U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1997
-------------------
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from ______________ to ______________
Commission file no. 33-21443
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CAPITAL GROWTH HOLDINGS, LTD.
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(Exact name of registrant as specified in its charter)
Colorado 87-1077246
- ------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
660 Steamboat Road, Greenwich, CT 06830
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(203) 861-7750
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Issuer's telephone number, including area code
----------------------------------------------------
(Former name, former address and formal 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
--- ---
The number of shares outstanding of each of the issuer's classes of
common equity as of May 19, 1997 was as follows: 3,398,496 shares of common
stock and 11,349,666 shares of class B common stock.
Transitional Small Business Disclosure Format (check one):
YES NO X
--- ---
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
The interim financial statements required by this Item are included
in this quarterly report on Form 10-QSB immediately following the signature
page hereto.
Item 2. Management's Discussion and Analysis.
Overview
International Capital Growth, Ltd. ("ICG"), a Delaware corporation
and the only operating subsidiary of Capital Growth Holdings, Ltd. (the
"Company"), was formed in February 1996 to develop a diversified financial
services company to pursue business opportunities in investment banking in the
United States and the United Kingdom and merchant banking, money management
and securities brokerage in the United States. ICG commenced formal operations
in October 1996 when it became registered as a broker-dealer with the
Securities and Exchange Commission (the "SEC") and obtained membership with
the National Association of Securities Dealers, Inc. (the "NASD"). On March
14, 1997, ICG consummated a share exchange transaction with the Company and
became the Company's wholly-owned subsidiary. Through December 31, 1996, ICG
was a development stage company.
During the first quarter of fiscal year 1997, the Company has
generated, and anticipates that it will continue generating, revenues from
ICG's investment banking activities. ICG has been retained to act as placement
agent for up to $10 million in financing for a publicly-traded company.
However, the Company anticipates that its operating expenses will increase in
connection with the commencement of its securities brokerage activities and
any other material expansion of the Company's business, which may result in
losses from operations, at least in the short term. The Company believes,
however, that it will attain profitability for the fiscal year 1997. During
the first quarter of 1997, the Company generated revenues from consulting fees
and merchant banking (securities investments). There can be no assurance,
however, that the Company will be able to generate additional revenue or
attain profitability, during this fiscal year, or at any time. To attain
profitability, the Company must generate revenues in excess of operating
expenses anticipated to be incurred in connection with ICG's business, the
commencement of its securities brokerage activities and the expansion of its
business.
1
<PAGE>
From time to time the Company may publish forward-looking
statements, including statements regarding, among other things, (i) the
Company's growth strategy or potential, (ii) anticipated trends in the
Company's businesses, (iii) the Company's ability to compete with its
competitors and (iv) the Company's profitability and projected financial
condition. These statements are based upon management's beliefs at the time
they are made as well as assumptions made by management based upon information
available to it. The current assumptions regarding the Company's operations,
performance, development and results of its business include (i) the accuracy
of estimates of anticipated increases in the Company's expenses due to
implementation of the Company's business plan, (ii) successful completion of
securities offerings anticipated to be consummated through ICG, (iii)
maintenance of market conditions affecting the Company's services and (iv)
appropriate regulatory approvals. Forward-looking statements are inherently
subject to various risks and uncertainties, including those described above,
as well as potential changes in economic or regulatory conditions that are
largely beyond the Company's control. Should one or more of these risks
materialize or changes occur, or should management's assumptions prove to be
incorrect, the Company's actual results may materially vary from those
anticipated or projected.
Results of Operations for the Quarter ended March 31, 1997
As ICG, the Company's only operating subsidiary, did not commence
business activities until October 1996, the Company believes that a quarter to
quarter comparison of results of operations would not be meaningful.
Revenues
ICG generated $1,425,172 in revenues during the quarter ended March
31, 1997, which included $319,854 in consulting fees earned from its financial
advisory activities. In addition, the Company generated unrealized gains on
its securities portfolio of $1,076,838 as well as interest income of $28,480.
