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, 1997
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 April 30, 1997, 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, 1997
(unaudited) 3
Statements of Operations -
Three Months Ended October 31, 1997 4
and 1996 and Cumulative From August 14,
1987 (Date of Inception) to October 31,
1997
Statements of Cash Flows -
Year Ended October 31, 1997
and 1996 Cumulative August 14, 1987 (Date
Of Inception) to October 31, 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
PART II. OTHER INFORMATION 12
2
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
October 31, 1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $404,005
Income taxes receivable 1,000
total current assets $405,005
LIABILITY AND STOCKHOLDERS 'EQUITY
CURRENT LIABILITY, accounts payable $2,670
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 stage (321,608)
Total stockholders' equity 402,335
$405,005
3
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U.S.A. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Cumulative
August 14, 1987
(Date of Inception)
to Three Months Ended October 31,
October 31, 1997 1997 1996
INTEREST AND DIVIDEND INCOME $ 217,109 $ 5,204 $ 4,915
EXPENSES:
Selling, general and
administrative expenses 252,379 $ 1,482 $ 1,570
Expenses incurred as a result
of rescinded investment 270,734
523,113 1,482 1,570
INCOME (LOSS) BEFORE
TAXES (306,004) 3,722 3,345
INCOME TAXES:
Federal 3,739
State 11,865 500 500
15,604 500 500
NET INCOME (LOSS) (321,608) 3,222 2,845
NET INCOME (LOSS) PER SHARE
OF COMMON STOCK NIL NIL NIL
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING DURING THE
PERIOD 10,970,000 10,970,000
</TABLE>
4
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Cumulative
August 14, 1987
(Date of Inception)
to Three Months Ended October 31,
October 31, 1997 1997 1996
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(321,608) $3,222 $2,845
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)
Increase (decrease) in
accounts payable 2,449
Total adjustments 1,670
NF-T CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (319,938) 3,222 2,845
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from
sales of common stock 723,943
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 404,005 3,222 2,845
CASH AND CASH EQUIVALENTS,
beginning of period 400,783 392,113
CASH AND CASH EQUIVALENTS,
end of period 404,005 404,005 394,958
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $20,987 500 500
</TABLE>
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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 10-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, 1997 and the results of operations
and cash flows for the three months ended October 31, 1997 and 1996 and
from the date of inception to October 31, 1997. 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, 1997 .
The results of operations for the three months ended October 31, 1997
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 account and money
market mutual funds with a yield of 2-5%.
NOTE 3 - INCOME TAXES:
At October 31, 1997, 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 $90,000
which expires in 2007, resulting in a deferred tax asset of
approximately $136,000, which was fully reserved at October 31, 1997.
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
6
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U.S.A. GROWTH INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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 $20,734 and the write-off of its investment in FOA of
$250,000.
NOTE 5 - CHANGES IN STOCKHOLDERS' EQUITY:
Accumulated deficit decreased by $3,222 which represents the net gain
for the three months ended October 31, 1997.
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, for $.17, one share of common stock and one Class B common
stock purchase warrant, through December 31, 1997. The Company has
reserved the right to redeem the unexercised warrants on thirty days
written notice for $.001 per warrant. Each Class B warrant entitles the
holder to purchase one share of common stock at $.25 per share,
exercisable through December 31, 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, 1997, the entire balance of $12,274 was
insured. The Company also has $391,631 in an uninsured money market
mutual fund which invests in short term U.S. government securities.
NOTE 8 - PROPOSED MERGER:
On July 1, 1997, the Company entered into an agreement with World Wide
Web Casinos, Inc. (WWWC), whereby the Company and WWWC would merge with
and into WWWC Acquisition Corporation, the surviving corporation, in a
tax free merger. The Agreement provides that the Company's Class A
warrants are to be exchanged ultimately for shares in WWWC Acquisition
7
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Corporation and that the exercise date for the warrants, formerly
August 16, 1997 is to be extended to a mutually acceptable date. The
Board of Directors voted, on August 15, 1997 to extend the exercise date
for the Class A warrants to December 31, 1997. The agreement shall
become effective when the parties involved have satisfied all conditions
therein.
8
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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 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 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.
On July 1, 1997, the Company entered into an agreement with World Wide Web
Casinos, Inc. (WWWC), whereby the Company and WWWC would merge with and into
WWWC Acquisition Corporation, the surviving corporation, in a tax free merger.
The Agreement provides that the Company's Class A warrants are to be exchanged
ultimately for shares in WWWC Acquisition Corporation and that the exercise date
for the warrants, formerly August 16, 1997 is to be extended to a mutually
acceptable date. The Board of Directors voted, on August 15, 1997 to extend the
exercise date for the Class A warrants to December 31, 1997. The agreement shall
become effective when the parties involved have satisfied all conditions
therein.
Results of Operations
The Company is a development stage company and as of October 31, 1997 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, 1997 the Company's cash balance was $12,294 of which $12,294 is insured by
the FDIC. The remaining funds of $391,631 is invested in uninsured money market
mutual funds which invests in government securities. The Company had a net gain
of $3,222 for the three months ended October 31, 1997 as compared to a net gain
of $2,845 for the three months ended October 31, 1997.
Selling, general and administrative expenses during the three months
ended October 31, 1997 were $1,482, as compared to $1,570 for the three months
ended October 31, 1996, a decrease of $88. Selling, general and administrative
expenses, primarily consisted of professional (legal and accounting), transfer
agent and filing fees and expenses related to investigating business
opportunities.
9
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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, 1997,
the Company had working capital of $404,005. The Company had a current ratio of
193 to 1 at October 31, 1997. Stockholders equity increased from $399,113 for
the fiscal year ended July 31, 1996 to $402,335 for the nine months ended
October 31, 1997, which represents a net gain of $3,222 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.
10
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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 19, 1997
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.
11
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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> 4-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-01-1997
<PERIOD-END> OCT-31-1997
<CASH> 404,005
<SECURITIES> 0
<RECEIVABLES> 1,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 405,005
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 405,005
<CURRENT-LIABILITIES> 2,670
<BONDS> 0
0
0
<COMMON> 10,970,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 405,005
<SALES> 0
<TOTAL-REVENUES> 5,204
<CGS> 0
<TOTAL-COSTS> 1,482
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 500
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,222
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
