UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
________________________________
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2015
Commission file number 0-19041
USA
EQUITIES CORP.
(Exact Name Of Registrant
As Specified In Its Charter)
| Delaware | 11-2655906 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
| 79 East Putnam Ave, Greenwich, CT | 06830 |
| (Address of Principal Executive Offices) | (ZIP Code) |
Registrant's Telephone Number, Including Area Code: (212) 400-7198
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨
On November 23, 2015, the Registrant had 5,988,740 shares of common stock outstanding.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act) .
| Large accelerated filer ¨ | Accelerated filer ¨ | Non-Accelerated filer ¨ | Smaller reporting company x |
TABLE OF CONTENTS
| Item | Description | Page | |||
|---|---|---|---|---|---|
PART I - FINANCIAL INFORMATION | |||||
| ITEM 1. | FINANCIAL STATEMENTS | 3 | |||
| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION | 8 | |||
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 9 | |||
| ITEM 4. | CONTROLS AND PROCEDURES. | 10 | |||
PART II - OTHER INFORMATION | |||||
| ITEM 1. | LEGAL PROCEEDINGS | 10 | |||
| ITEM 1A. | RISK FACTORS | 10 | |||
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 10 | |||
| ITEM 3. | DEFAULT UPON SENIOR SECURITIES | 10 | |||
| ITEM 4. | MINE SAFETY DISCLOSURE | 10 | |||
| ITEM 5. | OTHER INFORMATION | 10 | |||
| ITEM 6. | EXHIBITS | 10 | |||
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS Back to Table of Contents
| Consolidated Balance Sheets | 3 |
| Consolidated Statements of Operations | 4 |
| Consolidated Statements of Cash Flows | 5 |
| Notes to Unaudited Interim Consolidated Financial Statements | 6 |
| USA Equities Corp. | ||||
| (f/k/a American Biogenetic Sciences, Inc.) | ||||
| Consolidated Balance Sheets | ||||
| As of September 30, 2015 and December 31, 2014 | ||||
| Back to Table of Contents | ||||
| September 30, 2015 | December 31, 2014 | |||
| (Unaudited) | (Audited) | |||
| Assets | ||||
| Total Assets | $ | - | $ | - |
Liabilities and Stockholders' Deficit | ||||
| Current Liabilities: | ||||
| Accounts payable - trade | $ | 11,170 | $ | 12,800 |
| Accrued expenses | 58,916 | 50,310 | ||
| Advances from and accruals due to related party | 50,480 | 18,375 | ||
| Convertible notes payable to related party | 329,181 | 331,681 | ||
| Total current liabilities | 449,747 | 413,166 | ||
| Total liabilities | 449,747 | 413,166 | ||
| Stockholders' Deficit: | ||||
| Preferred stock, 10,000,000 shares authorized, $0.0001 par value; | ||||
| none issued and outstanding | - | - | ||
| Common stock, 900,000,000 shares authorized, $0.0001 par value; | ||||
| 5,988,740 and 1,088,740 shares issued and outstanding at Sept. 30, 2015 and Dec. 31, 2014 | 599 | 109 | ||
| Additional paid-in capital | 1,368,701 | 46,191 | ||
| Common stock subscriptions receivable | (648,000) | - | ||
| Accumulated deficit | (1,171,047) | (459,466) | ||
| Total stockholders' deficit | (449,747) | (413,166) | ||
| Total liabilities and stockholders' Equity (Deficit) | $ | - | $ | - |
| See accompanying notes to unaudited interim consolidated financial statements. | ||||
| USA Equities Corp. | ||||||||
| (f/k/a American Biogenetic Sciences, Inc.) | ||||||||
| Consolidated Statements of Operations | ||||||||
| For the Three and Nine Months Ended September 30, 2015 and 2014 | ||||||||
| (Unaudited) | ||||||||
| Back to Table of Contents | ||||||||
| Three Months | Three Months | Nine Months | Nine Months | |||||
| Ended | Ended | Ended | Ended | |||||
| September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | |||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||
| Revenue | $ | - | $ | - | $ | - | $ | - |
| Costs and expenses: | ||||||||
| General and administrative | 11,714 | 5,875 | 30,476 | 20,250 | ||||
| Interest expense | 2,894 | 2,904 | 8,605 | 8,646 | ||||
| Loss on conversion of debt | 672,500 | - | 672,500 | - | ||||
| Total general and administrative expenses | 687,108 | 8,779 | 711,581 | 28,896 | ||||
| Net operating loss | (687,108) | (8,779) | (711,581) | (28,896) | ||||
| Income taxes | - | - | - | - | ||||
| Net loss | $ | (687,108) | $ | (8,779) | $ | (711,581) | $ | (28,896) |
| Basic and diluted per shares amounts: | ||||||||
