U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
Amendment No. 2 to
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL USINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
CAPITAL DEVELOPMENT GROUP, INC.
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(Name of Small Business Issuer in Its Charter
Oregon 33-1113777
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation organization) Identification no.)
4129 Main Street, Suite 100A, Riverside, CA 92501-3625
- ------------------------------------------- ----------
(Address of Principal Executive offices) (Zip Code)
(909) 276-0873
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(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
----------------------------------------
(Title of Class)
----------------------------------------
(Title of Class)
Securities to be Registered under Section 12(g) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
Common Stock NASDAQ OTC BBS
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<PAGE>
PART F/S
Capital Development Group, Inc.
Balance Sheet
As of March 31, 1999
(Unaudited)
Mar 31, '99
ASSETS
Current Assets
Checking/Savings
Trust Account 6,027.72
Total Checking/Savings 6,027.72
Total Current Assets 6,027.72
TOTAL ASSETS 6,027.72
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Loan from Gordon Root 20,000.00
Due to DWT 2,702.15
Due to Mike Vahl 39,893.90
Total Other Current Liabilities 62,596.05
Total Current Liabilities 62,596.05
Total Liabilities 62,596.05
Equity
Paid in Capital 2,040,941.73
Offering Expenses -9,149.50
Common Stock 698.95
Treasury Stock-common-for resal -0.10
Retained Earnings -2,073,108.54
Net Income -15,950.87
Total Equity -56,568.33
TOTAL LIABILITIES & EQUITY 6,027.72
Page 1
<PAGE>
Capital Development Group, Inc.
Profit and Loss
January through March 1999
(Unaudited)
Jan - Mar '99
Ordinary Income/Expense
Expense
Management Fees 9,450.00
Professional Fees
Legal Fees 4,748.59
Total Professional Fees 4,748.59
Rent 450.00
Telephone 207.89
Travel & Ent 1,094.39
Total Expense 15,950.87
Net Ordinary Income -15,950.87
Net Income -15,950.87
Page 2
<PAGE>
Capital Development Group, Inc.
STATEMENT OF CASH FLOWS
(Unaudited)
March 31, 1999
Increase (decrease) in Cash
Cash flows from operating activities
Net loss $( 15,951)
Change in current liabilities:
(Decrease) increase in:
Accounts payable ( 9,888)
Due to DWT 665
Due to Michael Vahl 11,202
Net cash used for operating activities ( 13,972)
Net decrease in cash ( 13,972)
Cash, beginning of quarter 20,000
Cash, end of quarter $ 6,028
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
Organizational Data:
Capital Development Group, Inc. (the Company) was incorporated on May 19, 1993
as an Oregon corporation. The Company was organized to engage in the business of
purchasing healthcare receivable from hospitals and other healthcare
institutions at a discount and administering the collection process of such
receivables. The source of funding for such purchases will be its wholly owned
subsidiary, CDG Credit Corporation which has not yet commenced operations. The
Company has developed its own "Administrator One" software to monitor purchase
and collections of accounts receivable.
Accounting Method
The Company maintains its books of account on the accrual basis of accounting.
Under this method of accounting, revenue is recognized when they are earned, or
billed, and expenses are recognized when goods or services are received, whether
paid or not.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash and cash equivalents include
cash on hand, funds on deposit with financial institutions, and investments with
original maturities of three months or less. The Company maintains an account in
trust with their attorney in Portland Oregon.
Property & Equipment:
Property and equipment owned by the Company are fully depreciated. The Company
does not anticipate that future cash flows will be generated from its property
and equipment. Therefore, property and equipment is considered impaired, with a
net value of zero, and is not reflected on the balance sheet. The original cost
of computer equipment and software development is $155,010. The Company has not
purchased any additional equipment.
Income Taxes:
Income tax expense is based on pre-tax financial accounting income and includes
deferred taxes for the effects of timing differences between financial
accounting and taxable earnings. Tax credits are accounted for as a reduction of
tax expense in the years in which the credits reduce taxes payable.
The Company currently has net operating loss carry-forwards to future periods
for book and tax purposes of approximately $2,098,000 in the first quarter of
1999. A deferred tax asset for the NOL carry forwards has not been recorded as
its realization in future periods is questionable at this time.
