U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
Quarterly Report Under
the Securities Exchange Act of 1934
For Quarter Ended: February 28, 1998
Commission File Number: 0-26920
USAsurance Group, Inc.
(Exact name of small business issuer as specified in its charter)
Colorado
(State or other jurisdiction of incorporation or organization)
84-1298212
(IRS Employer Identification No.)
7345 E. Peakview Ave.
Englewood, Colorado
(Address of principal executive offices)
80111
(Zip Code)
(303) 689-0123
(Issuer's Telephone Number)
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) 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 such filing requirements for the past 90 days:
Yes __X__ No _____.
The number of shares of the registrant's only class of common stock
issued and outstanding, as of February 28, 1998, was 1,566,000
shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the nine month period
ended February 28, 1998, are attached hereto.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION, RESULTS OF OPERATIONS AND PLAN OF
OPERATION
The following discussion should be read in conjunction with
the Financial Statements and notes thereto included herein.
USAsurance Group, Inc. (the "Company") is a company
incorporated pursuant to the laws of the State of Colorado on
January 15, 1991, for the purpose of engaging as an insurance
brokerage company. The Company did not undertake any business
activities relevant thereto and in June 1995, the Company's Board
of Directors elected to change the Company's principal business
activities to the viatical settlement industry wherein the Company
acquired life insurance policies from individuals who are
terminally ill or pools of policies from other companies. However,
during the last fiscal year, the viatical settlement industry has
changed due to advances in medication which prolong life for these
individuals and, as a result thereof, the Company ceased further
participation in the viatical settlement business due to such
extended life expectancies resulting in lower returns.
As a result thereof, during its prior fiscal quarter, the
Company, desiring to remain in some segment of the insurance
industry, changed its business activities to the reinsurance
business. The Company applied for licensing in Aruba using a
wholly owned subsidiary, Insurenational, A.V.V., and was approved
to commence operations on September 25, 1997. The Company intended
to use the life insurance policies that it now holds as its capital
contribution in Insurenational, A.V.V. However, upon reflection
and after significant analysis of the intended new business plan,
management has elected not to proceed with the reinsurance
business. As such, the Company can be defined as a "shell"
company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. See
"Plan of Operation" below.
Forward Looking Statements
This report contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") concerning the Company's operations, economic
performance and financial conditions, including, in particular, the
likelihood of the Company's ability to acquire another existing
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business or assets. These statements are based upon a number of
assumptions and estimates which are inherently subject to
significant uncertainties and contingencies, many of which are
beyond the control of the Company and reflect future business
decisions which are subject to change. Some of these assumptions
inevitably will not materialize and unanticipated events will occur
which will affect the Company's results. Consequently, actual
results will vary from the statements contained herein and such
variance may be material. Prospective investors should not place
undue reliance on this information.
Results of Operations
Comparison of Results of Operations for the nine month period ended
February 28, 1998 and nine month period ended February 28, 1997.
The Company had no revenues for the nine month periods ended
February 28, 1998 and February 28, 1997. In the nine month period
ended February 28, 1998, general and administrative expenses
increased $16,677 (40.6%) from $41,033 for the nine month period
ended February 28, 1997 to $57,710. This increase was due
primarily to costs associated with the incorporation of
Insurenational, A.V.V., management's efforts relating to locating
and reviewing merger or acquisition candidates after the
abandonment of the reinsurance business plan including fees paid to
a consultant associated with a potential acquisition by the Company
of a digital pager company and payment by the Company of its share
of general office expenses incurred as a subleasee at its present
offices. The Company incurred a net loss of $(65,139) for the nine
month period ended February 28, 1998, compared to a net loss of
$(38,854) for the nine months ended February 28, 1997, an increase
of $(26,285), or 67.7%, primarily due to the costs described above.
