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, 1999
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, 1999, is 11,100,000 shares.
1
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U.S.A. GROWTH INC.
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INDEX
Page No.
PART 1 - FINANCIAL INFORMATION:
Item 1 - Financial Information
Balance Sheet - April 30, 1999
(unaudited) 3
Statements of Operations -
Three Months Ended April 30, 1999 4
and 1998 and Cumulative From August 14,
1987 (Date of Inception) to April 30,
1999
Statements of Operations -
Nine Months Ended April 30, 1999 5
and 1998 and Cumulative From August 14,
1987 (Date of Inception) to April 30,
1999
Statements of Cash Flows -
Three months ended April 30, 1998
and 1999 Cumulative August 14, 1987 (Date
Of Inception) to April 30, 1999 6
Statements of Cash Flows -
Nine months ended April 30, 1998
and 1999 Cumulative August 14, 1987 (Date
Of Inception) to April 30, 1999 7
Notes to Financial Statements 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10
2
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
April 30, 1999
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $405,068
Income taxes receivable 1,150
total current assets $406,218
LIABILITY AND STOCKHOLDERS 'EQUITY
CURRENT LIABILITY, accounts payable $ 0
STOCKHOLDERS' EQUITY:
Common stock, par value $.001 per share,
authorized 100,000,000 shares, issued
11,100,000 shares $11,100
Capital in excess of par value 723,243
Deficit accumulated during development stage (328,125)
Total stockholders' equity 406,218
$406,218
3
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U.S.A. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(Unaudited)
Cumulative
August 14, 1987
(Date of Inception)
to Three Months Ended April 30,
April 30, 1999 1999 1998
INTEREST AND DIVIDEND INCOME $ 247,121 $ 4,499 $ 5,149
EXPENSES:
Selling, general and
administrative expenses 289,408 $ 7,043 $21,029
Expenses incurred as a result
of rescinded investment 270,734
560,142 7,043 21,029
INCOME (LOSS) BEFORE
TAXES (313,021) (2,544) (15,880)
INCOME TAXES:
Federal 3,739
State 11,365
15,104
NET INCOME (LOSS) (328,125) (2,544) (15,880)
NET INCOME (LOSS) PER SHARE
OF COMMON STOCK NIL NIL NIL
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING DURING THE
PERIOD 11,100,000 11,100,000
4
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U.S.A. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
(Unaudited)
Cumulative
August 14, 1987
(Date of Inception)
to Nine Months Ended April 30,
April 30, 1999 1999 1998
INTEREST AND DIVIDEND INCOME $ 247,121 $14,175 $15,547
EXPENSES:
Selling, general and
administrative expenses 289,408 $10,112 $24,712
Expenses incurred as a result
of rescinded investment 270,734
560,142 10,112 24,712
INCOME (LOSS) BEFORE
TAXES (313,021) 4,063 (9,165)
INCOME TAXES:
Federal 3,739
State 11,365 500
15,104 500
NET INCOME (LOSS) (328,125) 4,063 (9,665)
NET INCOME (LOSS) PER SHARE
OF COMMON STOCK NIL NIL NIL
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING DURING THE
PERIOD 11,100,000 11,100,000
5
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
Cumulative
August 14, 1987
(Date of Inception)
to Three Months Ended April 30,
April 30, 1999 1999 1998
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(328,125) $(2,544) $(15,880)
Adjustments to reconcile
net income (loss) to net cash
provided by (used in) operating
activities: Common stock issued
for services 10,400
Changes in assets and
liabilities:
Increase) decrease in
income taxes receivable (929)
Increase (decrease) in
accounts payable (221) (4,450)
Total adjustments 9,250
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (318,875) (6,994) (15,880)
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from
sales of common stock 723,943 10,400
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 405,068 (6,994) (5,480)
CASH AND CASH EQUIVALENTS,
beginning of period 412,062 406,998
CASH AND CASH EQUIVALENTS,
end of period 405,068 405,068 401,518
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $ 20,396
6
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U.SA. GROWTH INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
Cumulative
August 14, 1987
(Date of Inception)
to Nine months Ended April 30,
April 30, 1999 1998 1998
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(328,125) $4,063 $(9,665)
Adjustments to reconcile
net income (loss) to net cash
provided by (used in) operating
activities: Common stock issued
for services 10,400
Changes in assets and
liabilities:
Increase) decrease in
income taxes receivable (929)
Increase (decrease) in
accounts payable (221) (4,450)
Total adjustments 9,250
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (318,875) (387) $ (9,665)
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from
sales of common stock 723,943 10,400
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 405,068 (387) 735
CASH AND CASH EQUIVALENTS,
beginning of period 405,455 400,783
CASH AND CASH EQUIVALENTS,
end of period 405,068 405,068 401,518
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $20,396 500
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 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, 1999 and the results of operations
and cash flows for the three and nine months ended April 30, 1999 and
1998 and from the date of inception to April 30, 1999. 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, 1998 .
The results of operations for the three and nine months ended April 30,
1999 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 April 30, 1999, the Company has available an unused capital loss
carry forward of $250,000 which may be applied against future capital
gains expiring in 2005 and a net operating loss carry forward of $90,000
which expires in 2008, resulting in a deferred tax asset of
approximately $286,800, which was fully reserved at April 30, 1999.
NOTE 4 - CHANGES IN STOCKHOLDERS' EQUITY:
Accumulated deficit increased by $2,544 which represents the net loss
for the three months ended April 30, 1999.
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, 1999. 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, 1999.
8
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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 April 30, 1999, the
entire balance of $8,938 was insured. The Company also has
$396,030 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
not retained any independent consultants, as the management of the
Company has established numerous contacts which, on an ongoing basis,
can lead to inquiries from potential acquisition contacts. However,
management is currently considering retaining independent consultants to
help analyze its current business strategy with a view towards
restructuring or reorganizing the Company. In the event consultants are
retained, 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.
Results of Operations
The Company is a development stage company and as of April 30,
1999 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, 1999 the
Company's cash balance was $8,938 of which $8,938 is insured by the
FDIC. The remaining funds of $396,030 is invested in uninsured money
market mutual funds which invests in government securities. The Company
had a net loss of $2,544 for the three months ended April 30, 1999 as
compared to a net loss of $15,880 for the three months ended April 30,
1998.
Selling, general and administrative expenses during the three
months ended April 30, 1999 were $7,043 as compared to $21,029 for the
three months ended April 30, 1998, a decrease of $13,986. 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, 1999, the Company had working capital of $405,068. The Company had
no liabilities as of April 30, 1999. Stockholders equity increased from
$402,155 for the fiscal year ended July 31, 1998 to $406,218 for the
nine months ended April 30, 1999, which represents a net gain of $4,063
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.
The Company's operations are not effected by the Y2K problem.
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: June 16, 1999
U.S.A. GROWTH INC.
By:/s/ Robert Scher
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
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-QSB AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> APR-30-1999
<CASH> 405,068
<SECURITIES> 0
<RECEIVABLES> 1,150
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 406,218
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 406,218
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 11,100,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 406,218
<SALES> 0
<TOTAL-REVENUES> 4,499
<CGS> 0
<TOTAL-COSTS> 7,043
<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> (2,544)
<EPS-BASIC> 0
<EPS-DILUTED> 0
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