Earnings Per Share
Earnings per share are not reflected in the interim financial statements.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
NOTE 2 - RELATED PARTY TRANSACTIONS:
The Company President who is also a 72% shareholder, provides management
services for a fee, and is also reimbursed for expenses incurred for Company
related activities. The company has been unable to compensate and reimburse the
President in a consistent manner, and has therefore recorded accrued liabilities
of $39,894 in 1999. Total charges to the Company for management and expenses are
$11,202 in the first quarter of 1999.
The terms of the note payable include annual interest payable at 8.5 %, and is
unsecured. The note is due December 31,
1999.
NOTE 3 - PREFERRED STOCK AND COMMON STOCK ISSUANCES:
The Company has authorized third series preferred stock, none of which is issued
and outstanding at March 31, 1999.
The third series preferred stock has no voting rights, is entitled to a
preference to common shares of stock in liquidation and is convertible to one
share of common stock under certain conditions. The stated conversion price at
which the preferred stock could be converted to common stock is $2.40 per share,
or fraction thereof. The third series preferred stock had accumulated dividends
at the rate of 8.5% of the purchase price of the stock.
In 1998, common stock was issued in three separate occasions; All 256,865 shares
of third series preferred stock outstanding were completely converted to common
stock at a rate of 1.75 shares of common stock for each share of preferred stock
held.
In addition, all accrued dividends payable on the preferred stock were converted
into common stock at the rate if $1.00 per share, resulting in the issuance of
264,259 shares of stock issued in exchange for $264,259 dollars of preferred
dividends accrued, but never declared and paid.
The company also converted $44,300 in accounts payable to 103,600 shares of
common stock as part of its settlements with creditors.
NOTE 4 - LONG-TERM NOTES PAYABLE
At March 31, 1999, long-term notes payable consisted of a $20,000 demand note
payable to a stockholder of the Company. Interest accrues at a rate of 8.5% and
is due upon demand. The note is not secured by Company assets.
NOTE 5 - EXTRAORDINARY ITEMS AND COMMITMENTS AND CONTINGENCIES:
At December 31, 1998, the Company made a good faith effort with its creditors to
settle debts incurred in prior years. Creditors representing the majority of the
outstanding debt accepted the settlement, but several creditors did not respond.
In 1998, those liabilities to vendors that did not respond were written off and
recorded as an extraordinary gain on restructuring of debt. These vendors may
seek payment from the Company in the future, although the Company views this as
unlikely. Moreover, the Company will resist claims for past obligations by
raising defenses of estoppel and time limitation, among others.
<PAGE>
Capital Development Group, Inc.
Balance Sheet
As of June 30, 1999
(Unaudited)
Jun 30, '99
ASSETS 0.00
LIABILITIES & EQUITY
Liabilities
Current Liabilities
Other Current Liabilities
Due to Porter & Co. 1,637.58
Loan from Gordon Root 20,000.00
Due to DWT 3,907.40
Due to Mike Vahl 50,249.42
Total Other Current Liabilities 75,794.40
Total Current Liabilities 75,794.40
Total Liabilities 75,794.40
Equity
Paid in Capital 2,040,941.73
Offering Expenses -9,149.50
Common Stock 698.95
Treasury Stock-common-for resal -0.10
Retained Earnings -2,073,108.54
Net Income -35,176.94
Total Equity -75,794.40
TOTAL LIABILITIES & EQUITY 0.00
Page 3
<PAGE>
Capital Development Group, Inc.
Profit and Loss
April through June 1999
(Unaudited)
Apr - Jun '99
Ordinary Income/Expense
Expense
Management Fees 7,150.00
Postage and Delivery 14.00
Professional Fees
Accounting 5,079.75
Legal Fees 4,470.55
Total Professional Fees 9,550.30
Rent 450.00
Telephone 168.27
Travel & Ent 1,893.50
Total Expense 19,226.07
Net Ordinary Income -19,226.07
Net Income -19,226.07
Page 4
<PAGE>
Capital Development Group, Inc.