Since June 1995, the Company purchased, for its own account,
10 different insurance policies with a face value of $538,294 from
individuals, for an aggregate purchase price of $489,795. Five of
these policies have matured and net aggregate proceeds from these
policies in the total amount of $75,903 have been paid to the
Company, one of which matured during the nine months ended February
28, 1998, with the Company receiving approximately $27,000 as a
result of such maturity, the proceeds of such matured policy having
previously been recognized as income on an accrual basis. Because
the Company's Financial Statements are prepared on an accrual
rather than a cash basis, this income was accounted for in the
quarter ended May 31, 1997. The Company recognizes income (earned
discount) on each purchased policy by accruing, over the period
between the acquisition date of the policy and the Company's
estimated date of collection of the face value of the policy (the
accrual period), the difference (the unearned discount) between (a)
the death benefit payable (face value under the policy less the
amount of fees, if any, payable to a referral source upon
collection of the face value; and (b) the carrying value of the
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policy. The carrying value of each policy is reflected on the
Company's balance sheet under "purchased life insurance policies"
and consists of the purchase price, other capitalized cost and the
earned discount on the policy accrued to the balance sheet date.
The Company capitalizes as incurred the following costs of a
purchased policy: (i) the purchase price paid for the policy; (ii)
policy premiums, if any, paid by the Company; (iii) amounts, if
any, paid to referral sources upon acquisition of the policy; and
(iv) amounts paid to retained physicians or other medical
consultants who estimated the insured's life expectancy. The
carrying value of a policy change over time and is adjusted
quarterly to reflect the earned discounts accrued on the policy,
amounts paid for any additional future increases in coverage, any
additional premium payments and any premium refunds if the policy
becomes covered by premium waiver provisions. The length of the
accrual period is determined by the Company based upon its estimate
of the date on which it will collect the face value of the policy.
Such date is based upon the Company's estimate of the life
expectancy of the insured, after review of the medical records of
the insured by the Company's medical consultants, and also takes
into account the historical accuracy of the life expectancies
estimated by the Company's consultants and the typical period
(collection period) between the date of the insured's death and the
date on which the Company collects the face value of the policy.
The unearned discount is accrued over the accrual period using
the straight line method. Under the straight line method, the
unearned discount is earned evenly throughout the accrual period
and the unearned discount will be fully accrued as earned discount
by the end of the accrual period.
Any change in accrual periods will not cause a restatement of
earned discounts in prior periods but will impact earned discounts
in the current and future periods on policies owned by the Company
(by either accelerating or decelerating the recognition of
remaining unearned discount). The Company cannot predict how any
accrual period will change, if at all, in the future.
As discussed hereinabove, during the fiscal year ended May 31,
1997, the Company adopted a plan to cease further participation in
the viatical settlement industry. This was the Company's only
operating segment since its inception. The results of its
activities in the viatical settlement business for the current and
prior comparative period have been restated in the Company's
unaudited Financial Statements included herein to present the
viatical settlement business as a discontinued operation.
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Comparison of Results of Operations for the Three Month Periods
Ended February 28, 1998 and 1997.
The Company had no revenues for the three month periods ended
February 28, 1997 and 1998. In the three month period ended
February 28, 1998, general and administrative expenses increased
$2,508 (31%) from $8,093 for the three month period ended February
28, 1997 to $10,601. This increase was primarily due legal and
accounting fees and its share of general office expenses incurred
as a subleasee at its present offices.
The Company incurred a net loss of $(12,394) for the three
month period ended February 28, 1998, compared to a net loss of
$(11,161) for the three months ended February 28, 1997, an increase
of $(1,232), or 11%, primarily due to increased general and
administrative expenses.
Plan of Operation
The Company's new purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business
opportunities presented to it by persons or firms who or which
desire to seek the perceived advantages of an Exchange Act
registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location and
the Company may participate in a business venture of virtually any
kind or nature. This discussion of the proposed business is
purposefully general and is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter
into potential business opportunities. Management anticipates that
it may be able to participate in only one potential business
venture because the Company has nominal assets and limited
financial resources. This lack of diversification should be
considered a substantial risk to shareholders of the Company
because it will not permit the Company to offset potential losses
from one venture against gains from another.
