<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-KSB/A
FIRST AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
COMMISSION FILE NUMBER O-3718
EQUITY GROWTH SYSTEMS, INC.
(Name of Small Business Registrant in its charter)
DELAWARE
--------
(State or other jurisdiction of incorporation or organization)
11-2050317
----------
(I.R.S. Employer Identification Number)
3821-B TAMIAMI TRAIL, SUITE 201, PORT CHARLOTTE, FLORIDA, 33952
---------------------------------------------------------------
(Address of principal executive offices including Zip Code)
(941) 255-9582
--------------
(Registrant's telephone number)
Securities registered under Section 12(b) of the Act:
Title of each class: NONE Name of each exchange on which registered: NONE
---- ----
Securities Registered under Section 12(g) of the Act:
COMMON STOCK
------------
(Title of Class)
Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during
the past twelve 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 [_]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this form
10-KSB or any amendment to this Form 10-KSB: [X]
State Registrant's revenues for its most recent fiscal year: $ 185,756
---------
State the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the stock was sold,
or the average bid and asked prices of such stock, as of a specified date
within the past 60 days: $ 0 BASED ON THE ABSENCE OF ANY BID PRICE THEREFORE
DURING 1995.
State the number of shares outstanding of each of the Registrant's classes
of equity, as of the the latest practicable date: 3,491,148 SHARES OF COMMON
STOCK, AS OF JUNE 14, 1996.
This amendment to registration statement on Form 10-KSB, is comprised of
18 sequentially numbered pages, with the required exhibit index located at
sequentially numbered page 4.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM PAGE
NUMBER NUMBER ITEM CAPTION
- ------ ------ ------------
<S> <C> <C>
Item 1. * Description of Business
Item 2. * Description of Properties
Item 3. * Legal Proceedings.
Item 4. * Submission of Matters to Vote of Security Holders
Item 5. * Market for Common Equity and Related Stockholder
Matters.
Item 6. 3 Management's Discussion and Analysis of Financial
Condition and Results of Operations or Plan of
Operation
Item 7. 3, 6 Financial Statements
Item 8 * Changes in and Disagreements with Accountants
Item 9. * Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the
Securities Exchange Act of 1934, as amended.
Item 10. * Executive Compensation
Item 11. * Security Ownership of Certain Beneficial Owners &
Management
Item 12. * Certain Relationships and Related Transactions
Item 13. * Exhibits, Financial Statements & Reports on Form 8-K
5 Signatures
19 Additional Information
</TABLE>
_______
* Not affected by this amendment.
Equity Growth Systems, inc., Form 10-SB/A, Page 2
<PAGE> 3
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATION
During the year ended December 31, 1995 the Registrant reported income of
approximately $154,000 as compared to income from all sources of $0 during the
prior year ended. This increase was attributable to the Registrant s
exchanging 1,616,000 shares of common stock in exchange for the corpus of an
indenture of trust, various wrap around mortgages subject to the underlying
mortgages and certain leases and lease income.
During the year ended December 31, 1995 the Registrant's cost of revenue
increased by approximately $177,000 over the prior year end representing costs
associated with increased total revenues. The Registrant's cost of revenue
increased primarily as a result of the increased cost of managing the
mortgages, mostly consisting of interest expenses incurred in satisfying the
underlying mortgages. During the 1995 year end the Registrant recognized an
approximate 1100% increase in its general and administrative expenses primarily
caused by the advent of the interest expenses.
During the year ended December 31, 1995 the Registrant reported a net loss
of approximately $41,045 or $.017 per share as compared to a net loss of
approximately $17,136 or $.01 per share during the prior year end. The
increase in net loss primarily reflects the increase in interest and operating
expenses during 1995 which did not exist in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1995 the Registrant had a working capital position of
approximately $(195,000) as compared to a working capital position of
approximately $(56,000) for the year ended December 31, 1994. This decrease
reflects the Registrant's acquisition of the previously discussed mortgages and
leases. To date the cash flow generated from operations have been adequate to
meet the Registrant's mortgage obligations. A shareholder has been
contributing funds to meet various general and administrative expenses required
to fulfill all of the Registrant's obligations. No officer of the Registrant
has been receiving or accruing compensation at this time.
