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 June 30, 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
N/A
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 June 30, 1999 - 24,500,000 shares of $.001 par
value Common Stock.
<PAGE>
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 fi-
nancial condition of the Registrant.
Capital Growth, Inc.
[Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited]
<TABLE>
ASSETS
June 30, 1999 Dec. 31, 1998
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<S> <C> <C>
CURRENT ASSETS:
Cash in Bank $ 44,278 $ 819
Total Current Assets 44,278 819
TOTAL ASSETS: $ 44,278 $ 819
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
June 30, 1999 Dec. 31,1998
--------------- --------------
CURRENT LIABILITIES:
Accounts payable $ 4,640 $ 15
Note payable 2,000 2,000
Payable to related party 34,081 33,134
Total Current Liabilities 40,721 35,149
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock; authorized
50,000,000 shares at $0.001
par value; $0.001 par value; 24,500 2,500
2,500,000 shares issued and
outstanding
Additional paid-in Capital 87,602 65,602
Deficit accumulated during the
development stage (108,545) (102,432)
Total Stockholders' Equity 3,557 (34,330)
------------ ------------
TOTAL LIABILITIES & EQUITY $ 44,278 $ 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.
<PAGE>
Capital Growth, Inc.
[Development Stage Companies]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
</TABLE>
<TABLE>
For the Three From Inception
Months Ended On March 28, 1988
June 30, Through June 30,
1999 1998 1999
------- ------- ------------------
<S> <C> <C> <C>
REVENUE $ 0 $ 0 $ 2,471
------ ------ ----------
Total Revenue $ 0 $ 0 $ 2,471
EXPENSES
General and Administrative $5,554 $1,331 $ 108,280
Amortization of Organ. Costs - - 2,136
------ ------ ----------
Total Expenses $5,554 $1,331 $ 110,416
INCOME FROM OPERATION ($5,554) ($1,331) ($ 107,945)
INCOME TAXES CURRENT 0 0 $ (600)
NET INCOME/LOSS ($5,554) ($1,331) $ (108,545)
NET LOSS PER SHARE (.00) (.00) (.00)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Capital Growth, Inc.
[Development Stage Companies]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
<TABLE>
For the Six From Inception
Months Ended On March 28, 1988
June 30, Through June 30,
1999 1998 1999
-------- ------- ------------------
<S> <C> <C> <C>
REVENUE $ 0 $ 0 $ 2,471
-------- ------ ------------
Total Revenue $ 0 $ 0 $ 2,471
EXPENSES
General and Administrative $6,113 $1,905 $ 108,280
Amortization of Organ. Costs - - 2,136
-------- ------ -----------
Total Expenses $6,113 $1,905 $ 110,416
INCOME FROM OPERATION ($6,113) ($1,905) ($ 107,945)
INCOME TAXES CURRENT 0 0 $ (600)
NET INCOME/LOSS ($6,113) ($1,905) $ (108,545)
NET LOSS PER SHARES (.00) (.00) (.00)
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Capital Growth, Inc.
[Development Stage Company]
STATEMENTS OF CASH FLOWS
[Unaudited]
<TABLE>
For the Six From Inception
Months Ended On March 28, 1988
June 30, Through June 30,
1999 1998 1999
------ ------ -----------------
<S> <C> <C> <C>
Cash Flows to Operating Activities:
Net income (loss) $ (6,113) $(1,905) $(108,545)
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 $ 4,925 $ (835) 15,331
Net Cash Flows to
Operating Activities $ (1,188) $(2,740) (93,214)
Cash Flows to Investing Activities:
Related Party Payable 647 4,117 25,390
Cash Flows from (to) Financing
Activities:
Proceeds from common stock
issuance 44,000 - 139,000
Costs of issuing stock - - (26,898)
Net cash Flows from(to)
Financing Activities - - 112,102
Net Increase (Decrease) in Cash 43,459 1,377 44,278
------- ------- --------
Cash at Beginning of Period $ 819 996 -
Cash at End of Period $44,278 $ 2,373 $ 44,278
Supplemental Disclosure of Cash Flow Information:
The Company has not paid any amounts for interest or income taxes during
the periods ended June 30, 1999 and 1998.
</TABLE>
<PAGE>
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) neces-
sary to present fairly the financial position, results of operations and cash
flows at June 30, 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 there-
to included in the Company's December 31, 1998, audited financial statements.
The results of operations for the period ended June 30, 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 Com-
pany has had no revenues from operations and has a stockholders' equity of
$3,557 as of June 30, 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 ex-
penses. For the six months ended June 30, 1999 and 1998, the Company incurred
expenses under the agreement of $300 and $600 respectively. At January 1, 1996,
the Company owed $10,132 to an accounting firm whose managing partner was an of-
ficer 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 June 30, 1999,
the Company owed $14,226 to the individual.
<PAGE>
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 Feb-
ruary 1997, the officer advanced $538 through payment of certain overdue pay-
ables of the Company. The Company has continued to accrue interest and at June
30, 1999, the Company owed $19,855.
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 acquisi-
tion 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 June 30, 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 num-
ber 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 com-
ponent 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 pur-
chase 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 dur-
ing the period up to and including March 31, 1990. This period was extended by
the Board of Directors for both "A" and "B" warrants to December 31, 1998.
<PAGE>
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 registra-
tion of its securities and the preliminary investigation of potential invest-
ments 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 June 30, 1999 and 1998 the Company's assets consisted of cash in the
amounts of $44,278 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; proceeds from a
private placement of 1,705,000 shares of common stock for $35,000 and 22,000,000
for cash consideration of $44,000. The Company has no other resources. At pre-
sent, the Company is engaged in the search for potential investments or acquisi-
tions 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 dif-
ferent subsequent to the consummation of any acquisition.
Results of Operations
Six-months periods ended June 30, 1999 and June 30, 1998.
For the three month period ended June 30, 1999, the Company incurred nom-
inal general and administrative expenses totaling $6,113 for legal and account-
ing fees compared to $1,095 for the first half of 1998 which was primarily rent
and interest expenses. The Company's only operation to date has been the prelim-
inary investigation of potential acquisitions.
PART II - OTHER INFORMATION
ITEM I Legal Proceedings
None.
ITEM 2 Change in Securities
None.
ITEM 3 Defaults on Senior Securities
None.
ITEM 4 Submission on Matters to a Vote of Security Holders
None.
<PAGE>
ITEM 5 Other Information
None.
ITEM 6 Exhibits and Reports on Form 8-K
(A) Exhibits
None.
(B) Reports on Form 8-K;
Report dated July 19, 1999; Incorporated herein by reference.
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: 8/16/99 By /s/ David N. Nemelka
-----------------------
David N. Nemelka
President and Chief Executive Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> 12-31-1999
<PERIOD-END> 06-30-1999
<CASH> 44,278
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44,278
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 44,278
<CURRENT-LIABILITIES> 40,271
<BONDS> 0
0
0
<COMMON> 24,500
<OTHER-SE> (20,943)
<TOTAL-LIABILITY-AND-EQUITY> 44,278
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,554
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,554)
<EPS-BASIC> .00
<EPS-DILUTED> .00