The Company may seek a business opportunity with entities
which have recently commenced operations, or which wish to utilize
the public marketplace in order to raise additional capital in
order to expand into new products or markets, to develop a new
product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and extremely
risky. Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available
capital, management believes that there are numerous firms seeking
the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms
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on which additional equity financing may be sought, providing
liquidity for incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of
applicable statutes) for all shareholders and other factors.
Potentially, available business opportunities may occur in many
different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis
of such business opportunities extremely difficult and complex.
The analysis of new business opportunities will be undertaken
by, or under the supervision of, the officers and directors of the
Company, none of whom is a professional business analyst.
Management intends to concentrate on identifying preliminary
prospective business opportunities which may be brought to its
attention through present associations of the Company's officers
and directors, or by the Company's shareholders. In analyzing
prospective business opportunities, management will consider such
matters as the available technical, financial and managerial
resources; working capital and other financial requirements;
history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of
management services which may be available and the depth of that
management; the potential for further research, development, or
exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the
Company; the potential for growth or expansion; the potential for
profit; the perceived public recognition of acceptance of products,
services, or trades; name identification; and other relevant
factors. Officers and directors of the Company expect to meet
personally with management and key personnel of the business
opportunity as part of their investigation. To the extent
possible, the Company intends to utilize written reports and
personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited
financial statements cannot be obtained within a reasonable period
of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in
matters relating to the new business of the Company, shall rely
upon their own efforts and, to a much lesser extent, the efforts of
the Company's shareholders, in accomplishing the business purposes
of the Company. It is not anticipated that any outside consultants
or advisors will be utilized by the Company to effectuate its
business purposes described herein. However, if the Company does
retain such an outside consultant or advisor, any cash fee earned
by such party will need to be paid by the prospective merger/
acquisition candidate, as the Company has no cash assets with which
to pay such obligation. There have been no contracts or agreements
with any outside consultants and none are anticipated in the
future.
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The Company will not restrict its search for any specific kind
of firms, but may acquire a venture which is in its preliminary or
development stage, which is already in operation, or in essentially
any stage of its corporate life. It is impossible to predict at
this time the status of any business in which the Company may
become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However,
the Company does not intend to obtain funds in one or more private
placements to finance the operation of any acquired business
opportunity until such time as the Company has successfully
consummated such a merger or acquisition.
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and
shareholders of the Company will no longer be in control of the
Company. In addition, the Company's directors may, as part of the
terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders or may sell
their stock in the Company. Any terms of sale of the shares
presently held by officers and/or directors of the Company will be
also afforded to all other shareholders of the Company on similar
terms and conditions. Any and all such sales will only be made in
compliance with the securities laws of the United States and any
applicable state.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemption from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of its
transaction, the Company may agree to register all or a part of
such securities immediately after the transaction is consummated or
at specified times thereafter. If such registration occurs, of
which there can be no assurance, it will be undertaken by the
surviving entity after the Company has successfully consummated a
merger or acquisition and the Company is no longer considered a
"shell" company. Until such time as this occurs, the Company will
not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any
trading market which may develop in the Company's securities may
have a depressive effect on the value of the Company's securities
in the future, if such a market develops, of which there is no
assurance.
While the actual terms of a transaction to which the Company
may be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to avoid
the creation of a taxable event and thereby structure the
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acquisition in a so-called "tax-free" reorganization under Sections
368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In
order to obtain tax-free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or
more of the voting stock of the surviving entity. In such event,
the shareholders of the Company, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors
of the Company will meet personally with management and key
personnel, may visit and inspect material facilities, obtain
independent analysis of verification of certain information
provided, check references of management and key personnel, and
take other reasonable investigative measures to the extent of the
Company's limited financial resources and management expertise.