ITEM 7. FINANCIAL STATEMENTS.
SELECTED FINANCIAL DATA.
The following selected financial data should be read in conjunction with
the financial statements of the Registrant and the notes thereto included
elsewhere herein.
Equity Growth Systems, inc., Form 10-SB/A, Page 3
<PAGE> 4
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
Net Revenues * ** $ 0 0 153,839
Income/(loss) from Operations ( 39,700) ( 17,136) 41,045
Income/(loss) from Operations Per Share *** (Nil) (0.01) (0.017)
Total Assets 5,983 4,843 2,584,527
Total Liabilities 112,565 61,029 1,917,582
Stockholders' Equity (Deficit) ( 106,882) ( 56,186) 666,945
</TABLE>
_______
* As noted in Part I Item 1 above, in March 1974, the Registrant was
forced to discontinue its operations as a result of the foreclosure by
the Registrant's principal creditor, on its security interest in the
Registrant's operating assets. Until March of 1995, the Registrant's
activities were limited to the collection of royalties under the License
Agreement and the Victor Agreement and the disbursement of funds under
the Creditors Plan as described in Item 1 in Part I. Those activities
ceased in August 1991.
** Revenue for 1995 consists of interest and income from wrap around
mortgages.
*** Earnings per share were calculated using the weighted average of common
stock issued and outstanding.
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.
Exhibit 27 - Restated Financial Data Schedule (for SEC use only).
(a) INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.
The audited balance sheet of the Registrant for its years ended December
31, 1995, and 1994 and related statements of operations, stockholder's equity
and cash flows for the years ended December 31, 1995 and 1994 follow in
sequentially numbered pages numbered __ through __. The page numbers for the
financial statement categories are as follows:
Page Description
- ---- -----------
6 Cover Page (Joel S. Baum, C.P.A.)
7 Table of Contents
8 Report of Independent Accountants - December 31, 1995 and 1994;
9 Balance Sheet - December 31, 1995 and 1994;
10 Statements of Income and Accumulated Deficit, December 31, 1995 and 1994;
11 Statements of Shareholders' Deficit, December 31, 1995 and 1994;
12 Statement of Cash Flows - December 31, 1995 and 1994; and
13 Notes to Financial Statements - December 31, 1995 and 1994..
SIGNATURES
Equity Growth Systems, inc., Form 10-SB/A, Page 4
<PAGE> 5
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: August 31, 1996
EQUITY GROWTH SYSTEMS, INC.
By: /s/Edward Granville-Smith/s/
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/Edward Granville-Smith President, Chief Executive August 31, 1996
Edward Granville-Smith Officer and Sole Director
/s/Donald E. Homan Vice President & Chief Financial Officer August 31, 1996
Donald E. Homan
</TABLE>
Equity Growth Systems, inc., Form 10-SB/A, Page 5
<PAGE> 6
ADDITIONAL INFORMATION
CORPORATE HEADQUARTERS:
----------------------
3821-B Tamiami Trail, Suite 201, Port Charlotte, Florida, 33952
Telephone Number (941) 255-9582
Fax Number (941) 625-4491
DIRECTOR
--------
Edward Granville-Smith
<TABLE>
<S> <C>
EXECUTIVE OFFICERS
------------------
Edward Granville-Smith, Jr.; Chairman, President and Chief Executive Officer
Gene R. Moffitt; Executive Vice President, Asset Management and Chief Operating Officer
Rafi Weiss; Senior Vice President, Acquisitions
Donald E. Homan; Vice President & Chief Financial Officer
Charles J. Scimeca; Secretary & Treasurer
</TABLE>
INDEPENDENT PUBLIC ACCOUNTANT:
-----------------------------
JOEL S. BAUM, P.A., CPA
1515 University Drive, Suite 222; Coral Springs, Florida 33071
Telephone Number (945) 752-1712
TRANSFER AGENT:
--------------
LIBERTY TRANSFER COMPANY
191 New York Avenue; Huntington, New York 11743
Exhibits to the Form 10-KSB will be provided to shareholders of the
Registrant upon written request addressed to Edward Granville-Smith, Chairman;
EQUITY GROWTH SYSTEMS, INC., 3821-B Tamiami Trail, Suite 201; Port Charlotte,
Florida 33952. Any exhibits furnished are subject to a reasonable photocopying
charge.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF
THIS FORM 10-KSB AND ANNUAL REPORT TO SHAREHOLDERS NOR HAS IT PASSED UPON ITS
ACCURACY OR ADEQUACY.
