-----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, DQHrY7fQBK6YPir8KxRlMaPiFTVcNBoXLIxlcnEUZgXPM+r/k9Oy89NxL36oBq4w LR4dw8eQqWWUT6XpIVEdsQ== 0001044885-98-000029.txt : 19981001 0001044885-98-000029.hdr.sgml : 19981001 ACCESSION NUMBER: 0001044885-98-000029 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980930 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: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-03718 FILM NUMBER: 98718588 BUSINESS ADDRESS: STREET 1: 320 ISLAND WAY STREET 2: STE 210 CITY: CLEARWATER STATE: FL ZIP: 33767 BUSINESS PHONE: 9412559582 MAIL ADDRESS: STREET 1: 320 ISLAND WAY STREET 2: STE 210 CITY: CLEARWATER STATE: FL ZIP: 33767 FORMER COMPANY: FORMER CONFORMED NAME: INFOTEC INC DATE OF NAME CHANGE: 19930506 10QSB/A 1 AMENDMENT NO.1 TO FORM 10QSB QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 205490. AMENDMENT NO.1 TO FORM 10-QSB (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 For the transition period from_________ to_____________ Commission file number 0-3718 Equity Growth Systems, inc. -------------------------- (Exact name of registrant as specified in its charter) Delaware 11-2050317 -------- ---------- (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 3821-B Tamiani Trail, Suite 201; Port Charlotte, Florida 33952 ---------------------------------------- (Address of principal executive offices) (561)416-7239 ------------ (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- As at June 30, 1998, the registrant had outstanding 4,116,148 shares of Common Stock, par value $0.01. Transitional Small Business Disclosure Format: Yes No X --- --- EQUITY GROWTH SYSTEMS, inc. Index Page ---- Part I - Financial Information Item 1. Financial Statements Accountant's Compilation Report ............................. 1 Balance Sheets .............................................. 2 Statements Income and Accumulated Deficit.................... 3 Statements of Shareholders' Equity........................... 4 Statements of Cash Flows..................................... 5 Notes to Financial Statements................................ 6 - 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................ 14 Signatures................................................... 15 i To the Shareholders Equity Growth Systems, inc., Port Charlotte, Florida 33952 I have compiled the accompanying balance sheet of Equity Growth Systems, inc. as of June 30, 1988 and 1997 and the related statements of income and retained earnings and cash flows for the six months then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of management. I have not audited or reviewed the accompanying financial statements and, accordingly, do not express an opinion or any other form of assurance on them. Leo J. Paul August 3, 1998 1 EQUITY GROWTH SYSTEMS, inc. BALANCE SHEET JUNE 30, 1998 AND 1997 1998 1997 A S S E T S CURRENT ASSETS Cash and cash equivalents $ (28) $ 1,764 Mortgage receivable, current portion (Note 6 & 7) 156,471 145,510 Promissory notes, current portion (Note 8) 5,480 5,480 ---------- ---------- TOTAL CURRENT ASSETS 161,923 152,754 OTHER ASSETS Mortgages receivable (Note 6 & 7) 1,039,982 1,196,453 Promissory notes (Note 8) 258,438 233,106 Interest receivable 49,637 47,215 Escrow receivable 98,000 98,000 ---------- ---------- TOTAL OTHER ASSETS 1,446,057 1,574,774 ---------- ---------- TOTAL ASSETS $1,607,980 $1,727,528 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and other current liabilities (Note 3) $ 35,761 $ 20,132 Mortgage payable, current portion (Note 7) 177,317 156,948 Note payable (Note 9) 143,437 105,500 ---------- ---------- TOTAL CURRENT LIABILITIES 356,515 282,580 LONG-TERM LIABILITIES Mortgage payable (Note 7) 904,548 1,126,351 ---------- ---------- TOTAL LIABILITIES 1,261,063 1,408,931 ---------- ---------- SHAREHOLDERS' EQUITY (Note 13) Preferred stock-no par value authoriz- ed-5,000,000 shares; zero issued and outstanding - - Common stock-$.01 par value author- ized-20,000,000 shares; issued and outstanding-4,116,148 shares in 1998 and 3,771,148 in 1997 41,161 37,711 Capital in excess of par value 2,891,645 2,892,195 Accumulated deficit (2,585,889) (2,611,309) ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 346,917 318,597 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,607,980 $1,727,528 ========== ========== Read Accountant's Compilation Report The accompanying notes are an integral part of these financial statements. 