U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

           
                               FORM 10-KSB


     [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
             SECURITIES EXCHANGE ACT OF 1934 

For the fiscal year ended December 31, 1996.

     [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
             SECURITIES EXCHANGE ACT OF 1934 

     For the transition period from               to               
                                    -------------     --------------
Commission File No. 33-24138-D


                        CAPITAL GROWTH, INC.                
          ----------------------------------------------
          (Name of small business issuer in its charter)


          Nevada                               87-0463772
------------------------------             ------------------
State or other jurisdiction of              (I.R.S. Employer
incorporation or organization              Identification No.)


     10 West 100 South, Ste. 450
         Salt Lake City, Utah                       84101  
---------------------------------------          -----------
(Address of principal executive offices)          (Zip Code)

Registrant's telephone number, including area code: (801) 355-0252

 Securities registered pursuant to Section 12(b) of the Act: None

 Securities registered pursuant to Section 12(g) of the Act: None

       Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. 
Yes   X     No  ____   

       The aggregate market value of the common voting stock held by
non-affiliates as of March 31, 1997:  Not Determinable.

       Shares outstanding of the Registrant's common stock as of December 31,
1996:  44,500,000 shares.

       The issuer's revenues for the year ended December 31, 1995, were
nominal
<PAGE>
                              PART I
Item 1.  Description of Business.
     (a)  General Development of Business.
     Capital Growth, Inc. (the "Registrant" or "Company"), was incorporated
under the laws of the State of Nevada on March 28, 1988.  The Registrant was
organized to raise capital and to investigate and acquire any suitable asset,
property or other business opportunity which management believes has good
business potential.  No specific business or industry is presently
contemplated.

     The Company was formed as a wholly-owned subsidiary of Data Growth, Inc.,
a public blind pool (blank check) company, for the purpose of allowing the
shareholders of Data Growth, Inc. to participate in another company which will
seek a business acquisition of its own.  The formation of the Registrant was
intended to diversify the number and type of acquisitions which could
potentially benefit the shareholders of Data Growth, Inc.

     In connection with its formation, the Company issued 5,000,000 Units
comprising 5,000,000 shares of common stock, 5,000,000 A Warrants and
5,000,000 B Warrants to Data Growth, Inc. for $50,000.

     Data Growth, Inc. during 1989, distributed 4,600,640 of the Units to its
shareholders on a 1 for 3 basis (one Unit for every three shares) and retained
399,360 Units.

     The Units were distributed at no cost to Data Growth, Inc. shareholders
who were shareholders of record as of January 23, 1989, the Record Date.  One
Unit was distributed for each three shares owned as of the Record Date.  The
stock, A Warrants and B Warrants are evidenced by transferable certificates
and are not separable from the Units.

                                       2
<PAGE>
     The distribution of the Units and the exercise of any Warrants was not
conditioned upon the consent of shareholders of Data Growth, Inc. or upon the
subscription of any minimum number of shares or Warrants.

     The Company's outstanding Warrants are not detachable from the Units and
may not be traded separately.  Each "A" Warrant is exercisable at a price of
$.20 per share through May 15, 1997, and the "B" Warrants at $.30 per share
through May 15, 1997, (these dates are extensions of the original dates of
September 30, 1989 and March 31, 1990).  The exercise price may be reduced at
the  option of management of the Company without changing the number of
outstanding warrants.

     All Unit Warrants are subject to a one-time right of redemption by the
Company at $.001 per Warrant, on 30 days notice, at any time after the market
price (based on the closing bid price as reported by any market-maker) of the
Company's common stock for any consecutive 20 day period reaches or exceeds
the Warrant exercise price.  All outstanding Warrants must be redeemed if any
are redeemed.  If notice of redemption is given, a holder of a Warrant will
have a 30 day period after notice of redemption is given in which to exercise
his Warrants after which he will be compelled to accept the redemption price. 
The redemption price will be paid to the registered owner as of a specified
record date and the certificate will be considered canceled.

     The Warrants contain provisions that protect the holders thereof against
dilution by adjustment of the exercise price in certain events, such as stock
dividends and distributions, splits, recapitalization, mergers or
consolidations.  The Company is not required to issue fractional shares with
respect to any such adjustment.  A holder of Warrants, as such, does not
possess any rights as a shareholder of the Company unless such Warrants are
exercised.

                                       3 
<PAGE>                                       
     (b)  Financial Information about Industry Segments.
     The Registrant does not presently have separate industry segments.

     (c)  Narrative Description of the Business.

