UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1997
-----------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-26262
USA Bridge Construction of N.Y., Inc.
(Exact name of registrant as specified in its charter)
New York 11-3032277
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
53-09 97th Place, Corona, New York 11368
(Address of principal executive offices) (Zip Code)
(718) 699-0100
(Registrant's telephone number, including area code)
U.S. Bridge of N.Y., Inc.
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
section 13 or 15 (d) of the Exchange Act 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 [xx] No [
] APPLICABLE ONLY TO CORPORATE ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common stock, par value $.001 per share: 2,659,182 shares outstanding as of
February 19, 1998.
<PAGE>
USA BRIDGE CONSTRUCTION OF N.Y., INC.
( FORMERLY U.S. BRIDGE OF N.Y., INC.)
INDEX
<TABLE>
<CAPTION>
PART 1 - Financial Information:
ITEM 1 - Financial Statements
<S> <C>
Balance Sheets December 31, 1997 (Unaudited)
and June 30, 1997 1
Statements of Operations (Unaudited)
for the Three Months ended December 31, 1997 and 1996 2
Statements of Operations (Unaudited)
for the Six Months ended December 31, 1997 and 1996 3
Statement of Stockholders' Equity (Unaudited)
for the Six Months ended December 31, 1997 4
Statements of Cash Flows (Unaudited)
for the Six Months ended December 31, 1997 and 1996 5
Notes to Financial Statements 6 - 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 11 - 15
PART II
ITEM 1. Legal Proceedings 16
ITEM 4. Submission Of Matters To A Vote Of Security Holders 17
Signatures 18
</TABLE>
<PAGE>
USA BRIDGE CONSTRUCTION OF N.Y., INC.
( FORMERLY U.S. BRIDGE OF N.Y., INC.)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
(Unaudited)
December June
31, 1997 30, 1997
Current assets:
<S> <C> <C>
Cash ......................................................$ 211,724 $ 554,025
Cash, restricted .......................................... 219,199 214,001
Contracts and retainage receivable, net ................... 10,126,003 8,943,147
Costs and estimated earnings in excess of billings
on uncompleted contracts ................................. 1,437,547 2,225,723
Deferred tax asset ........................................ 224,775 239,750
Due from parent company ................................... 1,022,016 --
Other current assets ...................................... 160,923 80,727
----------- -----------
Total current assets .................................. 13,402,187 12,257,373
Other assets ................................................... 22,176 21,445
----------- -----------
Total assets ................................................... $13,424,363 $12,278,818
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, including cash overdraft
of $21,256 and $119,658, respectively .................... $ 1,162,668 3,392,317
Accrued expenses .......................................... 1,289,885 915,016
Current portion of long-term payables ..................... 325,000 --
Payroll taxes payable ..................................... 1,667,512 1,349,225
Due to related parties .................................... 75,734 321,894
Income taxes payable ...................................... 804,964 507,379
Billings in excess of costs and estimated earnings
on uncompleted contracts ................................. 380,408 126,455
----------- -----------
Total current liabilities ............................. 5,706,171 6,612,286
----------- -----------
Long-term payables ............................................. 1,425,000 --
----------- -----------
Commitments and contingencies (Note 3) ......................... -- --
Stockholders' equity:
Preferred stock $.01 par value, authorized 500,000 shares,
issued and outstanding -0- ............................... -- --
Common stock $.001 par value, authorized 10,000,000 shares,
issued and outstanding 2,302,515 ......................... 504,047 504,047
Additional paid in capital ................................ 4,459,906 4,459,906
Retained earnings ......................................... 1,329,239 702,579
---------- -----------
Total stockholders' equity ............................ 6,293,192 5,666,532
----------- -----------
Total liabilities and stockholders' equity ..................... $13,424,363 $12,278,818
========== ===========
</TABLE>
See accompanying notes to financial statements (unaudited)
<PAGE>
USA BRIDGE CONSTRUCTION OF N.Y., INC.