Operating Expenses
Operating expenses for the quarter ended March 31, 1997 were
$746,375, consisting of general and administrative expenses of $660,260,
approximately 50% of which was management and employee salaries, and the
recognition of $86,115 in the equity in the net loss of its unconsolidated
affiliate CGE.
Net Income
As a result of the foregoing, and after provision for taxes of
$200,000, the Company had net income of $478,797 for the quarter ended March
31, 1997.
Liquidity and Capital Resources
Capital for the Company has been provided by the investments made by
the initial shareholder group and through private placements of ICG's and the
Company's securities. In
2
<PAGE>
March 1997, the Company raised gross proceeds of approximately $1.24 million
in a private placement of 549,496 shares of its common stock.
To date, the Company has used its capital for merchant banking
(securities investments), working capital and for general corporate purposes.
In addition, in March 1997, the Company loaned $200,000 to an entity
controlled by Messrs. Ronald Koenig and Stanley Hollander, two of the
Company's directors, officers and principal shareholders. The loan, which was
approved by a majority of disinterested directors, bears interest at the rate
of 6% per annum and is due on March 26, 1998.
The Company acquired marketable securities with a market value of
approximately $1.4 million and illiquid securities with a cost basis of
approximately $170,000, all of which were acquired for investment purposes for
a total cost of $450,000.
The Company anticipates committing a significant amount of capital
during the third and fourth quarters of 1997 to establish and develop its
securities brokerage business. The Company anticipates raising additional
equity capital of approximately $1.0 million in the fourth quarter of 1997 for
this purpose. There can be no assurance, however, that the Company's efforts
to raise additional capital will be successful. The Company has no material
capital commitments other than annual salaries to its executive officers and
employees of approximately $1,237,000. The Company believes that its current
cash resources and anticipated cash flow from operations will be adequate to
satisfy its capital commitments during 1997.
Variability of Results
The Company anticipates that a substantial portion of its future
revenues will originate from ICG's activities as placement agent in private
financings. When acting as placement agent, ICG is typically compensated upon
the successful closing of a financing. Agency financings typically take from
90 to 120 days to consummate after ICG is retained as placement agent.
Activities will be undertaken and expenses incurred in one fiscal period
although a fee may not be earned until a subsequent period. As a result, the
financial results of the Company may vary dramatically from quarter to
quarter. Further, the Company's operating results will also vary as a result
of the marking to market of its portfolio of securities.
3
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10 Promissory Note of Sachem Financial Consultants,
Ltd. in favor of Capital Growth Holdings, Ltd.
11 Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
On March 28, 1997, the Company filed a report on Form 8-K dated
March 14, 1997 covering Items 1 (Change in Control of the Company); 2
(Acquisition or Disposition of Assets); 4 (Change in Company's Certifying
Accountant); 5 (Other Events); 7 (Financial Statements and Exhibits); 8
(Change in Fiscal Year); and 9 (Sales of Equity Securities Pursuant to
Regulation S). Financial statements of International Capital Growth, Ltd.
covering the year ended December 31, 1996 and unaudited pro forma financial
statements of the Company giving effect to the acquisition of International
Capital Growth, Ltd. will be filed by amendment to the Company's March 14,
1997 Form 8-K not later than May 28, 1997.
4
<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.
CAPITAL GROWTH HOLDINGS, LTD.