Equity Growth Systems, inc., Form 10-SB/A, Page 1
<PAGE> 7
EQUITY GROWTH SYSTEMS, INC.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<PAGE> 8
EQUITY GROWTH SYSTEMS, INC.
FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
TABLE OF CONTENTS
PAGE
FINANCIAL STATEMENTS
Independent auditor's reports 1 & 2
Balance sheets 3
Statements of income 4
Statements of shareholders' equity 5
Statements of cash flows 6
Notes to financial statements 7 - 12
<PAGE> 9
[JOEL S. BAUM P.A. LETTERHEAD]
INDEPENDENT AUDITORS REPORT
To the Shareholders of
Equity Growth Systems, Inc.
Port Charlotte, Florida
We have audited the balance sheets of Equity Growth Systems, Inc. at December
31, 1995 and 1994, and the related statements of income, shareholders' equity
and cash flows for the years then ended. 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. The financial
statements of Equity Growth Systems, Inc. as of December 31, 1994 and for the
year then ended were audited by other auditors and their report dated April 17,
1995 expressed an unqualified opinion except for going concern considerations.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Equity Growth Systems, Inc. at
December 31, 1995 and 1994, and the results of its operations and its cash flow
for the year then ended in conformity with generally accepted accounting
principles.
March 24, 1996
Joel S. Baum, PA, CPA
Coral Springs, Florida
<PAGE> 10
EQUITY GROWTH SYSTEMS, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Current Assets
Cash $ -0- $ 1,051
Other receivables 5,671 3,792
Mortgage receivable,
current portion (Note 7) 215,081 -0-
Promissory notes, current portion
(Note 8) 8,757 -0-
----------- ----------
Total Current Assets 229,509 4,843
----------- ----------
Other Assets
Mortgages receivable (Note 7) 1,989,766 -0-
Promissory Notes (Note 8) 321,670 -0-
Interest Receivable 43,582 -0-
----------- ----------
Total Other Assets 2,355,018 -0-
----------- ----------
Total Assets $ 2,584,527 $ 4,843
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Other Current liabilities (Note 3) $ 41,158 61,029
Mortgage payable, current portion
(Note 7) 383,143 -0-
----------- ----------
Total Current Liabilities 424,301 61,029
Long-Term Liabilities
Mortgage payable (Note 7) 1,493,281 -0-
----------- ----------
Total Liabilities 1,917,582 61,029
----------- ----------
Shareholders' Equity (Note 13)
Preferred Stock - no par value
authorized - 5,000,000 shares;
zero issued and outstanding -0- -0-
Common stock - $.01 par value
authorized - 20,000,000 shares;
issued and outstanding -
2,822,072 shares 28,221 20,000
Capital in excess of par value 2,881,492 2,125,537
Accumulated deficit (2,242,768) (2,201,723)
----------- ----------
666,945 (56,186)
----------- ----------
Total Liabilities $ 2,584,527 $ 4,843
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 3 -
<PAGE> 11
EQUITY GROWTH SYSTEMS, INC.
STATEMENT OF INCOME AND ACCUMULATED DEFICIT
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Revenue $ 153,839 $ -0-
General and Administrative Expenses 194,884 17,136
---------- ----------
Net (Loss) before
provisions for income taxes (41,045) (17,136)
Provisions for income taxes (Note 2) -0- -0-
---------- ----------
Net (Loss) (41,045) (17,136)
========== ==========
Earnings per share $ (.017) $ (.009)
========== ==========
Weighted average of shares outstanding 2,411,036 2,000,000
---------- ----------
</TABLE>
The accompanying notes are an integral part of these financial statement.
- 4 -
<PAGE> 12
EQUITY GROWTH SYSTEMS, INC.