(FORMERLY U.S. BRIDGE OF N.Y., INC.)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31,
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Contract revenue ............................ $ 3,350,901 $ 2,627,918
Cost of contract revenue .................... 2,536,107 1,888,570
--------- ---
Gross profit ................................ 814,794 739,348
General and administrative .................. 667,286 583,807
--------- ---
Income from operations before other income
and provision for income taxes ............. 147,508 155,541
Other income (expenses):
Interest expense ......................... -- (1,011)
Interest income .......................... 2,251 --
---------- ---
Total other income ................... 2,251 (1,011)
---------- ---
Income before provision for income taxes .... 149,759 154,530
Provision for income taxes (See Note 2) ..... 85,610 --
---------- ---
Net income .................................. $ 64,149 $ 154,530
========== ===
Basic:
Net income ............................... $ .03 $ .08
========== ===
Weighted average number of shares outstanding 2,302,515 1,907,515
=========== ===
</TABLE>
See accompanying notes to financial statements (unaudited).
<PAGE>
USA BRIDGE CONSTRUCTION OF N.Y., INC.
(FORMERLY U.S. BRIDGE OF N.Y., INC.)
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31,
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- ----------
<S> <C> <C>
Contract revenue ............................ $12,269,286 $ 5,774,860
Cost of contract revenue .................... 10,077,282 4,142,957
----------- ---
Gross profit ................................ 2,192,004 1,631,903
General and administrative .................. 1,257,983 1,071,239
----------- ---
Income from operations before other income
and provision for income taxes ............. 934,021 560,664
Other income (expenses):
Interest expense ......................... -- (1,011)
Interest income .......................... 5,199 999
----------- ---
Total other income (expense) ......... 5,199 (12)
----------- ---
Income before provision for income taxes .... 939,220 560,652
Provision for income taxes (See Note 2) ..... 312,560 --
----------- ---
Net income .................................. $ 626,660 $ 560,652
=========== ===
Basic:
Net income ............................... $ .27 $ .29
=========== ===
Weighted average number of shares outstanding 2,302,515 1,907,515
=========== ===
</TABLE>
See accompanying notes to financial statements (unaudited).
<PAGE>
USA BRIDGE CONSTRUCTION OF N.Y., INC.
(FORMERLY U.S. BRIDGE OF N.Y., INC.)
STATEMENT OF STOCKHOLDERS EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Common
stock
Additional
paid in Retained
Shares Amount capital stockholders Total
earnings equity
<S> <C> <C> <C> <C> <C>
Balances at July 1, 1997 .... 2,302,515 $ 504,047 $4,459,906 $ 702,579 $5,666,532
Net income for the six months
ended December 31, 1997 .... -- -- -- 626,660 626,660
---------- ---------- ---------- ---------- ----------
Balance at December 31, 1997 2,302,515 $ 504,047 $4,459,906 $1,329,239 $6,293,192
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements (unaudited).
<PAGE>
USA BRIDGE CONSTRUCTION OF N.Y., INC.
(FORMERLY U.S. BRIDGE OF N.Y., INC.)
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31,
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
-------------- ----------
Cash flows from operating activities:
<S> <C> <C>
Net income .................................................................. $ 626,660 $ 560,652
Adjustments to reconcile net income to net
provided by (cash used) for operating activities:
Amortization ......................... 3,048 2,327
Deferred income tax expense 14,975 --
Decrease (increase) in:
Contracts and retainage receivable (1,182,856) (3,324,289)
Costs and estimated earnings in
excess of billings on uncompleted contracts 788,176 1,361,524
Other current assets (80,196) (11,738)
Increase (decrease) in:
Accounts payable (479,649) 1,134,370
Accrued expenses 374,869 14,597
Payroll taxes payable 318,287 152,870
Income taxes payable 297,585 --
Billings in excess of costs and
estimated earnings on uncompleted contracts 253,953 (8,857)
----------- -----------
Net cash provided by (used for) operating activities ............................. 934,852 (118,544)
----------- -----------
Cash flows from investing activities:
Advances to parent company ...................................................... (1,022,016) --
Purchase of fixed assets ........................................................... (3,779) (5,677)
----------- -----------
Net cash used for investing activity (1,025,795) (5,677)
----------- -----------
Cash flows from financing activities:
(Repayments to) proceeds from related parties .....................................(246,160) 266,963
----------- -----------
Net cash (used for) provided by financing activities ..............................(246,160) 266,963
----------- -----------
Net (decrease) increase in cash ....................................................(337,103) 142,742
Cash, beginning .................................................................... 768,026 223,789
----------- -----------
Cash, ending .....................................................................$ 430,923 $ 366,531
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid ...................................................................$ -- $ 1,011
=========== ===========
</TABLE>
See accompanying notes to financial statements (unaudited).