Date: May 20, 1997 By: /s/ Ronald B. Koenig
------------ -----------------------
Ronald B. Koenig
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 20, 1997 By: /s/ Michael S. Jacobs
------------ ------------------------
Michael S. Jacobs
Senior Vice President
(Chief Accounting Officer)
5
<PAGE>
CAPITAL GROWTH HOLDINGS, LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS
A S S E T S
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(unaudited)
<S> <C> <C>
Current assets:
Cash........................................................................ $2,931,482 $3,060,255
Investment in marketable securities......................................... 1,436,876 0
Loan to affiliate........................................................... 200,000 0
---------- ----------
Total current assets.................................................. 4,568,358 3,060,255
Investments in illiquid securities.............................................. 562,317 120,000
Fixed assets, net............................................................... 212,787 464
Customer list................................................................... 110,000 120,000
Other assets.................................................................... 119,533 186,115
---------- ----------
TOTAL ASSETS................................................................ $5,572,995 $3,486,834
========== ==========
(continued)
</TABLE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(Unaudited)
<S> <C> <C>
Liabilities:
Accrued expenses and other liabilities...................................... $ 669,641 $ 51,000
Deferred tax liability...................................................... 200,000 0
---------- ----------
Total liabilities........................................................... 869,641 51,000
Stockholders' equity:
Series A preferred stock - $.01 par value, 4,365,000 shares
authorized; 4,365,000 and 4,001,334 shares issued and outstanding at
December 31, 1996 and March 31,1997
respectively at liquidation value of $.14 ............................ 560,187 611,100
Series B preferred stock - $.01 par value, 1,200,000 shares
authorized; 1,200,000 and 1,080,000 shares issued and outstanding at
December 31, 1996 and March 31, 1997
respectively at liquidation value of $.21 ............................ 226,800 252,000
Common Stock - no par value, 25,000,000 shares authorized;
13,415,000 and 3,398,496 shares issued and outstanding at December
31,
1996 and March 31, 1997 respectively.................................. 4,054,306 13,415
Class B Common Stock - no par value, 25,000,000 shares authorized; 0
and 11,349,666 shares issued and outstanding at December 31, 1996
and
March 31, 1997 respectively........................................... 334,803 0
Additional paid in capital...................................................... 35,418 3,333,535
Accumulated deficit............................................................. (449,560) (718,616)
Subscriptions receivable........................................................ (53,600) (55,600)
Treasury stock (2,500 Shares)................................................... (5,000) 0
--------- ----------
Total stockholders' equity.................................................. 4,703,354 3,435,834
---------- ----------
T O T A L............................................................. $5,572,995 $3,486,834
========== ==========
</TABLE>
2
<PAGE>
Capital Growth Holdings, Ltd.
Condensed Consolidated
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
Revenue
Consulting fees.............................................................. $ 319,854 $ 0
Unrealized gains on securities............................................... 1,076,838 0
Interest income.............................................................. 28,480 0
----------- ----------
Total revenue.................................................................... 1,425,172 0
=========== ==========
Operating expenses
Equity in net loss of unconsol. affiliate ................................... 86,115 0
General and administrative................................................... 660,260 0
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Total operating expenses......................................................... 746,375 0
----------- ----------
Pre-tax income................................................................... 678,797 0
Provision for taxes.............................................................. 200,000 0
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Net income....................................................................... $ 478,797 $ 0
=========== ==========
Primary:
Net income per common share...................................................... $ 0.03 $ 0.00
=========== ==========
Weighted average number of
shares outstanding........................................................... 14,651,787 3,243,333
=========== ==========
Fully diluted:
Net income per common share...................................................... $ 0.02 $ 0.00
=========== ==========
Weighted average number of
shares outstanding........................................................... 19,733,121 3,243,333
=========== ==========
</TABLE>
3
<PAGE>
CAPITAL GROWTH HOLDINGS, LTD
Statement of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................... 478,797 0
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Amortization and depreciation expense........................................ 15,665
Equity in loss of unconsolidated affiliate 86,115
Valuation of warrant for consulting.......................................... 35,417
Deferred tax expense......................................................... 200,000
Changes in assets and liabilities:
Other assets........................................................... (20,227)
Accrued expenses & other liabilities .................................. (408,900)
Net cash provided by
operating activities................................................... 1,204,667 0
---------- -------
Cash flows from investing activities:
Investment in marketable securities ................................... (1,436,876)
Investment in illiquid securities...................................... (442,317)
Investment in fixed assets............................................. (217,280)
Loan to affiliate...................................................... (200,000)
----------
Net cash (used in)
investing activities................................................... 2,296,473) 0
---------- -------
Cash flows from financing activities:
Net proceeds from sales
of common stock........................................................ 966,033 145,950
Reduction of subscription receviable .................................. 2,000
Purchase of treasury stock............................................. (5,000)
----------
Net cash provided by
financing activities................................................... 963,033 145,950
---------- -------
Net (decrease) in cash........................................................... (128,773) 145,950
-------
Cash at beginning of period...................................................... 3,060,255 0
---------- -------
Cash at end of period............................................................ 2,931,482 145,950
========== =======
</TABLE>
4
<PAGE>
CAPITAL GROWTH HOLDINGS, LTD.
