UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10QSB
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(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the quarterly period ended September 30, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ___________
Commission file number: 333-117114
USA SUPERIOR ENERGY HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Nevada 30-0220588
- ---------------------------------- --------------------
(State of Incorporation) (IRS Employer ID Number)
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(Address of principal executive offices)
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(Registrant's Telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 the filing requirements for the past 90
days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of November 19, 2007, there were 68,680,000 shares of the registrant's sole
class of common shares outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
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Balance Sheets -September 30, 2007 and December 31, 2006 F-1
Statements of Operations -
Three and Nine months ended September 30, 2007 and 2006 and
From November 12, 2003 (Inception) to September 30, 2007 F-2
Statement of Changes in Stockholders' Deficit -
From November 12, 2003 (Inception) to September 30, 2007 F-3
Statements of Cash Flows -
Nine months ended September 30, 2007 and 2006 and From
November 12, 2003 (Inception) to September 30, 2007 F-4
Notes to Financial Statements F-5
Item 2. Management's Discussion and Analysis 1
Item 3. Controls and Procedures 3
Item 3A(T). Controls and Procedures 3
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 3
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 3
- Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable 4
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 4
Item 5. Other Information - Not Applicable 4
Item 6. Exhibits 4
SIGNATURES 5
PART I
ITEM 1. FINANCIAL STATEMENTS
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, December 31,
2007 2006
(Unaudited) (Audited)
----------------- --------------
ASSETS;
Current Assets:
Cash $ 53,591 $ 6,197
Inventory 576 -
Prepaid expenses 416,655 48,902
----------------- --------------
Total Current Assets 470,822 55,099
Property and Equipment:
Land 1,200,000 -
Equipment 40,296 9,274
Automobiles 6,435 -
Less accumulated depreciation (153) -
----------------- --------------
1,246,578 -
TOTAL ASSETS $ 1,717,400 $ 64,373
================= ==============
LIABILITIES & STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable $ 53,275 $ 92,145
Accrued expenses 175,217 -
Notes payable 52,740 -
Note payables, related parties 119,277 -
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Total Current Liabilities 400,509 92,145
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Long Term Liability:
Note payable 800,000 19,589
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Total Liabilities 1,200,509 111,734
Stockholders Equity (Deficit):
Common stock, $0.001par value, 150,000,000 shares 68,680 10,000
authorized, 68,680,000 and 31,680,000 shares issued and
outstanding at June 30, 2007 and December 31, 2006, respectively
Additional paid-in capital 1,987,202 563,210
Subcription Receivable - (100)
Deficit accumulated during development stage (1,538,981) (508,737)
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Total Stockholders' Equity (Deficit) 516,901 (47,631)
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $ 1,717,410 $ 64,373
================= ==============
The accompanying notes are an integral part of these consolidated financial
statements.
F-1
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
November 12, 2003
For the Three Months Ended For the Nine Months Ended (Inception) to
September 30, September 30, Sept. 30,
2007 2006 2007 2006 2007
------------- ------------ ------------ ------------- ------------
Revenue:
Sales $ 86,992 $ - $ 281,327 $ - $ 281,327
Cost of Sales 3,015 - 129,439 - 129,439
------------- ------------ ------------ ------------- ------------
Gross Profit 83,977 - 151,888 - 151,888
------------- ------------ ------------ ------------- ------------
Operating Expenses:
General and Administrative 356,314 - 1,108,975 - 1,682,085
------------- ------------ ------------ ------------- ------------
Total Operating Expenses 356,314 - 1,108,975 - 1,682,085
------------- ------------ ------------ ------------- ------------
Other Income (Expense)
Interest income 412 - 412 - 412
Other income - - 3,516 - 3,516
Interest expense (12,712) - (12,712) - (12,712)
------------- ------------ ------------ ------------- ------------
(12,300) - (8,784) - (8,784)
Net Loss $ (284,637) $ - $ (965,871) $ - $ (1,538,981)
============= ============ ============ ============= ============
Per Share Information:
Weighted average number
of common shares outstanding 68,680,000 31,680,000 65,813,700 31,680,000
------------- ------------ ------------ -------------
Net Loss per common share $ * $ * $ (0.02) $ *
============ ============ ============ =============
Less than ($0.01) per share.