| Basic and diluted net loss | $ | (0.16) | $ | (0.01) | $ | (0.33) | $ | (0.03) |
| Weighted average shares outstanding: | ||||||||
| Basic and diluted | 4,337,653 | 1,088,740 | 2,183,612 | 1,088,740 | ||||
| See accompanying notes to unaudited interim consolidated financial statements. | ||||||||
| USA Equities Corp. | ||||
| (f/k/a American Biogenetic Sciences, Inc.) | ||||
| Consolidated Statements of Cash Flows | ||||
| For the Nine Months Ended September 30, 2015 and 2014 | ||||
| (Unaudited) | ||||
| Back to Table of Contents | ||||
| Nine Months | Nine Months | |||
| Ended | Ended | |||
| September 30, 2015 | September 30, 2014 | |||
| (Unaudited) | (Unaudited) | |||
| Cash flows from operating activities: | ||||
| Net loss | $ | (711,581) | $ | (28,896) |
| Adjustment required to reconcile net loss to cash used in operating activities: | ||||
| Loss realized on conversion of debt | 672,500 | - | ||
| Changes in net assets and liabilities: | ||||
| Increase in accounts payable and accrued expenses | 6,975 | 14,021 | ||
| Cash flows used in operating activities | (32,106) | (14,875) | ||
| Cash flows from financing activities: | ||||
| Proceeds of related party borrowings | 32,106 | 14,875 | ||
| Cash provided by financing activities | 32,106 | 14,875 | ||
| Change in cash | - | - | ||
| Cash - beginning of period | - | - | ||
| Cash - end of period | $ | - | $ | - |
| Supplemental cash flow information: | ||||
| Non-cash transactions: | ||||
| Debt converted to common stock | $ | 2,500 | $ | - |
| Fair value of shares issued to acquire future interest in real estate | $ | 648,000 | $ | - |
| See accompanying notes to unaudited interim consolidated financial statements. | ||||
USA Equities Corp.
(f/k/a American Biogenetic Sciences, Inc.)
Notes to Unaudited Interim
Consolidated Financial Statements
September 30, 2015
Back to
Table of Contents
Note 1. The Company
USA Equities Corp, (f/k/a American Biogenetic Sciences, Inc.) (the
"Company", "We" or the "Registrant") was incorporated in Delaware on
September 1, 1983. The Company's Board of Directors approved the name change
from American Biogenetic Sciences, Inc. to USA Equities Corp on May 29,
2015. Prior to ceasing its operations in 2002, the Company was
engaged in the research, development and production of bio-pharmaceutical
products. On September 19, 2002, the Registrant filed for bankruptcy under
the U.S. Bankruptcy Code in the U.S. Bankruptcy Court Eastern District of
New York. On November 4, 2005, the Company emerged from Bankruptcy Court. On
August 13, 2010, the Company's sole officer/director transferred and
assigned his control stock position to an unrelated third party but remained
as the Company's sole executive officer/director. On April 14, 2015, the
Company incorporated a wholly-owned subsidiary in Delaware (USA Equities
Trust, Inc.) for the purpose of acquiring real estate.
Note 2. Going Concern
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The Company has incurred losses,
has negative operational cash flows and has no revenues. The future of the
Company is dependent upon Management's success in its efforts and limited
resources to pursue and effect a business combination. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. These financial statements do not include any adjustments that
might arise from this uncertainty.
Note 3. Basis of Presentation
The Financial Statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States of
America. In the opinion of management, the accompanying unaudited financial
statements include all adjustments, consisting of only normal recurring
accruals, necessary for a fair statement of financial position, results of
operations, and cash flows. The information included in this Quarterly
Report on Form 10-Q should be read in conjunction with the financial
statements and the accompanying notes included in our Annual Report on Form
10-K for the year ended December 31, 2014. The accounting policies are
described in the "Notes to the Financial Statements" in the 2014 Annual
Report on Form 10-K and updated, as necessary, in this Form 10-Q. The
year-end balance sheet data presented for comparative purposes was derived
from audited financial statements, but does not include all disclosures
required by accounting principles generally accepted in the United States.
