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 January 31, 1998
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 January 31, 1998, is 10,970,000 shares.
1
<PAGE>
U.S.A. GROWTH INC.
INDEX
Page No.
PART 1 - FINANCIAL INFORMATION:
Item 1 - Financial Information
Balance Sheet - January 31, 1998
(unaudited) 3
Statements of Operations -
Three Months Ended January 31, 1998 4
and 1997 and Cumulative From August 14,
1987 (Date of Inception) to January 31,
1998
Statements of Cash Flows -
Three Monts Ended January 31, 1998
and 1997 Cumulative August 14, 1987 (Date
Of Inception) to January 31, 1998 6
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.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
January 31, 1998
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $406,998
Income taxes receivable 1,000
----------
total current assets $407,998
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 (318,615)
Total stockholders' equity 405,328
-------
$407,998
3
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U.S.A. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
(Unaudited)
Cumulative
August 14, 1987
(Date of Inception)
to Three Months Ended January 31,
January 31, 1998 1998 1997
INTEREST AND DIVIDEND INCOME $ 222,303 $ 5,194 $ 4,918
EXPENSES:
Selling, general and
administrative expenses 254,580 $ 2,201 $ 4,297
Expenses incurred as a result
of rescinded investment 270,734
525,314 2,201 4,297
INCOME (LOSS) BEFORE
TAXES (303,011) 2,993 621
INCOME TAXES:
Federal 3,739
State 11,865
15,604
NET INCOME (LOSS) (318,615) 2,993 621
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
4
</TABLE>
<PAGE>
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 Six Months Ended January 31,
January 31, 1998 1998 1997
INTEREST AND DIVIDEND INCOME $ 222,303 $ 10,398 $ 9,833
EXPENSES:
Selling, general and
administrative expenses 254,580 $ 3,683 $ 5,867
Expenses incurred as a result
of rescinded investment 270,734
525,314 3,683 5,867
INCOME (LOSS) BEFORE
TAXES (303,011) 6,715 3,966
INCOME TAXES:
Federal 3,739
State 11,865 500 500
15,604 500 500
NET INCOME (LOSS) (318,615) 6,215 3,466
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
</TABLE>
<PAGE>
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 January 31,
January 31, 1998 1998 1997
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(318,615) $2,993 $ 621
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 (316,945) 2,993 621
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from
sales of common stock 723,943
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 406,998 2,993 621
CASH AND CASH EQUIVALENTS,
beginning of period 404,005 394,958
CASH AND CASH EQUIVALENTS,
end of period 406,998 406,998 395,579
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $20,396
6
</TABLE>
<PAGE>
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 Six months Ended January 31,
January 31, 1998 1998 1997
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(318,615) $2,993 $ 3,446
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 (316,945) 6,215 621
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from
sales of common stock 723,943
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 406,998 6,215 3,466
CASH AND CASH EQUIVALENTS,
beginning of period 400,783 392,113
CASH AND CASH EQUIVALENTS,
end of period 406,998 406,998 395,579
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $20,396 500
7
</TABLE>
<PAGE>
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 January 31, 1998 and the results of operations
and cash flows for the three and six months ended January 31, 1998 and
1997 and from the date of inception to January 31, 1998. 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 and six months ended January 31,
1998 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 3-5%.
NOTE 3 - INCOME TAXES:
At January 31, 1998, 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 January 31, 1998.
NOTE 4 - CHANGES IN STOCKHOLDERS' EQUITY:
Accumulated deficit decreased by $2,993 which represents the net gain
for the three months ended January 31, 1998.
8
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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 through December 31, 1998. 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, 1998.
NOTE 6 - 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 January 31, 1998, the
entire balance of $10,136 was insured. The Company also has
$396,762 in an uninsured money market mutual fund which
invests in short term U.S. government securities.
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. On January 28, 1998, WWWC informed the Company that it
was still unable to provide audited financial statements which was one
of the conditions for consummating the merger agreement, and
furthermore WWWC was terminating the merger.
9
<PAGE>
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.
On January 28, 1998, WWWC informed the Company that it was still unable to
provide audited financial statements which was one of the conditions for
consummating the merger agreement, and furthermore WWWC was terminating the
merger.
Results of Operations
The Company is a development stage company and as of January 31, 1998 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 January
31, 1998 the Company's cash balance was $10,136 of which $10,136 is insured by
the FDIC. The remaining funds of $396,762 is invested in uninsured money market
mutual funds which invests in government securities. The Company had a net gain
of $2,993 for the three months ended January 31, 1998 as compared to a net gain
of $621 for the three months ended January 30, 1997.
Selling, general and administrative expenses during the three months
ended January 31, 1998 were $2,201 as compared to $4,297 for the three months
ended January 31, 1997, a decrease of $2,096. 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 January 31, 1998,
the Company had working capital of $406,998. The Company had a current ratio of
193 to 1 at January 31, 1998. Stockholders equity increased from $399,113 for
the fiscal year ended July 31, 1997 to $405,328 for the six months ended January
31, 1998, which represents a net gain of $6,215 for the six 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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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: March 12, 1998
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.
12
<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-31-1997
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 406,998
<SECURITIES> 0
<RECEIVABLES> 1,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 407,998
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 407,998
<CURRENT-LIABILITIES> 2,670
<BONDS> 0
0
0
<COMMON> 10,970,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 407,998
<SALES> 0
<TOTAL-REVENUES> 5,194
<CGS> 0
<TOTAL-COSTS> 2,201
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,993
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