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES STOCKHOLDERS' DEFICIT
September 30, 2007
(Unaudited)
Deficit
COMMON STOCK Additional Accum. During Total
----------------------------
Paid-in Development Stockholders'
# of Shares Amount Capital Stage Equity (Deficit)
------------- ------------ ------------- ------------- -------------------
Issuance of common stock
November 12, 2003, date of inception 22,500,000 $ 22,500 $ (20,000) $ - $ 2,500
Contribution of capital - - 280 - 280
Net loss, December 31, 2003 - - - (280) (280)
------------ ----------- ------------ ------------ -------------
Balance - December 31, 2003 22,500,000 22,500 (19,720) (280) 2,500
------------ ----------- ------------ ------------- -------------
Issuance of common stock 9,180,000 9,180 7,020 - 16,200
March 31, 2004, forward split 15:1 - - - - -
Net loss, December 31, 2004 - - - (13,051) (13,051)
------------ ----------- ------------ ------------- -------------
Balance - December 31, 2004 31,680,000 31,680 (12,700) (13,331) 5,649
------------- ------------ ------------- ------------- -------------
April 8, 2005, forward split 2:1 - - - - -
November 2, 2005, forward split 3:1 - - - - -
Net loss, December 31, 2005 - - - (6,215) (6,215)
------------- ------------ ------------- ------------- -------------
Balance - December 31, 2005 31,680,000 31,680 (12,700) (19,546) (566)
------------- ------------ ------------- ------------- -------------
Net loss, December 31, 2006 - - - (31,662) (31,662)
------------- ------------ ------------- ------------- -------------
Balance - December 31, 2006 31,680,000 31,680 (12,700) (51,208) (32,228)
------------- ------------ ------------- ------------- -------------
Common stock issued in acquisition 34,000,000 34,000 539,110 - 573,110
(51,208) (521,902) (573,110)
Common stock issued for consulting
services 500,000 500 514,500 515,000
Common stock issued for cash 2,500,000 2,500 758,458 - 760,958
Warrants issued for cash - - 239,042 - 239,042
Net loss, September 30, 2007 - - - (965,871) (965,871)
------------- ------------ ------------- ------------- -------------
Balance - September 30, 2007 68,680,000 $ 68,680 $1,987,202 $(1,538,981) $ 516,901
============= ============ ============= ============= =============
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
November 12, 2003
For the Nine Months Ended (Inception) to
September 30, September 30,
2007 2006 2007
-------------- -------------- --------------
Cash Flows from Operating Activities:
Net Loss $ (965,871) $ - $ (1,538,981)
Depreciation 153 - 898
Accretion expense - - 558
Amortization of stock issued for services 376,431 - 376,431
Adjustments to reconcile net loss to cash used
by operating activities:
Increase in accounts receivable - - -
Increase in inventory (576) - (576)
Increase in prepaid expenses and deposits (278,096) - (278,096)
Increase in accounts payable 53,276 53,276
Increase in accrued expenses 175,217 - 175,217
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Net Cash Used by Operating Activities (639,466) - (1,211,273)
-------------- -------------- --------------
Cash Flows from Investing Activities:
Purchase of property and equipment (23,149) - (406,643)
Purchase of land (400,000) - (400,000)
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Net Cash Used by Investing Activities (423,149) - (806,643)
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Cash Flows from Financing Activities:
Proceeds from advance 52,740 - 52,740
Capital Contribution - - 995,815
Proceeds from stockholder loan - - 22,000
Proceeds from notes payable and advances, officer 119,726 57,212
Payment of notes payable ( 62,917) (62,917)
Proceeds from common stock 1,000,000 - 1,000,000
-------------- -------------- --------------
Net Cash Provided by Financing Activities 1,109,549 - 2,064,850
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Cash acquired in acquisition 6,197 - 6,197
Net Increase in Cash & Cash Equivalents 53,131 - 53,131
Beginning Cash & Cash Equivalents 460 - -
-------------- -------------- --------------
Ending Cash & Cash Equivalents $ 53,591 $ - $ 53,131
============== ============== ==============
Supplemental Disclosure of Cash Flow Information
Cash paid for Interest $ - - 83
============== ============== ==============
Cash paid for Income Taxes $ - - -
============== ============== ==============
Supplemental Disclosure of Non-cash Investing and
Financing Activities:
Issuance of common stock for consulting services $ 515,000 - 515,000
============== ============== ==============
Purchase of land for cash and promissory note $ 400,000 - 400,000
============== ============== ==============
Warrants issued in connection with common stock issued for
cash $ 239,042 - 239,042
============== ============== ==============
Subscription receivable $ 50,000 - 50,000
============== ============== ==============
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Nine Months Ended September 30, 2007 and 2006
(Unaudited)
1. Business, Basis of Presentation and Significant Accounting Policies:
Business:
The accompanying consolidated financial statements are for USA Superior Energy
Holdings, Inc., a Nevada corporation, (the Company) and its wholly-owned
subsidiary, USA Superior Energy, Inc., a Delaware company and USA Superior
Energy, Inc.'s 80% owned subsidiary Superior Energy, LLC., a Delaware limited
liability company. All significant intercompany accounts and transactions have
been eliminated in consolidation. In January 2007, the Company amended its
Articles of Incorporation, in order to change its name from Comlink
Communications Company to USA Superior Energy Holdings, Inc.