General Discussion
     The Company's business plan is to seek one or more potential business
ventures, anywhere in the United States, which, in the opinion of management
may warrant involvement by the Company.  The Company will only acquire
businesses which can generate or provide audited financial statements. 
Management intend to make acquisitions of entities for which it can obtain
audited financial statements.  This will limit the types of businesses which
the Company could acquire to those firms which have previously had audited
financial statements.  The Company recognizes that because of its limited
financial, managerial and other resources, the number of suitable potential
business ventures which may be available to it will be extremely limited.  The
Company's principal business objective will be to seek long-term growth
potential in the business venture in which it participates rather than to seek
immediate, short-term earnings.  In seeking to attain the Company's business
objective, it will not restrict its search to any particular business or
industry, but may participate in business ventures of essentially any kind or
nature, including, but not limited to, finance, high technology,
manufacturing, natural resources, service, research and development,
communications, insurance, brokerage, transportation and others.  Management's
discretion is unrestricted and it may participate in any business venture
whatsoever, which may meet the business objectives discussed herein.  It is
emphasized that the business objectives discussed are extremely general and
are not intended to be restrictive upon the discretion of management. 

                                       4
<PAGE>
     The Company will seek one or more potential business ventures from its
known sources, but will rely heavily on personal contacts of its officers and
directors as well as indirect associations between them and other business and
professional people.  It is not anticipated that the Company will engage
professional firms specializing in business acquisitions or reorganizations. 
In some instances, the Company may publish notices or advertisements seeking a
potential business venture in financial or trade publications.

     The Company will not restrict its search for any specific kind of firms,
but may acquire a venture in its preliminary or development stage, may
participate in a business which is already in operation or in a business in
various stages of its corporate existence.  It is impossible to predict at
this stage the status of any venture in which the Company may participate, in
that the venture may need additional capital, may merely desire to have its
shares publicly traded, or may seek other perceived advantages which the
Company may offer.  In some instances, the business endeavors may involve the
acquisition of or merger with a corporation which does not need substantial
additional cash but which desires to establish a public trading market for its
common stock.

     Firms which seek the Company's participation in their operations through
a reorganization, asset acquisition, or some other means may desire to do so
to avoid what such firms may deem to be adverse factors related to undertaking
a public offering. Such factors include substantial time requirements and
legal costs, along with other conditions or requirements imposed by various
state laws.

     To a large extent, a decision to participate in a specific business
endeavor may be made upon management's analysis of the quality of the other
firm's management and personnel, the anticipated acceptability of new products

                                       5
<PAGE>
or marketing concepts, the merit of technological changes, and numerous other
factors which are difficult, if not impossible, to analyze through the
application of any objective criteria.  In many instances, it is anticipated
that the results of a specific firm to date may not necessarily be indicative
of the potential for the future because of the requirement to substantially
shift marketing approaches, expand significantly, change product emphasis,
change or substantially augment management, and other factors.  Because the
Company may participate in business endeavors with newly organized firms or
with firms which are entering a new phase of their growth, it should be
emphasized that the Company will incur further risks since management in many
instances will not have proved its abilities or effectiveness, the eventual
market of such firm's product or services will likely not be established, and
the profitability of the firm will be unproved and cannot be predicted.

     The analysis of new business endeavors will be undertaken by or under the
supervision of the officers and directors, none of whom is a professional
business analyst.  No member of management has any significant business
experience or expertise in any type of business which is likely to be
investigated by the Company.  Thus, management will have to rely on their own
common sense and business judgment as well as upon the advice of consultants
to examine the factors described herein.  The mention of various factors to be
looked at by management with regard to potential business endeavors should not
be read as implying any experience or expertise on behalf of management. 
These are merely guidelines which stockholders should know that management
will go by as they attempt to examine potential business ventures.  In
analyzing prospective business endeavors, management will consider such
matters as the available technical, financial and managerial resources, the
working capital and other financial requirements, the history of operations,
if any; prospects for the future; the nature of present and expected
competition; the quality and experience of management services which may be

                                       6
<PAGE>
available and the depth of that management; the potential for further
research, development or exploration; risk factors; the potential for growth
and expansion; the potential for profit, the perceived public recognition or
acceptance of products, services, trade or service marks; name identification;
and other relevant factors.

     Generally, the Company will analyze all available factors in the
circumstances and make a determination based upon a composite of available
facts, without reliance upon any single factor as controlling.

     It is anticipated that business endeavors will be available to the
Company from various sources, including its officers and directors,
professional advisors, securities broker-dealers,  venture capitalists,
members of the financial community, and other who may present unsolicited
proposals.  In certain circumstances, the Company may agree to pay a finder's
fee or to otherwise compensate investment banking or other services provided
by persons who are unaffiliated with the Company but who submit a potential
business endeavor in which the Company participates.  No such finder's or
other fees will be paid to any person who is an officer, director, owner of
record or, to the knowledge of the Company the owner beneficially of 10% or
more of the Company's issued and outstanding stock, unless approval is
received by majority vote of disinterested shareholders.

