Form 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934 For the quarterly period ended June 30, 1998.
[ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ...............to.............
Commission file number: 0-23171 - CIK: 0001045280
Applied Capital Funding, Inc.
-----------------------------
(Exact name of small business issuer as specified in its charter)
Colorado 84-1280679
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4155 E. Jewell Ave., Suite 909
Denver, Colorado 80222
- ---------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, (303) 691-6163
NONE
----
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer
(1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 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
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes......No........
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 15,112,000
Transitional Small Business Disclosure Format (check one); Yes: No: X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the quarter year ended June 30, 1998, are
attached as follows.
<PAGE>
Applied Capital Funding, Inc.
Balance Sheet
- --------------------------------------------------------------------------------
Unaudited Audited
June December
30, 1998 31, 1997
-------- --------
ASSETS
Current Assets - Cash $ 14,068 $ 18,010
-------- --------
TOTAL ASSETS $ 14,068 $ 18,010
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts Payable $ 0 $ 0
Other Accrued Expenses 1,100 622
-------- --------
TOTAL LIABILITIES 1,100 622
-------- --------
SHAREHOLDERS' EQUITY
Preferred Stock, No Par Value,
Non Voting, Authorized 5,000,000 shares;
Issued And Outstanding -0- Shares 0 0
Common Stock, No Par Value
Authorized 50,000,000 shares;
15,112,000 Shares Issued And Outstanding 34,520 31,520
Retained (Deficit) (21,552) (14,132)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 12,968 17,388
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 14,068 $ 18,010
======== ========
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
F-2
<PAGE>
Applied Capital Funding, Inc.
Unaudited Statement Of Operations
- --------------------------------------------------------------------------------
Unaudited Unaudited
3 Months 3 Months
June June
30, 1998 30, 1997
-------- --------
Income:
Loan Fees $ 0 $ 20
------------ ------------
Total Revenue 0 38
------------ ------------
Operating Expenses:
Appraisals, Credit Reports & Closing Fees 0 24
Bank Charges 2 30
Office 60 0
Rent 300 0
Salaries 1,500 0
Telephone 0 103
------------ ------------
Total Expenses 1,862 157
------------ ------------
Net (Loss) (1,862) (119)
============ ============
Basic(Loss) Per Common Share $-0.00 $-0.00
============ ============
Weighted Average Common Shares Outstanding 15,112,000 1,412,000
============ ============
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
F-3
<PAGE>
Applied Capital Funding, Inc.
Unaudited Statement Of Operations
- --------------------------------------------------------------------------------
Unaudited Unaudited
6 Months 6 Months
June June
30, 1998 30, 1997
-------- --------
Income:
Loan Fees $ 0 $ 425
------------ ------------
Total Revenue 0 425
------------ ------------
Operating Expenses:
Accounting 2,000 0
Appraisals, Credit Reports & Closing Fees 1,752 56
Bank Charges 8 46
Office 60 0
Rent 600 0
Salaries 3,000 0
Telephone 0 208
------------ ------------
Total Expenses 7,420 310
------------ ------------
Net (Loss) (7,420) 115
============ ============
Basic(Loss) Per Common Share $-0.00 $ 0.00
============ ============
Weighted Average Common Shares Outstanding 15,112,000 1,412,000
============ ============
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
F-4
<PAGE>
Applied Capital Funding, Inc.
Unaudited Statement Of Cash Flow
- --------------------------------------------------------------------------------
Unaudited Unaudited
6 Months 6 Months
June June
30, 1998 30, 1997
-------- --------
Net (Loss) ($ 7,420) $ 115
-------- --------
Plus Items Not Affecting Cash Flow: 0 0
Contributed Services 3,000 0
Increase (Decrease) In Accounts Payable 0 0
Increase (Decrease) In Accrued Expenses 478 (80)
-------- --------
Net Cash Flows From Operations (3,942) 35
-------- --------
Cash Flows From Investing Activities:
0 0
-------- --------
Net Cash Flows From Investing: 0 0
-------- --------
Cash Flows From Financing Activities:
0 0
-------- --------
Net Cash Flows From Financing: 0 0
-------- --------
Net Increase (Decrease) In Cash (3,942) 35
Cash At Beginning Of Period 18,010 9
-------- --------
Cash At End Of Period $ 14,068 $ 44
======== ========
Summary Of Non-Cash Investing And Financing
Activities:
$ 0 $ 0
======== ========
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
F-5
<PAGE>
Applied Capital Funding, Inc.