On January 16, 2007, the Company acquired 100% of the issued and outstanding
shares, at the time 34,000,000 shares, of USA Superior Energy, Inc. In exchange
for the 34,000,000 shares of the common stock of USA Superior Energy, Inc., the
Company issued 34,000,000 shares of its restricted common stock. The Company has
accounted for the transaction using reverse merger accounting. As a result of
the transaction, the Company amended its Articles of Incorporation in order to
change its name, as mentioned above, and increased its authorized capital from
75,000,000 shares of $0.001 par value common stock to 150,000,000 shares of
$0.01 par value common stock.
As a result of the acquisition, the Company, through its wholly-owned subsidiary
operates in the energy industry. Specifically, the Company is involved in the
developing, owning and operating of prospects and energy projects in East and
Southeast Texas.
In the opinion of the management of the Company, the accompanying unaudited
consolidated financial statements include all normal adjustments considered
necessary to present fairly the financial position and operating results of the
Company for the periods presented. The financial statements and notes are
presented as permitted by Form 10-QSB, and do not contain certain information
included in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2006. It is management's opinion that when the interim financial
statements are read in conjunction with the December 31, 2006 Annual Report on
Form 10-KSB, the disclosures are adequate to make the information presented not
misleading. Interim results are not necessarily indicative of results for a full
year or any future period.
Basis of Presentation:
The Company has not earned any significant revenues from its limited operations.
Accordingly, the Company's activities have been accounted for as those of a
"Development Stage Enterprise" as set forth is Financial Accounting Standards
Board Statement No. 7 ("FASB 7"). Among the disclosures required by FASB 7 are
that the Company's financial statements be identified as those of a development
stage company, and that the statements of operation, stockholders' equity
(deficit) and cash flows disclose activity since the date of the Company's
inception.
F-5
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Nine Months Ended September 30, 2007 and 2006
(Unaudited)
Significant Accounting Policies:
Inventory
Inventories are stated at cost. Cost is determined using a weighted average
method and consist primarily of chemicals used in the production process.
Prepaid Expenses
During the nine months ended September 30, 2007, the Company had prepaid well
costs of $278,096. These costs are written down as they are incurred.
Deferred Consulting Costs
In January 2007, the Company entered into a twelve-month consulting services
agreement with a third party, in which this party agreed to provide public and
investor relation services and general business services for the twelve-month
term of the agreement. Compensation consisted of 500,000 shares of the Company's
restricted common stock with a market value of approximately $515,000 (based on
the closing market price of $1.03 per share at the date of the transaction). The
deferred cost is being amortized on a straight-line basis, as earned, over the
twelve-month period from the date of the agreement. During the nine months ended
September 30, 2007, $376,431 was expensed.
Property & Equipment
Property and equipment are stated at cost. Depreciation is provided by use of
the accelerated method over the estimated useful lives of the related assets
which range from five to seven years.
Repairs and maintenance are charged to operations as incurred. Major renewals
and improvements that extend the useful lives of property and equipment are
capitalized.
Revenue Recognition
Revenue is recognized when earned. The Company's revenue recognition policies
are in compliance with Staff Accounting Bulletin (SAB) 104. Sales revenue is
recognized at the date of shipment to customers when a formal arrangement
exists, the price is fixed or determinable, the delivery is completed, no other
significant obligations of the Company exist and collectability is reasonably
assured. Payments received before all of the relevant criteria for revenue
recognition are satisfied are recorded as unearned revenue.
