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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2004
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No.: 000-49672
USA TELCOM INTERNATIONALE
(Exact name of registrant as specified in its charter)
NEVADA 88-0408213
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1549 N. LEROY STREET, SUITE D-1000
FENTON, MI 48430
(Address of principal executive offices)
Issuer's telephone number: (810) 714-2918
-------------------
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 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___
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 10, 2004, 17,250,000 shares of our common stock were outstanding.
Transitional Small Business Disclosure Format: Yes ___ No _X_
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1
PART 1: FINANCIAL INFORMATION
ITEM 1 - CONDENSED FINANCIAL STATEMENTS
USA TELCOM INTERNATIONALE
(A NEVADA CORPORATION)
BALANCE SHEET
(UNAUDITED)
March 31,
2004
---------
ASSETS
Current assets:
Cash and equivalents $ 105,566
Prepaid expense 36,000
---------
Total current assets 141,566
---------
$ 141,566
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ --
---------
Stockholders' equity:
Common stock, $0.001 par value, 25,000,000 shares
authorized, 17,250,000 shares issued and outstanding 17,250
Additional paid-in capital 421,743
Retained earnings (297,427)
---------
141,566
---------
$ 141,566
=========
The accompanying notes are an intregal part of these financial statements.
2
USA TELCOM INTERNATIONALE
(A NEVADA CORPORATION)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
----------------------------
2004 2003
----------- -----------
Revenue $ -- $ --
----------- -----------
Expenses:
General and administrative expenses 29,239 19,488
----------- -----------
Total expenses 29,239 19,488
----------- -----------
Other income (expense):
Interest income -- 32,038
Interest (expense) (50) --
(Loss) on the sale of assets - related party (290,769) --
----------- -----------
Total other income (expense) (290,819) 32,038
----------- -----------
Net income (loss) $ (320,058) $ 12,550
=========== ===========
Weighted average number of
common shares outstanding - basic and fully diluted 6,127,778 4,250,000
=========== ===========
Net income (loss) per share - basic and fully diluted $ (0.05) $ 0.00
=========== ===========
The accompanying notes are an integral part of these financial statements.
3
USA TELCOM INTERNATIONALE
(A NEVADA CORPORATION)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
-----------------------
2004 2003
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(320,058) $ 12,550
Adjustments to reconcile net income (loss) to net cash (used) by
operating activities:
Depreciation -- 43
Loss on the sale of assets - related party 290,769 --
Changes in operating assets and liabilities:
(Decrease) increase in accrued and other liabilities (15,508) 13,680
--------- ---------
Net cash provided (used) by operating activities (44,797) 26,273
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of assets - related party 10,300 --
Cash outlay for note receivable -- (203,888)
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Net cash provided (used) by investing activities 10,300 (203,888)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 260,000 --
Decrease (increase) in loan payable - related party (84,052) 1,650
--------- ---------
Net cash provided by financing activities 175,948 1,650
--------- ---------
Net increase (decrease) in cash and equivalents 141,451 (175,965)
Cash and equivalents - beginning 115 176,354
--------- ---------
Cash and equivalents - ending $ 141,566 $ 389
========= =========
Supplemental disclosures:
Interest paid $ 50 $ --
========= =========
Income taxes paid $ 5,828 $ --
========= =========
The accompanying notes are an integral part of these financial statements.
4
USA TELCOM INTERNATIONALE
(A NEVADA CORPORATION)
NOTES
NOTE 1 - BASIS OF PRESENTATION
The consolidated interim financial statements included herein, presented in
accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by the Company, without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the information
presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
consolidated interim financial statements be read in conjunction with the
financial statements of the Company for the year ended December 31, 2003 and
notes thereto included in the Company's 10-KSB annual report. The Company
follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual
results.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has had a change in control and has changed its
business plan and it has not generated any revenues. The future of the Company
is dependent upon its ability to obtain financing and upon future profitable
operations from the development of its new business opportunities. Management
plans to research possible acquisitions of various entities and an officer of
the Company has agreed to loan the Company funds as needed to sustain business
for a period of twelve months. However, the Company is dependent upon its
ability to secure equity and/or debt financing and there are no assurances that
the Company will be successful, without sufficient financing it would be
unlikely for the Company to continue as a going concern.
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 - STOCKHOLDERS' EQUITY
The Company is authorized to issue 25,000,000 shares of its $0.001 par value
common stock.
On March 19, 2004, the Company issued a total of 13,000,000 shares of its $0.001
par value common stock in exchange for cash of $260,000 to an officer and
director of the Company.
