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 July 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No.: 0-20277
U.S.A. GROWTH INC.
(Name of small business issuer in its charter)
Delaware 11-2872782
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 West 190th Street, New York, New York 10040
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (212) 568-7307
Securities registered under Section 12(b) of the Exchange Act:
None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001 per share
(Title of Class)
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 [ ]
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B is not contained in this
form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form l0-KSB . [x]
Issuer's revenues for its most recent fiscal year are
$19,204.
The aggregate market value of the 9,170,000 shares of
Common Stock held by non-affiliates of the Company as of October
28, 1996 is $286,563.
The number of shares of Common Stock, par value $.001 per
share, outstanding as of October 28, 1996, is 10,970,000.
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PART I
Item 1. Description of Business
Business Development
U.S.A. Growth Inc. ("USA" or the "Company") was
incorporated in Delaware on August 14, 1987. The Company was
organized to provide a vehicle for participating in one or more
business ventures which may become available to the Company which,
in the opinion of management, will provide a profit to the Company.
Business of the Company
The Company is not an operating business and has no
income from operations. The Company engages in research either by
itself and/or through the use of independent consultants (who may
have to agree to receive stock of the Company in payment for their
services in lieu of cash) to determine what type of business can be
established by a new venture which could have potentially high
profits. After a potential business is identified, the Company
intends to formulate a business plan, including the amount of
capital required, the type of business, etc. and then to organize,
establish or purchase a subsidiary in that field of business. At
this time, the Company is unable to determine the industries which
may be deemed suitable in which to establish or acquire a business.
Although preliminary discussions may be held from time to time, the
Company has no arrangements with any person or entity regarding any
possible establishment or acquisition of any business.
At the present time the Company has no plans with regard
to any particular industry in which it may establish or purchase
subsidiaries, or the individuals which it may hire to research the
industries in which the Company may attempt to establish or
purchase subsidiaries. Additionally, management of the Company may
have no experience in a particular field in which it may establish
or purchase a subsidiary. Therefore, when the Company does
determine in which industry or industries it intends to establish
or purchase a subsidiary, the Company may have to find an
independent knowledgeable manager for that subsidiary, a person
with sufficient background in the business that the subsidiary will
be engaged in, in order that the subsidiary will be able to be
properly managed. It is intended that the remuneration to be paid
to such manager, if found, would be paid by that subsidiary.
In addition, any proposed acquisition of businesses or
assets by the Company must be approved by management of the
Company, which may not be experienced in the business being
acquired and which may not be able to devote significant amounts of
their time to such business being acquired. Therefore, no assurance
can be given that any assets or businesses will be found, or if
found, that such assets and/or business will benefit the Company.
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There are also instances where the owners of private
companies may seek to establish a public trading market for their
company's Common Stock by participating with the Company in a
merger or asset acquisition in order to avoid what such private
companies may deem to be adverse consequences of undertaking a
public offering themselves. Such factors may include time delays,
significant expense, loss of voting control and the inability or
unwillingness to comply with various state laws enacted for the
protection of investors. Under such circumstances, persons
purchasing Common Stock of the Company may be deprived of the
protection of various state laws which impose certain minimum
standards on the initial public offering of securities. In making
an investment in the Company, persons should recognize that
individuals purchasing shares of the Common Stock in the Company
may do so under terms which may ultimately be less favorable under
the foregoing criteria than if such persons were investing in a
firm with a specific business which was undertaking its own public
offering. In addition, the issuance of additional shares of Common
Stock to outside individuals in connection with an acquisition,
merger or to raise additional capital could cause the present
stockholders of the Company to lose control of the majority of the
voting shares of Common Stock of the Company. As part of such a
transaction, all or a majority of the Company's directors may
resign, and new directors may be appointed without any vote by
stockholders of the Company. Furthermore, the issuance of
additional shares of the Common Stock could dilute the book value
of the Common Stock. Also, any selling by these individuals could
have an adverse effect on the share price, and consequently reduce
the value of the Common Stock held by the current stockholders, and
make it more difficult for the current stockholders to sell their
own stock at a satisfactory price.
Management believes that the Company may also be able to
benefit from the use of "leverage" in the acquisition of a
business. Leveraged financing involves the acquisition of a
business through incurring significant indebtedness for a large
percentage of the purchase price for that business. In a leveraged
transaction, the Company would be required to use less of its
available funds for the acquisition of the business and instead
would be able to commit such funds to the operations of the
business, to the acquisition of other businesses or to other
activities. The borrowing involved in a leveraged transaction will
ordinarily be secured by the assets of the business being acquired.
If the business acquired is not able to generate sufficient
revenues to make payments on the debt incurred by the Company to
acquire that business, the lender would be able to exercise the
remedies provided by law or by contract. These leveraging
techniques, while reducing the amount of funds the Company must
commit to the acquisition of a business, may correspondingly
increase the cost of operations and make the acquisition more
risky. Lenders from which the Company may obtain funds for purposes
of a leveraged buy out may impose restrictions on the future
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borrowing, distribution and operating policies of the Company. It
is not possible, at this time, to predict the restrictions, if any,
which lenders may impose, or the impact thereof on the Company.
