U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 33-24138-D
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CAPITAL GROWTH, INC.
(Name of Small Business Issuer as specified in its charter)
Nevada 87-0463772
(State of other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
10 West 100 South, Suite 450, Salt Lake City, Utah 84101
(Address of principal executive offices)
Registrant's telephone no., including area code: (801) 533-2727
No Change
Former name, former address, and former fiscal year, if
changed since last report.
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: None
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 ___.
Common Stock outstanding at September 30, 1997 - 48,000,000 shares of
$.001 par value Common Stock.
NOTE: Page 1 of 9 sequentially numbered pages.
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 Financial Statements
CAPITAL GROWTH, INC.
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited]
ASSETS
September 30, December 31,
1997 1996
----------- -----------
CURRENT ASSETS:
Cash in bank $ 1,011 $ 310
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 100 --
Payable to related party 30,339 28,124
----------- -----------
Total Liabilities 30,439 28,124
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock -- --
Common stock 48,000 44,500
Capital in excess of par value 18,102 18,102
Deficit accumulated during the
development stage (95,530) (90,416)
----------- -----------
Total Stockholders' Equity (29,428) (27,814)
----------- -----------
Total Liabilities and Stockholders'
Equity $ 1,011 $ 310
=========== ===========
The accompanying notes are an integral part of
these financial statements
NOTE: The balance sheet at December 31, 1996 has been taken from the
audited financial statements at that date.
-2-
<PAGE>
CAPITAL GROWTH, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
[Unaudited]
For The Three For the Nine From Inception
Months Ended Months Ended on March 28,
September 30, September 30, 1988 Through
________________________________________September 30,
1997 1996 1997 1996 1997
--------- --------- --------- -----------------------
REVENUE:
Interest income $ - $ - $ - $ - $ 2,471
--------- --------- -------- --------- ---------
EXPENSES:
General and
adminsitrative 564 568 2,611 2,399 30,997
Amortization - - - - 2,136
Professional fees - 1,166 2,403 1,166 64,168
--------- --------- --------- --------- ---------
Total Expenses 564 1,734 5,014 3,565 97,301
--------- --------- --------- --------- ---------
LOSS BEFORE INCOME TAXES (564) (1,734) (5,014) (3,565) (94,830)
INCOME TAXES CURRENT - - (100) (100) (700)
--------- --------- --------- --------- ---------
NET LOSS $ (564) $(1,734) $(5,114) $(3,665) $(95,530)
========= ========= ========= ========= =========
LOSS PER SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.01)
========= ========= ========= ========= =========
The accompanying notes are an integral part of
these financial statements
-3-
<PAGE>
CAPITAL GROWTH, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
[Unaudited]
For the Nine From Inception
Months Ended on March 28,
September 30, 1988 Through
_____________________________ September 30,
1997 1996 1997
----------- ----------- --------------
Cash Flows to Operating Activities:
Net income (loss) $ (5,114) $ (3,665) $ (95,530)
----------- ----------- --------------
Adjustments to reconcile net
income to net cash used by
operating activities:
Amortization expense - - 2,136
Increase in organization costs - - (2,136)
Changes in assets and liabilities:
Accounts payable - (10,132) -
Income taxes payable 100 - 100
----------- ----------- --------------
- (10,132) 100
----------- ----------- --------------
Net Cash Flows to Operating
Activities (5,014) (13,797) (95,430)
----------- ----------- --------------
Cash Flows to Investing Activities:
Proceeds (to) from related entity 2,215 11,852 30,339
----------- ----------- --------------
Cash Flows from (to) Financing Activities:
Proceeds from common stock issuance 3,500 2,000 93,000
Costs of issuing stock - - (26,897)
----------- ----------- --------------
Net Cash Flows from (to)
Financing Activities 3,500 2,000 66,102
----------- ----------- --------------
Net Increase (Decrease) in Cash 701 55 1,011
Cash at Beginning of Period 310 801 -
----------- ----------- --------------
Cash at End of Period $ 1,011 $ 856 $ 1,011
=========== =========== ==============
The accompanying notes are an integral part of
these financial statements
-4-
<PAGE>
CAPITAL GROWTH, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 -- CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 1997 and 1996
and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1996
audited financial statements. The results of operations for the period ended
September 30, 1997 and 1996 are not necessarily indicative of the operating
results for the full year.
NOTE 2 -- RELATED PARTY TRANSACTIONS
Commencing January 1, 1996, the Company agreed to pay $100 per month to a
shareholder, officer and director of the company for accounting and office
expenses. For the three and nine month periods ended September 30, 1997 and
1996, the Company incurred expenses under the agreement of $300 and $900. At
January 1, 1996, the company owed $10,132 to an accounting firm whose
managing partner was an officer and director of the Company. On January 1,
1996 the officer terminated his employment with the accounting firm and at
the time of termination the firm agreed to transfer the outstanding
obligation to the officer. At September 30, 1997 the Company owed to the
individual $12,232.