The results of operations for the three and nine-months ended September 30,
2015 are not necessarily indicative of the operating results for the full
year or for any other subsequent interim period.
Accounting Policies
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statement and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the estimates.
Principles of Consolidation: The consolidated financial statements include the accounts of USA Equities Corp and as of April 14, 2015 and the accounts of its wholly owned subsidiary USA Equities Trust, Inc. All significant inter-company balances and transactions have been eliminated.
Principles of Consolidation: The consolidated financial statements include the accounts of USA Equities Corp and as of April 14, 2015 and the accounts of its wholly owned subsidiary USA Equities Trust, Inc. All significant inter-company balances and transactions have been eliminated.
Cash and Cash Equivalents
For financial statement presentation purposes, the Company considers those
short-term, highly liquid investments with original maturities of three
months or less to be cash or cash equivalents.
Fair Value of Financial Instruments
ASC #825, "Disclosures about Fair Value of Financial Instruments," requires
disclosure of fair value information about financial instruments. Fair value
estimates discussed herein are based upon certain market assumptions and
pertinent information available to management as of September 30, 2015.
These financial instruments include accounts payable and accrued expenses.
Fair values were assumed to approximate carrying values for these financial
instruments since they are short-term in nature and their carrying amounts
approximate fair values.
Earnings per Common Share
Basic net loss per share is computed using the weighted average number of
common shares outstanding during the period. Diluted net loss per common
share is computed using the weighted average number of common and dilutive
equivalent shares outstanding during the period. Dilutive common equivalent
shares consist of options to purchase common stock (only if those options
are exercisable and at prices below the average share price for the period)
and shares issuable upon the conversion of issued and outstanding preferred
stock. Due to the net losses reported, dilutive common equivalent shares
were excluded from the computation of diluted loss per share, as inclusion
would be anti-dilutive for the periods presented. There were no common
equivalent shares required to be added to the basic weighted average shares
outstanding to arrive at diluted weighted average shares outstanding as of
September 30, 2015 or 2014.
Income Taxes
The Company accounts for income taxes in accordance with ASC #740,
"Accounting for Income Taxes," which requires recognition of estimated
income taxes payable or refundable on income tax returns for the current
year and for the estimated future tax effect attributable to temporary
differences and carry-forwards. Measurement of deferred income tax is based
on enacted tax laws including tax rates, with the measurement of deferred
income tax assets being reduced by available tax benefits not expected to be
realized.
ASC 740 also clarifies the accounting for uncertainty in tax positions. This
guidance prescribes a two-step process to determine the amount of tax
benefit to be recognized. First, the tax position must be evaluated to
determine the likelihood that it will be sustained upon external
examination. If the tax position is deemed "more-likely-than-not" to be
sustained, the tax position is then assessed to determine the amount of
benefit to recognize in the financial statements. The amount of the benefit
that may be recognized is the largest amount that has a greater than 50%
likelihood of being realized upon ultimate settlement. There are no
uncertain tax positions taken by the Company on its tax returns. Tax years
subsequent to 2005 remain open to examination by U.S. federal and state tax
jurisdictions.
Management of the Company is not aware of any additional needed liability
for unrecognized tax benefits at September 30, 2015 and December 31, 2014.
The Company has net operating losses of about $499,000, which begin to
expire in 2026.
Impact of Recently Issued Accounting Standards
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties
about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"), an
amendment to FASB Accounting Standards Codification ("ASC") Topic
205, Presentation of Financial Statements. This update provides guidance on
management's responsibility in evaluating whether there is substantial doubt
about an entity's ability to continue as a going concern and to provide
related footnote disclosures. This ASU 2014-15 is effective for annual
periods ending after December 15, 2016, and for annual and interim periods
thereafter. Early adoption is permitted. The Company provides the
disclosures required by ASU 2014-15.
There were no other new accounting pronouncements that had a significant
impact on the Company's operating results or financial position.