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
(1) Financial Statement Presentation
The unaudited financial statements of Capital Growth Holdings, Ltd.
(the "Company") herein have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC) and, in
the opinion of management, reflect all adjustments (consisting only
of normal recurring accruals) necessary to present fairly the
results of operations for the interim periods presented. Certain
information and footnote disclosures normally included in financial
statements, prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to
such rules and regulations. However, management believes that the
disclosures are adequate to make the information presented not
misleading. These financial statements and the notes thereto should
be read in conjunction with the financial statements and the notes
thereto included in the Company's Annual Report on Form 10-KSB for
the fiscal year ended January 31, 1997. On March 25, 1997, the
Company changed its fiscal year-end to December 31, commencing
December 31, 1997. The results for the interim periods are not
necessarily indicative of the results for the full fiscal year.
(2) Acquisition of International Capital Growth, Ltd.
On March 14, 1997, the Company acquired 100% of the outstanding
capital stock of International Capital Growth, Ltd. ("ICG"), a
Delaware corporation and member of the National Association of
Securities Dealers, Inc (the "NASD"), in a reverse acquisition
consummated through a share exchange transaction (the "Share
Exchange"). The Share Exchange was not subject to the registration
requirements of the Securities Act of 1933, as amended (the
"Securities Act").
The Share Exchange resulted in a change in control of the Company.
The former shareholders of the Company currently own approximately
2%, and the former stockholders of ICG currently own approximately
98% of the outstanding capital stock of the Company.
The 18,900,000 shares of capital stock of the Company that were
issued in the Share Exchange consisted of (a) 2,549,000 shares of
common stock ("Common Stock"), (b) 11,349,666 shares of newly
authorized class B common stock ("Class B Common Stock"), (c)
4,001,334 shares of newly-designated 5% Cumulative Convertible
Series A Preferred Stock ("Series A Preferred Stock") and (d)
1,080,000 shares of newly-designated 5% Cumulative Convertible
Series B Preferred Stock ("Series B Preferred Stock"), all of which
classes of capital stock vote together as one class. The Class B
Common Stock is junior in priority with respect to dividends to the
Common Stock and the Designated Preferred Stock and automatically
converts into Common Stock on a one-for-one basis on December 31,
1998. The holders of the Series A Preferred Stock and Series B
Preferred Stock (collectively, the "Designated Preferred Stock")
are entitled to preferential cumulative dividends until conversion
thereof into Class B Common Stock, share equally with the Class B
Common Stock in any dividend declared thereon, can be converted
into Class B Common Stock by the holder on a one-for-one basis at
any time, and automatically convert into Class B Common Stock on a
one-for-one basis on October 12, 1997. The Warrants consist of
1,625,000 redeemable warrants, each exercisable to purchase one
share of Common Stock at $4.00 per share (subject to adjustment) at
any time until October 1999 (the "Common Warrants") and 250,000
redeemable warrants, each exercisable to purchase one share of
Class B Common Stock at $2.00 per share (subject to adjustment) at
any time, subject to an exercise schedule, until November 1999 (the
"Class B Warrants").
5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
10 Promissory Note of Sachem Financial Consultants, Ltd. in favor
of Capital Growth Holdings, Ltd.
