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: November 30, 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 November 30, 1998, was 1,566,000
shares.
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS.
The unaudited financial statements for the six month period
ended November 30, 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 Company's audited financial statements and notes thereto
included herein. In connection with, and because it desires to
take advantage of, the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company cautions
readers regarding certain forward looking statements in the
following discussion and elsewhere in this report and in any other
statement made by, or on the behalf of the Company, 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 the Company's 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 behalf of, the
Company. The Company disclaims any obligation to update forward
looking statements.
Statement of Financial Accounting Standards 130 Reporting
Comprehensive Income and Statement of Financial Accounting
Standards 131 Disclosures About Segments of an Enterprise and
Related Information were recently issued. Statement 130
establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those
resulting from investments by owners and distributions to owners.
Among other disclosures, Statement 130 requires that all components
of comprehensive income shall be classified based on their nature
and shall be reported in the financial statements in the period in
which they are recognized. A total amount for comprehensive income
shall be displayed in the financial statements where the components
of other comprehensive income are reported. Statement 131
supersedes Statement of Financial Accounting Standards 14 Financial
Reporting for Segments of a Business Enterprise. Statement 131
establishes standards on the way that public companies report
financial information about operating segments in annual financial
2
<PAGE>
statements and requires reporting of selected information about
operating segments in interim financial statements issued to the
public. It also establishes standards for disclosures regarding
products and services, geographic areas, and major customers.
Statement 131 defines operating segments as components of a company
about which separate financial information is available that is
evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
Statements 130 and 131 are effective for financial statements
for periods beginning after December 15, 1997 and require
comparative information for earlier years to be restated. Because
of the recent issuance of these standards, management has been
unable to fully evaluate the impact, if any, the standards may have
on the future financial statement disclosures. Results of
operations and financial position, however, will be unaffected by
implementation of these standards. Actual results could differ
from those estimates.
Introduction
The Company was organized and has been engaged in the business
of investing in the viatical settlement industry by acquiring life
insurance policies from individuals or pools of policies from other
companies. During the fiscal year ended May 31, 1997, the industry
changed due to advances in medication that prolongs life for these
individuals and the Company has ceased further participation in the
viatical settlement business due to the extended life expectancies
resulting in lower returns. The Company's current plan of
operations is discussed in detail hereinbelow.
Results of Operations
Comparison of Results of Operations for the Six Month Periods
ended November 30, 1998 and 1997
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 were restated in the
Company's audited Financial Statements included in the Company's
annual report on Form 10-KSB for the fiscal year ended May 31,
1998, to present the viatical settlement business as a discontinued
operation.
The Company, while incorporated in January 1991, did not
commence business operations until June 1995, when the discontinued
viatical settlement business plan of the Company was adopted.
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. During
3
<PAGE>
the fiscal year ended May 31, 1998, none of these policies matured.
During the fiscal year ended May 31, 1997, one policy matured and
the Company recognized approximately $9,000 in revenues. As a
result, the Company incurred a net loss of $104,746 during fiscal
year 1998 ($.07 per share), as compared to a net loss of $58,889
for the 1997 fiscal year ($.04 per share).
The Company had no revenues for the six month periods ended
November 30, 1998 and November 30, 1997. In the six month period
ended November 30, 1998, general and administrative expenses
decreased $18,977 (40.5%) from $46,910 for the six month period
ended November 30, 1997 to $27,933. This decrease was due to (i)
fees incurred during the applicable period in 1997 to a consultant
associated with a potential acquisition by the Company of a digital
pager company; (ii) the elimination of rental payments by the
Company for its principal office space, which space is provided by
a shareholder who has agreed to abate such rental payments; and
(iii) significant reduction of compensation to officers of the
Company. However, legal fees incurred by the Company during this
period increased as a result of the proposed share exchange between
the Company and 2PI, which proposed transaction was terminated in
November 1998.
The Company incurred a net loss of $(34,975) for the six month
period ended November 30, 1998, compared to a net loss of $(52,547)
for the six months ended November 30, 1997. All losses were
attributable primarily to general and administrative expenses
incurred by the Company.
Comparison of Results of Operations for the Three Month Periods
Ended November 30, 1998 and 1997.
The Company had no revenues for the three month periods ended
November 30, 1998 and 1997. In the three month period ended
November 30, 1998, general and administrative expenses decreased
$3,007 (13%) from $23,188 for the three month period ended November
30, 1997 to $20,181. This decrease was primarily due to fees
incurred to a consultant associated with a potential acquisition by
the Company of a digital pager company during the applicable period
in 1997; however, the Company incurred additional legal expenses
relating to the proposed share exchange between the Company and
AFEW, Inc. and 2Xtreme, which was terminated in November 1998.
The Company incurred a net loss of $(23,752) for the three
month period ended November 30, 1998, compared to a net loss of
$(25,756) for the three months ended November 30, 1997, a decrease
of $(2,004), or 7.8%, primarily due to the decrease in general and
administrative expenses.