2 EQUITY GROWTH SYSTEMS, inc. CONDENSED STATEMENT OF INCOME AND ACCUMULATED DEFICIT Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 -------------------- ------------------- Income $ 40,476 $ 55,475 $ 80,833 $ 113,466 General and Adminis- trative Expenses 52,443 189,404 101,452 232,448 ---------- ---------- ---------- ---------- Net Income (Loss) Before Provisions for Income Taxes (11,967) (133,929) (20,619) (118,982) Provisions for Income Taxes Note (10) - - - - ---------- ---------- ---------- ---------- Net Income (Loss) (11,967) (133,929) (20,619) (118,982) Accumulated Deficit- Beginning (2,573,922) (2,477,380)(2,565,270)(2,492,327) ========== ========== ========== ========== Accumulated Deficit- Ending (2,585,889) (2,611,309)(2,585,889)(2,611,309) ========== ========== ========== ========== Earnings Per Share (0.003) (0.036) (0.005) (0.032) Weighted Average of Shares Outstanding 4,116,149 3,771,148 3,979,204 3,771,148 ---------- ---------- ---------- ---------- Read Accountant's Compilation Report The accompanying notes are an integral part of these financial statements. 3 EQUITY GROWTH SYSTEMS, inc. STATEMENTS OF SHAREHOLDERS' EQUITY JUNE 30, 1998 Capital in No. of Common Excess of Accumulated Shares Stock Par Value Deficit Balances January 1, 1995 2,822,072 28,221 $2,881,492 $(2,242,768) Common Stock Issued 949,076 9,490 10,703 Net (loss) for the year ended December 31, 1996 (249,559) ---------- ------- ---------- ----------- Balances, December 31, 1996 3,771,148 37,711 2,892,195 (2,492,327) Common Stock Issued 55,000 550 (550) Net (loss) for the year ended December 31, 1997 (72,943) ---------- ------- ---------- ----------- Balances, December 31, 1997 3,826,148 38,261 2,891,645 (2,565,270) Common Stock Issued 290,000 2,900 Net income for the six months ended June 30, 1998 (20,619) ---------- ------- ---------- ----------- Balances June 30, 1998 4,116,148 41,161 $2,891,645 $(2,585,889) ========== ======= ========== =========== Read Accountant's Compilation Report The accompanying notes are an integral part of these financial statements. 4 EQUITY GROWTH SYSTEMS, inc. STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997 1998 1997 Cash Flows From Operating Activities: Net Profit (Loss) $ (20,619) $(118,982) Adjustments to Reconcile Net Profit (Loss) to Net Cash Used for Operating Depreciation - - Decrease in other receivable 580 - Decrease in mortgages and notes receivable 60,880 329,108 Increase (decrease) in accounts payable and current liabilities 30,761 (9,304) Increase (decrease) in mortgage and notes payable (74,530) (200,020) -------- -------- Net Cash Provided (Used) by Operations (2,928) 802 -------- -------- Cash Flows From Financial Activities Capital stock issued 2,900 - Additional paid in capital - - -------- -------- Net Cash Provided by Financial Activities 2,900 - -------- -------- Net Increase (Decrease) in Cash (28) 802 Cash-Beginning of Year - 962 -------- -------- Cash-End of Period $ (28) $ 1,764 ======== ======== Supplemental Cash Flows Information Cash paid for interest $ 65,774 $ 69,776 ======== ======== Read Accountant's Compilation Report The accompanying notes are an integral part of these financial statements. 5 EQUITY GROWTH SYSTEMS, inc. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 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 8, 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. Use of 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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash in banks, and any highly liquid investments with a maturity of three months or less at the time of purchase. The Company maintains cash and cash equivalent balances at a financial institution which is insured by the Federal Deposit Insurance Corporation up to $100,000. At June 30, 1998, there is no concentration of credit risk from uninsured bank balances. Fixed Assets The fixed assets are depreciated over their estimated allowable useful lives, primarily over five to seven years utilizing the modified acceleration 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 Standards Board issued a 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 bases. 6 EQUITY GROWTH SYSTEMS, inc. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. Earnings/Loss Per Shares Primary earnings per common share are computed by dividing the net income (loss) by the weighted average number of shares of common stock and common stock equivalents outstanding during the year. The number of shares used for the six months ended June 30, 1998 and 1997 were $3,979,204 and $3,771,148, respectively. NOTE 2 - PROPERTY, PLANT AND EQUIPMENT 1998 & 1997 Equipment $ 2,022 ------- Less: Accumulated depreciation (2,022) $ - ======= Depreciation expense charged during 1998 and 1997 was $-0- and $-0-, respectively. NOTE 3 - SETTLEMENT WITH CREDITORS On October 31, 1996, the Company issued 200,000 shares of it common stock in consideration for the cancellation of $107,393 owed by the Corporation to Diversified Corporate Consulting Group, LLC for professional services rendered since 1994. Additionally, in June and October of 1997 , the Company issued an aggregate of 460,000 shares of the Company's $.01 par value common stock for advisory services performed on its behalf with a value of $4,600. On August 15, 1995, the Company 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. 7 EQUITY GROWTH SYSTEMS, inc. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 NOTE 3 - SETTLEMENTS WITH CREDITORS (Continued) 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 of $.01 par value stock in payment of accounting bill of $15,360. The remaining balance of $67,832 was written off as the Company was not able to locate creditors. 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, 1997. In addition, annual salary is 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 days of the new year. During May of 1997, the Company recruited two executive officers, Messers. Gener R. Moffitt and Donald E. Homan, both with offices in Kansas City, Missouri. Such recruitment was effected in two parts, first, the Company exchanged 100,000 shares with each (200,000 shares in the aggregate), for all of the capital stock in their recently formed corporations (Moffitt Properties, Ltd., and Homan Equities, Inc., both Missouri corporations), and then the Company and the subject corporation entered into employment agreements. Each employment agreement was identical and provides for the following compensation. (a) An annual bonus payable in shares of the Company's common stock, determined by dividing 10% of the Company's pre-tax profits for the subject calendar year by the average bid price for the Company's common stock at during the last five trading days prior to the end of the last day of each year and 8 EQUITY GROWTH SYSTEMS, inc. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 NOTE 4 - EMPLOYMENT AGREEMENT (Continued) the initial five days of the new year, provided, however, that the employment agreement shall have been in effect for at least one half of the subject year; and, provided further that in the event of a reorganization pursuant to which another entity becomes the Company's parent, the common stock of such entity shall be issuable hereunder, rather than that of the Company. (b) An annual cash bonus equal to 40% of the Company's pre-tax profits for the subject calendar year, provided, however, that the employment agreement shall have been in effect for at least one half of the subject year. (c) A guaranteed minimum monthly draw against the annual bonus described above, in a sum equal to not be less than $6,250; subject to availability of cash flow. NOTE 5 - CONSULTING AGREEMENTS The Company had 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 serves 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. The agreements' terms called for Bolina Trading Company, S.A. to receive as compensation 84,000 shares of the Company's common stock plus $100 per hour after 520 hours of service per year and Warren A. McFadden to 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. In 1997, the consulting agreement with Warren A. McFadden was terminated and the 110,000 shares of common stock he received, which were subsequently acquired by Diversified Consulting, were used by Diversified as consideration to cancel a $30,000 promissory note liability owed to the Company. 9 EQUITY GROWTH SYSTEMS, inc. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 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 (2) two 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 12.9041%. The underlying mortgages bear interest at 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 June 30, June 30, 1998 1997 ------- ------- Mortgages consist of the following: Subordinate "wrap" mortgage receivables: (a) Nevada/California Property 12.9041 $ 633,452 $ 726,469 (b) Oregon Property 9.080% 563,001 615,494 ---------- ---------- 1,196,453 1,341,963 Less: Current Portion 156,471 145,510 ---------- ---------- $1,039,982 $1,196,453 ========== ========== Original Mortgages Payable: (a) Nevada/California Property 9.750% $ 570,171 $ 704,230 (b) Oregon Property 9.750% 511,694 579,069 ---------- ---------- 1,081,865 1,283,299 Less: Current Portion 177,317 156,948 ---------- ---------- $ 904,548 $1,126,351 ========== ========== 10 EQUITY GROWTH SYSTEMS, inc. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 NOTE 7 - MORTGAGES (Continued) (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. (b) 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, 2002. 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 1998 1997 Nevada/California Property Quarterly payments of $868.55 4% above prime, currently 12.40% original amount $63,000 $161,722 $145,528 Oregon Quarterly payments of $501.13 4% above prime, currently 12.40% original amount $38,742 102,196 93,058 -------- -------- 263,918 238,586 Less Current Portion 5,480 5,480 -------- -------- $258,438 $233,106 ======== ======== NOTE 9 - NOTE PAYABLE A secured note payable including accrued interest, due on demand on interest payable quarterly at a rate of 10% per annum. This loan was assumed by the Company as part of the asset acquisition. The note has a cumulative interest clause on any short fall in payment being added to the original principal amount of $104,000 $143,437 $105,500 ======== ======== 11 EQUITY GROWTH SYSTEMS, inc. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 NOTE 10 - INCOME TAXES As discussed in Note 1, the Company has applied the provisions of Statement 109. The significant components of deferred income tax expense benefit for the years ended June 30, 1998 and 1997 arising from net operating losses as follows: Deferred tax benefit $11,800 $ 6,200 Valuation allowance 11,800 6,200 ------- ------- $ - $ - ======= ======= The Company has operating loss carry forwards in excess of two million dollars that can be used to offset future taxable income. NOTE 11 - 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 12 - COMPENSATION No officer or director has received any compensation to date, except as discussed in Note 4. NOTE 13 - 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, $0.01 par value, and (c) The Company 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. 12 EQUITY GROWTH SYSTEMS, inc. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1998 NOTE 14 - LEGAL MATTERS The Company is currently not a party to any legal proceedings. Although the Company is not a party to the following proceedings directly, they involve real estate located in Kansas and Tennessee in which the Company has an interest. A. On October 20, 1997, the various parties to a wrap around mortgage transaction with the Company and the current tenant agreed to settle, but certain parties reserved claims against each other. The settlement calls for a payment from the current tenant of $150,000 in exchange for the transfer of a clear and free title of the underlying real estate. The mortgage holder Fleet National Bank received $52,000 and the balance to be held in escrow between the other parties. The Company holds the position that the ultimate disbursement of a substantial portion of these escrowed funds should be earmarked for the reduction of the wrap around mortgage and promissory note receivable. B. The Company was also in default of the mortgage on the property located in Memphis, Tennessee because it could not satisfy the balloon payment, in the original amount of $193,580, that was due on December 31, 1996. ($174,801 at 12/31/96). The mortgage holder (Lutheran Brotherhood) had refused to renegotiate or extend the term of the mortgage and would not accept any further amortization payments from the lessor of the underlying lease, other than the one made in December, 1996, which was based upon the old repayment schedule's terms. Through August 1997, the Company had received funds from Sun West N.O.P., the lessor on the underlying lease, which represented the monthly rent payments made on such lease ($4,609.38) by the tenant of the Memphis Property. Becausethe mortgage holder could not accept any amortization payments on their matured loan from Sun West N.O.P., the Company was using such proceeds to reduce the related wrap mortgage receivable. In August of 1997, the mortgage holder foreclosed on the mortgage payable, which resulted in a foreclosure sale of the Memphis, Tennessee property. As a result of these events of foreclosure, the Company wrote off the balance on the mortgage payable and the related wrap mortgage receivable ($251,722) and promissory note receivable ($93,686) at December 31, 1996. (See note 7 and 8). 13 EQUITY GROWTH SYSTEMS, inc. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations During the six months ended June 30, 1998, the registrant reported income of approximately $81,000 as compared to income from all sources of $113,000 during the prior six months ended. During the six months ended June 30, 1998, the registrant's cost of revenue was approximately $99,000 as compared $232,000 during the prior six months ended. The decrease was attributable to the decrease in interest expense. During the six months ended June 30, 1998, the registrant reported a net income of approximately ($18,000) or $(.005) per share, compared to ($119,000) or $(0.032) per share prior to six months ended. The $101,000 in net loss reflects the decrease in cost of operations. Liquidity and Capital Resources As of June 30, 1998, the registrant has a working capital position of approximately ($195,000) as compared to a working capital position of ($130,000) as of June 30, 1997. This reflects the write off of the Tennessee and Kansas wrap around mortgages, notes receivable and underlying mortgages. 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. 14 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the Registrant had duly caused the report to be signed on its behalf by the undersigned thereunto duly authorized. EQUITY GROWTH SYSTEMS, inc. Dated: 8/17/98 /s/ Charles J. Scimeca -------------------------- Charles J Scimeca Secretary 15 EX-27 2 FDS --
5 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 (28) 0 161,951 0 0 161,923 0 0 1,607,980 356,515 0 0 0 41,161 2,891,645 1,607,980 80,833 80,833 0 101,452 0 0 0 (20,619) 0 (20,619) 0 0 0 (20,619) (.005) (.005)
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