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, 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 January 31, 1999, is 11,100,000 shares.
1
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U.S.A. GROWTH INC.
INDEX
Page No.
PART 1 - FINANCIAL INFORMATION:
Item 1 - Financial Information
Balance Sheet - January 31, 1999
(unaudited) 3
Statements of Operations -
Six Months Ended January 31, 1999 4
and 1998 and Cumulative From August 14,
1987 (Date of Inception) to January 31,
1999
Statements of Operations -
Three Months Ended January 31, 1999 5
and 1998 and Cumulative From August 14,
1987 (Date of Inception) to January 31,
1999
Statements of Cash Flows -
Three months ended January 31, 1998
and 1999 Cumulative August 14, 1987 (Date
Of Inception) to January 31, 1999 6
Statements of Cash Flows -
Six months ended January 31, 1998
and 1999 Cumulative August 14, 1987 (Date
Of Inception) to January 31, 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
January 31, 1999
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $412,062
Income taxes receivable 1,150
-----------
total current assets $413,212
LIABILITY AND STOCKHOLDERS 'EQUITY
CURRENT LIABILITY, accounts payable $4,450
STOCKHOLDERS' EQUITY:
Common stock, par value $.001 per share,
authorized 100,000,000 shares, issued
10,970,000 shares $11,100
Capital in excess of par value 723,243
Deficit accumulated during development stage (325,581)
---------
Total stockholders' equity 408,762
-------
$413,212
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 Six Months Ended January 31,
January 31, 1999 1999 1998
INTEREST AND DIVIDEND INCOME $ 242,622 $ 9,676 $10,398
EXPENSES:
Selling, general and
administrative expenses 282,365 $ 3,069 $ 3,683
Expenses incurred as a result
of rescinded investment 270,734
553,099 3,069 3,683
INCOME (LOSS) BEFORE
TAXES (310,477) 6,607 6,715
INCOME TAXES:
Federal 3,739
State 11,365 500
15,104 500
NET INCOME (LOSS) (325,581) 6,607 6,215
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 10,970,000
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 Three Months Ended January 31,
January 31, 1999 1999 1998
INTEREST AND DIVIDEND INCOME $ 242,622 $ 4,637 $5,194
EXPENSES:
Selling, general and
administrative expenses 282,365 $ 1,246 $ 2,201
Expenses incurred as a result
of rescinded investment 270,734
553,099 1,246 2,201
INCOME (LOSS) BEFORE
TAXES (310,477) 3,391 2,993
INCOME TAXES:
Federal 3,739
State 11,365
15,104
NET INCOME (LOSS) (325,581) 3,391 2,993
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 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
Cumulative
August 14, 1987
(Date of Inception)
to Three Months Ended January 31,
January 31, 1999 1999 1998
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(325,581) $3,391 $2,993
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 4,229
Total adjustments 13,700
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (311,881) 3,391 2,993
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from
sales of common stock 723,943
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 412,062 3,391 2,993
CASH AND CASH EQUIVALENTS,
beginning of period 408,671 404,005
CASH AND CASH EQUIVALENTS,
end of period 412,062 412,062 406,998
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $20,987
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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 Six months Ended January 31,
January 31, 1999 1999 1998
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Income (loss) $(325,581) $6,607 $6,215
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 4,229
Total adjustments 13,700
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (311,881) 6,607 6,215
NET CASH PROVIDED BY FINANCING
ACTIVITIES, net proceeds from
sales of common stock 723,943
NET INCREASE (DECREASE)
IN CASH
AND CASH EQUIVALENTS 412,062 6,607 6,215
CASH AND CASH EQUIVALENTS,
beginning of period 405,455 400,783
CASH AND CASH EQUIVALENTS,
end of period 412,062 412,062 406,998
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION, cash paid for
income taxes $20,987 500
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 January 31, 1999 and the results of operations
and cash flows for the three and six months ended January 31, 1999 and
1998 and from the date of inception to January 31, 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 six months ended January 31,
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 January 31, 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 January 31, 1999.
NOTE 4 - CHANGES IN STOCKHOLDERS' EQUITY:
Accumulated deficit decreased by $3,391 which represents the net gain
for the three months ended January 31, 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 January 31, 1999, the
entire balance of $20,364 was insured. The Company also has
$391,598 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.
Results of Operations
The Company is a development stage company and as of January 31,
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 January 31, 1999 the
Company's cash balance was $20,364 of which $20,364 is insured by the
FDIC. The remaining funds of $391,598 is invested in uninsured money
market mutual funds which invests in government securities. The Company
had a net gain of $3,391 for the three months ended January 31, 1999 as
compared to a net gain of $2,993 for the three months ended January 31,
1998.
Selling, general and administrative expenses during the three
months ended January 31, 1999 were $1,246 as compared to $2,201 for the
three months ended January 31, 1998, a decrease of $955. 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, 1999, the Company had working capital of $412,062. The Company had a
current ratio of 92 to 1 at January 31, 1999. Stockholders equity
increased from $402,155 for the fiscal year ended July 31, 1998 to
$408,762 for the six months ended January 31, 1999, which represents a
net gain of $6,607 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.
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: March 11, 1999
U.S.A. GROWTH INC.
By:_____________________
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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<LEGEND>
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> NOV-01-1998
<PERIOD-END> JAN-31-1999
<CASH> 412,062
<SECURITIES> 0
<RECEIVABLES> 1,150
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 413,212
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 413,212
<CURRENT-LIABILITIES> 4,450
<BONDS> 0
0
0
<COMMON> 11,100,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 413,212
<SALES> 0
<TOTAL-REVENUES> 4,637
<CGS> 0
<TOTAL-COSTS> 1,246
<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> 3,391
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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