UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Nine Months Ended September 30, 2001
CAPITAL DEVELOPMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-1113777
- ------------------------------------------ -----------------------------
(State or other jurisdiction (IRS Employer Identification
of incorporation or No.)
organization)
4333 Orange Street, Suite 3600 Riverside, CA 92501-3839
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(Address of principal administrative (City, State, Zip Code)
offices)
(909) 276-0873
-----------------------------------
(Registrants telephone number)
Check whether the issuer (1) 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 No X
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
Class Shares Outstanding, September 30, 2001
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Common Stock, $.0001 par value 15,005,000
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Financial Statements are included as part of this document at the end of the
document.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Disclosure regarding forward-looking statements.
This filing includes "forward-looking statements" as that term is defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements are
based on management's beliefs and assumptions based on currently available
information. All statements other than statements of historical fact regarding
our financial position, business strategy and management's plans and objectives
for future operations are forward-looking statements. Although the Company
believes that management's expectations as reflected in forward-looking
statements are reasonable, we can give no assurance that those expectations will
prove to be correct. Forward-looking statements are subject to various risks and
uncertainties that may cause our actual results to differ materially and
adversely from our expectations as indicated in the forward-looking statements.
Many of these risks and uncertainties are disclosed in our recent filings with
the Securities and Exchange Commission, including those set forth below and
those disclosed in our quarterly report on Form 10-Q for the quarter ended
September 30, 2001. You should be aware that these factors are not an exhaustive
list, and you should not assume these are the only factors that may cause our
actual results to differ from our expectations.
(a) Plan of Operation
The company is currently evaluating companies to merge with and form a
profitable on-going concern.
(b) Management's Discussion and Analysis of Financial Condition and Results of
Operations
The Company has split IntraMed Corporation out of Capital Development Group,
Inc. The purpose of this was to transfer all of the assets and liabilities of
Capital Development Group into IntraMed ("Newco"). IntraMed ("Newco") is owned
by the shareholders of Capital Development Group in the proportional share that
they own Capital Development Group as of September 28, 2001. Newco gave Capital
Development Group some cash as part of the transaction to cover some of the
Accounts Payables that IntraMed did not assume. The transfer of assets and
liabilities as a result of the reorganization of the Company resulted in an
increase in additional-paid-in-capital of approximately $260,000.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No legal proceedings have occurred or are occurring in this quarter.
ITEM 2. CHANGES OF SECURITIES
4,841,065 shares were issued during the period. These were issued for conversion
of debt to the company.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No defaults have occurred this quarter.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted for a vote of the security holders this quarter.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Capital Development Group, Inc.
By: /s/ Michael P. Vahl, President
------------------------------
April 15, 2002
ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Stockholders
Capital Development Group, Inc. and Subsidiaries
We have reviewed the consolidated condensed balance sheet of Capital Development
Group, Inc. and Subsidiaries (collectively referred to as the "Company") as of
September 30, 2001, the related consolidated condensed statement of operations
for the three and nine-month periods then ended, and the related consolidated
condensed statement of cash flows for the nine-month period ended September 30,
2001. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of condensed financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the aforementioned consolidated condensed financial statements in
order for them to be in conformity with accounting principles generally accepted
in the United States.
The accompanying consolidated condensed financial statements have been prepared
assuming that the Company will continue as a going concern. The Company has an
accumulated deficit of approximately $6,400,000 since inception. As discussed in
Note 9 to the consolidated condensed financial statements, a significant amount
of additional capital will be necessary for the Company to maintain and increase
operations. The accompanying consolidated condensed financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
April 9, 2002
Newport Beach, California
Balance Sheet as of 09/30/2001
(unaudited)
Assets
Current Assets
Cash $ 168
A/R, net 8,000
-----------
Total Current Assets 8,168
===========
Liabilities & Stockholders Deficit
Current Liabilities
A/P & Accrued Liabilities 50,935
Total Current Liabilities 50,935
Stockholders Deficit
Common stock; $0.001 par value; 30,000,000
shares authorized; 15,005,000 shares issued
and outstanding 1,500
Convertible Series A preferred stock; $0.0001
par value; 1,000,000 shares authorized; zero
shares issued and outstanding 0
Additional Paid-in Capital 6,594,945
Accumulated Deficit (6,639,212)
------------
Total Stockholders Deficit (42,767)
------------
Total Liabilities & Stockholders Deficit $ 8,168
============
The accompanying notes are an integral part of these financial statements.