Note 4. Stockholders Equity
Recent Issuances
Common shares issued to acquire future interest in real estate
On July 31, 2015, the Company through its Delaware wholly-owned subsidiary,
USA Equities Trust, Inc., entered into an Asset Purchase Agreement with an
unaffiliated third party, Green US Builders, Inc. (the "Seller"), a Delaware corporation
for the purchase of a mixed-used investment property located in Bridgeport,
consisting of five retail stores and five apartments. At the end of October,
the parties decided to rescind the transaction because of the inability to
fulfill certain representations regarding the status of the property. The
Seller, who was issued 2.4 million shares in consideration for the asset, is
negotiating with the Company to replace the asset with a property of equal
value. The shares were valued at $0.27 per share or $648,000, the closing
bid at July 31, 2015. The shares have been carried as a common stock
subscription receivable at September 30, 2015.
Common shares issued on conversion of debt
On July 31, 2015, our CFO and control shareholder converted $2,500 in
principal amount of the $76,000 note into 2,500,000 restricted shares of common
stock. The Company recorded a loss on conversion of $672,500 during the
three month ended September 30, 2015 in relation to the conversion of the
$2,500 in principal amount. See also Note 5.
Note 5. Convertible Notes to Related Party
On October 2, 2009, we issued a convertible promissory note in the amount of
$76,000 to our sole officer/director. The note bears interest at the rate of
12% per annum until paid or the note and accrued interest is converted into
shares of the Company's common stock at a conversion price of $0.001. The
convertible note was issued in consideration of cash advances made and for
services provided to the Company by the sole officer/director, who was also
the Company's controlling shareholder. On August 13, 2010, the Company's
sole officer/director transferred and assigned his controlling stock
position to an unrelated third party but remained as the Company's sole
executive officer/director. In connection with the August 2010 change in
control, the convertible note payable to sole officer/director together with
accrued interest was also verbally assigned to the new controlling
shareholder. A written agreement was entered into between the Company and
the controlling shareholder on December 31, 2013 to assign the $76,000
convertible promissory note to the controlling shareholder. On July 31,
2015, our CFO and control shareholder converted $2,500 in principal amount
of this note into 2,500,000 restricted shares of common stock. The Company
recorded a loss on conversion of $672,500 during the three month ended
September 30, 2015 in relation to the conversion of the $2,500 in principal
amount.
On December 31, 2013, we issued a convertible promissory note in the amount
of $255,681 to our controlling shareholder. The note bears interest at the
rate of 1% per annum until paid or the note and accrued interest is
converted into shares of the Company's common stock at a conversion price of
$0.25 per share. The Company does not expect to record an expense related to
the difference between fair market price of its common stock and conversion
price of this note during the quarter due to the lack of marketability of
its common stock. The Company believes that the conversion of $0.25
presently represents the fair market value of its common stock. The note was
issued in consideration of cash advances made and for services provided to
the Company by its former sole officer/director and an entity controlled by
our sole officer/director, who was also the Company's previous controlling
shareholder.
In accordance Accounting Standard Codification ("ASC #815"), "Accounting for
Derivative Instruments and Hedging Activities", we evaluated the holder's
non-detachable conversion right provision and liquidated damages clause,
contained in the terms governing the note to determine whether the features
qualify as an embedded derivative instruments at issuance. Such
non-detachable conversion right provision and liquidated damages clause did
not need to be accounted as derivative financial instruments.
Note 6. Related Party Transactions
Fair value of services
An entity controlled by the Company's former CEO provided corporate
securities compliance services to the Company valued at $10,500 during the
nine months ended September 30, 2015, which was recorded as accrued expenses
and is reflected in the statement of operations as general and
administrative expenses.
An entity controlled by the Company's former CEO provided corporate
securities compliance services to the Company valued at $10,000 during the
nine-month period ended September 30, 2014, which was recorded as accrued
expenses and is reflected in the statement of operations as general and
administrative expenses.
Due Related Parties
Amounts due to related parties consist of cash advances received from our
controlling shareholder. Such items due totaled $50,480 at September 30,
2015 and $18,375 at December 31, 2014.
Note 7. Commitments and Contingencies
There are no pending or threatened legal proceedings as of September 30,
2015. The Company has no non-cancellable operating leases.
Note 8. Subsequent Event
At the end of October, the Company agreed to rescind the Asset Purchase
Agreement entered with Green US Builders, Inc. (the Seller) because of the
inability to fulfill certain representations made regarding the status of
the property. The Seller, who was issued 2.4 million shares in consideration
for the asset, is negotiating with the company to replace the asset with a
property of equal value. The shares were valued at $0.27 per share or
$648,000, the closing bid at July 31, 2015. The shares have been carried as
a common stock subscription receivable at September 30, 2015.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS