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 December 31, 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 of (I.R.S. Employer
incorporation or organization) Identification Number)
15915 Ventura Boulevard, Suite 301
Encino, California 91436
-------------------------------------- ---------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (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
January 15, 1999.
- -------------------------------------------------------------------------------
<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............................. 10
<PAGE>3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>4
USA INTERNATIONAL CHEMICAL, INC.
BALANCE SHEET
DECEMBER 31, 1998
(UNAUDITED)
ASSETS
Current Assets
Cash $ 635
-------------
Total Assets $ 635
=============
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities $ - 0 -
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 (327,545)
-------------
Total Stockholders Equity 635
-------------
Total Liabilities and Stockholders' Equity $ 635
=============
See accompanying notes.
<PAGE>5
USA INTERNATIONAL CHEMICAL, INC.
STATEMENTS OF OPERATIONS FOR THE THREE
AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997
(UNAUDITED)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
September 30, December 31,
-------------------- -----------------------------
1998 1997 1998 1997
------ ------ ------ ------
Sales .......................................... $ - $ - $ - $ -
---------- ---------- ----------- ----------
General Administrative Expenses.................... 2,391 1,519 9,175 8,367
---------- ---------- ---------- ----------
Loss from Operations.......................... (2,391) (1,519) (9,175) (8,367)
---------- ---------- ---------- ----------
Loss Before Income Tax Provisions............. (2,391) (1,519) (9,175) (8,367)
---------- ---------- ---------- -----------
Provision for Income Tax........................... 0 0 800 800
---------- ---------- ---------- -----------
Net Loss........................................... $ (2,391) (1,519) (9,975) (9,167)
========== ========== ========== ==========
Net Loss Per Share ................................ $ - $ - $ (.01) $ (.01)
========== ========== ========== ==========
Weighted Average Shares Outstanding................ 1,346,809 1,341,809 1,346,809 1,341,809
</TABLE>
See accompanying notes.
<PAGE>6
USA INTERNATIONAL CHEMICAL, INC.
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997
(UNAUDITED)
Six Months Ended
December 31,
----------------
1998 1997
-------- -------
Operating Activities:
Net Cash Used in Operating Activities $(7,975) $(9,167)
Financing Activities:
Capital Contributions 5,000 6,000
------- --------
Net Cash Provided by Financing Activities 5,000 6,000
------- --------
Net Increase (Decrease) in Cash (2,975) (3,167)
Cash at beginning of period 3,610 5,524
------- --------
Cash at end of period $ 635 $ 2,357
======== ========
See accompanying notes
<PAGE>7
USA INTERNATIONAL CHEMICAL, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED DECEMBER 31, 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 and six
months ended December 31, 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 six months ended December 31, 1998 principal shareholders contributed
$5,000 to the Company.
<PAGE>8
ITEM 2. MANAGEMENT'S DISCUSSION ANDANALYSIS 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.
Operating Activities
----------------------
There were no sales for the six month period ended December 31, 1998 or
1997. 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 $2,391 for the quarter ended December 31,
1998, and $9,175 for the six months ended December 31, 1998, which include
$2,000 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 quarterly and annual reports and the material for the
Company's annual shareholders meeting. Operating expenses totaled $1,519 and
$8,367 for the comparable periods in 1997. The similar level of expenses reflect
comparable fees for services rendered in both periods for 1998 and 1997.
During the six months ended December 31, 1998, net cash of $7,975 was
used by operations compared to $9,167 for the same period in 1997.
Net loss totaled $2,391 for the three months and $9,975 for the six
months ended December 31, 1998, compared to a net loss of $1,519 for the three
months and $9,167 for the six months ended December 31, 1997. The relatively
similar net loss incurred for both six month periods reflect similar levels of
administrative expenses recognized in such periods.
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.
<PAGE>9
Capital Resources and Liquidity
Since September 30, 1994, the Company has generated no revenues from
operations. During the six months ended December 31, 1998, capital was provided
for operations from $5,000 in contributions from two of the Company's principal
stockholders. During the six months ended December 31, 1997, capital for
operations was provided from $6,000 in contributions from these principal
shareholders or other affiliates of the Company. 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>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
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) No Exhibits
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
<PAGE>11
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: January 25, 1999 /s/ HAROLD S. FLEISCHMAN
--------------------------------
Harold S. Fleischman
President and Chief Financial Officer
(Principal Accounting Person)