F-6
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Nine Months Ended September 30, 2007 and 2006
(Unaudited)
Net Loss per Share
Net loss per share is calculated in accordance with the Statement of Financial
Accounting Standards No. 128 (SFAS No. 128), "Earnings per Share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB No. 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles, and expands disclosures about fair
value measurements. This statement applies under other accounting pronouncements
that require or permit fair value measurements. SFAS No. 157 is effective for
the Company for its fiscal year beginning on July 1, 2008. The Company is
currently assessing the impact the adoption of SFAS No. 157 will have on its
financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108 in
order to eliminate the diversity of practice surrounding how public companies
quantify financial statement misstatements. In SAB 108, the SEC staff
established an approach that requires quantification of financial statement
misstatements based on the effects of the misstatements on each of the Company's
financial statements and the related financial statement disclosures. SAB No.
108 is effective for the Company for its current fiscal year. The adoption of
SAB No. 108 did not have an impact on the Company's financial statements.
On February 15, 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115." This standard permits an entity to measure many financial
instruments and certain other items at estimated fair value. Most of the
provisions of SFAS No. 115 ("Accounting for Certain Investments in Debt and
Equity Securities) applies to all entities that own trading and
available-for-sale securities. The fair value option created by SFAS No. 159
permits an entity to measure eligible items at fair value as of specified
election dates. Among others, eligible items exclude (1) financial instruments
classified (partially or in total) as permanent or temporary stockholders'
equity (such as a convertible debt security with a non-contingent beneficial
conversion feature) and (2) investments in subsidiaries and interests in
variable interests that must be consolidated. A for-profit business entity will
be required to report unrealized gains and losses on items for which the fair
value option has been elected in its statements of operations at each subsequent
reporting date. The fair value option (a) may generally be applied instrument by
instruments, (b) is irrevocable unless a new election date occurs, and (c) must
be applied to the entire instrument and not to only a portion of the instrument.
SFAS No. 159 is effective as of the beginning of the first fiscal year that
begins after November 15, 2007. The Company has not yet evaluated the effect
that the application of SFAS No. 159, may have, if any, on its future results of
operations and financial condition.
F-7
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Nine Months Ended September 30, 2007 and 2006
(Unaudited)
2. Going Concern:
In the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2006, the Report of the Independent Registered Public Accounting Firm
includes an explanatory paragraph that describes substantial doubt about the
Company's ability to continue as a going concern. The Company's interim
financial statements for the nine months ended September 30, 2007 have been
prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of
business. The Company reported a net loss of $965,871 for the nine months ended
September 30, 2007, and an accumulated deficit of $1,538,981 as of September 30,
2007.
The future success of the Company is likely dependent on its ability to attain
additional capital to develop its proposed products and ultimately, upon its
ability to attain future profitable operations. There can be no assurance that
the Company will be successful in obtaining such financing, or that it will
attain positive cash flow from operations.
3. Notes Payable:
During the nine months ended September 30, 2007, the Company purchase property
for $1,200,000. The Company purchased the property through a combination of cash
and debt. The Company paid $400,000 in cash and issued a promissory note for
$800,000 for the remaining portion of the purchase price.
During the nine months ended September 30, 2007, an officer and director of the
Company advanced the Company $89,277. The amount is unsecured and due on demand.
During the nine months ended September 30, 2007, a shareholder of the Company
advanced the Company $30,000 in exchange for an unsecured note payable due on
demand.
During the nine months ended September 30, 2007, a related party of the Company
advanced $27,740 to the Company in exchange for an unsecured note payable due on
demand.
Prior to its acquisition by the Company, USA Superior Energy was granted a loan
for $30,229 by a banking institution. The loan has a term of 5 years and accrues
interest at a rate of 7.8% per annum. During the nine months ended September 30,
2007, the Company paid the note in full.
4. Stockholders' Equity:
In January 2007, the Company amended its Articles of Incorporation to increase
its authorized capital from 75,000,000 shares of $0.001 par value common stock
to 150,000,000 shares of $0.001 par value common stock.
In January 2007, in connection with the acquisition of USA Superior Energy, the
Company issued 34,000,000 shares of its restricted common stock to the holders
of all of the common stock of the USA Superior Energy.