Competition
There are inherent difficulties for any new company
seeking to enter an established field. With regard to the proposed
business of the Company, namely the origination of presently
unknown subsidiaries and the operation of such subsidiaries, these
difficulties are compounded since there are numerous firms which
are more experienced, better established and better financed than
the Company in the originating of profitable subsidiaries.
Additionally, many of these firms have personnel experienced in
running such subsidiaries, unlike the Company. Furthermore, the
Company's present capital will only permit the Company to organize
relatively few subsidiaries which will face competition from firms
which are larger, more experienced and better established than
these subsidiaries. Additionally, small "start-up" firms such as
the Company, with insignificant resources, are at a very serious
disadvantage against established competitors.
Employees
At the present time, the Company has no employees and
does not have any present intention to hire any. Each of the
Company's officers devotes ten percent or less of his time to the
affairs of the Company, and does not receive any remuneration.
Item 2. Description of Property
The Company presently utilizes the residence/office of
its President, Robert Scher, located at 900 West 190th Street, New
York, New York 10040, at no cost. Such arrangement is expected to
continue as long as Mr. Scher is President of the Company.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
The Company's Common Stock, par value $.001 per share
(the "Common Stock"), is traded on the Bulletin Board. The closing
high and low bid prices for the Common Stock for the Company's
prior two fiscal years were as follows:
BID PRICES
High Low
Period
Fiscal 1995
Quarter ended July 31, 1995 .03 .03
Quarter ended April 30, 1995 .03 .03
Quarter ended January 31, 1995 .03 .03
Quarter ended October 31, 1994 .08 .03
Fiscal 1996
Quarter ended July 31, 1996 .03 .03
Quarter ended April 30, 1996 .03 .03
Quarter ended January 31, 1996 .03 .03
Quarter ended October 31, 1995 .03 .03
The foregoing price quotations have been reported by a
broker/dealer making a market in the securities. Such quotations
represent inter-dealer prices, without retail mark-up, markdown or
commission and may not represent actual transactions. There is no
established trading market for the Company's securities, and
trading may be considered limited and sporadic.
(b) The number of record holders of the Common Stock as
of October 28, 1996 was 73 The Company believes that there are a
substantially greater number of beneficial owners of shares of its
Common Stock, based upon inductions from brokerage firms.
(c) The future payment by the Company of dividends, if
any, is discretionary with the Board of Directors and will depend
upon the Company's earnings, capital requirements and financial
condition, as well as other relevant factors.
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Item 6. Management's Discussion and Analysis or Plan of Operation
Plan of Operation
The Company continues to engage in research either by
itself and/or through the use of independent consultant(s) (who may
have to agree to receive stock of the Company in payment for their
services in lieu of cash) to determine what type of business can be
established by a new venture which would have potentially high
profits. The Company's management has no present intention to
retain any independent consultants and management of the Company
has established numerous contacts which, on an ongoing basis, can
lead to inquiries from potential acquisition contacts. In the event
consultants are retained in the future, it is intended that their
compensation, whether in restricted securities of the Company or
otherwise, will be based on the fair market value of the Company's
stock and the fair market value of such services calculated on an
arms-length basis.
After an industry is identified, the Company intends to
formulate a business plan, including the amount of capital
required, the type of business, etc. and then to organize,
establish or purchase a subsidiary in that field of business. At
this time, the Company is unable to determine the industries which
may be deemed suitable in which to establish or acquire a business.
The Company has no arrangements with any person or entity regarding
any establishment or acquisition of any business.
Results of Operations
The Company is a development stage company and as of July
31, 1996 had not generated any operating revenue.
The Company's only source of revenue since inception has
been certificate of deposit and money market account interest
income and dividends from money market funds. The money market
funds had a yield for Fiscal 1995 and 1996 of 5% per annum. The
Company maintains its cash balance in a financial institution. The
balance is insured by the Federal Deposit Insurance Corporation
("FDIC") up to $100,000. At July 31, 1996, the Company's cash and
cash equivalent balance was $392,113, of which $367,528 was not
insured by the FDIC. The Company's revenues increased in 1995 and
1996 over previous years as a result of the general increase in
interest rates in the United States in such years.
General and administrative expenses during fiscal 1995
and 1996 were $19,476 and $16,060, respectively. The primary
general and administrative expenses were professional (legal and
accounting), transfer agent and filing fees.
Management believes that inflation and changing prices
will have minimal effect on operations.
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Liquidity and Capital Resources
The Company has had no material operations and as of July
31, 1996, the Company had working capital of $391,013. The Company
has no present outside sources of liquidity. In the event the
Company determines that its present capital is not adequate for a
future acquisition, the Company may arrange for outside financing
and/or may do a public offering or private placement of its
securities.
