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, 1997
[ ] 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 10-KSB . [x]
Issuer's revenues for its most recent fiscal year are
$19,824.
The aggregate market value of the 10,870,000 shares of Common
Stock held by non-affiliates of the Company as of October 20, 1997 is
$2,717,500.
The number of shares of Common Stock, par value $.001 per
share, outstanding as of October 20, 1997, 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. On July 1, 1997 the Company entered into an Agreement
and Plan of Merger with World Wide Web Casinos, Inc.("WWWC"). WWWC is a Nevada
corporation with principal offices located at 200 East Sandpointe Avenue, Santa
Ana, California 92707. Its phone number is 714-513-2060. WWWC has acquired and
is developing rights to gaming software for the World Wide Web segment of the
Internet. Through its international casinos WWWC will offer the Internet player
a 3-Dimensional, virtual reality gaming experience in Cyberspace. The players
will walk through the on-line casino selecting one game and then another, the
experience made all the more realistic through the use of intensely graphic
images. The casino ambiance is further enhanced by the use of live audio and
translation of many languages in real time, providing the player with sight,
sound and a sense of actually being in the casino. The player will also receive
the same betting odds that they would at a casino in Las Vegas, Nevada.
The Merger Agreement provides that, subject to the
satisfaction or waiver (where permissible) of certain conditions: (i) the
Company will merge with a newly organized corporation (the "Corporation") which
will acquire all of the Company's assets, subject to all of its liabilities, in
exchange for shares (on a fully diluted basis) of the Corporation's Common
Stock; (ii) WWWC will merge with the Corporation, which will acquire all of
WWWC's assets, subject to all of it liabilities, in exchange for shares of the
Corporation's Common Stock. As a result of the Merger, the holders of both the
Company and WWWC Common Stock will become holders of the Corporation's Common
Stock, whereby on a fully diluted basis, USA Shareholder's will own 6% of the
new Corporation shares and WWWC shareholders will own 94% of the new
Corporation's shares. Accordingly, their rights will be governed by the
Corporation's Certificate of Incorporation and By-Laws. No date has
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been set for the consummation of the Merger.
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
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
Fiscal 1997
Quarter ended July 31, 1997 .83 .43
Quarter ended April 30, 1997 1.25 .04
Quarter ended January 31, 1997 .05 .04
Quarter ended October 31, 1996 .05 .03
</TABLE>
The foregoing price quotations have been reported on the NASD
OTC Bulletin Board. Such quotations represent inter-dealer prices, without
retail mark-up, markdown or commission and may not represent actual
transactions. There has been a limited trading market for the Company's
securities.
(b) The number of record holders of the Common Stock as of
August 6, 1997 was 78. The Company believes that there are over 1,200 beneficial
owners of shares of its Common Stock, based upon indications 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
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condition, as well as other relevant factors.
Item 6. Management's Discussion and Analysis or Plan of Operation
Results of Operations
The Company is a development stage company and as of July 31,
1997 had not generated any operating revenue.
The Company's only source of revenue since inception has been
certificate of deposit and money market bank account interest income and
dividends from money market mutual funds. The money market funds had a yield for
Fiscal 1997 and 1996 of 2%-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, 1997, the Company's
cash balance was $14,176, of which $14,176 was insured by the FDIC. The
remaining funds of $386,607 is invested in uninsured money market mutual funds
which invests in government securities. The Company's revenues increased in 1997
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 1997 and
1996 were $10,563 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.
Liquidity and Capital Resources
The Company has had no material operations and as of July 31,
1997, the Company had working capital of $399,113. 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
attempt to 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, 1997, and related statements of operations,
stockholders' equity, and cash flows for the years ended July 31, 1997 and 1996,
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.
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Item 8. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure
None
PART III
Item 9. Directors and Executive Officers
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
The directors and officers of the Company are as follows:
Name Age Position
Robert Scher 55 Chairman of the
Board of Directors,
President and
Treasurer
J. Peter Hans 52 Secretary and Director
</TABLE>
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 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 most recently as 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.
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 two occasions.
The term of office of each director is one year or until his
successor is elected at the Company's annual meeting and
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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.
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name and Address Number of Shares Owned Percent
J. Peter Hans 100,000 *
110-50 71st Road
Forest Hills, NY 11375
All Directors and 100,000 *
Officers as a group
(three persons)
</TABLE>
*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.
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Item 12. Certain Relationships and Related Transactions
None.
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits have previously been filed on Form 10-K
for the year ended July 31, 1996 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 1997.