4
<PAGE>
Plan of Operation
The Company's current 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. Relevant thereto, effective August 22,
1998, the Company entered into a letter of intent with 2xtreme
Performance International LLC., ("2PI"), a privately held Delaware
limited liability company, whereby the Company agreed in principle
to acquire all of the interests of 2PI, in exchange for issuance by
the Company of previously unissued "restricted" common stock.
However, this proposed transaction was terminated by 2PI on or
about October 30, 1998. As a result, management is presently
reviewing potential merger or acquisition candidates as of the date
of this report. However, while certain discussions have occurred
with such candidates subsequent to receipt of notice of termination
of the 2PI transaction, no definitive agreement has been reached
with any entity as of the date of this report.
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
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
5
<PAGE>
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.
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
6
<PAGE>
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
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
7
<PAGE>
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
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
8
<PAGE>
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 primary need for capital has been the funding of
policy purchases. Current management cannot ascertain what the
Company's primary need will be in the future due to the fact that
management cannot state what the business of the Company will be in
the future as of the date of this report.
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 $178,340. During the
fiscal years ended May 31, 1998 and 1997, the Company did not sell
additional stock or borrow any additional funds.
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 amended by the mutual consent of the parties, to reflect that
these loans will be due on June 30, 1999 for the initial two loans,
with the $75,000 loan due November 30, 1999, with interest accruing
at the rate of 7% per annum on each of the loans. The Company
utilized the proceeds of these loans to purchase insurance
policies.
For the six month period ended November 30, 1998, the Company
had a negative cash flow from operations of $1,505 compared to a
negative cash flow from operations of $154 at November 30, 1997.
The Company again did not produce enough cash flow from its now
discontinued operations to cover cash outflow and, therefore,
utilized existing cash resources, or such obligations were paid by
members of management as loans to the Company.
It is not anticipated that the Company will expend any of its
present financial resources on the purchase of any significant
9
<PAGE>
equipment in the future, nor is it anticipated that the number of
employees of the Company will increase to any significant degree in
the future, subject to the Company successfully consummating a
merger or acquisition, of which there can be no assurance.
Inflation
Although the operations of the Company are influenced by
general economic conditions, the Company does not believe that
inflation had a material affect on the results of its discontinued
operations during the six month periods ended November 30, 1998 and
1997.
Trends
As described above herein, the Company's principal business
was in the viatical settlement industry, where it purchased life
insurance policies from terminally ill patients, including patients
diagnosed with AIDS. However, as treatment of AIDS patients has
allowed these patients to increase their respective life
expectancies, this has resulted in management making the election
to change the principal business of the Company, as also described
herein.
Management is unaware of any existing trends which may have
any impact on the proposed business of the Company, either negative
or positive. Management believes that it will have more
understanding of such trends, if any, once the Company has
implemented its proposed new business plan.
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. The Company presently owns
approximately $2,000 worth of computers. It utilizes outside
contractors for the bulk of its computer work. These consultants
have advised the Company that they have made all necessary
revisions to their software to avoid any potential problems arising
in the year 2000. 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.
10
<PAGE>
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.
On or about November 2, 1998, the Company filed a report on
Form 8-K, advising that the Company had received written notice
from legal counsel to AFEW, Inc. and 2xtreme Performance
International LLC., advising of their decision not to proceed with
the proposed transaction reported by the Company on a Form 8-K
dated August 25, 1998 and filed with the SEC. No reason for their
decision was contained in the aforesaid notice; however, based
upon discussions between principals of the Company and AFEW, Inc.,
management believes that the decision not to proceed was not due to
any problems relating to the Company, its principals or business
activities, but rather was made by the principals of AFEW, Inc. and
based upon their own needs and interests.
11
<PAGE>
<TABLE>
USAsurance Group, Inc.
Balance Sheet
- -----------------------------------------------------------------
<CAPTION>
Unaudited Audited
November May
30, 1998 31, 1998
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 498 $ 2,003
Notes Receivable (Net of $42,000
Allowance) 0 0
--------- ---------
Total Current Assets 498 2,003
--------- ---------
Property and Equipment 3,890 3,890
Less Accumulated Depreciation (1,912) (1,558)
--------- ---------
Net Property and Equipment 1,978 2,332
--------- ---------
Other Assets-Purchased Life Insurance
Company 407,776 407,776
--------- ---------
TOTAL ASSETS $ 410,252 $ 412,111
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Current Liabilities:
Accounts Payable $ 25,585 $ 18,703
Interest Payable 21,650 14,608
--------- ---------
Total Current Liabilities 47,235 33,311
--------- ---------
Long-Term Debt - Related Party 121,331 103,340
Long-Term Debt - Other 75,000 75,000
--------- ---------
Total Long-Term Debt 196,331 178,340
--------- ---------
TOTAL LIABILITIES 243,566 211,651
--------- ---------
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 402,791 401,591
Preferred Stock, $.01 Par Value, Non Voting
Authorized 1,000,000 Shares;
Issued And Outstanding -0- Shares 0 0
Retained Earnings (Deficit) (236,262) (201,288)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 166,686 200,460
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 410,252 $ 412,111
========= =========
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
12
<PAGE>
<TABLE>
USAsurance Group, Inc.