F-8
USA SUPERIOR ENERGY HOLDINGS, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
For the Nine Months Ended September 30, 2007 and 2006
(Unaudited)
In January 2007, the Company entered into a twelve-month consulting services
agreement with a third party, in which this party agreed to provide public and
investor relation services and general business services for the twelve-month
term of the agreement. Compensation consisted of 500,000 shares of the Company's
restricted common stock with a market value of approximately $515,000 (based on
the closing market price of $1.03 per share at the date of the transaction).
During the nine months ended September 30, 2007, the Company sold 2,500,000
units at a price of $0.40 per unit for an aggregate amount of $1,000,000 cash,
pursuant to a Subscription Agreement. A unit consists of (i) one share of the
Company's common stock and (ii) a warrant to purchase one-half a share of common
stock at an exercise price of $0.80 per share. All warrants have a term of 3
years. As a result of the sale, the Company issued 2,500,000 shares of its
restricted common stock and 1,250,000 warrants with an exercise price of $0.80
per share.
5. Subsequent Event:
On October 30, 2007, the Company signed a $2.3 million secured Promissory Note
in connection with a Securities Purchase Agreement. The Note is due on demand on
any time after January 30, 2012. The note is secured by all accounts receivable,
inventory, equipment and all products and proceeds. The Securities Purchase
Agreement, signed on October 30, 2007, provides for the Company to issue a 9
3/4% convertible debenture in exchange for $2.5 million in cash, less any fees.
The Convertible Debenture provides for it to be converted to common stock at a
rate of either the lesser of $0.50 per share or 80% of the average of the 3
lowest volume Weighted Average Price during the 20 day trading period prior to
conversion.
F-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The independent registered public accounting firm's report on the Company's
financial statements as of December 31, 2006, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to the factors prompting the
explanatory paragraph are discussed below and also in Note 2 to the unaudited
quarterly financial statements.
OPERATIONS
On January 16, 2007, the Company acquired 100% interest in USA Superior Energy,
Inc, a Delaware Company ("USA Superior Energy") through the issuance of
34,000,000 shares of its restricted common stock to the shareholders of USA
Superior Energy. In connection with the acquisition, the Company amended its
Articles of Incorporation to change the name of the Company from Comlink
Communication Company to USA Superior Energy Holdings, Inc. and increased the
Company's authorized capital from 75,000,000 shares of $0.001 par value common
stock to 150,000,000 shares of $0.001 par value common stock.
As a result of the acquisition, the Company, through its wholly-owned subsidiary
operates in the energy industry. Specifically, the Company is involved in the
developing, owning and operating of prospects and energy projects in East and
Southeast Texas.
RESULTS OF OPERATION
Results of Operations for the Nine Months Ended September 30, 2007 Compared to
the Nine Months Ended September 30, 2006
The Company recognized $281,327 in revenues during the nine months ended
September 30, 2007 and no revenues during the nine months ended September 30,
2006. During the nine months ended September 30, 2007, the Company incurred
costs of sales of $129,439, resulting in a gross profit of $151,888 for the nine
months ended September 30, 2007.
During the nine months ended September 30, 2007, operating expenses were
$1,108,975, the Company did not have any operating expenses during the nine
months ended September 30, 2006. The $1,108,975 increase is due to the
operations of USA Superior Energy.
1
During the nine months ended September 30, 2007, the Company recognized a net
loss of $965,871. The Company did not recognize either a net loss or net income
during the nine months ended September 30, 2006. Net loss per share was nominal
in the periods in 2007 and 2006.
Results of Operations for the Three Months Ended September 30, 2007 Compared to
the Three Months Ended September 30, 2006
The Company recognized $86,992 in revenues during the three months ended
September 30, 2007 and no revenues during the three months ended September 30,
2006. During the three months ended September 30, 2007, the Company incurred
costs of sales of $3,015, resulting in a gross profit of $83,977 for the three
months ended September 30, 2007.
During the three months ended September 30, 2007, operating expenses were
$356,314, the Company did not have any operating expenses during the three
months ended September 30, 2006. The $356,314 increase is due to the operations
of USA Superior Energy.