The manner in which the Company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and
desires of the Company and other parties, the management of the
opportunity and the relative negotiation strength of the Company
and such other management.
With respect to any merger or acquisition, negotiations with
target company management is expected to focus on the percentage of
the Company which the target company shareholders would acquire in
exchange for all of their shareholdings in the target company.
Depending upon, among other things, the target company's assets and
liabilities, the Company's shareholders will in all likelihood hold
a substantially lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company
acquires a target company with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the
Company's then shareholders.
The Company will participate in a business opportunity only
after the negotiation and execution of appropriate written
agreements. Although the terms of such agreements cannot be
predicted, generally such agreements will require some specific
representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing
and the conditions which must be satisfied by each of the parties
prior to and after such closing, will outline the manner of bearing
costs, including costs associated with the Company's attorneys and
accountants, will set forth remedies on default and will include
miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge
with any entity which cannot provide independent audited financial
statements within a reasonable period of time after closing of the
proposed transaction. The Company is subject to all of the
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reporting requirements included in the 34 Act. Included in these
requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as the Company's
audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements
of the 34 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be
acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable, at the
discretion of the present management of the Company. If such
transaction is voided, the agreement will also contain a provision
providing for the acquisition entity to reimburse the Company for
all costs associated with the proposed transaction.
Liquidity and Capital Resources
The Company's prior primary need for capital has been the
funding of policy purchases. Since its inception, the Company has
relied upon the proceeds from the sale of common stock of $329,448
derived from a private offering and loans from related parties of
$175,340. During the nine month period ended February 28, 1998,
the Company financed its operations from cash flow generated from
a outstanding receivable derived from the maturity of one life
insurance policy in the amount of $27,000.
In June 1995, Terry Whiteside, the Company's former President
loaned the Company the principal sum of $42,340, which the Company
utilized to purchase its initial insurance policy with a face value
of $58,000. In August 1995, Ms. Whiteside loaned the Company the
principal sum of $58,000. Additionally in August 1995, a minority
shareholder of the Company loaned the Company the principal sum of
$75,000. Each of these aforesaid loans are unsecured and all have
been extended until August 1998 by the mutual consent of the
parties, with interest accruing at the rate of 7% per annum. The
Company utilized the proceeds of these loans to purchase insurance
policies.
At February 28, 1998, the Company had an increase in cash flow
of $425 compared to a decrease in cash flow of $(116,679) at
February 28, 1997, primarily because the Company did not engage in
any material operations during the nine month period ended February
28, 1998. Current assets consists mostly of Purchased Life
Insurance Policies. Current liabilities consists mostly of
outstanding accounts payables and accrued interest to related
parties.
Because the Company is not required to pay salaries to any of
its officers or directors, management believes that the Company has
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sufficient funds to continue operations through the foreseeable
future.
Year 2000 Disclosure
Many existing computer programs use only two digits to
identify a year in the date field. These programs were designed
and developed without considering the impact of the upcoming change
in the century. If not corrected, many computer applications could
fail or create erroneous results by or at the Year 2000. As a
result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company has nominal
assets, including no personal property such as computers, it is not
anticipated that the Company will incur any negative impact as a
result of this potential problem. However, it is possible that
this issue may have an impact on the Company after the Company
successfully consummates a merger or acquisition. Management
intends to address this potential problem with any prospective
merger or acquisition candidate. There can be no assurances that
new management of the Company will be able to avoid a problem in
this regard after a merger or acquisition is so consummated.
The Company's common stock shares are currently traded on the
NASDAQ over the counter Bulletin Board using the trading symbol
"UASG".
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS - None
ITEM 2. CHANGES IN SECURITIES - NONE
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 AND REPORTS ON FORM 8-K
(a) Exhibits
EX-27 Financial Data Schedule
(b) Reports on Form 8-K - None.
