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 Securites Exchange Act
of 1934
For the quarterly period ended September 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: 0001-45280
Applied Capital Funding, Inc.
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(Exact name of small business issuer as specified in its charter)
Colorado 84-1280679
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(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 requird 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>
Applied Capital Funding, Inc.
Balance Sheet
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Unaudited Audited
September December
30, 1998 31, 1997
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ASSETS
Current Assets - Cash $ 6,564 $ 18,010
-------- --------
TOTAL ASSETS $ 6,564 $ 18,010
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts Payable $ 0 $ 0
Other Accrued Expenses 1,430 622
-------- --------
TOTAL LIABILITIES 1,430 622
-------- --------
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) (29,386) (14,132)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 5,134 17,388
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 6,584 $ 18,010
======== ========
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
2
<PAGE>
Applied Capital Funding, Inc.
Unaudited Statement Of Operations
- --------------------------------------------------------------------------------
Unaudited Unaudited
3 Months 3 Months
September September
30, 1998 30, 1997
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Income:
Loan Fees $ 0 $ 38
------------ ------------
Total Revenue 0 38
------------ ------------
Operating Expenses:
Appraisals, Credit Reports & Closing Fees 0 0
Bank Charges 8 18
Legal & Accounting 1,800 0
Office 352 239
Rent 300 0
Salaries 4,500 0
Stock Transfer Fees 470 0
Taxes - Payroll 404 0
Telephone 0 0
------------ ------------
Total Expenses 7,834 257
------------ ------------
Net (Loss) (7,834) (219)
============ ============
Basic(Loss) Per Common Share $-0.00 $-0.00
============ ============
Weighted Average Common Shares Outstanding 15,112,000 15,112,000
============ ============
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
3
<PAGE>
Applied Capital Funding, Inc.
Unaudited Statement Of Operations
- --------------------------------------------------------------------------------
Unaudited Unaudited
9 Months 9 Months
September September
30, 1998 30, 1997
-------- --------
Income:
Loan Fees $ 0 $ 425
------------ ------------
Total Revenue 0 425
------------ ------------
Operating Expenses:
Appraisals, Credit Reports & Closing Fees 1,752 56
Bank Charges 16 64
Legal & Accounting 3,800 0
Office 412 239
Rent 900 0
Salaries 7,500 0
Stock Transfer Fees 470 0
Taxes - Payroll 404 0
Telephone 0 208
------------ ------------
Total Expenses 15,254 567
------------ ------------
Net (Loss) (15,254) (142)
============ ============
Basic(Loss) Per Common Share $-0.00 $ -0.00
============ ============
Weighted Average Common Shares Outstanding 15,112,000 15,112,000
============ ============
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
4
<PAGE>
Applied Capital Funding, Inc.
Unaudited Statement Of Cash Flow
- --------------------------------------------------------------------------------
Unaudited Unaudited
9 Months 9 Months
September September
30, 1998 30, 1997
-------- --------
Net (Loss) ($15,264) $ (142)
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Plus Items Not Affecting Cash Flow: 0 0
Contributed Services 3,000 0
Increase (Decrease) In Accounts Payable 330 2,500
Increase (Decrease) In Accrued Expenses 478 (95)
-------- --------
Net Cash Flows From Operations (11,446) 2,263
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Cash Flows From Investing Activities: 0 0
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Net Cash Flows From Investing: 0 0
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Cash Flows From Financing Activities:
Common Stock Issued For Cash 0 27,400
Deferred Offering Costs 0 (5,500)
-------- --------
Net Cash Flows From Financing: 0 21,900
-------- --------
Net Increase (Decrease) In Cash (11,446) 24,163
Cash At Beginning Of Period 18,010 9
-------- --------
Cash At End Of Period $ 6,584 $ 24,172
======== ========
Summary Of Non-Cash Investing And Financing
Activities:
$ 0 $ 0
======== ========
The Accompanying Notes Are An Integral Part
Of These Unaudited Financial Statements.
5
<PAGE>
Applied Capital Funding, Inc.
Notes To Unaudited Financial Statements
For The Nine Month Period Ended September 30, 1998
- --------------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the three month and nine month
interim period ended September 30, 1998 and 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 nine month period ended September
30, 1998 are not necessarily indicative of the results expected for the fiscal
year ended September 30, 1998.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited financial statements for the quarter year ended September 30,
1998, are attached as follows.
Item 2. Management's Discussion and Analysis or Plan of Operation
Management's Discussion and Analysis
- ------------------------------------
The management of the Company is pursuing the development of the Company's
historical residential mortgage brokerage business. It currently has
arrangements with wholesale lenders to fund loans the Company originates,
although several lenders the Company has dealt with in the past have filed for
bankruptcy or merged with other entities. Management believes that the
developing economic conditions, including a falling dollar, collapse of
unregulated hedge funds holding mortgage backed securities, decreasing liquidity
in the marketplace, and potential governmental economic policy to inflate the
economy of offset current deflationary pressures all may affect the Company's
efforts to develop its business. Management has been unsuccessful in concluding
the review process of its Form 10-SB by the SEC, which has been ongoing for
almost one year. Neither corporate counsel nor the SEC reviewer have offered any
idea as to when this will occur. As a result, the Company has no likelihood of
raising additional funding for its activities and its officers cannot be paid
more than a minimal salary. Management will continue to work towards completion
of that process.
The unaudited financial statement for the quarter-year ended September 30,
1998, indicates the Company's limited working capital and raises substantial
doubt about its ability to continue as a going concern absent additional funds.
Nevertheless, the Company has continued in operation despite the on-going
decline in its total revenue and capital 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.
To effect any alternative business plans or arrangements may involve
seeking additional 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 the Company's business plan appear profitable.
6
<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 and ancillary
services such as credit agencies 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. The Company has tested its computers and
they appear to be Y2K compliant.
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.
7
<PAGE>
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)
/s/ David R. Reitsema
----------------------------------------
President and CEO
8
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 6,564
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,564
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,564
<CURRENT-LIABILITIES> 1,430
<BONDS> 0
0
0
<COMMON> 34,520
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,564
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 15,254
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15,254)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,254)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,254)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0
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