<PAGE>
USA BRIDGE CONSTRUCTION OF N.Y., INC.
(FORMERLY U.S. BRIDGE OF N.Y., INC.)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(UNAUDITED)
NOTE 1 - ORGANIZATION
USA Bridge Construction of N.Y., Inc., (formerly U.S. Bridge
of N.Y., Inc.) ("the Company") is a New York corporation which
provides steel erection for building, roadway and bridge
repair projects for contractors who have been engaged by
private and municipal/governmental clients. The Company was
incorporated on September 4, 1990 and is a 53.23% owned
subsidiary of USAG Corp. (AUSABG@) formerly known as U.S.
Bridge Corp. The Company's President is also the majority
stockholder of USABG.
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with
instructions to Form 10-QSB. 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, the interim
financial statements include all adjustments necessary in
order to make the financial statements not misleading. The
results of operations for the three and six months ended is
not necessarily indicative of the results to be expected for
the full year. For further information, refer to the Company=s
audited financial statements and footnotes thereto at June 30,
1997, included in the Company=s Annual Report Form 10K-SB,
filed with the Securities and Exchange Commission.
NOTE 2 - PROVISION FOR INCOME TAXES
For the three and six months ended December 31, 1997, the
Company recorded an estimated income tax expense of $85,610
and $312,560, respectively. For the three and six months ended
December 31, 1996, no income tax expense was recorded by the
Company as a result of its then net operating tax carryforward
which was subsequently utilized through December 31, 1996.
NOTE 3 - COMMITMENT AND CONTINGENCIES
a) Disclosure of significant estimates - revenue recognition
The Company=s construction revenue is recognized on the
percentage of completion basis. Consequently, construction
revenue and gross margin for each reporting period is
determined on a contract by contract basis by reference to
estimates by the Company=s management and engineers of
expected costs to be incurred to complete each project. These
estimates include provisions for known and anticipated cost
overruns, if any exist or are expected to occur. These
estimates may be subject to revision in the normal course of
business.
b) Lease agreement
The Company leases its administrative offices and storage
space pursuant to a signed lease agreement with RSJJ Realty
Corp., (ARSJJ@), an entity wholly-owned by the Company=s
President. Such lease requires monthly payments of $20,000 and
expires on March 31, 1998. (See Note 5a(i) for additional
information). Under such lease agreement, before any term
modifications, the Company is required to make future minimum
lease payments as follows:
<PAGE>
Year Ending
June 30,
1998 $ 60,000
===============
Included in general and administrative expenses is rent
expense which amounted to $60,000 for the three months ended
December 31, 1997 and 1996 and $120,000 for the six months
then ended. In addition, pursuant to an oral agreement, the
Company leases a yard for storage material with an unrelated
party which requires monthly payments of approximately $3,500.
Accordingly, total rent expense for the three months ended
December 31, 1997 and 1996 amounted to $70,500 and $141,000
for the six months then ended. As of December 31, 1997,
$87,500 of rent remains unpaid and is included in accounts
payable. During June 1997, the Company issued 270,000 shares
of its common stock USABG, which in turn, it issued 150,000
shares of its common stock to RSJJ to settle $480,000 of
accrued rent owed.
c) Significant customers and vendors
For the six months ended December 31, 1997 and 1996, the
Company had one and three unrelated customers respectively,
which accounted for approximately 45% and 85%, respectively,
of total revenues. As of December 31, 1997 approximately 75%
of contracts and retainage receivables are due from two
customers.
d) Seasonality
The Company operates in an industry which may be seasonal,
generally due to inclement weather occurring during the winter
months. Accordingly, the Company may experience a seasonal
pattern in its operating results with lower revenue in the
third quarter of each fiscal year. Quarterly results may also
be affected by the timing of bid solicitations by governmental
authorities, the stage of completion of major projects and
revenue recognition policies.
e) Bonding requirements
The Company is required to provide bid and/or performance
bonds in connection with governmental construction projects.