Notes To Unaudited Financial Statements
For The Six Month Period Ended June 30, 1998
- --------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the three month and six month
periods ended June 30, 1998 and June 30, 1997 were taken from the books and
records without audit. However, such information reflects all adjustments
(consisting only of normal recurring adjustments, which are of the opinion of
management, necessary to reflect properly the results of interim periods
presented). The results of operations for the six month period ended June 30,
1998 are not necessarily indicative of the results expected for the year ended
December 31, 1998.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Management's Discussion and Analysis
- ------------------------------------
The management of the Company has completed its analysis of the specialized
marketing of the Company's business of commercial and residential mortgage
brokering. Management is capable of proceeding with marketing its mortgage
brokerage service on the internet, but is unable to accurately evaluate the
affect of competition or to project revenues from such marketing activities.
Management is concerned about a potential downturn in the economy and an
accompanying increase in interest rates as they apply to mortgage loans. Such an
increase in interest rates has historically deterred new borrowers and the
number of mortgage loans in the Denver and Colorado area have decreased
significantly in direct proportion to the amount of interest rate increase.
Because of this, and to determine, to whatever extent possible, the future
growth and direction of the Company, the directors have called the Annual
Meeting of the shareholders for 10 am., July 20, 1998, at which the directors
will review the activities of management and seek guidance and suggestions from
the shareholders as to whether the thrust of the business of the Company should
be continued or changed to a more productive enterprise.
Financial Condition, Capital Resources and Liquidity
- ----------------------------------------------------
The unaudited financial statement for the quarter-year ended June 30,1998,
indicates the Company's lack of sufficient working capital and raises
substantial doubt about its ability to continue as a going concern.
Nevertheless, the Company has continued in operation despite the continuous
decline in its total revenue since inception resulting, in management's opinion,
primarily, from the combined effect of the following factors: (i) intense
competition from larger and better financed mortgage brokers and banks; (ii) the
Company's lack of operating capital and (iii) the limited amount of time and
effort able to be devoted to the Company's affairs by its management since June
1996. At the current minimum level of the Company's operations, management
believes, without assurance, that the Company has sufficient cash assets to
enable it to continue in operation for the next twenty-four months. While
management's business plan envisions the Company continuing its historic
operations in the mortgage refinance and second mortgage business on an economic
basis, management has not generated additional revenue from business activities.
At the present time management is unable to accurately evaluate the likelihood
of any success of its business plan. Management's immediate plan is to discuss
with its shareholders, at the Company's Annual Meeting in July, possible
alternatives to its current business activities.
To effect any alternative business plans or arrangements may involve
seeking addition capital for the Company, but there is no commitment by any
person to provide additional equity or debt funding to the Company. While
management has determined to explore potential capital resources, there can be
no assurance that additional equity and/or debt financing will be available to
the Company. The Company's executive officers have indicated their willingness
to provide capital to fund the Company's operations from their personal
resources should implementation of an alternative business plan appear
profitable.
<PAGE>
Year 2000 Issues. The mortgage business of the Company may be impacted to
an unknown degree in the computation of forward interest rates and any unknown
problems exhibited by the Company's wholesalers of mortgage funds upon which the
Company's lending activities entirely depend. The Company is unable at this date
to make any reasonable estimate of difficulties which may be encountered in the
future due to the impact of computer technology which may be unable to
accommodate the automatic use of the year 2000 in numbered use.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
(2) Plan of acquisition, reorganization, arrangement liquidation, or succession.
Not applicable.
(4) Instruments defining the rights of holders, incl. Indentures.
Previously filed.
(10) Material contracts.
None.
(11) Statement re: computation of per share earnings.
Previously filed.
(15) Letter on unaudited interim financial information.
See Note 1. of unaudited financial statements.
(19) Reports furnished to securities holders.
None.
(22) Published report regarding matters submitted to vote.
None.
(23) Consents of experts and counsel.
Previously filed.
(24) Power of attorney.
Previously filed.
(27) Financial Data Schedule
Signatures.
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
APPLIED CAPITAL FUNDING, INC.
(Registrant)
Date July 8, 1998 By /s/
----------------------------------------
David R. Reitsema, Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 14,068
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 14,068
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 34,520
<OTHER-SE> (21,552)
<TOTAL-LIABILITY-AND-EQUITY> 14,068
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,862
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,862)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,862)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,862)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
