-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MH5J4A1gss/vQzLxS57jKwUvBWTgkHjMVKpIp/eEcGI2fLwpRcXqBh5FacF4N2Ul cjjaQFfeCmhr0lxPgeq/eg== 0000950144-96-006218.txt : 19960912 0000950144-96-006218.hdr.sgml : 19960912 ACCESSION NUMBER: 0000950144-96-006218 CONFORMED SUBMISSION TYPE: 10KSB40/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960911 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY GROWTH SYSTEMS INC /DE/ CENTRAL INDEX KEY: 0000050471 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER & OFFICE EQUIPMENT [3570] IRS NUMBER: 112050317 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB40/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-03718 FILM NUMBER: 96628587 BUSINESS ADDRESS: STREET 1: 3821-B TAMIAMI TRAIL SUITE 201 CITY: PORT CHARLOTTE STATE: FL ZIP: 33952 BUSINESS PHONE: 9412559582 MAIL ADDRESS: STREET 1: 3821-B TAMIAMI TRAIL SUITE 201 CITY: PORT CHARLOTTE STATE: FL ZIP: 33952 FORMER COMPANY: FORMER CONFORMED NAME: INFOTEC INC DATE OF NAME CHANGE: 19930506 10KSB40/A 1 EQUITY GROWTH SYSTEMS FORM 10-KSB405/A 12/31/95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-KSB/A FIRST AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER O-3718 EQUITY GROWTH SYSTEMS, INC. (Name of Small Business Registrant in its charter) DELAWARE -------- (State or other jurisdiction of incorporation or organization) 11-2050317 ---------- (I.R.S. Employer Identification Number) 3821-B TAMIAMI TRAIL, SUITE 201, PORT CHARLOTTE, FLORIDA, 33952 --------------------------------------------------------------- (Address of principal executive offices including Zip Code) (941) 255-9582 -------------- (Registrant's telephone number) Securities registered under Section 12(b) of the Act: Title of each class: NONE Name of each exchange on which registered: NONE ---- ---- Securities Registered under Section 12(g) of the Act: COMMON STOCK ------------ (Title of Class) Check whether the Registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, during the past twelve 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 [_] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this form 10-KSB or any amendment to this Form 10-KSB: [X] State Registrant's revenues for its most recent fiscal year: $ 185,756 --------- State the aggregate market value of the voting stock held by non-affiliates computed by reference to the price at which the stock was sold, or the average bid and asked prices of such stock, as of a specified date within the past 60 days: $ 0 BASED ON THE ABSENCE OF ANY BID PRICE THEREFORE DURING 1995. State the number of shares outstanding of each of the Registrant's classes of equity, as of the the latest practicable date: 3,491,148 SHARES OF COMMON STOCK, AS OF JUNE 14, 1996. This amendment to registration statement on Form 10-KSB, is comprised of 18 sequentially numbered pages, with the required exhibit index located at sequentially numbered page 4. 2 TABLE OF CONTENTS
ITEM PAGE NUMBER NUMBER ITEM CAPTION - ------ ------ ------------ Item 1. * Description of Business Item 2. * Description of Properties Item 3. * Legal Proceedings. Item 4. * Submission of Matters to Vote of Security Holders Item 5. * Market for Common Equity and Related Stockholder Matters. Item 6. 3 Management's Discussion and Analysis of Financial Condition and Results of Operations or Plan of Operation Item 7. 3, 6 Financial Statements Item 8 * Changes in and Disagreements with Accountants Item 9. * Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended. Item 10. * Executive Compensation Item 11. * Security Ownership of Certain Beneficial Owners & Management Item 12. * Certain Relationships and Related Transactions Item 13. * Exhibits, Financial Statements & Reports on Form 8-K 5 Signatures 19 Additional Information