     The Company may acquire a business venture by conducting a reorganization
involving the issuance of securities in the Company. Due to the requirements
of certain provisions of the Internal Revenue Code of 1986 (as amended) in
order to obtain certain beneficial tax consequences in such reorganizations,
the number of shares held by all of the present shareholders of the Company
prior to such transaction or reorganization, including persons purchasing
shares in this offering, may be substantially less than the total outstanding

                                       7
<PAGE>
shares held by such shareholders in any reorganized entity.  As noted above,
such a transaction may be based upon the sole determination of management
without any vote or approval by the shareholders of the Company.  The result
of any such reorganization could be additional dilution to the shareholders of
the Company prior to such reorganization.  If the Company were to issue
substantial additional securities in any such reorganization, or otherwise,
such issuance may have an adverse effect on any trading market which may
develop in the Company's securities in the future.

     It is anticipated that the investigation of specific business endeavors
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others.  If a
decision is made not to participate in a specific business endeavor, the costs
theretofore incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a
specific business venture, the failure to consummate that transaction may
result in the loss to the Company of the related costs incurred.

     The Issuer has not yet engaged in any business activities. The Company
has no formal business plan or any particular area of business in which it
intends to engage.  Management of the Company will attempt to acquire on
behalf of the Company assets, properties and/or ongoing businesses which it
believes have potential for successful development.  This may include
businesses or assets related to manufacturing, retail and wholesale sales,
industrial development, and natural resource development or any other field of
business or endeavor which Management of the Company may encounter. Management
of the Company have not adopted any formal business plan or conducted any
market studies with respect to any business or industry.  No representation is
made that Management of the Company have any particular expertise in

                                       8
<PAGE>
connection with the proposed activities of the Company or any particular
industry or business field.  Management of the Company may rely on independent
experts or consultants in any business field in connection with their
examination and investigation of potential acquisitions.

     Management intends to send a letter to its stockholders every time the
Company is involved in a transaction or which relates to an event deemed by
management to be material to the Company.  This would include a change in
management, acquisition of substantial assets, or other similar matters such
as would also be disclosed by the Company on Form 8-K and/or 10-QSB filed with
the Securities and Exchange Commission.

     Management of the Company presently have no specific assets, properties
or business operation which it has in mind for potential acquisition nor does
it have any particular areas of business or industry in which it intends to
look for such business acquisitions.

     In the acquisition of any given business the Company may incur
substantial indebtedness which will substantially change the capital structure
of the Company and would most likely expose the Company's stockholders to a
greater risk of loss in the event of financial difficulty.

Item 2.  Properties.
     The Registrant has no material assets except cash in the approximate
amount of $310 at December 31, 1996.

Office Facilities and Employees
     The Company has no office facilities of its own or employees. The Company
uses the offices and various office and accounting services of the Company's
president.  Such services and facilities are being provided for a fee of $100
per month. 

                                       9
<PAGE>
Item 3.  Legal Proceedings.
     There are not currently any material pending legal proceedings, to which
the registrant is a party or of which any of its property is subject and no
such proceedings are known to the registrant to be threatened or contemplated
by or against it.

Item 4.  Submission of Matters to a Vote of Security Holders.
     No matter was submitted to a vote of the security holders, through
solicitation of proxies or otherwise during the 4th quarter of the fiscal year
covered by this report.

                              PART II

Item 5.  Market for Common Equity and Related Stockholder Matters.

     (a)  Market Information.
     The registrant's common stock has never been actively traded, however
the common stock is eligible for quotation on the electronic bulletin board.

     (b)  Holders.
     The approximate number of holders of the registrant's common stock as of
May 31, 1996 is 319.

     (c)  Dividends.
     The registrant has not paid any cash dividends to date and does not
anticipate or contemplate paying dividends in the foreseeable future.  It is
the present intention of management to utilize all available funds for the
development of the Company's business.

     The Company is authorized by its certificate of incorporation to issue up
to 50,000,000 shares of common stock, $.001 par value.

                                       10
<PAGE>
     One-third of the outstanding shares of the Company's common stock must be
present at a duly called shareholders' meeting in order to have a quorum. 
However, under Nevada law, amendments to the Company's articles of
incorporation and certain other matters require an affirmative vote of at
least a majority of all outstanding shares.