11 Computation of Per Share Earnings
27 Financial Data Schedule
EXHIBIT 10
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, ASSIGNED OR TRANSFERRED EXCEPT (i) PURSUANT TO A REGISTRATION
STATEMENT UNDER THE ACT WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT
TO THESE SECURITIES, OR (ii) PURSUANT TO A SPECIFIC EXEMPTION FROM
REGISTRATION UNDER THE ACT BUT ONLY UPON A HOLDER HEREOF FIRST HAVING OBTAINED
THE WRITTEN OPINION OF COUNSEL TO THE CORPORATION, OR OTHER COUNSEL REASONABLY
ACCEPTABLE TO THE CORPORATION, THAT THE PROPOSED DISPOSITION IS CONSISTENT
WITH ALL APPLICABLE PROVISIONS OF THE ACT AS WELL AS ANY APPLICABLE "BLUE SKY"
OR SIMILAR STATE SECURITIES LAW.
SACHEM FINANCIAL CONSULTANTS, LTD.
PROMISSORY NOTE
The Transferability of this Note
is Restricted as Provided in Section 2
Dated as of: March 26, 1997
$200,000.00 New York, New York
FOR VALUE RECEIVED, Sachem Financial Consultants, Ltd., a
Connecticut corporation (the "Company"), promises to pay to Capital Growth
Holdings, Ltd., a Colorado corporation, or its registered assigns (the
"Holder"), the principal amount of TWO HUNDRED THOUSAND DOLLARS ($200,000.00)
(the "Principal Amount"), in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, together with simple interest thereon at the rate of
six percent (6%) per annum (calculated on the basis of a 360-day year), at the
principal office of the Company, on March 26, 1998. No payments of principal
and/or interest shall be due until maturity.
Notwithstanding anything to the contrary herein contained, the
Principal Amount of this Note or any interest hereon may be prepaid at any
time or from time to time, prior to the maturity of this Note, in whole or in
part, without prior notice and without penalty or premium. Prepayments shall
be applied first to interest due and then to principal.
1. Covenants: The Company covenants and agrees that, so long
as the Note shall be outstanding and unpaid:
1.1 Payment of Note. The Company will punctually pay
or cause to be paid the Principal Amount and interest on this Note. Any sums
required to be withheld from any payment of Principal Amount or interest on
this Note by operation of law or pursuant to any
<PAGE>
order, judgment, execution, treaty, rule or regulation may be withheld by the
Company and paid over in accordance therewith.
1.2 Nothing in this Note or in any other agreement
between the Holder and the Company shall require the Company to pay, or the
Holder to accept, interest in an amount which would subject the Holder to any
penalty or forfeiture under applicable law. In the event that the payment of
any charges, fees or other sums due under this Note or provided for in any
other agreement between the Company and the Holder are or could be held to be
in the nature of interest and would subject the Holder to any penalty or
forfeiture under applicable law, then ipso facto the obligations of the
Company to make such payment to the Holder shall be reduced to the highest
rate authorized under applicable law and, in the event that the Holder shall
have ever received, collected, accepted or applied as interest any amount in
excess of the maximum rate of interest permitted to be charged by applicable
law, such amount which would be excess interest under applicable law shall be
applied first to the reduction of principal then outstanding, and, second, if
such principal amount is paid in full, any remaining excess shall forthwith be
returned to the Company.
2. Restrictions Upon Transferability. This Note has not been
registered under the Act, and may not be offered, sold, pledged, hypothecated,
assigned or transferred except (i) pursuant to a registration statement under
the Act which has become effective and is current with respect to this Note,
or (ii) pursuant to a specific exemption from registration under the Act but
only upon a Holder hereof first having obtained the written opinion of counsel
to the Company, or other counsel reasonably acceptable to the Company, that
the proposed disposition is consistent with all applicable provisions of the
Act as well as any applicable "blue sky" or other state securities law.