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<TABLE>
USAsurance Group, Inc.
Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
Unaudited Audited
February May
28, 1998 31, 1997
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 1,154 $ 729
Matured Policies Receivable - Related Party 0 27,000
Purchased Life Insurance Policies 407,776 407,000
Deposits With Insurance Company 0 38,476
Advances To Affiliated Entities 35,000 0
Other Assets 18,759 18,040
--------- ---------
Total Current Assets 462,689 491,245
--------- ---------
TOTAL ASSETS $ 462,689 $ 491,245
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Accounts Payable 9,044 3,969
Interest Payable 11,487 9,229
--------- ---------
Total Current Liabilities 20,531 13,198
--------- ---------
Long-Term Debt - Related Party 103,340 100,340
Long-Term Debt - Other 75,000 75,000
--------- ---------
Total Long-Term Debt 178,340 175,340
--------- ---------
TOTAL LIABILITIES 198,871 188,538
--------- ---------
SHAREHOLDERS' EQUITY
Common Stock, $.0001 Par Value
Authorized 900,000,000 Shares;
Issued And Outstanding 1,566,000 Shares 157 157
Capital Paid In Excess Of
Par Value Of Common Stock 425,341 399,091
Preferred Stock, $.01 Par Value, Non Voting
Authorized 1,000,000 Shares;
Issued And Outstanding -0- Shares 0 0
Retained Earnings (Deficit) (161,680) (96,541)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 263,818 302,707
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 462,689 $ 491,245
========= =========
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
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<TABLE>
USAsurance Group, Inc.
Statement Of Operations
- -----------------------------------------------------------------
<CAPTION>
Unaudited Unaudited
3 Month 3 Month
Period Ended Period Ended
February February
28, 1998 28, 1997
------------ ------------
<S> <C> <C>
Income: $ 0 $ 0
General & Administrative Expenses:
Compensation - Officers 8,250 8,250
Depreciation 177 135
Legal And Accounting 1,674 (1,412)
Rent 500 500
Telephone 0 620
------------ ------------
Total 10,601 8,093
------------ ------------
Net (Loss) Before Other Income
& Discontinued Operations (10,601) (8,093)
============ ============
Other Income (Expense)
Interest Income 829 0
Other Income 500 0
Interest Expense (3,121) (3,068)
------------ ------------
Total Other Income (Expense) (1,792) (3,068)
------------ ------------
(Loss) Before Discontinued Operations (12,393) (11,161)
Discontinued Operations -
Income from discontinued operations
for February 28, 1998, net of income
tax expense of $ -0-. 0 3,487
------------ ------------
Net (Loss) $ (12,393) $ (7,674)
============ ============
Basic (Loss) Per Common Share:
Before Discontinued Operations ($0.01) ($0.01)
Discontinued Operations $0.00 $0.00
============ ============
Basic (Loss) Per Common Share ($0.01) ($0.01)
============ ============
Weighted Average Common Shares
Outstanding 1,566,000 1,566,000
============ ============
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
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<TABLE>
USAsurance Group, Inc.
Statement Of Operations
- -----------------------------------------------------------------
<CAPTION>
Unaudited Unaudited
9 Month 9 Month
Period Ended Period Ended
February February
28, 1998 28, 1997
------------ ------------
<S> <C> <C>
Income: $ 0 $ 0
General & Administrative Expenses:
Compensation To Officers 24,750 24,750
Depreciation 531 405
Legal And Accounting 13,610 13,560
Office 5,739 223
Professional Services 7,500 0
Rent 1,518 1,100
Telephone 1,566 995
Travel 2,476 0
------------ ------------
Total 57,710 41,033
------------ ------------
Net (Loss) Before Taxes & Discontinued
Operations (57,710) (41,033)
============ ============
Other Income (Expense)
Interest Income 1,329 96
Other Income 500 0
Interest Expense (9,258) (8,955)
------------ ------------
Total Other Income (Expense) (7,429) (8,859)
------------ ------------
(Loss) Before Discontinued Operations (65,139) (49,892)
Discontinued Operations -
Income from discontinued operations
for February 28, 1998, net of
income tax expense of $ -0-. 0 11,036
------------ ------------
Net (Loss) $ (65,139) $ (38,854)
============ ============
Basic (Loss) Per Common Share:
Before Discontinued Operations ($0.04) ($0.03)
Discontinued Operations $0.00 $0.01
============ ============
Basic (Loss) Per Common Share ($0.04) ($0.02)
============ ============
Weighted Average Common Shares
Outstanding 1,566,000 1,566,000
============ ============
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
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<TABLE>
USAsurance Group, Inc.