Item 7. Financial Statements
The Company's financial statements, consisting of the
balance sheet for the year ended July 31, 1996, and related
statements of operations, stockholders' equity, and cash flows for
the years ended July 31, 1996 and 1995, have been audited by
Rothstein, Kass & Company, P.C. independent certified public
accountants, which, along with their report thereon, appears on
pages F-1 through F-7 hereof.
Item 8. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure
None
PART III
Item 9. Directors and Executive Officers
The directors and officers of the Company are as follows:
Name Age Position
Robert Scher 54 Chairman of the
Board of Directors
and President
J. Peter Hans 51 Treasurer and Director
Robert Scher has been President and Chairman of the Board
of the Company since July 10, 1995. In addition, he has been
President, Treasurer and Chairman of the Board of two publicly held
corporations, Hunter Industrial Facilities, Inc. and World
Television Inc. He graduated in 1963 from the City University of
New York, Baruch College, with a B.A. in Accounting. He has been an
Associate Accountant with the Health and Hospital Corporation of
New York since 1971. He has been a private investor for almost
thirty years. Mr. Scher will devote such time to the Company as the
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Board of Directors may require. It is believed that he will devote
approximately 10% of his time to the affairs of the Company.
J. Peter Hans has been a Director of the Company since
its inception and since 1988 has been its Treasurer. Since June
1994, Mr. Hans has been self employed as a financial consultant.
From January 1990 to June 1994, Mr. Hans was employed by UMB Bank
and Trust Company and is presently a Vice President in the Private
Banking Division. From 1979 to 1990, Mr. Hans was employed by Bank
Leumi Trust Company of New York in various positions. Mr. Hans has
completed advance graduate work in International Economics and
Finance. Mr. Hans is also a Director and Treasurer of Eaststar
Corporation.
The Company does not have standing audit, nominating or
compensation committees of the Board of Directors, or committees
performing similar functions. Last year, the Board of Directors met
on three occasions.
The term of office of each director is one year or until
his successor is elected at the Company's annual meting and
qualified. Each officer is appointed by the Board of Directors and
serves at the discretion of the Board.
The Certificate of Incorporation of the Company provides
for indemnification of officers and directors to the fullest extent
permitted by Delaware law.
Item 10. Executive Compensation
No officer or director of the Company has received any
cash or other remuneration (directly or indirectly) since the
Company's inception, and no one is to receive or accrue any
remuneration from the Company, except as to repayment for
accountable expenses incurred on the Company's behalf. No
remuneration of any nature has been paid for or on account of
services rendered by a director in such capacity. None of the
officers and directors intends to devote more than 10% of his time
to the Company's affairs.
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Item 11. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth the number of shares of
Common Stock of the Company beneficially owned, directly or
indirectly, by (i) each of the Company's officers and directors;
(ii) all persons known to the Company to be beneficial owners of
more than five percent of the outstanding shares of Common Stock;
and (iii) all officers and directors of the Company as a group:
Name and Address Number of Shares Owned Percent
Sam Gower 1,700,000 15.5%
4 Winwood Court
Dix Hills, NY 11746
J. Peter Hans 100,000 *
110-50 71st Road
Forest Hills, NY 11375
All Directors and 100,000 *
Officers as a group
(three persons)
*Less than one percent
The Company is unaware of any arrangement, the operation
of which, at a subsequent date, may result in a change in control
of the Company.
Effective May 1, 1991, the Securities and Exchange
Commission promulgated new rules under Section 16 of the Securities
Exchange Act 10 1934. The Company believes that during the
preceding year the executive officers and directors have complied
with all Section 16 reporting requirements.
Item 12. Certain Relationships and Related Transactions
None.
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Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits have previously been filed on an
S-18 Registration Statement with the New York Regional Office of
the Securities and Exchange Commission and are hereby incorporated
by reference pursuant to Rule 12b-23:
3.1 Certificate of Incorporation
3.2 By-Laws of the Company
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K for its
last quarter in Fiscal 1996.
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INDEPENDENT AUDITORS' REPORT
Board of Directors
U.S.A. Growth Inc.
New York, New York
We have audited the accompanying balance sheet of U.S.A. Growth Inc. (a
development stage company) as of July 31,
1996 and the related statements of operations, stockholders' equity, and cash
flows for the cumulative period August 14,
1987 (date of inception) to July 31, 1996 and for the years ended July 31, 1996
and 1995. 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
U.S.A. Growth Inc. (a development stage company) as of July 31, 1996 and the
results of its operations and its cash flows
for the cumulative period August 14, 1987 (date of inception) to July 31, 1996
and for the years ended July 31, 1996 and
1995 in conformity with generally accepted accounting principles.
ROTHSTEIN, KASS & COMPANY, P.C.