     All shares of stock, when issued, will be fully-paid and nonassessable. 
All shares are equal to each other with respect to voting, liquidation and
dividend rights.  Holders of shares of common stock are entitled to one vote
for each share they own at any stockholders' meeting.  Holders of shares of
common stock are entitled to receive such dividends as may be declared by the
Board of Directors out of funds legally available therefor, and upon
liquidation are entitled to participate pro-rata in a distribution of assets
available for such a distribution to stockholders.  There are no conversion,
pre-emptive or other subscription rights or privileges with respect to any
shares.  Reference is made to the Company's Articles of Incorporation together
with the Amendments thereto and its By-Laws as well as to the applicable
statutes of the State of Nevada for a more complete description of the rights
and liabilities of holders of common stock.  The common stock of the Company
does not have cumulative voting rights which means that the holders of more
than 50% of the shares voting for the election of directors may elect all of
the directors if they choose to do so.  In such event, the holders of the
remaining shares aggregating less than 50% will not be able to elect any
directors.

Item 6.  Management's Discussion and Analysis or Plan of Operation.
     The Company was incorporated March 28, 1988, for the purpose of investing
in any and all types of assets, properties, and businesses.  The Company has
completed a public stock distribution on behalf of its sole shareholder, Data
Growth, Inc. with 4,600,460 shares being distributed to the shareholders of
Data Growth, Inc. Distribution expenses of $26,989 were offset against the
amount paid by Data Growth, Inc. for the stock.  The distribution was

                                       11
<PAGE>
registered on Form S-18 with the Securities and Exchange Commission.  The
Company's only business activity, to date, has been its formation, the
registration of its securities and the preliminary investigation of potential
investments and acquisitions.

       The Company's plan of operation is to actively pursue a business
combination with an existing business operation.  The Company presently has no
business combination contemplated but intend to actively seek such a
combination.  

Item 7.  Financial Statements.
       See attached financial statements.


Item 8.  Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure.

       During the two most recent fiscal years, there has not been any change
in the principal independent accountant for the registrant, and there has been
no disagreement on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.  

                             PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.

     (a) Identification of Directors.
      The current sole director of the registrant, who will serve until the
next annual meeting, or until his successors are elected or appointed and
qualified, is set forth below:

                                       12
<PAGE>
                              YEAR FIRST ELECTED
     NAME           AGE         AS DIRECTOR        POSITION
     ----           ---       ------------------   --------------------

Gary B. Peterson     49        Since Inception     President, Secretary/
                                                   Treasurer and
                                                   Director
     

     (b) Identification of Executive Officers.
      Same as above.

     (c) Significant Employees.
      The registrant has no significant employees.

     (d) Family Relationships.
      None.

     (e) Business Experience.
     (1)  Background

     Gary B. Peterson, is currently associated with the CPA firm of Smith &
Deacon and is also functioning as the chief financial officer of Digitran
Systems, Inc., a public company.  During 1995 and 1996, he was the chief
executive officer of Data Security Corporation, a public company.  From 1982
through 1995, Mr. Peterson was the shareholder/officer in the Utah C.P.A. firm
of Peterson, Siler & Stevenson.  Mr. Peterson is qualified to practice as a
CPA in California and Utah and is a member of the Utah Society of Certified
Public Accountants and the American Institute of CPA's.  Prior to starting his
own practice in 1982 he worked as a tax senior and manager with Price
Waterhouse & Company from 1972 to 1976, Touche Ross & Company from 1976 to
1977 and Charles Huber & Associates from 1977 to 1978.  Mr. Peterson worked as
a controller for Newbery Engineering and Construction Company from 1978 to
1982, where he was responsible for all of the company's financial matters. 
Mr. Peterson graduated with honors from Brigham Young University in Provo,
Utah in 1972.  Mr. Peterson has served as President of Data Growth, Inc., the

                                       13
<PAGE>
parent company of the Registrant since its inception in January, 1986.  Mr.
Peterson has served as a Director and Secretary-Treasurer of Maxi Group, Inc,,
a public blank-check company since its inception in June, 1986.

     (2) Directorships
     Except as described herein none of the registrant's directors, nor any
person nominated or chosen to become a director holds any other directorships
in any other company with class of securities registered pursuant to Section
12 of the Exchange Act or subject to the requirements of Section 15(d) of such
Act or any company registered as an investment company under the Investment
Company Act of 1940.

     (f)  Involvement in Certain Legal Proceedings.
     None of the officers or directors have been involved in any material
legal proceedings which occurred within the last five years of any type as
described in Section 401(f) of Regulation S-K. 
Item 10.  Executive Compensation.
     (a)  Cash Compensation.
     Other than the $100 per month being paid to the Company's president for
use of office facilities and accounting services, during the last fiscal year
none of the registrant's officers or directors individually received any
salary, wage or other compensation.  During 1996 a total of $1,200 was paid to
the Company's president pursuant to this arrangement.  During the current
fiscal year the registrant will continue this arrangement but has no present
plans to pay any other compensation to officers or directors.  The Company
also accrued fees payable to the accounting firm of Peterson, Siler &
Stevensen, of which the registrant's president was a managing partner during
part of 1995, in the amount of $3,310.00 for 1995, for accounting services
rendered by such firm to the registrant.  