(unaudited)
Income Statement for the 9 months ended 09/30/2001 09/30/2000
---------- ----------
Revenue - 38,638
Operating Expenses
Consulting Fees 128,573 4,000
Management Fees 113,750 113,692
Other Expenses 182,085 405,478
Depreciation & Amortization 80,607 191,089
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Total Operating Expenses 505,015 714,259
Interest Expense 137,320 66,994
Stock promotion expenses - 1,353,000
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137,320 1,419,994
Loss Before Provision for Income taxes
and discontinued (642,335) (2,095,615)
Provision for Income Taxes 0 0
Discontinued Operations
Loss from discontinued operations (26,258) -
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26,258 -
Net Loss (668,593) (2,095,615)
========== =========
Basic and diluted loss per share from:
Continuing operations (0.06) (0.25)
Discontinued operations - -
--------- --------
(0.06) (0.25)
========== =========
Weighted average shares outstanding 10,243,359 8,527,560
========== =========
The accompanying notes are an integral part of these financial statements.
(unaudited)
Income Statement for the 3 months ended 09/30/2001 09/30/2000
---------- ----------
Revenue - 28,539
Operating Expenses
Consulting Fees 46,038 -
Management Fees 30,000 48,850
Other Expenses 137,404 273,055
Depreciation & Amortization 80,607 130,336
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Total Operating Expenses 294,049 452,241
Interest expense 109,031 53,415
Loss Before Provision for Income taxes
and discontinued operations (403,080) (477,117)
Provision for Income taxes - -
Discontinued operations
Loss from discontinued operations (26,258) -
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Net Loss (429,338) (477,117)
========== =========
Basic and Diluted loss per share
Continuing operations (0.04) (0.05)
Discontinued operations - -
--------- --------
(0.04) (0.05)
========== =========
Weighted Average # of Shares 10,288,275 9,953,935
========== =========
The accompanying notes are an integral part of these financial statements.
Cash Flows from Operating Activities (unaudited)
for the 9 Months Ended 09/30/2001 09/30/2000
---------- ----------
Net Loss $ (668,593) $(2,095,615)
Adj's to reconcile net loss to net cash
Depreciation and Amortization 128,573 191,089
Issuance of warrants for services - 353,000
Impairment of goodwill 80,607 -
Issuance of stock for services 164,800 1,012,500
Interest Expense - 64,834
Changes in Operation Assets and Liabilities
Accounts Receivable (31,696) (35,617)
Other current assets 2,242 6,430
Accounts Payable and Accrued Liabilities 77,459 7,024
Due to Related Parties 186,986 224,585
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Net Cash used by Operating Activities (59,622) (271,770)
Net Cash used in Investing Activities
Purchase of furniture and fixtures - (19,726)
Net Cash used in financing activities
Proceeds from issuance of notes payable 40,000 300,000
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Net increase (decrease) in Cash (19,622) 8,504
Cash at Beginning of Period 19,790 -
Cash at end of Period $ 168 $ 8,504
========== ===========
See accompanying notes to consolidated financial statements for non-cash
investing and financing activities.
The accompanying notes are an integral part of these financial statements.
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Nature of Business
Capital Development Group, Inc. (the "Company") was incorporated in Oregon on
May 19, 1993. Prior to the acquisitions of IntraMed Corporation and HealthSource
Financial Advisors, LLC, the Company was primarily engaged in the business of
purchasing healthcare receivables from hospitals and other healthcare
institutions at a discount and administering the collection process of such
receivables. As of December 31, 2001, the Company had redirected its efforts and
has become primarily focused on searching for a suitable reverse merger
candidate.
