UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended September 30, 1998
Commission File Number 33-24608-LA
USA INTERNATIONAL CHEMICAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 95-4068292
(State of other jurisdiction (I.R.S. Employer Identification Number)
incorporation or organization)
15915 Ventura Boulevard, Suite 301
Encino, California 91436
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including are (818) 783-0393
------------------------------------------------
Indicate by check mark 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 preceding 12 months (or for such shorter period
that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days:
YES X NO
Common stock, $.00001 par value, 1,346,809 issued and outstanding as of
October 21, 1998.
<PAGE>2
INDEX
PAGE
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited) ..............................3
ITEM 2. Management's Discussion and Analysis ..........................8
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.............................................10
ITEM 2. Changes in Securities.........................................10
ITEM 3. Defaults upon Senior Securities........ .....................10
ITEM 4. Submission of Matters to a Vote of Security Holders...........10
ITEM 5. Other Information.............................................10
ITEM 6. Exhibits and Reports on Form 8-K..............................11
<PAGE>3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>4
USA INTERNATIONAL CHEMICAL, INC.
BALANCE SHEET (UNAUDITED)
SEPTEMBER 30, 1998
ASSETS
Current Assets
Cash $ 4,779
-------
Total Assets $ 4,779
=======
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities $ 1,753
Stockholders' Equity (Notes 1 and 2)
Common stock, $.00001 par value, authorized
50,000,000 shares, issued and outstanding
1,346,809 shares 13
Additional paid-in capital 328,167
Accumulated deficit (325,154)
---------
Total Stockholders Equity 3,026
---------
Total Liabilities and Stockholders' Equity $ 4,779
=========
See accompanying notes.
<PAGE>5
USA INTERNATIONAL CHEMICAL, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Three Months Ended
September 30,
--------------------------
1998 1997
---- ----
Sales .................................. $ ---- $ ----
-------- --------
General Administrative Expenses........... 6,784 6,848
-------- --------
Loss from Operations................. (6,784) (6,848)
-------- --------
Loss Before Income Tax Provisions.... (6,784) (6,848)
-------- --------
Provision for Income Tax.................. 800 $ 800
-------- --------
Net Loss.................................. $ (7,584) $ (7,648)
-------- --------
Net Loss Per Share ....................... $ (.01) $ (.01)
=========== =========
Weighted Average Shares Outstanding....... 1,346,809 1,341,809
See accompanying notes.
<PAGE>6
USA INTERNATIONAL CHEMICAL, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
Three Months Ended
September 30,
-------------------
Operating Activities:
1998 1997
--------- -------
Net Cash Used in Operating Activities $(3,831) $(5,907)
Financing Activities:
Capital Contributions 5,000 3,000
--------- --------
Net Cash Provided by Financing Activities 5,000 3,000
--------- --------
Net Increase (Decrease) in Cash 1,169 (2,907)
Cash at beginning of period 3,610 5,524
--------- --------
Cash at end of period $4,779 $2,617
========= ========
See accompanying notes
<PAGE>7
USA INTERNATIONAL CHEMICAL, INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1998
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
pursuant to Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
September 30, 1998 are not necessarily indicative of the results that may be
expected for the year ending June 30, 1999. For further information refer to the
financial statements and footnotes thereto included in Form 10-KSB for the year
ended June 30, 1998 filed by the Company.
The Company has a history of losses and is evaluating various alternatives to
recapitalize the Company which may provide the opportunity for the Company to
continue as a going concern.
It is not possible to predict the success of management's efforts. If management
is unable to achieve any of its goals, the Company will find it necessary to
undertake actions as may be appropriate to continue operations. The financial
statements do not reflect any adjustments that might result from the outcome of
this uncertainty.
NOTE 2 - SHAREHOLDERS' DEFICIT
During the three months ended September 30, 1998 principal shareholders
contributed $5,000 to the Company.
<PAGE>8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion, other than the historical financial information, may
consist of forward-looking statements that involve risks and uncertainties,
including when the Company may resume business operations. Consequently, actual
results may vary from management's expectations.
Results of Operations for the Three Months Ended September 30, 1998
-------------------------------------------------------------------
Operating Activities
--------------------
There were no sales for the three month period ended September 30, 1998.
Since the change of control of the Company in September, 1994, the Company has
not pursued any of the Company's former business. Consequently, until the
Company's current management develops or acquires new business lines, no
operating revenues are expected.
Operating expenses totaled $6,784 for the quarter ended September 30,
1998. Net cash used by operations was $3,831 and $2,000 was paid for services by
issuing 5,000 shares of common stock. Operating expenses for the quarter
consisted primarily of legal and accounting fees relating to the Company's
year-end annual report on Form 10-KSB and the material for the Company's annual
shareholders meeting.
Net loss totaled $7,584 for the three months ended September 30, 1998.
In light of the foregoing, the Company will attempt to keep
administrative expenses to a minimum. However, operating losses are anticipated
until the Company establishes new lines of business.