STATEMENTS OF SHAREHOLDERS' DEFICIT
DECEMBER 31, 1995
<TABLE>
<CAPTION> Capital in
No. of Common excess of Accumulated
Shares Stock Par Value Deficit
--------- ------- ---------- ------------
<S> <C> <C> <C> <C>
Balance,
December 31, 1991 1,902,152 $19,022 $2,101,411 $(2,137,567)
Net (Loss) for the
year ended
December 31, 1992 (7,320)
---------- ------- ---------- -----------
Balances,
December 31, 1992 1,902,152 19,022 2,101,411 (2,144,887)
Common Stock issued
as payment for
professional fees 75,000 750
Common Stock issued in
exchange for accrued
interest 22,848 228 24,126
Net (Loss) for the
year ended
December 31, 1993 (39,700)
---------- ------- ---------- -----------
Balances,
December 31, 1993 2,000,000 $20,000 $2,125,537 $(2,184,587)
Net (Loss) for the
year ended
December 31, 1994 (17,136)
---------- ------- ---------- -----------
Balances,
December 31, 1994 2,000,000 $20,000 $2,125,537 $(2,201,723)
Reverse Split (1,800,000) (18,000) 18,000
Common Stock Issued 2,622,072 26,221 737,955
Net Loss for the
year ended
December 31, 1995 (41,045)
---------- ------- ---------- -----------
Balances,
December 31, 1995 2,822,072 $28,221 $2,881,492 $(2,242,768)
========== ======= ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statement.
- 5 -
<PAGE> 13
EQUITY GROWTH SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---------- --------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (Loss) $ 41,045 $(17,136)
Adjustments to Reconcile Income to
Net Cash Used for Operating Activities:
Depreciation 2,022 -0-
Decrease in Development Costs -0- 101
(Increase) in Receivables (2,580,735) -0-
(Decrease) in Accrued Expenses (19,871) -0-
Increase in Notes Payable 1,980,424 15,996
---------- --------
Net Cash (Used) for Operations (763,205) (1,039)
Cash Flows From Financing Activities:
Purchase of Fixed Assets (2,022) -0-
Cash Flow From Investing Activities:
Issuance of Common Stock 8,221 -0-
Additional Paid in Capital Generated
as a result of Issuance of Common Stock 755,955 -0-
---------- --------
764,176 -0-
---------- --------
Net (Decrease) in Cash (1,051) (1,039)
Cash - Beginning of Year 1,051 2,090
---------- --------
Cash - End of Year $ -0- $ 1,051
========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
- 6 -
<PAGE> 14
EQUITY GROWTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS AND ORGANIZATION
The Company (formerly known as InfoTech, Inc.) was organized under the
laws of the State of Delaware on December 08, 1964. The principal
business of the Company is specializing in structuring and marketing
mortgaged backed securities as well as, the acquisition of select
commercial real estate for its own account.
FIXED ASSETS
The fixed assets are depreciated over their estimated allowable useful
lives, primarily over five to seven years utilizing the modified
accelerated cost recovery system. Expenditures for major renewals and
betterments that extend the useful lives of fixed assets are
capitalized. Expenditures for maintenance and repairs are charged to
expenses as incurred.
INCOME TAXES
In February 1992, the Financial Accounting Sttandards Board issued
Statement on Financial Accounting Standards 109 of "Accounting for
Income Taxes." Under Statement 109, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases.
Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the effect
on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
1995
----
<S> <C>
Equipment $ 2,022
-------
Less Accumulated Depreciation (2,022)
-------
$ - 0 -
=======
</TABLE>
The depreciation expense charged during 1995, was $2,022.00.
- 7 -
<PAGE> 15
EQUITY GROWTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 3 - SETTLEMENT WITH CREDITORS
In March of 1995, the Company issued 20,000 shares of the Company's
$.01 par value of common stock after the reverse split in payment of
legal bills of $45,734, and 6,072 shares $.01 par value stock in
payment of accounting bill of $15,360. The balance of $67,832 was
written off as Company was not able to locate creditors.