3. Events of Default and Remedies. An "Event of Default"
shall occur if:
3.1 Payment of Notes. The Company defaults in the
payment of Principal Amount or interest of this Note, when and as the same
shall become due and payable whether at maturity thereof, or by acceleration
or otherwise, which default shall continue uncured for a period of thirty (30)
days from the date thereof; or
3.2 Performance of Covenants, Conditions or
Agreements. The Company fails to comply with any of the covenants, conditions
or agreements set forth in this Note and such default shall continue uncured
for a period of thirty (30) days after receipt of written notice to the
Company from the Holder stating the specific default or defaults; or
3.3 Bankruptcy, Insolvency, etc. The Company shall
file or consent by answer or otherwise to the entry of an order for relief or
approving a petition for relief, reorganization or arrangement or any other
petition in bankruptcy for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or shall make an assignment for the
benefit of its creditors, or shall consent to the appointment of a custodian,
receiver, trustee or other
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<PAGE>
officer with similar powers of itself or of any substantial part of its
property, or shall be adjudicated a bankrupt or insolvent, or shall take
corporate action for the purpose of any of the foregoing, or if a court or
governmental authority of competent jurisdiction shall enter an order
appointing a custodian, receiver, trustee or other officer with similar powers
with respect to the Company or any substantial part of its property or an
order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law, or an order for the dissolution, winding up or
liquidation of the Company, or if any such petition shall be filed against the
Company and such petition shall not be dismissed within sixty (60) days.
3.4. Remedies. In case an Event of Default (other
than an Event of Default resulting from the Company's failure to pay the
Principal Amount of, or any interest upon, this Note, when the same shall be
due and payable in accordance with the terms hereof (after giving affect to
applicable "cure" provisions herein) and an Event of Default resulting from
bankruptcy, insolvency or reorganization) shall occur and be continuing, the
Holder of the Note may declare by notice in writing to the Company all unpaid
Principal Amount and accrued interest on the Note then outstanding to be due
and payable immediately. Any such acceleration may be annulled and past
defaults (except, unless theretofore cured, a default in payment of Principal
Amount or interest on the Note) may be waived by the Holder. In case an Event
of Default resulting from the Company's nonpayment of Principal Amount of, or
interest upon, this Note shall occur, the Holder may declare all unpaid
Principal Amount and accrued interest on this Note held by such Holder to be
due and payable immediately. In case an Event of Default resulting from
bankruptcy, insolvency or reorganization shall occur, all unpaid principal and
accrued interest on the Note held by the Holder shall be due and payable
immediately without any declaration or other act on the part of the Holder.
4. Costs of Collection. Should the indebtedness represented by this
Note or any part thereof be collected in any proceeding, or this Note be
placed in the hands of attorneys for collection after default, the Company
agrees to pay as an additional obligation under this Note, in addition to the
Principal Amount and interest due and payable hereon, all costs of collecting
this Note, including reasonable attorneys' fees.
5. Waiver and Amendments. This Note may be amended, modified,
superseded, canceled, renewed or extended, and the terms hereof may be waived
only by a written instrument signed by the Company and the Holder. No delay on
the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver hereof, nor shall any waiver on the part of any
party of any right, power or privilege or privilege hereunder preclude any
other or further exercise hereof or the exercise of any other right, power or
privilege hereunder. The rights and remedies provided herein are cumulative
and are not exclusive of any rights or remedies which any party may otherwise
have at law or in equity.
6. Loss, Theft, Destruction or Mutilation of Note. Upon
receipt by the Company of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation
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<PAGE>
of this Note, and of indemnity or security reasonably satisfactory to the
Company, and upon reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Note, if
mutilated, the Company will make and deliver a new Note of like tenor, in lieu
of this Note. Any Note made and delivered in accordance with the provisions of
this Section 6 shall be dated as of the date to which interest has been paid
on this Note, or if no interest has theretofore been paid on this Note, then
dated the date hereof.