Roseland, New Jersey
October 22, 1996
F-1
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USA GROWTH, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
July 31, 1996
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Notes 1, 2 and 6) $ 392,113
Income taxes receivable (Note 3) 1,000
Total current assets $ 393,113
LIABILITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITY, accounts payable $ 2,100
COMMITMENT
STOCKHOLDERS' EQUITY (Note 5):
Common stock, par value $.001 per share,
authorized 100,000,000 shares, issued
10,970,000 shares $ 10,970
Capital in excess of par value 712,973
Deficit accumulated during development stage (332,930)
Total stockholders' equity 391,013
$ 393,113
F-2
See accompanying notes to financial statements.
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USA GROWTH, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
Cumulative
August 14, 1987
(Date of Inception)
to Year Ended July 31,
July 31, 1996 1996 1995
INTEREST AND DIVIDEND INCOME $ 192,081 $ 19,204 $ 10,909
EXPENSES:
Selling, general and
administrative expenses 240,334 16,060 19,476
Expenses incurred as a result
of rescinded investment (Note 4) 270,734
511,068 16,060 19,476
INCOME (LOSS) BEFORE INCOME
TAXES (318,987) 3,144 (8,567)
INCOME TAXES:
Federal 3,739
State 10,204 407 2,534
13,943 407 2,534
NET INCOME (LOSS) $ (332,930) $ 2,737 $ (11,101)
NET INCOME (LOSS) PER SHARE OF
COMMON STOCK (Note 1) $ NIL $ NIL
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING DURING THE
PERIOD (Note 1) 10,970,000 10,970,000
F-3
See accompanying notes to financial statements.
<PAGE>
USA GROWTH, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended July 31, 1995 and 1996
Deficit
Accumulated
Capital in During
Common Stock Excess of Development
Shares Amount Par Value Stage
BALANCES,
July 31,
1994 10,970,000 $ 10,970 $ 712,973 $ (324,566)
NET LOSS (11,101)
BALANCES,
July 31,
1995 10,970,000 10,970 712,973 (335,667)
NET INCOME 2,737
BALANCES,
July 31,
1996 10,970,000 $ 10,970 $ 712,973 $ (332,930)
F-4
See accompanying notes to financial statements.
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USA GROWTH, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
Cumulative
August 14, 1987
(Date of Inception)
to Year Ended July 31,
July 31, 1996 1996 1995
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ (332,930) $ 2,737 $ (11,101)
Adjustments to reconcile
net income (loss)
to net cash provided by
(used in) operating
activities:
Changes in assets and
liabilities:
(Increase) decrease in
income taxes
receivable (779) 898
Increase (decrease) in
accounts payable 1,879 (121) (27,086)
Total adjustments 1,100 (121) (26,188)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (331,830) 2,616 (37,289)
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from
sales of
common stock 723,943
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 392,113 2,616 (37,289)
CASH AND CASH EQUIVALENTS,
beginning of period 389,497 426,786
CASH AND CASH EQUIVALENTS,
end of period $ 392,113 $ 392,113 $ 389,497
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $ 19,896 $ 527 $ 1,636
F-5
See accompanying notes to financial statements.
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USA GROWTH, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization - The Company was incorporated on August 14, 1987 in the State of
Delaware, and has adopted a July 31 year end. At July 31, 1996, the Company is a
development stage company since it has not commenced meaningful operations and
does not have any current business ventures or plans. Cash and Cash Equivalents
- - The Company includes all highly liquid instruments purchased with a maturity
of less than three months to be cash equivalents. Income Taxes - The Company
complies with Statement of Financial Accounting Standards no 109 (SFAS 109),
"Accounting for Income Taxes", which requires an asset and liability approach to
financial accounting and reporting of income taxes. Deferred income tax assets
and liabilities are computed annually for differences between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future, based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce the deferred
income tax assets to the amount to be realized. 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 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. Net Income (Loss) Per Share -
Net income (loss) per share of common stock is based upon the weighted average
number of shares outstanding during the period (see Note 5). NOTE 2 - CASH AND
CASH EQUIVALENTS: Cash and cash equivalents consist of money market funds with a
yield of 3-5%. NOTE 3 - INCOME TAXES: At July 31, 1996, the Company has
available an unused capital loss carryforward of $250,000 which may be applied
against future capital gains expiring in 2004 and a net operating loss
carryforward of approximately $100,000 which expires in 2007, resulting in a
deferred tax asset of approximately $140,000, which was fully reserved at July
31, 1996.