Starting in July 1994, the Company agreed to pay interest expense to its
former parent company, Data Growth, Inc. The loans, on which interest was
charged, were advanced to the Company by its former parent during the years
1990 through 1993. On September 17, 1996, the amount owing to the former
parent was transferred to an officer, director and shareholder of the
Company. During February, 1997, the officer advanced $538 through payment of
certain overdue payables of the Company. The Company has continued to accrue
interest and at September 30, 1997, the Company owed $18,107.
During March, 1993 the Company issued 35,000,000 restricted shares of its
common stock ($.001 par value) upon payment of $35,000 by certain persons who
would then have absolute voting control of the Company. During the years
ended December 31, 1995 and 1996, and the period ended September 30, 1997,
the same shareholders purchased an additional 8,000,000 shares of common
stock at par value for $8,000.
During March, 1993, an officer, director and principal shareholder of the
Company granted an option wherein the optionee has the right to purchase
1,000,000 shares of the Company's common stock currently owned by the officer
within seven years of the grant of option or within two years of the closing
of an acquisition by the Company.
-5-
<PAGE>
CAPITAL GROWTH, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 3 -- PUBLIC OFFERING OF COMMON STOCK
The initial issuance of the Company's common stock occurred in August, 1988.
Such shares are a component of 5,000,000 units issued. Each unit consists of
one (1) share of the aforementioned common stock and two (2) warrants to
purchase shares of common stock. Initially, each class "A" warrant entitled
the holder thereof to purchase one share of common stock at a price of $.20
per share during the period up to and including March 31, 1990. Each class
"B" warrant entitles the holder thereof to purchase one share of common stock
at a price of $.30 per share during the period up to and including March 31,
1990. This period has been extended by the Board of Directors for both "A"
and "B" warrants to December 31, 1997.
The Company filed a registration statement through which it registered, for
distribution to the shareholders of the parent corporation, Data Growth,
Inc., 4,600,640 of the aforementioned units of common stock and warrants. The
Company registered the units on Form S-18 in accordance with the Securities
Act of 1933. Such registration became effective on December 15, 1988. Costs
of the public offering, amounting to $26,898 have been charged against
capital in excess of par value.
-6-
<PAGE>
CAPITAL GROWTH, INC.
[A Development Stage Company]
PART I FINANCIAL INFORMATION
ITEM 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Company was incorporated March 28, 1988 for the purpose of investing in
any and all types of assets, properties, and businesses. The Company has
completed a public stock distribution on behalf of its sole shareholder, Data
Growth, Inc. with 4,600,460 shares being distributed to the shareholders of
Data Growth, Inc. Distribution expenses of $26,898 were offset against the
amount paid by Data Growth, Inc. for the stock. The distribution was
registered on Form S-18 with the Securities and Exchange Commission. The
Company's only business activity, to date, has been its formation, the
registration of its securities and the preliminary investigation of potential
investments and acquisitions. During March 1993 the Company issued 35,000,000
shares of common stock for $35,000 ($.001 per share). The persons who
purchased the stock also acquired absolute voting control of the Company.
During the years ended December 31, 1995 and 1996 and the period ended
September 30, 1997, additional shares of stock were purchased by the same
persons at par value for $2,000, $2,500 and $3,500, respectively.
Liquidity and Capital Resources
At September 30, 1997 and 1996 the Company's assets consisted of cash in the
amounts of $1,011 and $310 respectively, from the issuance of common stock,
from advances from the Company's former parent corporation and proceeds from
private placements of 43,000,000 shares of common stock for $43,000. The
Company has no other resources. At present, the Company is engaged in the
search for potential investments or acquisitions of private companies.
Management believes that any acquisition will be made by issuing shares of
the Company's unissued common stock. The Company's liquidity, capital
resources and financial statements will be significantly different subsequent
to the consummation of any acquisition.
Results of Operations
The Company's only operation to date has been the preliminary investigation
of potential acquisitions.
-7-
<PAGE>
CAPITAL GROWTH, INC.
[A Development Stage Company]
PART II OTHER INFORMATION
ITEM 1 Legal Proceedings
None
ITEM 2 Changes in Securities
None
ITEM 3 Defaults on Senior Securities
None
ITEM 4 Submission of Matters to a Vote of Security Holders
None
ITEM 5 Other Matters
None
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
-8-
<PAGE>
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.
CAPITAL GROWTH, INC.
/s/ Gary B. Peterson Date: March 16, 1998
- -------------------------- -------------------------
Gary B. Peterson
President
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CAPITAL
GROWTH, INC. SEPTEMBER 30, 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,011
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,011
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,011
<CURRENT-LIABILITIES> 30,439
<BONDS> 0
0
0
<COMMON> 48,000
<OTHER-SE> (77,428)
<TOTAL-LIABILITY-AND-EQUITY> 1,011
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 5,014
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,014)
<INCOME-TAX> 100
<INCOME-CONTINUING> (5,114)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,114)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