7. Notice. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed
or sent by certified, registered, or express mail, postage prepaid, and shall
be deemed given when so delivered personally, telegraphed or, if mailed, five
(5) days after the date of deposit in the United States mails, as follows:
(i) if to the Company, to:
Sachem Financial Consultants, Ltd.
12 Sachem Road
Weston, CT 06883
Attn: Ronald B. Koenig, Chairman
(ii) if to the Holder, to the address of such Holder as shown
on the books of the Company.
8. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
its conflicts of law principles. The Company agrees that any dispute or
controversy arising out of this Note shall be adjudicated in a court located
in New York City, and hereby submits to the exclusive jurisdiction of the
courts of the State of New York located in New York, New York and of the
federal courts in the Southern District of New York, and irrevocably waives
any objection it now or hereafter may have respecting the venue of such action
or proceeding brought in such a court or respecting the fact that such court
is an inconvenient forum, and consents to the service of process in any such
action or proceeding by means of registered or certified mail, return receipt
requested.
9. Successors and Assigns. All the covenants, stipulations,
promises and agreements in this Note contained by or on behalf of the Company
shall bind its successors and assigns, whether or not so expressed.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be signed
in its corporate name by a duly authorized officer and to be dated as of the
date first above written.
SACHEM FINANCIAL CONSULTANTS, LTD.
By: /s/ Ronald B. Koenig
---------------------------------
Name: Ronald B. Koenig
Title: Chairman
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EXHIBIT 11
Capital Growth Holdings, Ltd.
Computation of Net Income Per Common Share
(Unaudited)
Three Months Ended
March 31,
1997 1996
----------- ----------
Primary:
Net Income $ 478,797 $ 0
Less cumulative preferred dividend (18,576) 0
----------- ----------
NET INCOME USED FOR E.P.S.
COMPUTATION 460,221 0
=========== ==========
Weighted average number of
common shares outstanding 14,018,824 3,243,333
Shares issuable upon exercise of stock
options and warrants, net of shares
assumed to be repurchased (1) 632,963 0
----------- ----------
Shares used for computation 14,651,787 3,243,333
=========== ==========
Net income per common share $ 0.03 $ 0.00
=========== ==========
Fully Diluted:
NET INCOME USED FOR E.P.S.
COMPUTATION 478,797 0
Weighted Average number of
common shares outstanding 14,018,824 3,243,333
Shares issuable upon exercise of stock
options and warrants, net of shares
assumed to be repurchased (1) 632,963 0
----------- ----------
Convertible Series A & B Preferred Shares 5,081,334 0
----------- ----------
Shares used for computation 19,733,121 3,243,333
=========== ==========
Net income per common share $ 0.02 $ 0.00
=========== ==========
(continued)
<PAGE>
Notes and Assumptions:
(1) The Company has outstanding warrants and options with exercise prices
below the current value of its common stock which is deemed to be $2.25.
The Company has utilized the treasury stock method for computing the
weighted average shares outstanding.
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDED AS A PART OF THIS FORM
10-QSB
</LEGEND>
<CIK> 0000832324
<NAME> Capital Growth Holdings, Ltd.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 2,931,482
<RECEIVABLES> 0
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 0
<INSTRUMENTS-OWNED> 1,999,193
<PP&E> 212,787
<TOTAL-ASSETS> 5,572,995
<SHORT-TERM> 0
<PAYABLES> 669,641
<REPOS-SOLD> 0
<SECURITIES-LOANED> 0
<INSTRUMENTS-SOLD> 0
<LONG-TERM> 0
0
786,987
<COMMON> 4,389,109
<OTHER-SE> (472,742)
<TOTAL-LIABILITY-AND-EQUITY> 5,572,995
<TRADING-REVENUE> 0
<INTEREST-DIVIDENDS> 28,480
<COMMISSIONS> 0
<INVESTMENT-BANKING-REVENUES> 0
<FEE-REVENUE> 319,854
<INTEREST-EXPENSE> 0
<COMPENSATION> 0
<INCOME-PRETAX> 678,797
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 478,797
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.02
</TABLE>