_______ * Not affected by this amendment. Equity Growth Systems, inc., Form 10-SB/A, Page 2 3 ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATION During the year ended December 31, 1995 the Registrant reported income of approximately $154,000 as compared to income from all sources of $0 during the prior year ended. This increase was attributable to the Registrant s exchanging 1,616,000 shares of common stock in exchange for the corpus of an indenture of trust, various wrap around mortgages subject to the underlying mortgages and certain leases and lease income. During the year ended December 31, 1995 the Registrant's cost of revenue increased by approximately $177,000 over the prior year end representing costs associated with increased total revenues. The Registrant's cost of revenue increased primarily as a result of the increased cost of managing the mortgages, mostly consisting of interest expenses incurred in satisfying the underlying mortgages. During the 1995 year end the Registrant recognized an approximate 1100% increase in its general and administrative expenses primarily caused by the advent of the interest expenses. During the year ended December 31, 1995 the Registrant reported a net loss of approximately $41,045 or $.017 per share as compared to a net loss of approximately $17,136 or $.01 per share during the prior year end. The increase in net loss primarily reflects the increase in interest and operating expenses during 1995 which did not exist in the prior year. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 1995 the Registrant had a working capital position of approximately $(195,000) as compared to a working capital position of approximately $(56,000) for the year ended December 31, 1994. This decrease reflects the Registrant's acquisition of the previously discussed mortgages and leases. To date the cash flow generated from operations have been adequate to meet the Registrant's mortgage obligations. A shareholder has been contributing funds to meet various general and administrative expenses required to fulfill all of the Registrant's obligations. No officer of the Registrant has been receiving or accruing compensation at this time. ITEM 7. FINANCIAL STATEMENTS. SELECTED FINANCIAL DATA. The following selected financial data should be read in conjunction with the financial statements of the Registrant and the notes thereto included elsewhere herein. Equity Growth Systems, inc., Form 10-SB/A, Page 3 4
1993 1994 1995 ---- ---- ---- Net Revenues * ** $ 0 0 153,839 Income/(loss) from Operations ( 39,700) ( 17,136) 41,045 Income/(loss) from Operations Per Share *** (Nil) (0.01) (0.017) Total Assets 5,983 4,843 2,584,527 Total Liabilities 112,565 61,029 1,917,582 Stockholders' Equity (Deficit) ( 106,882) ( 56,186) 666,945
_______ * As noted in Part I Item 1 above, in March 1974, the Registrant was forced to discontinue its operations as a result of the foreclosure by the Registrant's principal creditor, on its security interest in the Registrant's operating assets. Until March of 1995, the Registrant's activities were limited to the collection of royalties under the License Agreement and the Victor Agreement and the disbursement of funds under the Creditors Plan as described in Item 1 in Part I. Those activities ceased in August 1991. ** Revenue for 1995 consists of interest and income from wrap around mortgages. *** Earnings per share were calculated using the weighted average of common stock issued and outstanding. ITEM 13. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K. Exhibit 27 - Restated Financial Data Schedule (for SEC use only). (a) INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES. The audited balance sheet of the Registrant for its years ended December 31, 1995, and 1994 and related statements of operations, stockholder's equity and cash flows for the years ended December 31, 1995 and 1994 follow in sequentially numbered pages numbered __ through __. The page numbers for the financial statement categories are as follows: Page Description - ---- ----------- 6 Cover Page (Joel S. Baum, C.P.A.) 7 Table of Contents 8 Report of Independent Accountants - December 31, 1995 and 1994; 9 Balance Sheet - December 31, 1995 and 1994; 10 Statements of Income and Accumulated Deficit, December 31, 1995 and 1994; 11 Statements of Shareholders' Deficit, December 31, 1995 and 1994; 12 Statement of Cash Flows - December 31, 1995 and 1994; and 13 Notes to Financial Statements - December 31, 1995 and 1994.. SIGNATURES Equity Growth Systems, inc., Form 10-SB/A, Page 4 5 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: August 31, 1996 EQUITY GROWTH SYSTEMS, INC. By: /s/Edward Granville-Smith/s/ President Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE - --------- ----- ---- /s/Edward Granville-Smith President, Chief Executive August 31, 1996 Edward Granville-Smith Officer and Sole Director /s/Donald E. Homan