STATEMENT OF CASH FLOWS
(Unaudited)
June 30, 1999
Increase (decrease) in Cash
Cash flows from operating activities
Net loss $( 35,177)
Change in current liabilities:
(Decrease) increase in:
Accounts payable ( 9,888)
Due to Porter & Co. 1,638
Due to DWT 1,870
Due to Michael Vahl 21,557
Net cash used for operating activities ( 20,000)
Net decrease in cash ( 20,000)
Cash, beginning of quarter 20,000
Cash, end of quarter $ 0
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
Organizational Data:
Capital Development Group, Inc. (the Company) was incorporated on May 19, 1993
as an Oregon corporation. The Company was organized to engage in the business of
purchasing healthcare receivable from hospitals and other healthcare
institutions at a discount and administering the collection process of such
receivables. The source of funding for such purchases will be its wholly owned
subsidiary, CDG Credit Corporation which has not yet commenced operations. The
Company has developed its own "Administrator One" software to monitor purchase
and collections of accounts receivable.
Accounting Method
The Company maintains its books of account on the accrual basis of accounting.
Under this method of accounting, revenue is recognized when they are earned, or
billed, and expenses are recognized when goods or services are received, whether
paid or not.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash and cash equivalents include
cash on hand, funds on deposit with financial institutions, and investments with
original maturities of three months or less. The Company maintains an account in
trust with their attorney in Portland Oregon.
Property & Equipment:
Property and equipment owned by the Company are fully depreciated. The Company
does not anticipate that future cash flows will be generated from its property
and equipment. Therefore, property and equipment is considered impaired, with a
net value of zero, and is not reflected on the balance sheet. The original cost
of computer equipment and software development is $155,010. The Company has not
purchased any additional equipment.
Income Taxes:
Income tax expense is based on pre-tax financial accounting income and includes
deferred taxes for the effects of timing differences between financial
accounting and taxable earnings. Tax credits are accounted for as a reduction of
tax expense in the years in which the credits reduce taxes payable.
The Company currently has net operating loss carry-forwards to future periods
for book and tax purposes of approximately $2,117,000 in the first quarter of
1999. A deferred tax asset for the NOL carry forwards has not been recorded as
its realization in future periods is questionable at this time.
Earnings Per Share
Earnings per share are not reflected in the interim financial statements.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
NOTE 2 - RELATED PARTY TRANSACTIONS:
The Company President who is also a 72% shareholder, provides management
services for a fee, and is also reimbursed for expenses incurred for Company
related activities. The company has been unable to compensate and reimburse the
President in a consistent manner, and has therefore recorded accrued liabilities
of $50,249 in 1999. Total charges to the Company for management and expenses are
$10,355 in the second quarter of 1999.
The terms of the note payable include annual interest payable at 8.5 %, and is
unsecured. The note is due December 31, 1999.
NOTE 3 - PREFERRED STOCK AND COMMON STOCK ISSUANCES:
The Company has authorized third series preferred stock, none of which is issued
and outstanding at June 30, 1999.
The third series preferred stock has no voting rights, is entitled to a
preference to common shares of stock in liquidation and is convertible to one
share of common stock under certain conditions. The stated conversion price at
which the preferred stock could be converted to common stock is $2.40 per share,
or fraction thereof. The third series preferred stock had accumulated dividends
at the rate of 8.5% of the purchase price of the stock.
In 1998, common stock was issued in three separate occasions; All 256,865 shares
of third series preferred stock outstanding were completely converted to common
stock at a rate of 1.75 shares of common stock for each share of preferred stock
held.
In addition, all accrued dividends payable on the preferred stock were converted
into common stock at the rate if $1.00 per share, resulting in the issuance of
264,259 shares of stock issued in exchange for $264,259 dollars of preferred
dividends accrued, but never declared and paid.
The company also converted $44,300 in accounts payable to 103,600 shares of
common stock as part of its settlements with creditors.
NOTE 4 - LONG-TERM NOTES PAYABLE
At June 30, 1999, long-term notes payable consisted of a $20,000 demand note
payable to a stockholder of the Company. Interest accrues at a rate of 8.5% and
is due upon demand. The note is not secured by Company assets.
NOTE 5 - EXTRAORDINARY ITEMS AND COMMITMENTS AND CONTINGENCIES:
At December 31, 1998, the Company made a good faith effort with its creditors to
settle debts incurred in prior years. Creditors representing the majority of the
outstanding debt accepted the settlement, but several creditors did not respond.
In 1998, those liabilities to vendors that did not respond were written off and
recorded as an extraordinary gain on restructuring of debt. These vendors may
seek payment from the Company in the future, although the Company views this as
unlikely. Moreover, the Company will resist claims for past obligations by
raising defenses of estoppel and time limitation, among others.