On September 28, 2001, the Company transferred all of the assets and liabilities
of the Company into a private Company, owned by the same shareholders of the
Company. The Company accounted for the transaction as a transfer of the net
liability of $217,993 being recorded as an addition to additional paid in
capital in the accompanying statements of stockholders' deficit. The Company is
a public shell with no continuing operations (see Note 3). As a result of the
transfer of the subsidiary, the Company's statements of operations for fiscal
2000 have been restated from what was reported in the Company's annual report
filed on May 22, 2001 to segregate amounts pertaining to the discontinued
operations.
The Company is publicly traded on the Over the Counter Bulletin Board ("OTCBB")
under the symbol "CDVG". As discussed in Note 7, the Company is delinquent on
several required SEC filings.
Interim Financial Statements
The accompanying condensed financial statements include the accounts of the
Company. The information furnished has been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial reporting, the instructions to Form 10-Q, and Rule 10-01 of Regulation
S-X. Accordingly, certain information and disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States have been condensed or omitted. In the opinion of
management, all adjustments considered necessary for the fair presentation of
the Company's financial position, results of operations and cash flows have been
included and are only of a normal recurring nature. The results of operations
for the quarter ended September 2001 are not necessarily indicative of the
results of operations for the year ending December 31, 2001.
These financial statements should be read in conjunction with the Company's
audited December 31, 2000 consolidated financial statements included in Form
10-KSB filed on May 22, 2001.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Income Taxes
Using the liability method required by Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes," the estimated tax
effects of temporary differences between financial and income tax reporting are
recorded in the period in which the events occur. Such differences between the
financial and tax bases of assets and liabilities result in future tax
deductions or taxable income.
Based on management's best estimate of taxable income in the foreseeable future,
it is more likely than not that some portion of deferred income tax assets, due
mostly to net operating loss carryforwards, may not be realized.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Loss per Common Share
Loss per common share is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during the year in
accordance with Statement of Financial Accounting Standards No. 128, "Earnings
per Share."
Recent Accounting Pronouncements
For the nine-month period ended September 30, 2001, the Company adopted
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), as amended. Since the Company
does not presently engage in activities covered by SFAS 133, there was no
significant effect on the Company's September 30, 2001 condensed consolidated
financial statements.
Proposed Acquisitions
On April 11, 2001, the Company entered into a non-binding letter of intent
agreement to acquire all of the outstanding common stock of MedTel Centers, Inc.
("MedTel"), a company engaged primarily in the business of network management of
medical facilities and physicians. Such proposed purchase is intended to qualify
as a tax-free transaction under Section 368 (a)(1)(B) of the 1986 Internal
Revenue Code, as amended. According to the terms of the agreement, the Company
would issue 2,000,000 shares of restricted common stock upon the closing date
and an additional 2,000,000 shares of restricted common stock within 90 days of
the first anniversary of such closing date. However, in July 2001, the Company
and MedTel decided that the acquisition was not in the best interest of all
parties and agreed to rescind the transaction. MedTel was compensated 120,000
shares of the Company's restricted common stock valued at $18,000.
3. TRANSFER OF ASSETS AND LIABILITIES
On September 28, 2001, the Company discontinued its operations in which all
assets and liabilities of the Company and its wholly owned subsidiary were
transferred into a private company owned by the same shareholders of the
Company. The Company accounted for the transaction as a transfer of assets and
liabilities with the Company recording the net liability of $217,993 to
additional paid-in capital in the related statements of stockholders' deficit at
the time of the transfer. The losses from the discontinued operations for 2001
and 2000, through the date of the transfer, were $26,258 and $115,379,
respectively, and are included in the statements of operations.
Management of the Company believes that all liabilities were transferred without
recourse to the private company and were properly assumed by such entity. There
can be no assurances however, that the creditors of such liabilities cannot
require the Company to settle such obligations if the private company defaults
under such obligations.
