SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No.: 0-20277
U.S.A. GROWTH INC.
(Exact name of small business issuer in its charter)
DELAWARE 11-2872782
(State or 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)
Issuer's telephone number: (212) 568-7307
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 number of shares of Common Stock, par value $.001 per share,
outstanding as of October 31, 1996, is 10,970,000 shares.
1
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U.S.A. GROWTH INC.
INDEX
Page No.
PART 1 - FINANCIAL INFORMATION:
Item 1 - Financial Information
Balance Sheet - October 31, 1996
(unaudited) 3
Statements of Operations -
Three Months Ended October 31, 1996 4
and 1995 and Cumulative From August 14,
1987 (Date of Inception) to October 31,
1996 (unaudited)
Statements of Cash Flows - 6
Year Ended October 31, 1995 and 1996
and Cumulative August 14, 1987 (Date
of Inception) to October 31, 1996
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of operations 10
PART II. OTHER INFORMATION 12
2
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U.S.A GROWTH INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 394,958
Income taxes receivable 1,000
Total current assets $ 395,958
LIABILITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITY, accounts payable $ 2,100
STOCKHOLDERS' EQUITY:
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 (330,085)
stage
Total stockholders' equity 393,858
$395,958
3
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U.S.A. GROWTH INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative
August 14, 1987
(Date of Inception)
to
October 31, 1996
INTEREST AND DIVIDEND INCOME $ 196,996
EXPENSES: Selling, general and
administrative $ 241,904
Expenses incurred as a result
of rescinded investment 270,734
512,638
INCOME (LOSS) BEFORE INCOME TAXES ( 315,642)
INCOME TAXES:
Federal 3,739
State 10,704
14,443
NET LOSS ($ 330,085)
NET LOSS PER SHARE OF COMMON STOCK NIL
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING DURING
THE PERIOD
4
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U.S.A. GROWTH INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
October 31,
1996 1995
INTEREST AND DIVIDEND INCOME $ 4,915 $ 4,490
EXPENSES: Selling, general and
administrative 1,570 7,697
Expenses incurred as a result
of rescinded investment
1,570 7,697
INCOME (LOSS) BEFORE TAXES 3,345 (3,207)
INCOME TAXES:
Federal
State 500 613
500 613
NET INCOME LOSS $ 2,845 ($3,820)
NET LOSS PER SHARE OF COMMON STOCK $ NIL $ NIL
WEIGHTED AVERAGE NUMBER OF SHARES
OF COMMON STOCK OUTSTANDING DURING
THE PERIOD $10,970,000 $10,970,000
5
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U.S.A. GROWTH INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
Cumulative
August 14, 1987
(Date of Inception)
to
October 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 330,085)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Changes in assets in liabilities:
(Increase) decrease in income
taxes receivable ( 779)
Increase (decrease) in accounts
payable 1,879
Total adjustments 1,100
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES: ($ 328,985)
NET CASH PROVIDED BY FINANCING
ACTIVITIES, Net proceeds from
sales of common stock $ 723,943
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 394,958
CASH AND CASH EQUIVALENTS,
beginning of period
CASH AND CASH EQUIVALENTS, end
of period $ 394,958
SUPPLEMENTAL DISCLOSURE OF CASH
FLOWS INFORMATION, cash period
for income taxes $ 20,396
6
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U.S.A. GROWTH INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
Year Ended
October 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ 2,845 ($3,820)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Changes in assets in liabilities:
(Increase) decrease in income
taxes receivable 113
Increase (decrease) in accounts
payable
Total adjustments
NET CASH USED IN OPERATING
ACTIVITIES: $ 2,845 ($3,707)
NET CASH PROVIDED BY FINANCING
ACTIVITIES, Net proceeds from
sales of common stock
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,845 (3,707)
CASH AND CASH EQUIVALENTS,
beginning of period 392,113 389,497
CASH AND CASH EQUIVALENTS, end
of period $ 394,958 $ 385,790
SUPPLEMENTAL DISCLOSURE OF CASH
FLOWS INFORMATION, cash paid
for income taxes $ 500 $ 500
7
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U.S.A. GROWTH INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - FINANCIAL STATEMENTS:
The accompanying unaudited financial statements of U.S.A.