As of March 31, 2004, there have been no other issuances of common stock.
NOTE 4 - CONTRACTS AND AGREEMENTS
On March 19, 2004, the Company executed a consulting agreement for a period of
nine months with the AMVI 1st Corporation (AMVI), a company owned and controlled
by the Company's former officer and director. The total compensation of the
contract is $141,516. The first payment of $36,000 was due upon execution of
this agreement. The second payment of $36,000 is due April 1, 2004. The third
payment of $36,000 is due July 1, 2004. The fourth payment of $33,516 is due
October 1, 2004. During the three month period ended March 31, 2004, the Company
paid $36,000 to AMVI and as of March 31, 2004 there is $36,000 in prepaid
expense.
5
USA TELCOM INTERNATIONALE
(A NEVADA CORPORATION)
NOTES
NOTE 5 - RELATED PARTY TRANSACTIONS
On March 23, 2004, the Company sold its assets totaling $301,069 to AMVI, a
company owned and controlled by the Company's former officer and director, for
cash of $10,300 to which this transaction is not considered an arm's length
transaction since it is a related party transaction. The Company's assets
consisted of marketable securities valued at $500, computer equipment valued at
$569 and a note receivable of $300,000. Accordingly, the Company recorded a loss
on the sale of assets of $290,769 on the accompanying statements of operations
for the three months ended March 31, 2004.
The Company does not lease or rent any property. Office space and services are
provided without charge by an officer and director. Such costs are immaterial to
the financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.
6
ITEM 2 - PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction
with our unaudited consolidated condensed financial statements and related notes
included in this report. This report contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. The
statements contained in this report that are not historic in nature,
particularly those that utilize terminology such as "may," "will," "should,"
"expects," "anticipates," "estimates," "believes," or "plans" or comparable
terminology are forward-looking statements based on current expectations and
assumptions.
Various risks and uncertainties could cause actual results to differ
materially from those expressed in forward-looking statements. All
forward-looking statements in this document are based on information currently
available to us as of the date of this report, and we assume no obligation to
update any forward-looking statements. Forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements.
The following discussion and analysis should be read in conjunction
with our unaudited condensed financial statements and related notes included in
this report. This report contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The statements
contained in this report that are not historic in nature, particularly those
that utilize terminology such as "may," "will," "should," "expects,"
"anticipates," "estimates," "believes," or "plans" or comparable terminology are
forward-looking statements based on current expectations and assumptions.
Various risks and uncertainties could cause actual results to differ
materially from those expressed in forward-looking statements. All
forward-looking statements in this document are based on information currently
available to us as of the date of this report, and we assume no obligation to
update any forward-looking statements. Forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements.
GENERAL
On March 19, 2004, USA Telcom Internationale issued 13,000,000 shares
of common stock to Robert C. Simpson for a purchase price of $260,000.00. Dr.
Simpson paid the purchase price for these shares from personal funds for these
shares. The 13,000,000 shares constitute approximately seventy-five percent
(75%) of the issued and outstanding shares of common stock of USA Telcom. Before
this issuance, Mr. Allen Jones was the controlling stockholder of USA Telcom.
After this acquisition, Dr. Simpson and George Peterman were appointed to the
board of directors of USA Telcom, and Dr. Simpson was named its President, Chief
Financial Officer, and Secretary.
In connection with this change of control, USA Telcom has retained
AMVI, a company controlled by Allen E. Jones, the former sole officer and
director of USA Telcom, as a consultant. Under the terms of the consulting
agreement, AMVI will receive a total of $141,516 from March 19, 2004 through
October 1, 2004, payable in four installments.
In addition, in connection with this change of control, USA Telcom sold
the following assets to AMVI for $10,300: 5,000 shares of common stock of an
unrelated corporation, certain computer equipment, and a note receivable in the
principal amount of $300,000.
Dr. Simpson acquired the shares from USA Telcom for investment
purposes. In addition, USA Telcom intends to either commence operations or
acquire another business with operations in which Dr. Simpson may have an equity
interest. It is possible that, as a result of any acquisition of a business in
which Dr. Simpson has an equity interest, USA Telcom may issue additional shares
of capital stock to Dr. Simpson.