F-6
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USA GROWTH, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - RESCINDED INVESTMENTS:
On August 19, 1988, the company issued 3,500,000 restricted shares of its common
stock, for all of the outstanding common stock of Factory Outlets of America,
Inc. (FOA) (a development stage company), a franchisor of general merchandise
stores. An additional 21,000,000 restricted shares of the Company's common stock
was placed in escrow and was to be issued if FOA attained specified profit
levels. In accordance with the agreement, the Company contributed $250,000 to
FOA's additional paid-in capital. Management of the Company has indicated that
FOA continued in the development stage through February 1990, at which time this
agreement was rescinded and 3,080,000 shares of restricted stock and all of the
restricted escrow shares of stock were returned to the Company. As a result of
this transaction, the Company incurred total expenses of $270,734 which was
comprised of acquisition and organization costs of $20,734 and the write-off of
its investment in FOA of $250,000. NOTE 5 - STOCKHOLDERS' EQUITY: On February
16, 1988, the Company successfully completed its public offering. The Company
sold for $.10 per unit, 8,000,000 units (each unit consisting of one share of
common stock and one Class A redeemable common stock purchase warrant). One
Class A warrant entitles the holder to purchase one share of common stock and
one Class B common stock purchase warrant for $.17 per unit through August 16,
1997. The Company has reserved the right to redeem the unexercised warrants on
thirty days written notice for $.001 per warrant. The Class B warrant entitles
the holder to purchase one share of common stock at $.25 per share, exercisable
through August 16, 1997. NOTE 6 - CONCENTRATION OF CREDIT RISK: The Company's
cash and cash equivalents are maintained in financial institutions and, at
times, exceed the Federal Deposit Insurance Corporation coverage of $100,000.
Management regularly monitors the financial condition of the financial
institution in order to keep the potential risk to a minimum.
F-7
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: November 5, 1996
U.S.A. GROWTH, INC.
BY: /s/ Robert Scher, President
and Chairman of the Board
of Directors
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 on the dates indicated.
Name Titles Date
/s/ Robert Scher President and Chairman November 5, 1996
Robert Scher of the Board of Directors
(Chief Executive Officer)
/s/ J. Peter Hans Director November 5, 1996
J. Peter Hans
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STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, MICHAEL HARKINS, SECRETARY OF STATE OF THE STATE OF DELAWARE DO
HEREBY CERTIFY U.S.A. GROWTH INC. IS DULY INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE AND IS IN GOOD STANDING AND HAS A LEGAL
CORPORATE EXISTENCE SO FAR AS THE RECORDS OF THIS OFFICE SHOW, AS OF THE
DATE SHOWN BELOW.
Department of State
Office of the Secretary of State
Delaware
728223012
Michael Harkins, Secretary of State
Authentication: :1821487
Date: 8/10/1988
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STATE OF DELAWARE
OFFICE OF SECRETARY OF STATE
I, Michael Harkins, Secretary of State of the State of Delaware,
do hereby certify that the attached is a true and correct copy of
Certificate of Incorporation filed in this office on August 14, 1987
DEPARTMENT OF STATE
OFFICE OF THE SECRETARY OF STATE
DELAWARE
Michael Harkins, Secretary of State
By. L. May
Date: August 10, 1988
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CERTIFICATE OF INCORPORATION
of
U.S.A. Growth, Inc.
FIRST: The name of this corporation is U.S.A. Growth, Inc.
SECOND: Its registered office in the State of Delaware is to be
located at 725 Market Street in the City of Wilmington, County of
New Castle. The registered agent in charge thereof is The Company
Corporation at 725 Market Street, in the City of Wilmington, County
of New Castle.
THIRD: The nature of the business and the objects and purposes
proposed to be transacted, promoted and carried on, are to do any or
all the things herein mentioned, as fully and to the same extent as
natural persons might or could do, and in any part of the world :
"The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the
General Corporation Law of Delaware".
FOURTH: The amount of the total authorized capital stock of
this corporation is 100,000,000 share of .001 Par Value.
FIFTH: The name and mailing address of the incorporator is as
follows:
Marsha Mills, 725 Market Street, Wilmington, Delaware 19801
SIXTH: The powers of the incorporator are to terminate upon
filing of the certificate of incorporation, and the name(s) and
mailing address(es) of persons who are to serve as director(s) until
the first annual meeting of stockholders or until their successors
are elected and qualify are as follows:
21
<PAGE>
Sam Gower, #4 Winwood Court, Dix Hills, New York 11746.
SEVENTH: The Directors shall have power to make and to alter or
amend the By-Laws; to fix the amount to be reserved as working
capital, and to authorize and cause to be executed, mortgages and
liens without limit as to the amount , upon the property and
franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the
holders of a majority of the capital stock issued and outstanding,
the Directors shall have the authority to dispose, in any manner, of
the whole property of this corporation.
The By-Laws shall determine whether and to what extent the
accounts and books of this corporation, or any of them shall be open
to the inspection of the stockholders and no stockholder shall have
any right of inspecting any account, or book or document of this
Corporation, except as conferred by the law or the By-Laws, or by
resolution of the stockholders.
The stockholders and directors shall have power to hold
their meetings and keep the books, documents and papers of the
Corporation outside of the State of Delaware, at such places as may
be from time to time designated by the By-Laws or by resolution of
the stockholders or directors, except as otherwise required by the
laws of Delaware.
It is the intention that the objects, purposes and powers
specified in the Third paragraph hereof shall, except where
otherwise specified said paragraph, be nowise limited or restricted
by reference to or inference from the terms of any other clause or
paragraph in this certificate of incorporation, but that the
22
<PAGE>
objects, purposes and powers specified in the Third paragraph and in
each of the clauses or paragraphs of this charter shall be regarded
as independent objects, purposes and powers.