On August 15, 1995, the Company has issued 200,000 shares of the
Company's $.01 par value of common stock for significant services to
the corporation at the request of its President with a value of
$2,000.
NOTE 4 - EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Edward
Granville-Smith, a chief executive officer for an initial term of five
years commencing June 1, 1995. The Company registered with the
Securities and Exchange Commission to issue 110,000 shares of common
stock to Edward Granville-Smith for compensation for services prior to
June 1, 1995. In addition, annual salary in a sum equal to the lesser
of 5% of the Company's annual gross income on a calendar basis or 15%
of its net pre-tax profit as determined for federal income tax
purposes, without taking depreciation or tax credits into account to
be paid on or before March 30 following the calendar for which salary
is due; subject to availability of cash flow. Edward Granville-Smith
would also be entitled to an annual bonus payable in shares of the
Company's common stock, determined by dividing 5% of the Company's
pre-tax profits for the subject calendar year by the average bid price
for the Company's common stock during the last five trading days prior
to the end of the last day of each year and the first five days of the
new year.
NOTE 5 - CONSULTING AGREEMENTS
The Company entered into two consulting agreements. One with Bolina
Trading Company, S.A., a Panamanian Corporation and the
second one with Warren A. McFadden. Each consultant shall serve as a
special advisor to Mr. Granville-Smith, in conjunction with Mr.
Granville-Smith's role as an officer and director of the Company, with
special responsibilities in the areas of strategic planning and
raising debt on equity capital required to implement the Company's
strategic plans. Bolina Trading Company, S.A. will receive as
compensation 84,000 shares of the Company's common stock plus $100 per
hour after 520 hours of service per year. Warren A. McFadden will
receive as compensation 110,000 shares of the Company's common stock
plus $100 per hour after 520 hours of service per year. Subsequent to
December 31, 1995, all of the above shares of the Company's common
stock were issued.
- 8 -
<PAGE> 16
EQUITY GROWTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 6 - INDENTURE OF TRUST AND WRAP AROUND MORTGAGES RECEIVABLE
On June 30, 1995, the Company issued 1,616,000 shares of common stock
in payment of an indenture of trust and wrap around mortgages subject
to the underlying mortgages, from the following partnerships: Pay-West
Associates, Montco Associates, San-Safe Associates and San-Ten
Associates.
The indenture of trust consists of (4) four demand notes bearing
interest at prime plus 4%. These notes are payable from the rental of
the various properties less payment on the wrap around mortgages. The
payment does not cover the accrued interest which is added back to the
notes.
The wrap around notes bear interest of 9.08% to 13.50%. The
underlying mortgages bear interest at 9.625 to 9.75%. The difference
between payments on the wrap around mortgages and underlying mortgages
are applied to debt service of the demand notes.
NOTE 7 - MORTGAGES
Mortgages consist of the following:
<TABLE>
<CAPTION>
12/31/95
--------
<S> <C> <C>
Subordinate "wrap" mortgage receivables:
(a) Nevada/California Property 12.940% $ 857,192
(b) Tennessee Property 13.500% 316,045
(c) Kansas Property (See Note 14) 12.320% 345,219
(d) Oregon Property 9.080% 686,392
-----------
Less Current Portion (215,081)
----------
$1,989,766
==========
Original Mortgages Payables:
(a) Nevada/California Property 9.750% $ 845,180
(b) Tennessee Property 9.625% 247,311
(c) Kansas Property (See Note 14) 9.750% 136,999
(d) Oregon Property 9.750% 646,934
----------
1,876,424
Less Current Portion (383,143)
----------
$1,493,281
==========
</TABLE>
(a) The mortgage secures a promissory note and is payable in equal
quarterly installments of $42,701.69 with a final payment of
$291,096.92, maturing January 1, 2001. There is also an
underlying "wrap" mortgage that is payable in equal quarterly
installments of $42,826.50, maturing July 1, 2005, with quarterly
payments decreasing to $9,314.75 for the last five years.
- 9 -
<PAGE> 17
EQUITY GROWTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 7 - MORTGAGES (CONTINUED)
(b) The mortgage secures a promissory note and is payable
in equal quarterly installments of $23,437.01, with a final
payment of $198,238.33 maturing December 31, 1996. There is also
an underlying "wrap" mortgage that is payable in equal quarterly
installments of $23,562.25 maturing December, 2006, with
quarterly payments decreasing to $7,329 for the last 10 years.