To date, the Company has been able to sufficiently obtain
bonding for its private projects. The Company is continuously
pursuing obtaining bonding for its governmental construction
projects. In addition, new or proposed legislation in various
jurisdictions may require the posting of substantial
additional bonds or require other financial assurances for
particular projects.
f) Mechanics liens
As of December 31, 1997, the Company filed various mechanics
liens on certain projects totaling $16,919,542.
g) Claims
The Company elected not to recognize any portion of the
revenue associated with any contract claims until the amounts
recoverable can be accurately estimated. Claims are amounts in
excess of the agreed contract price which the Company seeks to
collect for customer caused delays, errors in specifications
and designs, contract terminations, change orders in dispute
or unapproved.
<PAGE>
h) Legal Proceedings
The Company is a party to various claims and legal proceedings
incidental to its business. In management=s opinion, the
outcome of these claims and proceedings will not have a
material adverse effect on the financial statements of the
Company taken as a whole.
i) Payroll taxes
As of December 31, 1997, the Company owes approximately
$1,667,512 of payroll taxes. Although as of December 31, 1997,
the Company has not entered into any formal repayment
agreements with the respective tax authorities, it has been
making payments based on oral agreements.
j) Accounts payable
In November 1997, the Company entered into an agreement with
the Iron Workers Local 40,361 and 417 Joint Security Funds the
"Union@ in order to liquidate $1,750,000 owed relating to
unpaid union dues. The Company agreed to pay $75,000 by
January 1998 and at least $25,000 monthly commencing March 1,
1998 with interest at 9.5% per annum. As collateral, the
Company assigned its retainage receivable from a certain
project as well as $1,750,000 of the Company=s related
mechanics lien. Upon any funds being released or paid under
such mechanics lien, the Union will be repaid any balance owed
in full before the Company may receive any funds. The Company
will receive credit for any payments received by The Union
related to the assigned portion of the mechanics lien.
NOTE 4 - RELATED PARTY TRANSACTIONS
a) Purchase of material and labor
For the six months ended December 31, 1997 and 1996, the
Company paid $35,000 and $337,821, respectively, to US Bridge
MD for material and labor necessary to perform steel erection
services. US Bridge MD is a wholly-owned subsidiary of USABG.
During September 1996, US Bridge MD ceased substantially all
of its operations and the Company began purchasing material
and labor from unrelated third party steel fabricators. At
December 31, 1997 the Company owed US Bridge MD $47,220
principally for advances in connection with above services.
Such amounts are non-interest bearing and due on demand.
b) Rent expense
Included in general and administrative expenses is rent
expense paid pursuant to a signed lease agreement with a
company wholly-owned by the Company's President. Such rent
amounted to $60,000 for the three months ended December 31,
1997 and 1996 and $120,000 for the six months ended December
31, 1997 and 1996.
c) Employment agreement
On April 4, 1995, the Company entered into an employment
agreement with its President and Director for a term of
approximately three (3) years expiring on June 30, 1998. The
employment agreement provides for an annual salary of $300,000
with 10% annual escalations. In addition, the President and
Director has been granted options to purchase 25,000 shares of
the Company's common stock, all of which options shall vest
through April 1998. The exercise price of the options shall be
equal to $5.50 per share. The foregoing options are intended
to qualify as incentive stock options.
<PAGE>
d) Due from parent company
During the three months ended December 31, 1997, the Company
advanced funds to its parent, USABG These advances are
non-interest bearing and are due on demand. As of December 31,
1997 such advances amounted to $1,022,016.
e) Due to related parties
As of December 31, 1997, the Company has been advanced a total
of $75,734 from various affiliates and related parties. Such
advances are non-interest bearing and are due on demand.
NOTE 5 - SUBSEQUENT EVENTS
a) Issuance of common stock
i) On February 5, 1998, the Company agreed to issue 106,667
shares of its common stock to USABG as consideration to
USABG for issuing shares of its own stock to RSJJ in
consideration for payment in full of the rent due by the
Company to RSJJ for the period from January 1, 1998 to
December 31, 1998.
ii) During December 1998, the Company's board of directors
authorized the issuance of 250,000 shares of its common
stock pursuant to its Senior Management Incentive Plan.