Vice President & Chief Financial Officer August 31, 1996 Donald E. Homan
Equity Growth Systems, inc., Form 10-SB/A, Page 5 6 ADDITIONAL INFORMATION CORPORATE HEADQUARTERS: ---------------------- 3821-B Tamiami Trail, Suite 201, Port Charlotte, Florida, 33952 Telephone Number (941) 255-9582 Fax Number (941) 625-4491 DIRECTOR -------- Edward Granville-Smith EXECUTIVE OFFICERS ------------------ Edward Granville-Smith, Jr.; Chairman, President and Chief Executive Officer Gene R. Moffitt; Executive Vice President, Asset Management and Chief Operating Officer Rafi Weiss; Senior Vice President, Acquisitions Donald E. Homan; Vice President & Chief Financial Officer Charles J. Scimeca; Secretary & Treasurer
INDEPENDENT PUBLIC ACCOUNTANT: ----------------------------- JOEL S. BAUM, P.A., CPA 1515 University Drive, Suite 222; Coral Springs, Florida 33071 Telephone Number (945) 752-1712 TRANSFER AGENT: -------------- LIBERTY TRANSFER COMPANY 191 New York Avenue; Huntington, New York 11743 Exhibits to the Form 10-KSB will be provided to shareholders of the Registrant upon written request addressed to Edward Granville-Smith, Chairman; EQUITY GROWTH SYSTEMS, INC., 3821-B Tamiami Trail, Suite 201; Port Charlotte, Florida 33952. Any exhibits furnished are subject to a reasonable photocopying charge. THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED OF THIS FORM 10-KSB AND ANNUAL REPORT TO SHAREHOLDERS NOR HAS IT PASSED UPON ITS ACCURACY OR ADEQUACY. Equity Growth Systems, inc., Form 10-SB/A, Page 1 7 EQUITY GROWTH SYSTEMS, INC. FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1995 AND 1994 8 EQUITY GROWTH SYSTEMS, INC. FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 1995 AND 1994 TABLE OF CONTENTS PAGE FINANCIAL STATEMENTS Independent auditor's reports 1 & 2 Balance sheets 3 Statements of income 4 Statements of shareholders' equity 5 Statements of cash flows 6 Notes to financial statements 7 - 12 9 [JOEL S. BAUM P.A. LETTERHEAD] INDEPENDENT AUDITORS REPORT To the Shareholders of Equity Growth Systems, Inc. Port Charlotte, Florida We have audited the balance sheets of Equity Growth Systems, Inc. at December 31, 1995 and 1994, and the related statements of income, shareholders' equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of Equity Growth Systems, Inc. as of December 31, 1994 and for the year then ended were audited by other auditors and their report dated April 17, 1995 expressed an unqualified opinion except for going concern considerations. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Equity Growth Systems, Inc. at December 31, 1995 and 1994, and the results of its operations and its cash flow for the year then ended in conformity with generally accepted accounting principles. March 24, 1996 Joel S. Baum, PA, CPA Coral Springs, Florida 10 EQUITY GROWTH SYSTEMS, INC. BALANCE SHEETS DECEMBER 31, 1995 AND 1994 ASSETS
1995 1994 ---- ---- Current Assets Cash $ -0- $ 1,051 Other receivables 5,671 3,792 Mortgage receivable, current portion (Note 7) 215,081 -0- Promissory notes, current portion (Note 8) 8,757 -0- ----------- ---------- Total Current Assets 229,509 4,843 ----------- ---------- Other Assets Mortgages receivable (Note 7) 1,989,766 -0- Promissory Notes (Note 8) 321,670 -0- Interest Receivable 43,582 -0- ----------- ---------- Total Other Assets 2,355,018 -0- ----------- ---------- Total Assets $ 2,584,527 $ 4,843 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Other Current liabilities (Note 3) $ 41,158 61,029 Mortgage payable, current portion (Note 7) 383,143 -0- ----------- ---------- Total Current Liabilities 424,301 61,029 Long-Term Liabilities Mortgage payable (Note 7) 1,493,281 -0- ----------- ---------- Total Liabilities 1,917,582 61,029 ----------- ---------- Shareholders' Equity (Note 13) Preferred Stock - no par value authorized - 5,000,000 shares; zero issued and outstanding -0- -0- Common stock - $.01 par value authorized - 20,000,000 shares; issued and outstanding - 2,822,072 shares 28,221 20,000 Capital in excess of par value 2,881,492 2,125,537 Accumulated deficit (2,242,768) (2,201,723) ----------- ---------- 666,945 (56,186) ----------- ---------- Total Liabilities $ 2,584,527 $ 4,843 =========== ==========
The accompanying notes are an integral part of these financial statements. - 3 - 11 EQUITY GROWTH SYSTEMS, INC. STATEMENT OF INCOME AND ACCUMULATED DEFICIT DECEMBER 31, 1995 AND 1994