                                       14
<PAGE>
     (b)  Compensation Pursuant to Plans.
     There are presently no ongoing pension or other plans or arrangements
pursuant to which remuneration is proposed to be paid in the future to any of
the officers and directors of the registrant.
     (c)  Other Compensation.
     None.
     (d)  Compensation to Directors.
     None.

Item 11.  Security Ownership of Certain Beneficial Owners &
          Management.
     The following table sets forth the beneficial stock ownership of all
persons known by the registrant to own more than 5% of the outstanding common
stock, and the officers and directors, both individually and as a group. 

 Name and Address                       Amount and Nature       Percent
  of Beneficial         Position with   of Beneficial           of
     Owner              Company         Ownership               Class     
---------------------------------------------------------------------------

Gary B. Peterson         President       1,166,667 shares        2.9%
                         Secretary/     record & beneficial
                         Treasurer &    (1) (2)
                         Director

Robert W. Mann,                         37,500,000 shares       88.2%
Trustee, Robert W. 
Mann Retirement 
Trust

All officers and directors as
a group (1 person)                      1,166,667 shares         2.9%

     (1)  Mr. Peterson could also be deemed to beneficially own 76,667 shares 
owned by two partnerships of which he is an affiliate.

     (2)  Mr. Peterson has granted an option with respect to 1,000,000 of 
these shares.  See "Certain Relationships and Related Transactions" below.


     Changes in Control.

                                       15
<PAGE>
      There are no arrangements including pledges by any person of securities
of the Company, the operation of which may at a subsequent date result in a
change in control of the Company. 

Item 12. Certain Relationships & Related Transactions.
     On or about March 31, 1993, the Robert W. Mann Retirement Trust, Robert
W. Mann, Trustee (of Los Angeles, California) acquired 35,000,000 Units from
the Company for $35,000.  The Units comprise 35,000,000 restricted shares of
common stock, 35,000,000 A Warrants exercisable at $.20 per share until
December 31, 1993 and 35,000,000 B Warrants exercisable at $.30 per share
until December 31, 1993.  This transaction resulted in a shift in voting
control to the Robert W. Mann Retirement Trust. The funds will be used to pay
current liabilities and to maintain the corporation.  

     In September 1995, the Robert W. Mann Retirement Trust purchased
2,500,000 shares of common stock from the Company for $2500.  This was not an
arms-length transaction.

     In connection with the foregoing, Gary B. Peterson, the sole officer and
director of the Company has granted an option to the Robert W. Mann Retirement
Trust, wherein said Trust has the right to purchase 1,000,000 shares of the
Company's common stock from Mr. Peterson for $50,000 within seven years of
March 31, 1993, or within two years of any acquisition by the Company.

      The founding stockholder of the Company, Data Growth, Inc., purchased
from the Company, 5,000,000 Units comprising an aggregate of 5,000,000 shares,
5,000,000 A Warrants, and 5,000,000 B Warrants for $50,000 in August, 1988.

      No officer, director, promoter or affiliate of the Issuer has any direct
or indirect material interest by security holdings, contracts, or otherwise in
the Issuer or any asset proposed to be acquired by the Is suer other than as
described herein.

                                       16
<PAGE>
      The Company has no office facilities of its own or employees. The
Company uses the offices and various office services of the Company's
president.  Such services and facilities are being provided for a fee of $100
per month.  

     The Company received advances from Data Growth, Inc., its former parent,
which are being treated as loans.  Such advances or loans are interest-bearing
at the rate of 6% per annum and are unsecured.  During 1996, Data Growth
transferred the right to receive repayment to the Company's president.  The
Company was also indebted for accounting services to the accounting firm which
the Company's president was formerly an officer of, which receivable was also
transferred to the Company's president when he terminated association with
such firm.  At December 31, 1996, $28,124 was owed to the Company's president
with respect to these debts. 


Item 13.  Exhibits and Reports on Form 8-K.
     (a)  The following documents are filed as a part of this report:
     1.  Audited Financial Statements for the year ended December 31, 1996 and
1995 are included as part of this report.
     2.  Financial Statement Schedules.
        None.
     3.  Exhibits.
        Exhibit 27 - Financial Data Schedule

     Reports on Form 8-K.

     The Company filed no reports on Form 8-K during the last quarter of the
year ended December 31, 1996.  



                                       17
<PAGE>
                                  SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                   CAPITAL GROWTH, INC.          