Statement Of Cash Flows
- -----------------------------------------------------------------
<CAPTION>
Unaudited Unaudited
9 Month 9 Month
Period Ended Period Ended
February February
28, 1998 28, 1997
------------ ------------
<S> <C> <C>
Net (Loss) $ (65,139) $ (38,854)
Adjustments To Reconcile Net Loss
To Net Cash Used In Operating
Activities:
Depreciation 531 405
Contributed Services And Rent 26,250 25,850
Changes In Operating Assets
And Liabilities:
(Increase) Decrease In Receivable 27,000 (41,476)
(Increase) in Interest Receivable (1,250) 0
(Increase) In Purchased Life
Insurance Policies (776) (56,524)
Decrease In Life Insurance Deposits 38,476 0
(Decrease) in Deferred Tax Liability 0 (2,000)
Increase (Decrease) In Accounts Payable 5,075 (1,034)
Increase (Decrease) In Interest Payable 2,258 (3,046)
------------ ------------
Net Flows From Operations 32,425 (116,679)
Cash Flows From Investing Activities:
0 0
------------ ------------
Net Cash Flows From Investing 0 0
------------ ------------
Cash Flows From Financing Activities:
Loans Made To Other Parties (50,000) 0
Funds Received From Loans 22,000 0
Payments Made on Loans (4,000) 0
------------ ------------
Cash Flows From Financing (32,000) 0
------------ ------------
Net Increase In Cash 425 (116,679)
Cash At Beginning Of Period 729 124,540
------------ ------------
Cash At End Of Period $ 1,154 $ 7,861
============ ============
Summary Of Non-Cash Investing
And Financing Activities: $ 0 $ 0
============ ============
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
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USAsurance Group, Inc.
Notes To Unaudited Financial Statements
For The Nine Month Period Ended February 28, 1998
- -------------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the three month
and nine month interim periods ended February 28, 1998 and February
28, 1997 were taken from the books and records without audit.
However, such information reflects all adjustments (consisting only
of normal recurring adjustments, which are of the opinion of
management, necessary to reflect properly the results of interim
periods presented). The results of operations for the nine month
period ended February 28, 1998 are not necessarily indicative of
the results expected for the fiscal year ended May 31, 1998.
15
<PAGE>
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.
USAsurance Group, Inc.
(Registrant)
Dated: April 20, 1998
By: s/Matthew J. Kavanagh, III
----------------------------
Matthew J. Kavanagh, III
Secretary
16
<PAGE>
USAsurance Group, Inc.
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended February 28, 1998
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . 18
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTH PERIOD ENDED FEBRUARY 28,
1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> FEB-28-1998
<CASH> 1,154
<SECURITIES> 0
<RECEIVABLES> 35,000
<ALLOWANCES> 0
<INVENTORY> 407,776
<CURRENT-ASSETS> 462,689
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 462,689
<CURRENT-LIABILITIES> 20,531
<BONDS> 0
0
0
<COMMON> 157
<OTHER-SE> 263,661
<TOTAL-LIABILITY-AND-EQUITY> 462,689
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 57,710
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (9,258)
<INCOME-PRETAX> (65,139)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (65,139)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