1995 1994 ---------- ---------- Revenue $ 153,839 $ -0- General and Administrative Expenses 194,884 17,136 ---------- ---------- Net (Loss) before provisions for income taxes (41,045) (17,136) Provisions for income taxes (Note 2) -0- -0- ---------- ---------- Net (Loss) (41,045) (17,136) ========== ========== Earnings per share $ (.017) $ (.009) ========== ========== Weighted average of shares outstanding 2,411,036 2,000,000 ---------- ----------
The accompanying notes are an integral part of these financial statement. - 4 - 12 EQUITY GROWTH SYSTEMS, INC. STATEMENTS OF SHAREHOLDERS' DEFICIT DECEMBER 31, 1995
Capital in No. of Common excess of Accumulated Shares Stock Par Value Deficit --------- ------- ---------- ------------ Balance, December 31, 1991 1,902,152 $19,022 $2,101,411 $(2,137,567) Net (Loss) for the year ended December 31, 1992 (7,320) ---------- ------- ---------- ----------- Balances, December 31, 1992 1,902,152 19,022 2,101,411 (2,144,887) Common Stock issued as payment for professional fees 75,000 750 Common Stock issued in exchange for accrued interest 22,848 228 24,126 Net (Loss) for the year ended December 31, 1993 (39,700) ---------- ------- ---------- ----------- Balances, December 31, 1993 2,000,000 $20,000 $2,125,537 $(2,184,587) Net (Loss) for the year ended December 31, 1994 (17,136) ---------- ------- ---------- ----------- Balances, December 31, 1994 2,000,000 $20,000 $2,125,537 $(2,201,723) Reverse Split (1,800,000) (18,000) 18,000 Common Stock Issued 2,622,072 26,221 737,955 Net Loss for the year ended December 31, 1995 (41,045) ---------- ------- ---------- ----------- Balances, December 31, 1995 2,822,072 $28,221 $2,881,492 $(2,242,768) ========== ======= ========== ===========
The accompanying notes are an integral part of these financial statement. - 5 - 13 EQUITY GROWTH SYSTEMS, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994 ---------- -------- Cash Flows from Operating Activities: Net Income (Loss) $ 41,045 $(17,136) Adjustments to Reconcile Income to Net Cash Used for Operating Activities: Depreciation 2,022 -0- Decrease in Development Costs -0- 101 (Increase) in Receivables (2,580,735) -0- (Decrease) in Accrued Expenses (19,871) -0- Increase in Notes Payable 1,980,424 15,996 ---------- -------- Net Cash (Used) for Operations (763,205) (1,039) Cash Flows From Financing Activities: Purchase of Fixed Assets (2,022) -0- Cash Flow From Investing Activities: Issuance of Common Stock 8,221 -0- Additional Paid in Capital Generated as a result of Issuance of Common Stock 755,955 -0- ---------- -------- 764,176 -0- ---------- -------- Net (Decrease) in Cash (1,051) (1,039) Cash - Beginning of Year 1,051 2,090 ---------- -------- Cash - End of Year $ -0- $ 1,051 ========== ========
The accompanying notes are an integral part of these financial statements. - 6 - 14 EQUITY GROWTH SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BUSINESS AND ORGANIZATION The Company (formerly known as InfoTech, Inc.) was organized under the laws of the State of Delaware on December 08, 1964. The principal business of the Company is specializing in structuring and marketing mortgaged backed securities as well as, the acquisition of select commercial real estate for its own account. FIXED ASSETS The fixed assets are depreciated over their estimated allowable useful lives, primarily over five to seven years utilizing the modified accelerated cost recovery system. Expenditures for major renewals and betterments that extend the useful lives of fixed assets are capitalized. Expenditures for maintenance and repairs are charged to expenses as incurred. INCOME TAXES In February 1992, the Financial Accounting Sttandards Board issued Statement on Financial Accounting Standards 109 of "Accounting for Income Taxes." Under Statement 109, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
1995 ---- Equipment $ 2,022 ------- Less Accumulated Depreciation (2,022) ------- $ - 0 - =======