Date:      April 11, 1997             /s/ Gary B. Peterson         
     ---------------------         ----------------------------
                                   Gary B. Peterson, President,   
                                   Chief Executive Officer, and      
                                   Chief Financial Officer



     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.



Date:      April 11, 1997            /s/ Gary B. Peterson         
     ---------------------         ----------------------------
                                   Gary B. Peterson, Director







                                      18
<PAGE>
                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                                          Financial Statements

                                                                         Index
     
     
     
     
                                                                 Page
     
                                                           
     Independent auditors' report                                 F-1
     
     
     Balance sheet, December 31, 1996                             F-2
     
     
     Statement of operations for the years
     ended December 31, 1996 and 1995 and
     cumulative amounts since inception                           F-3
     
     
     Statement of stockholders' deficit 
     from inception through December 31,
     1996                                                         F-4
     
     
     Statement of cash flows for the years
     ended December 31, 1996 and 1995 and 
     cumulative amounts since inception                           F-6
     
     
     Notes to financial statements                                F-7


<PAGE>     
                                                  INDEPENDENT AUDITORS' REPORT
               
               
               
               
               
               To the Board of Directors of
               Capital Growth, Inc.
               
               
               We have audited the accompanying balance sheet of Capital
               Growth, Inc., (a development stage company) as of
               December 31, 1996, and the related statements of operations,
               stockholders' deficit and cash flows for the years ended
               December 31, 1996 and 1995 and the cumulative amounts from
               March 28, 1988 (date of inception).  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. 
               
               We conducted our audits 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
               misstatement.  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 audits provide
               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 Capital Growth, Inc., (a development stage
               company) at December 31, 1996 and the results of its
               operations and its cash flows for the years ended December
               31, 1996 and 1995 and cumulative amounts from March 28, 1988
               (date of inception) in conformity with generally accepted
               accounting principles.
               
               The accompanying financial statements have been prepared
               assuming that the Company will continue as a going concern. 
               As discussed in Note 2 to the financial statements, the
               Company has suffered recurring losses and has a
               stockholders' deficit.  These conditions raise substantial
               doubt about its ability to continue as a going concern. 
               Management's plans regarding those matters also are
               described in Note 2.  The financial statements do not
               include any adjustments that might result from the outcome
               of this uncertainty.
               
               
                                                TANNER+Co.
               
               
               Salt Lake City, Utah
               February 14, 1997
<PAGE>                                                           
                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                                                 Balance Sheet

                                                             December 31, 1996
           Assets

Current assets -
   cash                                                           $       310
                                                                  ------------

       Liabilities and Stockholders' Deficit

Current liabilities -
   related party payable                                               28,124
                                                                  ------------
Stockholders' deficit:
   Common stock; $.001 par value; 50,000,000 shares
     authorized, 44,500,000 shares issued and ou                       44,500
   Additional paid-in capital                                          18,102
   Accumulated deficit                                                (90,416)
                                                                  ------------
            Total stockholders' deficit                               (27,814)
                                                                  ------------
            Total liabilities and stockholders' deficit           $       310
                                                                  ============


See accompanying notes to financial statements.                           F-2
<PAGE>
                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                                       Statement of Operations

                                                       Year Ended December 31,

                                                                     Cumulative
                                                                       Amounts
                                                                        Since
                                               1996         1995     Inception
                                         --------------------------------------
Revenue - interest income                $       -   $         51 $      2,471
                                         --------------------------------------
Expenses:
   Professional fees                             389        3,310       61,765
   Administrative expenses                     4,370        4,760       28,386
   Amortization of organization costs            -            -          2,136
                                         --------------------------------------
        Total expenses                         4,759        8,070       92,287
                                         --------------------------------------
Loss before income taxes                      (4,759)      (8,019)     (89,816)

Income taxes - current                           -          (100)         (600)
                                         --------------------------------------
Net loss                                 $    (4,759)$     (8,119)$    (90,416)
                                         ======================================
Loss per share                           $       _   $       (.00)$       (.01)
                                         ======================================
Weighted average shares                   43,166,000   40,625,000   21,205,000
                                         ======================================


See accompanying notes to financial statements.                            F-3
<PAGE>
                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                            Statement of Stockholders' Deficit

                                              From Inception on March 28, 1988
                                                     Through December 31, 1996


                                                                    Deficit
                                                                  Accumulated
                                              Common   Additional  During the
                                  Number of  Stock at    Paid-in  Development
                                    Shares   Par Value   Capital     Stage
                                 ---------------------------------------------
Balance, March 28, 1988                 -   $      -   $      -   $      -   

Shares issued to initial
stockholder for cash, August
1988 at $.001 per share           5,000,000      5,000     21,266        -  

Net loss for the period ended
December 31, 1988                       -          -          -         (649)
                                 ---------------------------------------------
Balance, December 31, 1988        5,000,000      5,000     21,266        (649)