Growth, Inc. (the "Company"), have been prepared in
accordance with the instructions to Form 1O-QSB. In the
opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly
the financial position as of October 31, 1996, and the
results of operations and cash flows for the three months
ended October 31, 1996 and 1995 and from the date of
inception to October 31, 1996. While the Company believes
that the disclosures presented are adequate to make the
information contained therein not misleading, it is
suggested that these financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's Form 10-KSB for the year ended
July 31, 1996.
The results of operations for the three months ended October
31, 1996 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2 - CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of Bank money market funds
with a yield of 3-5%.
NOTE 3 - INCOME TAXES:
At October 31, 1996, the Company has available an unused
capital loss carry forward of $250,000 which may be applied
against future capital gains expiring in 2004 and a net
operating loss carry forward of $100,000 which expires in
2007, resulting in a deferred tax asset of approximately
$140,000, which was fully reserved at October 31, 1996.
NOTE 4 - RESCINDED INVESTMENT
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 franchiser of general
merchandise stores. An additional 21,000,000 restricted
shares of the Company's common stock was placed in escrow
8
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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 $20,734
and the write-off of its investment in FOA of $250,000.
NOTE 5 - CHANGES IN STOCKHOLDERS' EQUITY:
Accumulated deficit decreased by $2,845 which represents the
net gain for the three months ended October 31, 1996.
NOTE 6 - 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 7 - CONCENTRATION OF CREDIT RISK:
The Company maintains its cash balance in a financial
institution. The balance is insured by the Federal Deposit
Insurance Corporation up to $100,000. At October 31, 1996,
the entire balance of $22,919 was insured. The Company also
has $372,039 in an uninsured money market mutual fund which
invests in short term U.S. government securities.
9
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Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Plan of Operation
The Company engages 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 either
authorize, 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 October
31, 1996 had not generated any operating revenue.
The Company's only source of revenue since inception has
been certificate of deposit interest income, dividends from money
market funds and interest from money market mutual funds with an
approximate yield 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 October 31, 1996 the Company's cash balance was $22,919 of
which $22,919 is insured by the FDIC. The remaining funds of
$372,039 is invested in uninsured money market mutual funds which
invests in government securities. The Company had a net gain of
$2,845 for the three months ended October 31, 1996 as compared to
a net loss of $3,820 for the three months ended October 31, 1995.
Selling, general and administrative expenses during the
10
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three months ended October 31, 1996 were $1,570, as compared to
$7,697 for the three months ended October 31, 1996, a decrease of
$6,127. Selling, general and administrative expenses, primarily
consisted of professional (legal and accounting), transfer agent
and filing fees and expenses related to investigating business
opportunities.
Management believes that inflation and changing prices will
have minimal effect of operations.
Liquidity and Capital Resources
The Company has had no material operations and, as of
October 31, 1996, the Company had working capital of $395,958.
The Company had a current ratio of 193 to 1 at October 31, 1996.
Stockholders equity increased from $391,013 for the fiscal year
ended July 31, 1996 to $393,858 for the three months ended
October 31, 1996, which represents a net gain of $2,845 for the
three months.
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.
11
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits. None.
(b)Reports on Form 8-K. None.
12
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SIGNATURES
Pursuant to the requirements 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: December 11, 1996
U.S.A. GROWTH INC.
By:/s/ Robert Scher
Treasurer and
Principal Financial
Officer*
* Mr. Scher is signing this Report in the dual capacity of
duly authorized officer and principal financial officer.
13
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 394,958
<SECURITIES> 0
<RECEIVABLES> 1,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 395,958
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 395,958
<CURRENT-LIABILITIES> 2,100
<BONDS> 0
0
0
<COMMON> 10,970,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 395,958
<SALES> 0
<TOTAL-REVENUES> 4,915
<CGS> 0
<TOTAL-COSTS> 1,570
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 500
<INCOME-CONTINUING> 2,845
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,845
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<PAGE>
</TABLE>
