420,858 $ 631,000 $210,000 420,858 $ 631,000 $210,000
Genitope Corp. Series B Pfd. 332,992 $ 499,000 $420,000 332,992 $ 499,000 $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 $1,305,000 $805,000 $1,305,000 $805,000
---------- -------- ---------- --------
Total Investments $1,318,000 $818,000 $1,318,000 $818,000
---------- -------- ---------- --------
*At May 31, 2003 and February 28, 2003, all investments represent securities
which are not readily marketable and which are carried at fair value.
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 May 31, 2003, the Company had total assets of $1,337,000 compared to
total assets of $1,333,000 at February 28, 2003. Included in total assets were
investments of $1,318,000 at May 31, 2003 and February 28, 2003. Shareholders
deficiency was ($1,244,000) at May 31, 2003 and ($1,163,000) at February 28,
2003. There was no change in the fair value of the investments from February 28,
2003 to May 31, 2003. Operating expenses, including interest charges, amounted
to $81,000 for the three months ended May 31, 2003 and $80,000 for the three
months ended May 31, 2002. (Loss) from operations was ($81,000) for the
three-month period ended May 31, 2003 compared to ($48,000) for the three-month
period ended May 31, 2002. Net (loss) per share was ($0.03) for the three months
ended May 31, 2003 compared to ($0.02) for the three months ended May 31, 2002.
The weighted average number of shares of Common Stock outstanding at May 31,
2003 is 2,335,757 and 2002 is 2,347,257.
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, including accrued interest, to Mr. Stephen E.
Globus (his individual account) amounted to $217,000 at May 31, 2003 and
February 28, 2003. Loans payable, including accrued interest, to Mr. Richard D.
Globus (his individual account) remained the same at $1,000 at May 31, 2003 and
February 28, 2003. Loans payable to Messrs. Stephen E. and Richard D. Globus (a
separate joint account), including accrued interest, amounted to $240,000 at May
31, 2003, an increase of $2,000 from $238,000 at February 28, 2003. This
increase was due to an increase in accrued interest of approximately $2,000. At
May 31, 2003, loans payable, including accrued interest, to another member of
the Globus family, Ms. Jane Globus (the mother of Stephen E. and Richard D.
Globus), amounted to approximately $596,000, an increase of $72,000 in
additional loans and $4,000 in accrued interest from February 28, 2003. At May
31, 2003, unpaid salary owing to Mr. Stephen E. Globus was $741,000, and unpaid
salary owing to Mr. Richard D. Globus and his designee was $710,000; so that at
such date the total of monies owed to Messrs. Stephen E. Globus, Richard D.
Globus and Ms. Jane Globus aggregated approximately $2,505,000.
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 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 10-K Report for its fiscal year
ended February 28, 2003 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 July 15, 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 the 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 July 15, 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
July 15, 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
July 15, 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: July 15, 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
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 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 which regard to
significant deficiencies and material weaknesses.
July 15,2003
/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 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 which regard to
significant deficiencies and material weaknesses.
July 15,2003
/s/ Lisa M. Vislocky
Lisa M. Vislocky
Principal Accounting Officer