(c) The mortgage secures a promissory note and is payable
in equal quarterly installments of $18,508.87 maturing December
31, 1995. There is also an underlying "wrap" mortgage that is
payable in annual installments of $74,482, maturing October 1,
2005, with annual payments decreasing to $22,962 the last 10
years. (See note 14).
(d) The mortgage secures a promissory note and is payable
in equal quarterly installments of $26,409.87 with a final
payment of $232,199.50, maturing January 1, 2003. There is also
an underlying "wrap" mortgage that is payable in equal annual
payments of $106,640 maturing December 31, 2002.
NOTE 8 - NOTES RECEIVABLE
<TABLE>
<CAPTION>
1995
----
<S> <C>
Nevada/California Property $125,978
--------------------------
Quarterly payments of $868.55
4% above prime, currently 12.62%
original amount $63,000
Tennessee 84,689
---------
Quarterly payment of $477.90
4% above prime, currently 12.62%
original amount $40,000
Kansas 40,465
------
Quarterly payments of $341.73
4% above prime, currently 12.62%
original amount $21,073 (See Note 14)
Oregon 79,295
------
Quarterly payments of $501.13
4% above prime, currently 12.62%
original amount $38,742 --------
330,427
Less Current Portion (8,757)
--------
$321,670
========
</TABLE>
- 10 -
<PAGE> 18
EQUITY GROWTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 9 - DEFERRED INCOME TAXES:
As discussed in note 1, the Company has applied the provision of
statement 109.
The significant components of deferred income tax expense (benefit)
for the years then ended December 31, 1995 and 1994.
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Current Loss $(41,045) $(17,136)
Valuation Allowance 41,045 17,136
-------- --------
$ - 0 - $ - 0 -
======== ========
</TABLE>
These operating losses can be used to offset future taxable income.
NOTE 10 - RELATED PARTY TRANSACTION
The chief executive officer of the Company is also an officer of the
general partner in all the partnerships involved in the wrap around
mortgages subject to the underlying mortgages and promissory notes.
NOTE 11 - COMPENSATION
No officer or director has received any compensation to date.
NOTE 12 - STOCKHOLDERS' EQUITY
On May 18, 1995, the Company adopted a resolution to change the
authorized capitalization as follows:
(a) The 2,000,000 shares of common stock, $0.01 par value then
authorized, all of which were currently outstanding, were
reverse split into 200,000 shares, $0.01 par value; and
immediately thereafter;
(b) The Company's authorized common stock was increased from 200,000
shares, $0.01 par value, to 20,000,000 shares of common stock,
without par value, and
(c) The Company's was authorized to issue 5,000,000 shares of
preferred stock, the attributes of which are to be determined by
the Company's Board of Directors from time to time, prior to
issuance, in conformity with the requirements of Sections 151 of
the Delaware General Corporation Law.
- 11 -
<PAGE> 19
EQUITY GROWTH SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 13 - LEGAL MATTERS
The Company is currently in default on a property in Kansas City. The
tenant submitted an irrevocable offer to purchase the property. A
formal contract is being prepared and will be executed shortly. The
Company's legal counsel has confirmed that the first mortgage holder
has withheld any action to foreclose the mortgage due to the pending
sale which will satisfy all pending liabilities. At the time the sale
is consummated the wrap mortgage asset will be eliminated as well as
the underlying liability.
- 12 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF EQUITY GROWTH SYSTEMS, INC. FOR THE PERIOD ENDED
DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,584,527
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 229,509
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,584,527
<CURRENT-LIABILITIES> 424,301
<BONDS> 0
0
0
<COMMON> 28,221
<OTHER-SE> 638,724
<TOTAL-LIABILITY-AND-EQUITY> 2,584,527
<SALES> 153,839
<TOTAL-REVENUES> 153,839
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 194,884
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,045)
<EPS-PRIMARY> (.017)
<EPS-DILUTED> (.017)
</TABLE>