EIGHTH: Directors of the corporation shall not be liable
together the corporation or its stockholders for monetary damages
for a breach of fiduciary duties unless the breach involves: (i) a
director's duty of loyalty to the corporation or its stockholders;
(2) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (3) liability for unlawful
payments of dividends or unlawful stock purchases or redemption by
the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation
under the laws of the State of Delaware, do make, file and record
this Certificate and do certify that the facts herein are true; and
I have accordingly hereunto set my hand.
DATE: August 14, 1987
State of Delaware
County of New Castle
<PAGE>
CORPORATE RECORDS
OF
U.S.A. GROWTH INC.
INCORPORATED UNDER THE LAWS
OF THE
STATE OF DELAWARE
LAW OFFICES
OF
U.S.A. Growth Inc.
BY- LAWS
ARTICLE I - OFFICES
Section 1. The registered office of the corporation in
the State of Delaware shall be at 725 Market St., Wilmington
Delaware.
The registered agent in charge thereof shall be
The Company Corporation
Section 2. The corporation may also have offices at such other
places as the Board of Directors may from time to time appoint or
the business of the corporation may require.
25
<PAGE>
ARTICLE II - SEAL
Section 1. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
Section 1. Meetings of stockholders-shall be held at the registered
office of the corporation in this state or at such place, either
within or without this state, as may be selected from time to time by
the Board of Directors.
Section 2. Annual Meetings: The annual meeting of the
stockholders shall be held on the lst of August
in each year if not a legal holiday, and if a legal holiday,
then on the next secular day following at 9:00 o'clock A.M.,
when they shall elect a Board of Directors and transact such other
business as may properly be brought before the meeting. If the
annual meeting for election of directors is not held on the date
designated therefor, the directors shall cause the meeting to be
held as soon thereafter as convenient.
Section 3. Election of Directors: Elections of the directors of
the corporation may be by written ballot.
Section 4. Special Meetings: Special meetings of the stockholders
26
<PAGE>
may be called at any time by the President, or the Board of
Directors, or stockholders entitled to cast at least one-fifth of
the votes which all stockholders are entitled to cast at the
particular meeting. At any time, upon written request of any person
or persons who have duly called a special meeting, it shall be the
duty of the Secretary to fix the date of the meeting, to be held not
more than sixty days after receipt of the request, and to give due
notice thereof. If the Secretary shall neglect or refuse to fix the
date of the meeting and give notice thereof, the person or persons
calling the meeting may do so.
Business transacted at all special meetings shall be confined to
the objects stated in the call and matters germane thereto, unless
all stockholders entitled to vote are present and consent.
Written notice of a special meeting of stockholders stating the
time and place and object thereof, shall be given to each stock
holder entitled to vote thereat at least 30 days before such
meeting, unless a greater period of-notice is required by statute in
a particular case.
Section 5. Quorum: A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of stockholders. If less
than a majority of the outstanding shares entitled to vote is
represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The stockholders
27
<PAGE>
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Section 6. Proxies: Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize another
person or persons to act for him by proxy, but no such proxy shall
be voted or acted upon after three years from its date, unless the
proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it
is irrevocable and if, and only as long as, it is coupled with an
interest sufficient in law to support an irrevocable power. A proxy
may be made irrevocable regardless of whether the interest with
which it is coupled is an interest in the stock itself or an
interest in the corporation generally. All proxies
Section 9. List of Stockholders: The officer who has charge of
the stock ledger o-f the corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete list
of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and
the number of shares registered in the name of each stockholder. No
share of stock upon which any installment is due and unpaid shall be
voted at any meeting. The list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to
the meeting, either at a place within the city where the meeting is
to be held, which place shall be specified in the notice of the
28
<PAGE>
meeting, or, if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
ARTICLE IV - DIRECTORS
Section I.. The business and affairs of this corporation
shall be managed by its Board of Directors, 6 in number.
The directors need not be residents of this state or stockholders in
the corporation They shall be elected by the stockholders at the
annual meeting of stockholders of the corporation, and each director
shall be elected for the term of one year, and until his
successor shall be elected and shall qualify or until his earlier
resignation or removal.
Section 2. Regular Meetings: Regular meetings of the Board shall
be held without notice
at the registered office of the corporation, or
at such other time and place as shall be determined by the Board.
Section 3. Special Meetings: Special Meetings of the Board may be
called by the President on days notice to each director, either
personally or by mail or by telegram-, special meetings shall be
called by the President or Secretary in like manner and on like
notice on the written request of a majority of the directors in
29
<PAGE>
office.
Section 4. quorum: A majority of the total number of directors
shall constitute a quorum for the transaction of business.
Section 5. Consent in Lieu of Meeting: Any action required or
permitted to be taken at any meeting of the Board of Directors, or
of any committee thereof, may be taken without a meeting,,. if all
members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee. The Board of
Directors relay hold its meetings, and have an office or offices,
outside of this state.
