U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
Form 10-QSB
[X] Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.
FOR THE QUARTER ENDED MARCH 31, 1999
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission file number 33-24138-D
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.)
55 WEST 200 NORTH, PROVO, UT 84601
(Address of principal executive offices)
Registrant's telephone no., including area code: 801-377-1758
10 WEST 100 SOUTH, SUITE 450, SALT LAKE CITY, UTAH 84101
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 March 31, 1999 - 2,500,000 shares of $.001 par
value Common Stock.
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
The Financial Statements of the Registrant required to be filed
with this 10-QSB Quarterly Report were prepared by management together with
Related Notes. In the opinion of management, the Financial Statements fairly
present the financial condition of the Registrant.
CAPITAL GROWTH, INC.
[Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited]
ASSETS
March 31, 1999 Dec. 31, 1998
CURRENT ASSETS:
Cash in Bank $ 819 $ 819
Total Current Assets 819 819
TOTAL ASSETS $ 819 $ 819
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
March 31, 1999 Dec. 31,1998
CURRENT LIABILITIES:
Accounts payable $ 15 $ 15
Note payable 2,000 2,000
Payable to related party 33,693 33,134
TOTAL CURRENT LIABILITIES 35,708 35,149
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock; authorized 50,000,000
shares at $0.001 par value; 2,500 2,500
$0.001 par value; 2,500,000
shares issued and outstanding
Additional paid-in Capital 65,602 65,602
Deficit accumulated during the
development stage (104,991) (102,432)
Total Stockholders' Equity 36,889 (34,330)
TOTAL LIABILITIES & EQUITY $ 819 $ 819
The accompanying notes are an integral part of these financial statements.
NOTE: The balance sheet at December 31, 1998 was taken from the audited
financial statements at that date and condensed.
CAPITAL GROWTH, INC.
[Development Stage Companies]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
For the Three From Inception
Months Ended On March 28, 1998
March 31, Through March 31,
1999 1998 1999
REVENUE $ 0 $ 0 $ 2,471
TOTAL REVENUE $ 0 $ 0 $ 2,471
EXPENSES
General and Administrative Expenses $ 559 $ 574 $ 102,167
Amortization of Organization Costs - - 2,136
TOTAL EXPENSES $ 559 $ 574 $ 104,303
INCOME FROM OPERATION ($ 559) ($ 574) ( $101,832)
INCOME TAXES CURRENT 0 0 $ (600)
NET INCOME/LOSS ($ 559) ($574) $(102,432)
NET LOSS PER SHARE (.00) (.00) (.00)
WEIGHTED AVERAGE COMMON SHARES
(BASIC AND DILUTED) 2,408,000 2,385,000 1,319,000
The accompanying notes are an integral part of these financial statements.
CAPITAL GROWTH, INC.
[Development Stage Company]
STATEMENTS OF CASH FLOWS
[Unaudited]
For the Three From Inception
Months Ended On March 28, 1998
March 31, Through March 31,
1999 1998 1999
CASH FLOWS TO OPERATING ACTIVITIES:
Net income (loss) $ (559) $ (574) $(102,432)
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 $ 300 (85) 10,147
NET CASH FLOWS TO
OPERATING ACTIVITIES $ (259) (659) (92,285)
CASH FLOWS TO INVESTING ACTIVITIES:
Related Party Payable 259 559 25,002
CASH FLOWS FROM (TO) FINANCING
ACTIVITIES:
Proceeds from common stock
issuance - - 95,000
Costs of issuing stock - - (26,898)
Net cash Flows from(to)
Financing Activities - - 68,102
NET INCREASE (DECREASE) IN CASH 0 (100) 819
Cash at Beginning of Period $ 819 996 -
Cash at End of Period $ 819 $ 896 $ 819
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
The Company has not paid any amounts for interest or income taxes during
the periods ended March 31, 1999 and 1998.
CAPITAL GROWTH, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED & CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 March 31, 1999 and 1998, 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, 1998,
audited financial statements. The results of operations for the period ended
March 31, 1999 and 1998, are not necessarily indicative of the operation
results for the full year.