Unaudited Statement Of Operations
- -----------------------------------------------------------------
<CAPTION>
Unaudited Unaudited
3 Month 3 Month
Period Ended Period Ended
November November
30, 1998 30, 1997
------------ ------------
<S> <C> <C>
Income: $ 0 $ 0
General & Administrative Expenses:
Compensation - Officers 600 8,250
Depreciation 177 177
Legal And Accounting 19,225 5,867
Professional Services 0 5,000
Rent 0 765
Stock Transfer 179 0
Telephone 0 652
Travel 0 2,477
------------ ------------
Total 20,181 23,188
------------ ------------
Net (Loss) Before Other Income (20,181) (23,188)
============ ============
Other Income (Expense)
Interest Income 0 500
Interest Expense (3,571) (3,068)
------------ ------------
Total Other Income (Expense) (3,571) (2,568)
------------ ------------
Net (Loss) (23,752) (25,756)
============ ============
Basic (Loss) Per Common Share ($0.02) ($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>
13
<PAGE>
<TABLE>
USAsurance Group, Inc.
Unaudited Statement Of Operations
- -----------------------------------------------------------------
<CAPTION>
Unaudited Unaudited
6 Month 6 Month
Period Ended Period Ended
November November
30, 1998 30, 1997
------------ ------------
<S> <C> <C>
Income: $ 0 $ 0
General & Administrative Expenses:
Compensation - Officers 1,200 16,500
Depreciation 354 354
Legal And Accounting 26,194 11,937
Office 6 5,539
Professional Services 0 7,500
Rent 0 1,284
Stock Transfer 179 1,320
Telephone 0 2,476
------------ ------------
Total 27,933 46,910
------------ ------------
Net (Loss) Before Other Income (27,933) (46,910)
============ ============
Other Income (Expense)
Interest Income 0 500
Interest Expense (7,042) (6,137)
------------ ------------
Total Other Income (Expense) (7,042) (5,637)
------------ ------------
Net (Loss) (34,975) (52,547)
============ ============
Basic (Loss) Per Common Share ($0.02) ($0.03)
============ ============
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>
14
<PAGE>
<TABLE>
USAsurance Group, Inc.
Statement Of Cash Flows
- -----------------------------------------------------------------
<CAPTION>
Unaudited Unaudited
6 Month 6 Month
Period Ended Period Ended
November November
30, 1998 30, 1997
------------ ------------
<S> <C> <C>
Net (Loss) $ (34,975) $ (52,547)
Adjustments To Reconcile Net Loss
To Net Cash Used In Operating
Activities:
Depreciation 354 354
Contributed Services And Rent 1,200 17,500
Changes In Operating Assets
And Liabilities:
Decrease In Receivable 0 26,300
(Increase) In Purchased Life
Insurance Policies 0 (776)
Decrease In Deposits
With Insurance Companies 0 38,476
Increase In Accounts Payable 6,882 3,402
Increase In Interest Payable 7,042 (863)
------------ ------------
Net Flows From Operations (19,497) 31,846
Cash Flows From Investing Activities:
0 0
------------ ------------
Net Cash Flows From Investing 0 0
------------ ------------
Cash Flows From Financing Activities:
Loans Made To Other Parties 0 (50,000)
Funds Received From Loans 17,992 22,000
Payments Made on Loans 0 (4,000)
------------ ------------
Cash Flows From Financing 17,992 (32,000)
------------ ------------
Net Increase In Cash (1,505) (154)
Cash At Beginning Of Period 2,003 729
------------ ------------
Cash At End Of Period $ 498 $ 575
============ ============
Summary Of Non-Cash Investing
And Financing Activities:
Reclass Trade Payable to Note Payable $ 9,491 $ 0
============ ============
<FN>
The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.
</TABLE>
15
<PAGE>
USAsurance Group, Inc.
Notes To Unaudited Financial Statements
For The Six Month Period Ended November 30, 1998
- ------------------------------------------------
Note 1 - Unaudited Financial Information
- ----------------------------------------
The unaudited financial information included for the six month
interim periods ended November 30, 1998 and 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 six month period ended November 30,
1998 are not necessarily indicative of the results expected for the
fiscal year ended May 31, 1999.
16
<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: January 19, 1999
By: s/Matthew J. Kavanagh, III
---------------------------
Matthew J. Kavanagh, III,
Secretary
17
<PAGE>
USAsurance Group, Inc.
Exhibit Index to Quarterly Report on Form 10-QSB
For the Quarter Ended November 30, 1998
EXHIBITS Page No.
EX-27 Financial Data Schedule . . . . . . . . . . . 19
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED NOVEMBER 30, 1998,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-END> NOV-30-1998
<CASH> 498
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 498
<PP&E> 3,890
<DEPRECIATION> 1,912
<TOTAL-ASSETS> 410,252
<CURRENT-LIABILITIES> 47,235
<BONDS> 0
0
0
<COMMON> 157
<OTHER-SE> 166,529
<TOTAL-LIABILITY-AND-EQUITY> 410,252
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,933
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,042
<INCOME-PRETAX> (34,975)
<INCOME-TAX> 0
<INCOME-CONTINUING> (34,975)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (34,975)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