Offering costs incurred during 
1989                                    -          -       (3,164)        -  

Net loss for the year ended
December 31, 1989                       -          -          -       (16,406)
                                 --------------------------------------------- 
Balance, December 31, 1989        5,000,000      5,000     18,102     (17,055)

Net loss for the year ended
December 31, 1990                       -          -          -       (11,228)
                                 ---------------------------------------------
Balance, December 31, 1990        5,000,000      5,000     18,102     (28,283)

Net loss for the year ended
December 31, 1991                       -          -          -       (13,188)
                                 ---------------------------------------------
Balance, December 31, 1991        5,000,000      5,000     18,102     (41,471)

Net loss for the year ended
December 31, 1992                       -          -          -        (8,448)
                                 ---------------------------------------------

See accompanying notes to financial statements.                            F-4
<PAGE>

                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                            Statement of Stockholders' Deficit
                                                                     Continued


                                                                    Deficit
                                                                  Accumulated
                                              Common   Additional  During the
                                  Number of  Stock at    Paid-in  Development
                                    Shares   Par Value   Capital     Stage
                                 ---------------------------------------------

Balance, December 31, 1992         5,000,000     5,000     18,102      49,919

Stock issued in private
placement for cash March
1993 at $.001 per share           35,000,000    35,000        -           -  

Net loss for the year ended
December 31, 1993                        -         -          -       (14,069)
                                 ---------------------------------------------
Balance, December 31, 1993        40,000,000    40,000     18,102     (63,988)

Net loss for the year ended 
December 31, 1994                        -         -          -       (13,550)
                                 ---------------------------------------------
Balance, December 31, 1994        40,000,000    40,000     18,102     (77,538)

Stock issued in private 
placement for cash September
1995 at $.001 per share            2,500,000     2,500        -           -  

Net loss for the year ended
December 31, 1995                        -         -          -        (8,119)
                                 ---------------------------------------------
Balance, December 31, 1995        42,500,000    42,500     18,102     (85,657)

Stock issued in private 
placement for cash August
1996 at $.001 per share            2,000,000      2,000       -           -  

Net loss for the year ended
December 31, 1996                        -          -         -        (4,759)
                                 ---------------------------------------------
Balance, December 31, 1996        44,500,000 $   44,500 $  18,102    $(90,416)
                                 =============================================

See accompanying notes to financial statements.                            F-5
<PAGE>
                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                                       Statement of Cash Flows

                                                      Years Ended December 31,

                                                                   Cumulative
                                                                     Amounts
                                                                      Since
                                                   1996       1995  Inception
                                            ----------------------------------
Cash flows from operating activities:
   Net loss                                 $    (4,759)$   (8,119)$  (90,416)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
      Amortization expense                          -          -        2,136
      Increase in organization costs                -          -       (2,136)
      Increase in:
          Accounts payable                          -        1,860     10,032
          Income taxes payable                      -          -          100
                                            ----------------------------------
              Net cash used in
              operating activities               (4,759)    (6,259)   (80,284)
                                            ----------------------------------
Cash flows from investing activities -
   related party payable                          2,268     (1,081)    17,992
                                            ----------------------------------
Cash flows from financing activities:
   Proceeds from issuance of common stock         2,000      2,500     89,500
   Public offering costs                            -          -      (26,898)
                                            ----------------------------------
              Net cash provided by
              financing activities                2,000      2,500     62,602
                                            ----------------------------------
Net (decrease) increase in cash                    (491)    (4,840)       310

Cash, beginning of period                           801      5,641        -  
                                            ----------------------------------
Cash, end of period                         $       310 $      801 $      310
                                            ==================================


See accompanying notes to financial statements.                            F-6
<PAGE>
                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                                 Notes to Financial Statements
     
                                                    December 31, 1996 and 1995
     
     
     1.  Summary of Significant Accounting Policies
     
     The Company was organized under the laws of the state of Nevada on March
     28, 1988 and has designated December 31 as its fiscal year end.  The
     Company has not commenced planned principal operations and purposes to
     seek business ventures which will allow for long-term growth.  Further,
     the Company is considered a development stage company as defined in SFAS
     No. 7 and has not, thus far, engaged in business activities of any kind. 
     Its principal activities since inception have consisted of the offer and
     sale of common stock and the engagement of legal counsel and other
     professionals in connection with a proposed public offering of
     additional common shares.  The Company has, at the present time, not
     paid any dividends and any dividends that may be paid in the future will
     depend upon the financial requirements of the Company and other relevant
     factors.
     
     Cash and Cash Equivalents
     Cash equivalents are generally comprised of certain highly liquid
     investments with maturities of less than three months.
     