The depreciation expense charged during 1995, was $2,022.00. - 7 - 15 EQUITY GROWTH SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 3 - SETTLEMENT WITH CREDITORS In March of 1995, the Company issued 20,000 shares of the Company's $.01 par value of common stock after the reverse split in payment of legal bills of $45,734, and 6,072 shares $.01 par value stock in payment of accounting bill of $15,360. The balance of $67,832 was written off as Company was not able to locate creditors. On August 15, 1995, the Company has issued 200,000 shares of the Company's $.01 par value of common stock for significant services to the corporation at the request of its President with a value of $2,000. NOTE 4 - EMPLOYMENT AGREEMENT The Company entered into an employment agreement with Edward Granville-Smith, a chief executive officer for an initial term of five years commencing June 1, 1995. The Company registered with the Securities and Exchange Commission to issue 110,000 shares of common stock to Edward Granville-Smith for compensation for services prior to June 1, 1995. In addition, annual salary in a sum equal to the lesser of 5% of the Company's annual gross income on a calendar basis or 15% of its net pre-tax profit as determined for federal income tax purposes, without taking depreciation or tax credits into account to be paid on or before March 30 following the calendar for which salary is due; subject to availability of cash flow. Edward Granville-Smith would also be entitled to an annual bonus payable in shares of the Company's common stock, determined by dividing 5% of the Company's pre-tax profits for the subject calendar year by the average bid price for the Company's common stock during the last five trading days prior to the end of the last day of each year and the first five days of the new year. NOTE 5 - CONSULTING AGREEMENTS The Company entered into two consulting agreements. One with Bolina Trading Company, S.A., a Panamanian Corporation and the second one with Warren A. McFadden. Each consultant shall serve as a special advisor to Mr. Granville-Smith, in conjunction with Mr. Granville-Smith's role as an officer and director of the Company, with special responsibilities in the areas of strategic planning and raising debt on equity capital required to implement the Company's strategic plans. Bolina Trading Company, S.A. will receive as compensation 84,000 shares of the Company's common stock plus $100 per hour after 520 hours of service per year. Warren A. McFadden will receive as compensation 110,000 shares of the Company's common stock plus $100 per hour after 520 hours of service per year. Subsequent to December 31, 1995, all of the above shares of the Company's common stock were issued. - 8 - 16 EQUITY GROWTH SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 6 - INDENTURE OF TRUST AND WRAP AROUND MORTGAGES RECEIVABLE On June 30, 1995, the Company issued 1,616,000 shares of common stock in payment of an indenture of trust and wrap around mortgages subject to the underlying mortgages, from the following partnerships: Pay-West Associates, Montco Associates, San-Safe Associates and San-Ten Associates. The indenture of trust consists of (4) four demand notes bearing interest at prime plus 4%. These notes are payable from the rental of the various properties less payment on the wrap around mortgages. The payment does not cover the accrued interest which is added back to the notes. The wrap around notes bear interest of 9.08% to 13.50%. The underlying mortgages bear interest at 9.625 to 9.75%. The difference between payments on the wrap around mortgages and underlying mortgages are applied to debt service of the demand notes. NOTE 7 - MORTGAGES Mortgages consist of the following:
12/31/95 -------- Subordinate "wrap" mortgage receivables: (a) Nevada/California Property 12.940% $ 857,192 (b) Tennessee Property 13.500% 316,045 (c) Kansas Property (See Note 14) 12.320% 345,219 (d) Oregon Property 9.080% 686,392 ----------- Less Current Portion (215,081) ---------- $1,989,766 ========== Original Mortgages Payables: (a) Nevada/California Property 9.750% $ 845,180 (b) Tennessee Property 9.625% 247,311 (c) Kansas Property (See Note 14) 9.750% 136,999 (d) Oregon Property 9.750% 646,934 ---------- 1,876,424 Less Current Portion (383,143) ---------- $1,493,281 ==========