4. NOTES PAYABLE
All notes payables issued by the Company along with their accrued interest have
been converted into common shares of the Company's stock
5. RELATED PARTY TRANSACTIONS
In the current quarter, the Company converted approximately $190,000 of
advances/payables from stockholders, including the Company's President/CEO, into
1,285,337 shares of common stock at $0.15 per share. IntraMed Corporation has
assumed the balance of the debt.
The Company's Board of Directors voted to split off IntraMed Corporation on
September 28, 2001. IntraMed Corporation will be owned in a proportional number
of shares to the number of shares that are currently owned by the Company's
shareholders in the Company as of September 28, 2001. IntraMed Corporation
assumed all the Assets and Liabilities of Capital Development Group, Inc., as
well as any rights to all licenses and other potential settlements in exchange
for a small amount of cash to help pay the Company's existing Accounts Payables.
6. STOCKHOLDERS' DEFICIT
Common Stock
In the current quarter, the Company issued 180,000 shares of common stock,
valued at $36,000 (based on the market value on the date of grant) to
ex-employees in accordance with severance package agreements.
During the current quarter, the Company issued 2,651,738 shares of restricted
common stock pursuant to the conversion of various notes payable and accrued
expenses with a principal amount of $553,486 and accrued interest of $39,031.
In the current quarter, the Company issued 400,000 shares of common stock,
valued at $80,000 (based on the market value on the date of grant) to third
parties in accordance with agreements which the third parties agreed to
surrender common stock of an unrelated company.
In the current quarter, the Company issued 100,000 shares of common stock,
valued at $20,000 (based on the market value on the date of grant) to third
parties as consideration for notes payable totaling $20,000 (such amounts were
converted to common stock - see above).
In the current quarter, the Company issued 54,000 shares of common stock, valued
at $10,800 (based on the market value on the date of grant) to various third
parties for services rendered.
In the current quarter, the Company cancelled 200,000 shares of common stock due
to lack of performance.
Convertible Series A Preferred Stock
All of the Company's convertible Series A preferred stock was converted into
249,990 shares of the Company's common stock in September 2001.
7. SEC FILINGS
The Company did not file a Form 8-K in connection with either of the
acquisitions discussed above. Such filings are required under the 1934 Act of
the Securities and Exchange Commission ("SEC"). The Company did disclose such
acquisitions in its quarterly reports filed for the quarterly periods ended June
30, 2000 and September 30, 2000 and in its annual report on Form 10-KSB filed
with the SEC on May 22, 2001.
8. PREVIOUSLY FILED SEPTEMBER 30, 2001 FORM 10-QSB
The Company's September 30, 2001 Form 10-QSB filed on November 14, 2001 include
consolidated condensed financial statements for September 30, 2001 that were not
reviewed by the Company's independent certified public accountants as required
by Rule 10-01(d) of Regulation S-X. The Company's September 30, 2001
consolidated condensed financial statements included herein have been reviewed
in accordance with professional standards as described in the preceding
sentence, and, accordingly, the Company is filing this Form 10-QSB/A. Such
review resulted in adjustments to the previously unreviewed September 30, 2001
consolidated condensed financial statements.
The effect of the adjustments increased net loss by approximately $230,000 as a
result of various equity adjustments and the transfer of assets and liabilities
discussed in Note 3.
9. GOING CONCERN AND LIQUIDITY CONSIDERATIONS
The Company has not generated significant revenue or any profit from operations.
Such factors indicate that the Company may be unable to continue as a going
concern for a reasonable period of time. Management is in discussions with
potential investors to pursue additional capital infusions into the Company,
which management believes are necessary until such time that revenues achieve
profitability levels.
The condensed financial statements do not include any adjustments relating to
the recoverability of assets that might be necessary should the Company be
unable to continue as a going concern. The Company's continuation as a going
concern is dependent upon its ability to generate sufficient revenue and related
cash flow to meet its obligations on a timely basis and/or to obtain additional
financing or equity infusions as may be required.