     Loss Per Share
     The computation of loss per share of common stock is based on the
     weighted average number of shares outstanding as of December 31, 1996
     and 1995, respectively.  Common shares issuable upon exercise of stock
     purchase warrants and stock options are not included in the per share
     computation when their effect would be antidilutive.
     
     Use of Estimates in the Preparation of Financial Statements
     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.  Actual results could differ from those
     estimates.
     
     
     2.  Going Concern
     
     The accompanying financial statements of Capital Growth, Inc., have been
     prepared on a going-concern basis, which contemplates profitable
     operations and the satisfaction of liabilities in the normal course of
     business.  There are uncertainties that raise substantial doubt about
     the ability of the Company to continue as a going concern.  As shown in
     the statement of operations, the Company has had no revenues from
     operations, reported a net loss of $4,759 for the year ended
     December 31, 1996 and as of December 31, 1996, has a stockholders'
     deficit of $27,814.
     
                                                                           F-7
<PAGE>
                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                                 Notes to Financial Statements
                                                                     Continued
     
     2.   Going Concern - Continued
     
     The Company's continuation as a going concern is dependent upon its
     ability to satisfactorily meet its debt obligations, secure adequate new
     financing and generate sufficient cash flows for operations to meet its
     obligations.  The financial statements do not include any adjustments
     that might result from the outcome of these uncertainties.
     
     Management has entered into a plan where it is pursuing other financing
     and searching for additional business opportunities.  It is not known if
     the Company will be successful.
     
     
     3.   Income Taxes
     
     The difference between income taxes at statutory rates for 1996 and 1995
     and the amount presented in the financial statements is the increase in
     the valuation allowance, which offsets the income tax benefit of the
     operating loss carryforward.
     
     Deferred tax assets at December 31, 1996 are as follows:
     

                Operating loss carryforwards                     $    31,000
                Valuation allowance                                  (31,000)
                                                                 ------------
                                                                 $       -  
                                                                 ============
     
     The Company has net operating loss carryforwards of approximately
     $90,000, which begin to expire in the year 2003.  The amount of net
     operating loss carryforward that can be used in any one year will be
     limited by significant changes in the ownership of the Company and by
     the applicable tax laws which are in effect at the time such
     carryforward can be utilized.
     
                                                                           F-8
<PAGE>
                                                          CAPITAL GROWTH, INC.
                                                 (A Development Stage Company)
                                                 Notes to Financial Statements
                                                                     Continued
          
     4.   Related Party Transactions
     
     Commencing January 1, 1996, the Company agreed to pay $100 per month to
     a shareholder, officer and director of the Company for accounting and
     office expenses.  For the year ended December 31, 1996, the Company
     incurred expenses under the agreement of $1,200.  In addition, on
     January 1, 1996, the Company owed $10,132 to an accounting firm whose
     managing partner was an officer and director of the company.  On January
     1, 1996, the officer terminated his employment with the accounting firm
     and at the time of termination the firm agreed to transfer the
     outstanding obligation to the officer.  At December 31, 1996, the
     Company owed $11,332 to the individual.
     
     The Company has agreed to pay interest expense at 6% to its former
     parent company, Data Growth, Inc.  The loans, on which interest was
     charged, were advances to the Company by its former parent.  On
     September 17, 1996, the amount owing to the former parent was
     transferred to an officer, director, and shareholder of the Company.  At
     December 31, 1996, the Company owed $16,792 to the officer.
     
     During the year ended December 31, 1996 and 1995, a principal
     shareholder purchased additional stock at par value for $2,000 and
     $2,500, respectively.
     
     
     5.   Public Stock Distribution
     
     The initial issuance of the Company's common stock occurred in August
     1988.  Such shares are a component of 5,000,000 units issued.  Each unit
     consists of one (1) share of the aforementioned common stock and two (2)
     warrants to purchase shares of common stock.  Each class A warrant
     entitles the holder thereof to purchase one share of common stock at a
     price of $.20 per share during the period up to and including December
     31, 1996.  Each class B warrant entitles the holder thereof to purchase
     one share of common stock at a price of $.30 per share during the period
     up to and including May 15, 1997.
     
     In 1988, the Company prepared a registration statement through which it
     registered, for distribution to the shareholders of Data Growth, Inc.,
     4,600,640 of the aforementioned units of common stock and warrants.  The
     Company registered the units on Form S-18 in accordance with the
     Securities Act of 1933.  Such registration became effective on
     December 15, 1988.  Subsequently, 4,372,229 shares of the Company's
     stock were distributed to the shareholders of Data Growth, Inc.  Costs
     of the public distribution, amounting to $26,898 were charged against
     capital in excess of par value.

                                                                           F-9