(a) The mortgage secures a promissory note and is payable in equal quarterly installments of $42,701.69 with a final payment of $291,096.92, maturing January 1, 2001. There is also an underlying "wrap" mortgage that is payable in equal quarterly installments of $42,826.50, maturing July 1, 2005, with quarterly payments decreasing to $9,314.75 for the last five years. - 9 - 17 EQUITY GROWTH SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 7 - MORTGAGES (CONTINUED) (b) The mortgage secures a promissory note and is payable in equal quarterly installments of $23,437.01, with a final payment of $198,238.33 maturing December 31, 1996. There is also an underlying "wrap" mortgage that is payable in equal quarterly installments of $23,562.25 maturing December, 2006, with quarterly payments decreasing to $7,329 for the last 10 years. (c) The mortgage secures a promissory note and is payable in equal quarterly installments of $18,508.87 maturing December 31, 1995. There is also an underlying "wrap" mortgage that is payable in annual installments of $74,482, maturing October 1, 2005, with annual payments decreasing to $22,962 the last 10 years. (See note 14). (d) The mortgage secures a promissory note and is payable in equal quarterly installments of $26,409.87 with a final payment of $232,199.50, maturing January 1, 2003. There is also an underlying "wrap" mortgage that is payable in equal annual payments of $106,640 maturing December 31, 2002. NOTE 8 - NOTES RECEIVABLE
1995 ---- Nevada/California Property $125,978 -------------------------- Quarterly payments of $868.55 4% above prime, currently 12.62% original amount $63,000 Tennessee 84,689 --------- Quarterly payment of $477.90 4% above prime, currently 12.62% original amount $40,000 Kansas 40,465 ------ Quarterly payments of $341.73 4% above prime, currently 12.62% original amount $21,073 (See Note 14) Oregon 79,295 ------ Quarterly payments of $501.13 4% above prime, currently 12.62% original amount $38,742 -------- 330,427 Less Current Portion (8,757) -------- $321,670 ========
- 10 - 18 EQUITY GROWTH SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 9 - DEFERRED INCOME TAXES: As discussed in note 1, the Company has applied the provision of statement 109. The significant components of deferred income tax expense (benefit) for the years then ended December 31, 1995 and 1994.
1995 1994 ---- ---- Current Loss $(41,045) $(17,136) Valuation Allowance 41,045 17,136 -------- -------- $ - 0 - $ - 0 - ======== ========
These operating losses can be used to offset future taxable income. NOTE 10 - RELATED PARTY TRANSACTION The chief executive officer of the Company is also an officer of the general partner in all the partnerships involved in the wrap around mortgages subject to the underlying mortgages and promissory notes. NOTE 11 - COMPENSATION No officer or director has received any compensation to date. NOTE 12 - STOCKHOLDERS' EQUITY On May 18, 1995, the Company adopted a resolution to change the authorized capitalization as follows: (a) The 2,000,000 shares of common stock, $0.01 par value then authorized, all of which were currently outstanding, were reverse split into 200,000 shares, $0.01 par value; and immediately thereafter; (b) The Company's authorized common stock was increased from 200,000 shares, $0.01 par value, to 20,000,000 shares of common stock, without par value, and (c) The Company's was authorized to issue 5,000,000 shares of preferred stock, the attributes of which are to be determined by the Company's Board of Directors from time to time, prior to issuance, in conformity with the requirements of Sections 151 of the Delaware General Corporation Law. - 11 - 19 EQUITY GROWTH SYSTEMS, INC. NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995 NOTE 13 - LEGAL MATTERS The Company is currently in default on a property in Kansas City. The tenant submitted an irrevocable offer to purchase the property. A formal contract is being prepared and will be executed shortly. The Company's legal counsel has confirmed that the first mortgage holder has withheld any action to foreclose the mortgage due to the pending sale which will satisfy all pending liabilities. At the time the sale is consummated the wrap mortgage asset will be eliminated as well as the underlying liability. - 12 - EX-27 2 RESTATED FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF EQUITY GROWTH SYSTEMS, INC. FOR THE PERIOD ENDED DECEMBER 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 0 0 2,584,527 0 0 229,509 0 0 2,584,527 424,301 0 0 0 28,221 638,724 2,584,527 153,839 153,839 0 0 194,884 0 0 0 0 0 0 0 0 (41,045) (.017) (.017)
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