During the three months ended September 30, 2007, the Company recognized a net
loss of $284,637. The Company did not recognize either a net loss or net income
during the three months ended September 30, 2006. Net loss per share was nominal
in the periods in 2007 and 2006.
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 2007, the Company used $639,466 in
its operating activities. The Company had cash of $53,591 at September 30, 2007.
The Company used $423,149 in its investing activities of which $23,149 was used
in the purchase of property and equipment and $400,000 and a promissory note for
$800,000 were used for the purchase of land. During the nine months ended
September 30, 2007, the Company received $1,109,549 from its financing
activities. The Company received $52,740 from advances from, the Company
received $119,726 in advances and a note payable from an officer and director of
the Company. The Company received $1,000,000 from the sale of its common stock
and warrants.
During the nine months ended September 30, 2007, the Company sold 2,500,000
units at a price of $0.40 per unit for an aggregate amount of $1,000,000 cash,
pursuant to a Subscription Agreement. A unit consists of (i) one share of the
Company's common stock and (ii) a warrant to purchase one-half a share of common
stock at an exercise price of $0.80 per share. All warrants have a term of 3
years. As a result of the sale, the Company will issue 2,500,000 shares of its
restricted common stock and 1,250,000 warrants with an exercise price of $0.80
per share. The Company has used these funds to support its operations.
In January 2007, the Company entered into a twelve-month consulting services
agreement with a third party, in which this party agreed to provide public and
investor relation services and general business services for the twelve-month
term of the agreement. Compensation consisted of 500,000 shares of the Company's
restricted common stock with a market value of approximately $515,000 (based on
the closing market price of $1.03 per share at the date of the transaction). The
deferred cost is being amortized on a straight-line basis, as earned, over the
twelve-month period from the date of the agreement. During the nine months ended
September 30, 2007, $376,341 was expensed.
The Company will need to raise capital through loans or private placements in
order to carry out any operational plans. The Company does not have a source of
such capital at this time.
2
PLAN OF OPERATIONS
As a result of the acquisition, the Company, through its wholly-owned subsidiary
operates in the energy industry. Specifically, the Company is involved in the
developing, owning and operating of prospects and energy projects in East and
Southeast Texas. During the 2007 fiscal year, the Company intends to continue
its development of energy prospects and projects.
To the extent the Company's operations are not sufficient to fund the Company's
capital requirements the Company may enter into a revolving loan agreement with
financial institutions or attempt to raise capital through the sale of
additional capital stock or through the issuance of debt. At the present time
the Company does not have a revolving loan agreement with any financial
institution nor can the Company provide any assurance that it will be able to
enter into any such agreement in the future or be able to raise funds through
the further issuance of debt or equity in the Company.
ITEM 3. CONTROLS AND PROCEDURES
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a. Evaluation of Disclosure Controls and Procedures:
The management of the company has evaluated the effectiveness of the issuer's
disclosure controls and procedures as of the end of the period of the report
September 30, 2007 and have concluded that the disclosure controls, internal
controls and procedures are adequate and effective based upon their evaluation
as of the evaluation date.
b. Changes in Internal Control over Financial Reporting:
There were no changes in the small business issuers internal control over
financial reporting identified in connection with the Company evaluation
required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange act
that occurred during the small business issuers last fiscal quarter that has
materially affected or is reasonable likely to materially affect, the small
business issuers internal control over financial reporting.
ITEM 3(A)T. CONTROLS AND PROCEDURES
- -----------------------------------
There have been no changes in the small business issuers internal control over
financial reporting identified in connection with the evaluation required by
paragraph (d) of Rule 240.15d-15 that occurred during the small business
issuer's last fiscal quarter that has materially affected, or is likely to
materially affect, the small business issuer's internal control over financial
reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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NONE
ITEM 2. CHANGES IN SECURITIES
- ------------------------------
The Company made no sales of its securities from July 1, 2007 through
September 30, 2007.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ---------------------------------------
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
NONE.
ITEM 5. OTHER INFORMATION
- --------------------------
NONE.
ITEM 6. EXHIBITS
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Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-QSB. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-B.
Exhibit 31.1 Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive Officer pursuant to
Section 906 of the Sarbanes-Oxley Act
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
USA SUPERIOR ENERGY HOLDINGS, INC.
(Registrant)
Dated: November 19, 2007 By: /s/ G. Rowland Carey
--------------------
G. Rowland Carey, President
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