USA Telcom moved its principal executive offices to the following
address:
USA Telcom Internationale
1549 N. Leroy Street, Suite D-1000
Fenton, MI 48430
(810) 714-2978
7
Before the change of control described above, USA Telcom acted as an
agent in commercial transactions between Vietnamese purchasers and U.S.
manufacturers. In particular, USA Telcom (a) identified suitable (with respect
to products, quantities and trade terms) U.S. suppliers for Vietnamese buyers,
(b) facilitated communications between the parties, and (c) assisted Vietnamese
buyers with the preparation of letters of credit (L.C.) documentation and
submitting of such to the seller for approval. After buyer and seller approval,
the buyer's bank would issue a L.C. directly to the seller. The goods
transaction is completed based upon the L.C. terms and conditions.
USA Telcom's new management has decided to terminate the Vietnamese
commercial business and focus on opportunities within the United States.
Management is currently evaluating various business opportunities, including
operating opportunities, joint ventures, acquisitions or other business
combinations. Some of the opportunities being evaluated are ones in which
management has a current interest, and it is possible that, if USA Telcom
pursues one of these opportunities, management may receive additional capital
stock of USA Telcom in connection therewith.
USA Telcom currently has limited working capital with which to satisfy
its cash requirements, and it will require additional capital in order to
conduct operations. USA Telcom anticipates that we will at least $250,000 in
additional working capital in order to sustain operations for the next 12
months. This requirement may increase substantially, depending on the nature and
capital requirements of the business opportunities it elects to pursue. In order
to obtain the necessary working capital, USA Telcom intends to seek private
equity financing in 2004. Such financing may not be available to USA Telcom,
when and if needed, on acceptable terms or at all. In the event that USA Telcom
is unable to obtain such financing, management may provide additional financing
for USA Telcom.
In the next twelve months, USA Telcom intends to hire from six to up to
fifty employees, depending on the nature of the business opportunities it elects
to pursue. USA Telcom may establish an equity compensation plan in order to
attract and retain employees and to provide employees who make significant and
extraordinary contributions to USA Telcom's long-term growth and performance
with equity-based compensation incentives. USA Telcom may lease these employees
from an employment leasing agency rather than hire the employees directly, and
the employment leasing agency may be affiliated with our new management.
USA intends to retain any future earnings to finance the expansion of
its business and any necessary capital expenditures, and for general corporate
purposes.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet financing arrangements.
ITEM 3 - CONTROLS AND PROCEDURES
Our disclosure controls and procedures are designed to ensure that
information required to be disclosed in reports that we file or submit under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission. Our Chief Executive Officer and Chief Financial Officer has
reviewed the effectiveness of our "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c))
within the last ninety days and has concluded that the disclosure controls and
procedures are effective to ensure that material information relating to USA
Telcom Internationale is recorded, processed, summarized, and reported in a
timely manner. There were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
last day they were evaluated by our Chief Executive Officer and Chief Financial
Officer.
It should be noted that any system of controls, however well designed
and operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system are met. In addition, the design of any control system
is based in part upon certain assumptions about the likelihood of future events.
Because of these and other inherent limitations of control systems, there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. As a small organization, the effectiveness of
our controls heavily depends on the direct involvement of our Chief Executive
Officer and Chief Financial Officer.
8
PART II: OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None.
ITEM 2 - CHANGES IN SECURITIES
(a) None.
(b) None.
(c) On March 19, 2004, USA Telcom Internationale issued 13,000,000
shares of common stock to Robert C. Simpson for a purchase price of $260,000.00.
Dr. Simpson paid the purchase price for these shares from personal funds for
these shares. The 13,000,000 shares constitute approximately seventy-five
percent (75%) of the issued and outstanding shares of common stock of USA
Telcom.
(d) None.
(e) None.
ITEM 3 - DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Item
No. Description Method of Filing
---- ----------- ----------------
10.1 Stock Purchase Agreement by and among USA Telcom Filed as an exhibit to a Current Report on Form
Internationale, Inc. and the Purchaser dated as of 8-K filed on April 5, 2004, incorporated herein by
March 19, 2004. reference.
10.2 Consulting Agreement with AMVI Filed electronically herewith.
10.3 Asset Acquisition Agreement with AMVI Filed electronically herewith.
31.1 Certification of Robert C. Simpson pursuant to Rule Filed electronically herewith.
13a-14(a)
32.1 Chief Executive Officer and Chief Financial Officer Filed electronically herewith.
Certification pursuant to 18 U.S.C.ss.1350 adopted
pursuant to Section 906 of the Sarbanes Oxley Act of
2002
(b) Reports on Form 8-K
None.
9
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.
USA Telcom Internationale
May 11, 2004 /s/ Robert C. Simpson
-----------------------------------
Robert C. Simpson
Chairman of the Board of Directors,
President and Chief Financial Officer
(Principal Executive Officer, Principal Financial
Officer, and Principal Accounting Officer)
10