Of the 250,000 shares, 100,000 will be issued to the
Company=s President, 50,000 to the Company=s Secretary,
and 50,000 to the Company=s Treasurer. The remaining
50,000 shares will be issued to employees and consultants
to the Company. The Company also authorized the filing of
an amended Form S-8 Registration Statement to include the
issuance of these shares under the plan.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company recognizes revenue and costs for all contracts
under the percentage of completion method. Cost of contract
revenues include all direct material and labor costs and those
indirect costs related to contract performance. General and
administrative expenses are accounted for as period costs and
are, therefore, not included in the calculation of the
estimates to complete construction contracts in progress.
Material project losses are provided for in their entirety
without reference to the percentage of completion. As
contracts can extend over one or more accounting periods,
revision in costs and earnings estimated during the course of
the work are reflected during the accounting period in which
the facts become known. An amount equal to the costs
attributable to unapproved change orders and claims is
included in the total estimated revenue when realization is
probable.
The current asset, "costs and estimated earnings in excess of
billings on uncompleted contracts", represents costs and
estimated earnings in excess of amounts billed on respective
uncompleted contracts at the end of each period. The current
liability, "billings in excess of costs and estimated earnings
on uncompleted contracts," represents billings which exceed
costs and estimated earnings on respective uncompleted
contracts at the end of each period.
<PAGE>
The Company has elected not to recognize any portion of the
revenue associated with such claims until the amounts have
been received or awarded. Claims are amounts in excess of the
agreed contract price which the Company seeks to collect for
customer - caused delays, errors in specifications and
designs, contract terminations, change orders in dispute or
unapproved.
The Company's operations are substantially controlled by Mr.
Polito since he owns approximately 61% of the outstanding shares
of U.S. USABG, (AUSABG@) the parent company who owns 53.23% of
the common stock of U.S. Bridge of N.Y., Inc. (the ACompany") and
may be considered the beneficial owner of the Company. Mr. Polito
is also a 100% shareholder of RSJJ Realty Corp. ("RSJJ"). RSJJ
leases the administrative office space to the Company at a cost
of $20,000 per month pursuant to a signed lease agreement
expiring on March 31, 1998. Mr. Polito also has ownership
interest in Crown Crane, Inc. and Atlas Gem Leasing, Inc. which
provided services to the Company for the three months ended
December 31, 1997 and 1996. Lastly, the Company purchased from
U.S. Bridge of Corp. (Maryland) (AUS Bridge MD@) a wholly-owned
subsidiary of Bridge Corp, certain materials and labor to perform
steel erection service. US Bridge MD ceased substantially all of
its operations during September 1996 and, accordingly, the
Company purchased its steel from unrelated parties.
The Company plans to continue to undertake projects as a
subcontractor, but will focus on obtaining projects as a
general contractor in both the public and private sectors. The
Company will be responsible for performance of the entire
contract, including the work done by subcontractors.
Accordingly, the Company may be subject to substantial
liability if a subcontractor fails to perform as required.
Also there may be unanticipated difficulties in hiring and
overseeing subcontractors that the Company is currently not
aware of. The Company requires bonding from a New York
licensed bonding Company in order to bid on projects as a
general contractor.
<PAGE>
Though the Company does not believe its business is seasonal,
its operations are generally slow in the winter months due to
the decrease in worker productivity because of weather
conditions. Accordingly, the Company may experience a seasonal
pattern in its operating results with lower revenue in the
third quarter of each fiscal three months. Interim results may
also be affected by the timing of bid solicitation, the stage
of completion of major projects and revenue recognition
policies.
In order to obtain bonding, in addition to credit checks and
other due diligence disclosure requirements, bonding companies
require the Company receiving bonding to have certain amounts
of capital and liquid assets, which will base the amount of
bonding it will issue based on a formula, devised by each
individual bonding Company, which primarily takes into account
the Company's capital and liquid assets. In order for the
Company to obtain and maintain bonding, it must adhere to the
requirements stipulated in the bonding agreements which vary
with each bonding Company. The bonding costs for each bond are
incorporated in the contract price of each job. These costs
are carried as a line item in the requisition and paid by the
customer. Any monies taken from the working capital for this
purpose will be replaced as the monthly requisition payments
are received from the customer. Bonding requirements vary
depending upon the nature of the projects to be performed. The
Company anticipates paying a fee to bonding companies of
between 1 1/4% to 3 1/2% of the amount of the contracts to be
performed. Since these fees are generally payable at the
beginning of a project, the Company must maintain sufficient
working capital to satisfy the fee prior to receiving from the
project.