Many companies have older computer programs which recognize only the
last two digits of the year in any date (i.e. "98" for "1998"), which could
cause such software to fail to operate in the year 1999 or 2000 unless the
software is preprogramed or replaced (the "Year 2000 Problem"). Since the
Company has no active business operations, the Year 2000 Problem is not expected
to affect the Company's current limited operations. Consequently, the Company
believes that the cost of addressing the Year 2000 Problem will not have a
material effect on the Company's financial position, liquidity or results of
operations.
For the foreseeable future, the Company's sole activity is expected to
be the identification and evaluation of suitable business opportunities which
could result in an acquisition by or combination with the Company. There can be
no assurance, however, that the Company will be successful in its efforts, or
that other types of business transactions might not be considered.
Capital Resources and Liquidity
-------------------------------
Pursuant to the terms of a Stock Purchase Agreement, the Company
liquidated its assets and liabilities during the three months ended September
30, 1994. Since September 30, 1994, the Company has generated no revenues from
operations. During the three months ended September 30, 1998, capital was
provided for operations from $5,000 in contributions from two of the Company's
principal stockholders. The Company expects to fund its ongoing capital needs
through investments in or advances to the Company by its principal stockholders
or other affiliates of the Company.
<PAGE>9
Results of Operations for the Three Months Ended September 30, 1998 as Compared
to the Three Months Ended September 30, 1997
- ---------------------------------------------
Operating Activities
--------------------
There were no sales for the three month period ended September 30, 1998
or 1997.
Operating expenses totaled $6,784 for the quarter ended September 30,
1998, and $6,848 for the three months ended September 30, 1997. The similar
level of expenses reflect comparable fees for services rendered in both three
month periods.
During the three months ended September 30, 1998, net cash used by
operations was $3,831. During the three months ended September 30, 1997, net
cash of $5,907 was used by operations.
Net loss totaled $7,584 for the three months ended September 30, 1998,
compared to a net loss of $7,648 for the three months ended September 30, 1997.
The relatively equal net loss incurred for both periods reflect similar levels
of administrative expenses recognized in both quarters.
Capital Resources and Liquidity
-------------------------------
During the three months ended September 30, 1998, capital was provided
for operations from $5,000 in contributions from two of the Company's principal
stockholders. During the three months ended September 30, 1997, capital for
operations was provided from $3,000 in contributions from these principal
shareholders or other affiliates of the Company.
<PAGE>10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company, or to which the
Company or any of its officers or directors are a party, and to the knowledge of
the Company's management, no claims have been made against the Company.
ITEM 2. CHANGES IN SECURITIES
Effective September 1, 1998, the Company issued 5,000 shares of its
common stock to Arthur Lyons in consideration of services rendered to the
Company valued at $2,000. The shares were issued in a private offering in
reliance upon the exemption from registration pursuant to Section 4(2) of the
Securities Act of 1933 as amended. The reliance on the above registration
exemption was based primarily upon the following facts:
i) the issuance was made to a single individual who was
previously known to the Company's then President and CEO;
ii) the transferee was deemed capable of protecting his own interest in
this transaction; and
iii) the issuance was not accompanied by any general solicitation.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
`Effective September 1, 1998, Yale Farar resigned his positions as a Board
member and as President and Chief Financial Officer of the Company. Mr. Farar
will continue to assist the Company in achieving its business objectives but
will now share his time to pursue other business interests. Harold Fleischman
assumed the position of President and Chief Financial Officer effective
September 1, 1998. Also effective September 1, 1998, Mr Arthur Lyons was
appointed to the Company's Board of Directors and appointed corporate Secretary.
Mr. Lyons has been a businessman and restauranteur in Southern California for
over twenty years. Mr. Lyons served on the Palm Springs, California City Council
from 1992 to 1996. He is the author of seventeen fiction and non-fiction books,
as well as numerous magazine articles, short stories and screenplays. Mr. Lyons
is a graduate of the University of California at Santa Barbara.
<PAGE>11
As of September 1, 1998, the Company's executive offices were moved to 15915
Ventura Boulevard, Suite 301, Encino, California 91436. The Company's new phone
number will be (818) 783-0393. Such space and phone service will be provided by
Mr. Fleischman at no charge.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No Exhibits
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
USA INTERNATIONAL CHEMICAL, INC.
Dated: November 2, 1998 /s/HAROLD S. FLEISCHMAN
-------------------------------------
Harold S. Fleischman
President and Chief Financial Officer
(Principal Accounting Person)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(THIS SCHEDULE CONAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
10-QSB FOR THE PERIOD ENDING SEPTEMBER 30, 1998 FOR USA INTERNATIONAL
CHEMICAL, INC. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS)
</LEGEND>
<S> <C>
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<PERIOD-END> SEP-30-1998
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0
0
<COMMON> 13
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<INCOME-PRETAX> (6,784)
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