NOTE 2 - GOING CONCERN
The accompanying financial statements of Capital Growth, Inc., have been
prepared on a going-concern basis, which contemplates profitable operations
and the satisfaction of liabilities in the normal course of business. There
are uncertainties that raise substantial doubt about the ability of the
Company to continue as a going concern. As shown in the statement of
operations, the Company has had no revenues from operations and has a
stockholders' deficit of $36,889 as of March 31, 1999.
The Company's continuation as a going concern is dependent upon its
ability to satisfactorily meet its debt obligations, secure adequate new
financing and generate sufficient cash flows from operations to meet it
obligations. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
NOTE 3 - INCOME TAXES
The Company has net operating loss carryforwards of approximately
$100,000, which begin to expire in the year 2003. The amount of net operating
loss carryforward that can be used in any one year will be limited by
significant changes in the ownership of the company and by the applicable tax
laws which are in effect at the time such carryforwards can be utilized.
NOTE 4 - 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 months ended March 31, 1999 and 1998, the Company
incurred expenses under the agreement of $300. 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 March 31, 1999, the Company owed $14,032 to the individual.
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 March 31, 1999, the Company owed
$19,661.
At December 31, 1998, the Company owed an officer $2,000 related to cash
advances made during the year ended December 31, 1998. The advances are non-
interest bearing and have no specific repayment terms.
During March, 1993 the Company issued 1,750,000 restricted shares of its
common stock ($.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 400,000 shares of common stock at
par value $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
50,000 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.
NOTE 5 - SUPPLEMENTAL CASH FLOW INFORMATION
The Company has not paid any amounts for interest or income taxes during
the periods ended March 31, 1999 and 1998, and since inception.
NOTE 6 - SUBSEQUENT EVENT
On May 18, 1999, the Company's shareholders approved a 1 for 20 reverse
stock split. All references in the financial statements to number of shares
and per share amounts have been retroactively restated to reflect the
decreased number shares outstanding. In addition, the Company issued
22,000,000 post split shares of common stock for $44,000.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
PLAN OF OPERATION
The Company was incorporated March 28, 1988 for the purpose of investing
in any and all types of assets, properties, and businesses. The initial
issuance of the Company's common stock occurred in August, 1988. Such shares
are a component of 250,000 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, 1998.
The Company has completed a public stock distribution on behalf of its
sole shareholder, Data Growth, Inc. with 230,032 shares being distributed to
the shareholder 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 1994,
the Company issued 1,750,000 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, 1996, 1997
and 1998 additional shares of stock were purchased by the same persons at par
value for $2,000, $2,500 $3,500, and $2,000 respectively.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999 and 1998 the Company's assets consisted of cash in the
amounts of $819 and $896, respectively, from the issuance of 400,000 shares of
common stock, at par value, to the controlling shareholder of the Company;
from advances made by the Company's former parent corporation and proceeds
from a private placement of 1,750,000 shares of common stock for $35,000. 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
THREE-MONTHS PERIODS ENDED MARCH 31, 1999 AND MARCH 31, 1998.
For the three month period ended March 31, 1999, the Company incurred
nominal general and administrative expenses totaling $559 for interest and
rent expenses compared to $574 for first quarter 1998. The Company's only
operation to date has been the preliminary investigation of potential
acquisitions.
PART II - OTHER INFORMATION
ITEM I LEGAL PROCEEDINGS
None.
ITEM 2 CHANGE IN SECURITIES
On May 18, 1999, the Company's shareholders approved a 1 for 20
reverse stock split. All references in the financial statements
to number of shares and per share amounts have been retroactively
restated to reflect the decreased number shares outstanding. In
addition, the Company issued 22,000,000 post split shares of
common stock for $44,000.
ITEM 3 DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4 SUBMISSION ON MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 OTHER INFORMATION
None.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
None.
(B) REPORTS ON FORM 8-K;
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, hereunto duly authorized.
CAPITAL GROWTH, INC.
Date: 7/9/99 By /s/ David N. Nemelka
David N. Nemelka
President and Chief Executive Officer
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CAPITAL GROWTH, INC. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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