Three months ended December 31, 1997 as compared to the three
months ended December 31, 1996
Contract revenues for the three months ended December 31, 1997
and 1996 amounted to $3,350,901 and $2,627,918, respectively.
The increase amounted to $722,983 or approximately 27%. During
the three months ended December 31, 1997 the Company has
obtained no new contracts but has obtained additional change
orders to previous contracts. As of December 31, 1997, the
Company=s backlog amounted to approximately $3,227,000.
Backlog represents the amount of revenue the Company expects
to realize from work to be performed on uncompleted contracts
in progress and from contractual agreements which work has not
yet begun.
The Company's gross profit for the three months ended December
31, 1997 and 1996 amounted to 24% and 28%, respectively. The
decrease represents estimated cost adjustments on certain
contracts and shutdown costs on jobs which have been halted or
completed.
For the three months ended December 31, 1997 and 1996, the
Company paid $0 and $172,141, respectively, to US Bridge MD
for materials and labor necessary to perform steel erection
services. During September 1996, US Bridge MD ceased
substantially all of its operations and the Company began
purchasing material and labor from unrelated third party steel
fabricators. At December 31, 1997 the Company owed US Bridge
MD $47,220, principally for advances in connection with above
services and such amounts are non-interest bearing and due on
demand.
<PAGE>
General and administrative expenses have increased by $83,479
or 14% to $667,286 for the three months ended December 31,
1997 from $583,807 for the three months ended December 31,
1996. The increase in general administration costs are mainly
attributable to an overall increase of the Company's
administrative salaries associated with the material amount
increase in contract revenue and miscellaneous general
corporate overhead.
As of December 31, 1997, the Company=s allowance for doubtful
accounts amounts to $2,159,000 against its contract
receivable. In management=s opinion, the allowance for
doubtful accounts at December 31, 1997, will be sufficient to
absorb any losses that may be sustained from settlements. As
of December 31, 1997 and 1996 approximately 75% and 61% of
contracts and retainage receivables are due from two
customers.
For the three months ended December 31, 1997, the Company
recorded an estimated income tax expense of $85,610. For the
three months ended December 31, 1996, no income tax expense
was recorded by the Company as a result of its then net
operating tax carryforward which was subsequently utilized.
Six months ended December 31, 1997 as compared to the six
months ended December 31, 1996
Contract revenues for the six months ended December 31, 1997
and 1996 amounted to $12,269,286 and $5,774,860, respectively.
This net increase amounting to $6,494,426 or approximately
112% is a direct result of the Company=s backlog as of June
30, 1997 which amounted to approximately $6,088,000. This
backlog amount represents the contracts the Company had
entered into during the latter part of its June 30, 1997
fiscal year. During the six months ended December 31, 1997,
the Company has obtained no new contracts but has obtained
additional change orders to previous contracts amounting to
approximately $10,744,852. As of December 31, 1997, the
Company=s backlog amounted to approximately $3,227,000.
Backlog represents the amount of revenue the Company expects
to realize from work to be performed on uncompleted contracts
in progress and from contractual agreements which work has not
yet begun.
The Company=s gross profit for the six months ended December
31, 1997 and 1996 amounted to 18% to 28%, respectively. The
decrease in gross profit represents estimated cost adjustments
on certain contracts and shutdown costs on jobs which have
been halted or completed.
For the six months ended December 31, 1997 and 1996, the
Company paid $35,000 and $337,821, respectively, to US Bridge
MD for material and labor necessary to perform steel erection
services. During September 1996, US Bridge MD ceased
substantially all of its operations and the Company began
purchasing material and labor from unrelated third party steel
fabricators. At December 31, 1997, the Company owed US Bridge
MD $47,220, principally for advances in connection with above
services and such amounts are non-interest bearing and due on
demand.
<PAGE>
General and administrative expenses have increased by $186,744
or 17% to $1,257,983 for the six months ended December 31,
1997 from $1,071,239 for the six months ended December 31,
1996. The increase in general administration costs are mainly
attributable to an overall increase of the Company's
administrative salaries associated with the material increase
in contract revenue and general corporate overhead.
As of December 31, 1997, the Company=s allowance for doubtful
accounts amounts to $2,159,000 against its contract
receivable. In management=s opinion, the allowance for
doubtful accounts at December 31, 1997, will be sufficient to
absorb any losses that may be sustained from settlements. For
the six months ended December 31, 1997 and 1996, the Company
had one and three unrelated customers respectively, which
accounted for approximately 76% and 85% of total revenues.
For the six months ended December 31, 1997, the Company
recorded an estimated income tax expense of $312,560. For the
six months ended December 31, 1996, no income tax expense was
recorded by the Company as a result of its then net operating
tax carryforward which was subsequently utilized.
Liquidity and Capital Resources
At December 31, 1997, the Company's working capital amounted
to $7,696,016. As of December 31, 1997, the Company's net
contract receivable amounted to $10,126,003 of which
approximately $199,000 or 2% has been collected through
February 5, 1998.
Net cash provided by operating activities amounted to $934,852
for the six months ended December 31, 1997. The major
components of such provision of cash was directly attributed
to the Company's income amounting to $626,660 and increases in
accounts receivable net of increases of its payroll taxes
payable and accrued expenses. For the six months ended
December 31, 1996, the net cash used for operating activities
amounted to $118,544 which were principally attributable to
increases in account receivable, decreases in costs and
estimated earnings in excess of billings on uncompleted
contracts and increases in accounts payable.
With regards to investing activities, the Company used
$1,025,795 of cash for the six months ended December 31, 1997.
Such cash was used primarily for advances to its parent,
USABG.
As of December 31, 1997, the Company owes approximately
$1,667,512 of payroll taxes. Although, as of December 31,
1997, the Company has not entered into any formal repayment
agreements with the respective tax authorities, it has been
making payments based on oral agreements.
<PAGE>
In November 1997, the Company entered into an agreement with
the Iron Workers Local 40,361 and 417 Joint Security Funds
AThe Union@ in order to liquidate $1,750,000 owed relating to
unpaid union dues. The Company agreed to pay $75,000 by
January 1998 and at least $25,000 monthly commencing March 1,
1998 with interest at 9.5% per annum. As collateral, the
Company assigned its retainage receivable from a certain
project as well as $1,750,000 of the Company=s related
mechanics lien. Upon any funds being released or paid under
such mechanics lien, The Union will be repaid any balance owed
in full before the Company may receive any funds. The Company
will receive credit for any payments received by The Union
related to the assigned portion of the mechanics lien.
On February 5, 1998, the Company agreed to issue 106,667
shares of its common stock to USABG as consideration to USABG
for issuing shares of its own stock to RSJJ in consideration
for payment in full of the rent due by the Company to RSJJ for
the period from January 1, 1998 to December 31, 1998. The
value of the shares issued will be recorded at their estimated
market value at the date of issuance of $2.12 per share, with
a 50% discount due to the restricted nature of the stock.
During February 1998, the Company authorized the issuance of
250,000 shares of its common stock pursuant to its Senior
Management Incentive Plan. Of the 250,000 shares, 100,000 will
be issued to the Company=s President, 50,000 to the Company=s
Secretary, and 50,000 to the Company=s Treasurer. The
remaining 50,000 shares will be issued to employees and
consultants to the Company. The Company also authorized the
filing of an amended Form S-8 Registration Statement to
increase to 1,000,000 shares the shares which may be issued
under the plan and the registration of the above shares.
<PAGE>
PART II
Item 1. Legal Proceedings
In April 1995, the Company commenced an Article 78 proceeding in the
Supreme Court of the State of New York, County of New York, against the
Commissioners of the State Insurance Fund and the State Insurance Fund. This
action is scheduled for trial on March 17, 1998. See the Company=s Form 10-QSB
for the quarterly period ended September 30, 1997 for more information
concerning this matter.
In December 1995, in the United States District Court, Southern
District of New York, the Commissioners of the State Insurance Fund for and on
behalf of the State Insurance Fund commenced suit against Joseph Polito, Ronald
Polito, Steven Polito, the Company (f/k/a Metro Steel Structures, Ltd.), One
Carnegie, and others. This action is in the discovery phase. See the Company=s
Form 10-QSB for the quarterly period ended September 30, 1997 for more
information concerning this matter.
