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 April 30, 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
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Page No.
PART 1 - FINANCIAL INFORMATION:
Item 1 - Financial Information
Balance Sheet - April 30, 1997
(unaudited) 3
Statements of Operations -
Three Months Ended April 30, 1997 4
and 1996 and Cumulative From August 14,
1987 (Date of Inception) to April 30,
1997 (unaudited)
Statements of Operations - 5
Nine Months ended April 30, 1997
and 1996 Cumulative August 14, 1987 (Date
of Inception) to April 30, 1997
Statements of Cash Flows -
Three Months Ended April 30, 1997
and 1996 Cumulative August 14, 1987 (Date
Of Inception) to April 30, 1997 6
Statements of Cash Flows -
Nine Months Ended April 30, 1997
and 1996 Cumulative August 14, 1987 (Date
Of Inception) to April 30, 1997 7
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
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2
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
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<CAPTION>
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BALANCE SHEET
April 30, 1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $398,415
Income taxes receivable 1,000
total current assets 399,415
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 stage (326,628)
Total stockholders' equity 397,315
$399,415
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3
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U.S.A. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(Unaudited)
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<CAPTION>
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Cumulative
August 14, 1987
(Date of Inception)
to Three Months Ended April 30,
April 30, 1997 1997 1996
INTEREST AND DIVIDEND INCOME $ 206,744 $ 4,830 $ 4,662
EXPENSES:
Selling, general and
administrative expenses 248,195 $ 1,994 $ 1,347
Expenses incurred as a result
of rescinded investment 270,734
518,929 1,994 1,347
INCOME (LOSS) BEFORE
TAXES (312,185) 2,836 3,315
INCOME TAXES:
Federal 3,739
State 10,704
14,443
NET INCOME (LOSS) (326,628) 2,836 3,315
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
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4
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(Unaudited)
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<CAPTION>
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Cumulative
August 14, 1987
(Date of Inception)
to Nine months Ended April 30,
April 30, 1997 1997 1996
INTEREST AND DIVIDEND
INCOME $ 206,744 $ 14,663 $ 14,364
EXPENSES:
Selling, general and
administrative expenses 248,195 $ 7,861 $ 13,712
Expenses incurred as a result
of rescinded investment 270,734
518,929 7,861 13,712
INCOME (LOSS) BEFORE
TAXES (312,185) 6,802 652
INCOME TAXES:
Federal 3,739
State 10,704 500 613
14,443 500 613
NET INCOME (LOSS) (326,628) 6,302 39
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
5
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
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<CAPTION>
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Cumulative
August 14, 1987
(Date of Inception)
to Three Months Ended April 30,
April 30, 1997 1997 1996
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(326,628) $2,836 $3,315
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 1,879
Total adjustments 1,100
NF-T CASH PROVIDED BY (USED fN)
OPERATING ACTIVITIES (325,528) 2,836 3,315
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from sales of
common stock 723,943
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 398,415 2,836 3,315
CASH AND CASH EQUIVALENTS,
beginning of period 395,579 386,334
CASH AND CASH EQUIVALENTS,
end of period 398,415 398,415 389,649
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $20,396
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6
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
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<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Cumulative
August 14, 1987
(Date of Inception)
to Nine Months Ended April 30,
April 30, 1997 1997 1996
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(326,628) $6,302 $39
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) 113
Increase (decrease) in
accounts payable 1,879
Total adjustments 1,100 113
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (325,528) 6,302 152
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds
from sales of common stock 723,943
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 398,415 6,302 152
CASH AND CASH EQUIVALENTS,
beginning of period 392,113 389,497
CASH AND CASH EQUIVALENTS,
end of period 398,415 398,415 389,497
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $20,396 527
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
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 April 30,
1997, and the results of operations and cash flows for the three and nine months
ended April 30, 1997 and 1996 and from the date of inception to April 30, 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,
1996 .
The results of operations for the three and nine months ended April 30, 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 funds with a yield of
3-5%.
NOTE 3 - INCOME TAXES:
At April 30, 1997, 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 $100,000 which expires in 2007,
resulting in a deferred tax asset of approximately $140,000, which was fully
reserved at April 30, 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
8
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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 $2,836 which represents the net gain for the
three months ended April 30, 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 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 April
30, 1997, the entire balance of $16,868 was insured. The Company also has
$381,547 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 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 February 27, 1997, the Company signed a Letter of Intent to acquire World
Wide web Casinos, Inc., an Internet gambling company, for common shares of the
Company. The parties are currently preparing a Definitive Merger Agreement.
Results of Operations
The Company is a development stage company and as of April 30, 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 April 30,
1997 the Company's cash balance was $16,868 of which $16,868 is insured by the
FDIC. The remaining funds of $381,547 is invested in uninsured money market
mutual funds which invests in government securities. The Company had a net gain
of $2,836 for the three months ended April 30, 1997 as compared to a net gain of
$3,315 for the three months ended April 30, 1997.
Selling, general and administrative expenses during the three months ended April
30, 1997 were $1,994, as compared to $1,347 for the three months ended April 30,
1996, an increase of $647. 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.
10
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Liquidity and Capital Resources
The Company has had no material operations and, as of April 30, 1997, the
Company had working capital of $398,415. The Company had a current ratio of 193
to 1 at April 30, 1997. Stockholders equity increased from $391,013 for the
fiscal year ended July 31, 1996 to $397,315 for the nine months ended April 30,
1997, which represents a net gain of $6,302 for the nine 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.
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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: May 14, 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.
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<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the
financial statements contiained 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> FEB-1-1997
<PERIOD-END> APR-30-1997
<CASH> 398,415
<SECURITIES> 0
<RECEIVABLES> 1,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 399,415
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 399,415
<CURRENT-LIABILITIES> 2,100
<BONDS> 0
0
0
<COMMON> 10,970,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 399,415
<SALES> 0
<TOTAL-REVENUES> 4,830
<CGS> 0
<TOTAL-COSTS> 1,994
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,836
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,836
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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</TABLE>