Section E,. Conference Telephone: One or more directors ma
Section E,. Conference Telephone: One or more directors may
participate in a meeting of the Board, of a committee of the Board
or of the stockholders, by means of conference telephone or similar
communications equipment by means of which all persons participating
in the meeting can hear each other; participation in this manner
shall constitute presence in person at such
meeting.
Section 7. Compensation: Directors as such, shall not receive any
stated salary for their services, but by resolution of the Board, a
fixed sum and expenses of attendance if any, may be allowed for
attendance at each regular or special meeting of the Board PROVIDED,
that nothing herein contained shall be construed to preclude any
director from serving the corporation in any other capacity and
30
<PAGE>
receiving compensation therefor.
Section 8. Removal: Any director or the entire Board of Directors
may be removed, with or without cause, by the holders of a majority
of the shares then entitled to vote at an election of directors,
except that when cumulative voting is permitted, if less than the
entire Board is to be removed, no director may be removed without
cause if the votes cast against his removal would be sufficient to
elect him if then cumulatively voted at an election of the entire
Board of Directors, or, if there be classes of directors, at an
election of the class of directors of which he is a part.
ARTICLE V - OFFICERS
Section 1. The executive officers of the corporation shall
be chosen by the directors and shall be a President, Secretary
and Treasurer. The Board of Directors may also choose a Chairman,
one or more Vice Presidents and such other officers as it shall deem
necessary. Any number of offices may be held by the same person.
Section 2. Salaries: Salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 3. Term of Office: The officers of the corporation shall
hold office for one year and until their successors are chosen and
have qualified. Any officer or agent elected or appointed by the
Board may be removed by the Board of Directors whenever in its
judgment the best interest of the corporation will be served
thereby.
Section 4. President: The President shall be the chief executive
31
<PAGE>
officer of the corporation; he shall preside at all meetings of the
stockholders and directors; he shall have general and active
management of the business of the corporation, shall see that all
orders and resolutions of the Board are carried into effect,
subject, however, to the right of the directors to delegate any
specific powers, except such as may be by statute exclusively
conferred on the President, to any other officer or officers of the
corporation. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation. He shall be
EX-OFFICIO a member of all committees, and shall have the general
power and duties of supervision and management usually vested in the
office of President of a corporation.
Section 5. Secretary: The Secretary shall attend all sessions of
the Board and all meetings of the stockholders and act as clerk
thereof, and record all the votes of the corporation and the minutes
of all its transactions in a book to be kept for that purpose, and
shall perform like duties for all committees of the Board of
Directors when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and of the Board of
Directors, and shall perform such other duties as may be prescribed
by the Board of Directors or President, and under whose supervision
he shall be. He shall keep in safe custody the corporate seal of
the corporation, and when authorized by the Board, affix the same to
any instrument requiring it.
Section 6. Treasurer: The Treasurer shall have custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
32
<PAGE>
corporation, and shall keep the moneys of the corporation in a
separate account to the credit of the corporation. He shall
disburse the funds of the corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall
render to the President and directors, at the regular meetings of
the Board, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the
corporation.
ARTICLE VI - VACANCIES
Section 1. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, shall be
filled by the Board of Directors. Vacancies and newly created
directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining
director. If at any time, by reason of death or resignation or
other cause, the corporation should have no directors in office,
then any officer or any stockholder or an executor, administrator,
trustee or guardian of a stockholder, or other fiduciary entrusted
with like responsibility for the person or estate of a stockholder,
may call a special meeting of stockholders in accordance with the
provisions of these By-Laws. - Section 2. Resignations Effective at
Future Date: When one or more directors shall resign from the Board,
effective at a future date, a majority of the directors then in
office, including those who have so resigned, shall have power to
33
<PAGE>
fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective.
ARTICLE VII - CORPORATE RECORDS
Section 1. Any stockholder of record, in person or by attorney or
other agent, shall, upon written demand under oath stating the
purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a
list of its stockholders, and its other books and records, and to
make copies or extracts therefrom.
A proper purpose shall mean a purpose reasonably related to such
person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of
attorney or such other writing which authorizes the attorney or
other agent to so act on behalf of the stockholder. The demand
under oath shall be directed to the corporation at its registered
office in this state or at its principal place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
Section 1. The stock certificates of the corporation shall
be numbered and registered in the share ledger and transfer books of
the corporation as they are issued. They shall bear the corporate
34
<PAGE>
seal and shall be signed by the
Section 2. Transfers: Transfers of shares shall be made on the
books of the corporation upon surrender of the certificates
therefor, endorsed by the person named in the certificate or by
attorney, lawfully constituted in writing. No transfer shall be
made which is inconsistent with law.