On February 25, 1997, in New York State Supreme Court, Kings County,
the Company and Metro Steel Structures, Ltd. commenced suit against Perini
Corporation, Metropolitan Transportation Authority, New York City Transportation
Authority, and Fidelity and Deposit Company of Maryland. This action is in the
discovery phase. See the Company=s Form 10-QSB for the quarter ended September
30, 1997 for more information concerning this matter.
On February 26, 1997, in New York State Supreme Court, Queens County,
the Company, Metro Steel Structures, Ltd., and McKay Enterprises, Inc. commenced
suit against Perini Corporation, Department of Transportation of the City of New
York, and Fidelity and Deposit Company of Maryland. This action is in the
discovery phase. See the Company=s Form 10-QSB for the quarter ended September
30, 1997 for more information concerning this matter.
On February 7, 1997, in New York State Supreme Court, Kings County,
Perini Corporation commenced an action against the Company and Metro Steel
Structures, Ltd. This action is in the discovery phase. See the Company=s Form
10-QSB for the quarter ended September 30, 1997 for more information concerning
this matter.
On or about May 13, 1997, in the New York Supreme Court, Suffolk
County, the Company commenced suit against Kiska Construction, the State of New
York, acting through the New York State Comptroller, the New York State
Department of Transportation, and the Seaboard Surety Company. This action is in
the discovery phase. See the Company=s Form 10-QSB for the quarter ended
September 30, 1997 for more information concerning this matter.
In August 1997, the Company entered into an agreement settling the
January 1997 trademark infringement claim made by The Ohio Bridge Corporation.
The settlement required the Company to effect a name change to USA Bridge
Construction of N.Y., Inc. The name change was effected on January 12, 1998.
On October 14, 1997, the Company filed a mechanic=s lien in the amount
of $13,640,767 against EklecCo (f/k/a Pyramid Company of Rockland). On October
16, 1997, in New York State Supreme Court, Rockland County, EklecCo commenced
suit against the Company. On February 9, 1998, the plaintiff posted a bond in
the amount of $14,254,730 to secure payment of the Company=s $13,640,747
mechanic=s lien, interest, and court costs; accordingly, the court granted the
plaintiff=s motion to discharge said lien. The court further ordered that
discovery be expedited in this matter. This action is in the discovery phase.
See the Company=s Form 10-QSB for the quarter ended September 30, 1997 for more
information concerning this matter.
<PAGE>
ITEM 2. Changes In Securities And Use Of Proceeds: None
ITEM 3. Defaults Upon Senior Securities: None
ITEM 4. Submission Of Matters To A Vote Of Security Holders:
The Company held a meeting of its stockholders on December 3, 1997,
which was adjourned to February 3, 1998 with respect only to item 3 below. The
members of the board were elected and Item 2 was passed, Item 3, which needed a
2/3 vote did not pass.
Item 1. The results of the proposal to elect five (5) Directors to the
Company's Board of Directors to hold office for a period of one year or until
their successors are duly elected and qualified were as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Cast
For Against Abstentions
<S> <C> <C> <C>
Joseph M. Polito 1,605,238 - 16,400
Ronald J. Polito 1,606,738 - 14,900
Steven J. Polito 1,606,738 - 14,900
Philip Neilson * 1,606,738 - 14,900
Marvin Weinstein 1,606,738 - 14,900
------------------
</TABLE>
* Mr. Neilson resigned effective February 10, 1998 and was replaced by
Ronald Murphy.
Item 2. The results of the proposal to amend the Company's Certificate of
Incorporation to change the name of the Company from U.S. Bridge of N.Y., Inc.
to U.S. Bridge of N.Y., Inc. were as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Cast
For Against Abstentions
<S> <C> <C>
1,395,118 2,400 --
</TABLE>
Item 3. The results of the proposal to authorize a change of the
Company=s domicile (state of incorporation) from New York to Delaware are as
follows:
For Against Abstain
1,496,019 21,100 27,700
ITEM 5. Other Information: None
ITEM 6. Exhibits And Reports On Form 8-K: None
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, this 19th day of February, 1998.
U.S.A BRIDGE CONSTRUCTION OF N.Y., INC.
By: /s/ Joseph M. Polito
Joseph M. Polito, President
/s/ Steven J. Polito
Steven J. Polito, Treasurer