8
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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, 1997 and the related statements of
operations, stockholders' equity, and cash flows for the cumulative period
August 14, 1987 (date of inception) to July 31, 1997 and for the years ended
July 31, 1997 and 1996. 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, 1997 and the results of its operations
and its cash flows for the cumulative period August 14, 1987 (date of inception)
to July 31, 1997 and for the years ended July 31, 1997 and 1996 in conformity
with generally accepted accounting principles.
ROTHSTEIN, KASS & COMPANY, P.C.
Roseland, New Jersey
September 30, 1997
<PAGE>
USA GROWTH INC.
(A Development Stage Company)
BALANCE SHEET
July 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Notes 2 and 6) $ 400,783
Income taxes receivable (Note 3) 1,000
----------------
Total current assets $ 401,783
================
LIABILITY AND STOCKHOLDERS' EQUITY
CURRENT LIABILITY, accounts payable $ 2,670
COMMITMENTS AND CONTINGENCIES
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 (324,830)
-----------------
Total stockholders' equity 399,113
$ 401,783
</TABLE>
See accompanying notes to financial statements.
<PAGE>
USA GROWTH INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Cumulative
August 14, 1987
(Date of Inception)
to Year Ended July 31,
-------------------------------
July 31, 1997 1997 1996
------------------------- --------------- -------------
INTEREST AND DIVIDEND INCOME $ 211,905 $ 19,824 $ 19,204
------------------------- --------------- ---------------
EXPENSES:
Selling, general and
administrative expenses 250,897 10,563 16,060
Expenses incurred as a result
of rescinded investment (Note 4) 270,734 - -
------------------------- --------------- ------------
521,631 10,563 16,060
------------------------- --------------- ---------------
INCOME (LOSS) BEFORE INCOME
TAXES (309,726) 9,261 3,144
------------------------- --------------- ---------------
INCOME TAXES:
Federal 3,739
State 11,365 1,161 407
------------------------- --------------- ---------------
15,104 1,161 407
------------------------- --------------- ---------------
NET INCOME (LOSS) $ (324,830) $ 8,100 $ 2,737
========================= =============== ===============
NET INCOME (LOSS) PER SHARE OF
COMMON STOCK $ - $ -
=============== ============
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING DURING THE
PERIOD 10,970,000 10,970,000
=============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
USA GROWTH INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
Years Ended July 31, 1996 and 1997
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Capital in During
Common Stock Excess of Development
Shares Amount Par Value Stage
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)
NET INCOME 8,100
BALANCES, July 31, 1997 10,970,000 $ 10,970 $ 712,973 $ (324,830)
================ ============== ============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
USA GROWTH INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Cumulative
August 14, 1987
(Date of Inception)
to Year Ended July 31,
-------------------------------
July 31, 1997 1997 1996
------------------------- --------------- -------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ (324,830) $ 8,100 $ 2,737
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 2,449 570 (121)
------------------------- --------------- ---------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (323,160) 8,670 2,616
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from sales of
common stock 723,943
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 400,783 8,670 2,616
CASH AND CASH EQUIVALENTS,
beginning of period 392,113 389,497
------------------------- --------------- ---------------
CASH AND CASH EQUIVALENTS,
end of period $ 400,783 $ 400,783 $ 392,113
========================= =============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $ 20,487 $ 591 $ 527
========================= =============== ===============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
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, 1997, 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 three months or
less to be cash equivalents.
Income Taxes - The Company complies with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes",
which requires an asset and liability approach to financial
accounting for reporting of income taxes. Deferred income tax
assets and liabilities are computed 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 expected 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.
NOTE 2 - CASH AND CASH EQUIVALENTS:
Cash and cash equivalents consist of money market funds with
yields of 2-5%.
NOTE 3 - INCOME TAXES:
At July 31, 1997, the Company has available an unused capital
loss carryforward of $250,000 expiring in 2004 which may be
applied against future capital gains and a net operating loss
carryforward of approximately $90,000 which expires in 2007. The
resulting deferred tax asset of approximately $136,000, and
$140,000 at July 31, 1997 and 1996, respectively, was fully
reserved.
<PAGE>
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.
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, 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 and is
exercisable through December 31, 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 institutions in
order to keep the potential risk to a minimum.
NOTE 7 - 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 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.
<PAGE>
USA GROWTH, INC.
(A DEVELOPMENT STAGE COMPANY)
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: October 30, 1997
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 October 30, 1997
- ---------------
Robert Scher of the Board of Directors
(Chief Executive Officer)
/s/ J. Peter Hans Director October 30, 1997
J. Peter Hans