Section 3. Lost Certificate: The corporation may issue a new
certificate of stock in the place of any certificate theretofore
signed by it, alleged to have been lost, stolen or destroyed, and
the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative.
to give the corporation a bond sufficient to indemnify it against
any claim that may be made against it on account of the alleged
loss, theft or destruction of any such certificate or the issuance
of such new certificate.
Section 4. Record Date: In order that the corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than
35
<PAGE>
sixty days prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding
the day on which notice is given, or, if notice is waived, at the
close of business on the day next preceding the day on which the
meeting is held.
(b) The record date for determining stockholders entitled
to express consent to corporate action in writing without a
meeting, when no prior action by the Board of
Directors is necessary, shall be the day on which the fir@;t
written consent is expressed.
(c) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on
which the Board of Directors adopts the resolution relating
thereto.
(d) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record late for the adjourned meeting.
Section 5. Dividends: The Board of Directors may declare and pay
dividends upon the outstanding shares of the corporation, from time
to time and to such extent as they deem advisable, in the manner and
upon the terms and conditions provided by statute ,and the
Certificate of Incorporation.
Section 6. Reserves: Before payment of any dividend there may be
set aside out of the net profits of the corporation such sum or sums
36
<PAGE>
as the directors, from time to time, in their absolute discretion,
think proper as a reserve fund to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property
of the corporation, or for such other purpose as the directors shall
think conducive to the interests of the corporation, and the
directors may abolish any such reserve in the manner in which it was
created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. Checks: All checks or demands for money and notes of
the corporation shall be signed by such officer or officers as the
Board of Directors may from time to time designate.
Section 2. Fiscal Year: The fiscal year shall begin on the first
day of August.
Section 3. Notice: Whenever written notice is required
to be given to any person, it may be given to such person, either
personally or by sending a copy thereof through the mail, or by
telegram, charges prepaid, to his address appearing on the books of
the corporation, or supplied by him to the corporation for the
purpose of notice. If the notice is sent by mail or by telegraph,
it shall be deemed to have been given to the person entitled thereto
when deposited in the United States mail or with a telegraph office
for transmission to such person. Such notice shall
specify the place, day and hour of the meeting and, in the case
of a special meeting of stockholders, the general nature of the
business to be transacted.
Section 4. Waiver of Notice: Whenever any written notice is
required by statute, or by the Certificate or the By-Laws of this
37
<PAGE>
corporation a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such
notice. Except in the case of a special meeting of stockholders,
neither the business to be transacted at nor the purpose of the
meeting need be specified in the waiver of notice of such
meeting. Attendance of a person either in person or by proxy, at
any meeting shall constitute a waiver of notice of such meeting,
except where a person attends a meeting for the express purpose of
objecting to the transaction of any business because the meeting was
not lawfully called or convened.
Section 5. Disallowed Compensation: Any payments made to an
officer or employee of the corporation such as a salary, commission,
bonus, interest, rent, travel or entertainment expense incurred by
him, which shall be disallowed in whole or in part as a deductible
expense by the Internal Revenue Service, shall be reimbursed by such
officer or employee to the corporation to the full extent of such
disallowance. It shall be the duty of the directors, as a Board, to
enforce payment of each such amount disallowed. In lieu of payment
by the officer or employee, subject to the determination of the
directors, proportionate amounts may be withheld from his future
compensation payments until the amount owed to the corporation has
been recovered.
Section 6. Resignations: Any director or other officer may resign
at anytime, such resignation to be in writing, and to take effect
from the time of its receipt by the corporation, unless some time be
fixed in the resignation and then from that date. The acceptance of
38
<PAGE>
a resignation shall not be required to make it effective.
ARTICLE X - ANNUAL STATEMENT
Section 1. The President and Board of Directors shall
present at each annual meeting a full and complete statement of the
business and affairs of the corporation for the preceding year.
Such statement shall be prepared and presented in whatever manner
the Board of Directors shall deem advisable and need not be verified
by a certified public accountant.
ARTICLE XI - AMENDMENTS
Section 1. These By-Laws may be amended or repealed by the vote
of stockholders entitled to cast at least a majority of the votes
which all stockholders are entitled to cast thereon, at any regular
or special meeting of the stockholders, duly convened after notice
to the stockholders of that purpose.
ARTICLE XII - MERGERS AND ACQUISITIONS
Section 1. The Board of Directors has complete authority to
execute agreements relating to acquisitions by the Corporation or
merger with other Corporations or business for cash or through the
issuance of additional stock of the Corporation. The Board of
Directors are hereby permitted to effect such transactions on behalf
of the Corporation without shareholder approval in any and all
jurisdiction where this is permitted.
39
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFOMRATION EXTRACTED FROM
THE FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-KSB AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> JUL-31-1996
<CASH> 392,113
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 393,113
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 393,113
<CURRENT-LIABILITIES> 2,100
<BONDS> 0
0
0
<COMMON> 10,970,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 393,113
<SALES> 0
<TOTAL-REVENUES> 19,204
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 16,060
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,144
<INCOME-TAX> 407
<INCOME-CONTINUING> 2,737
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,737
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
