UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2017
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 ________
USA CAPITAL MANAGEMENT, INC
(Exact Name of Registrant as Specified in its Charter)
| Puerto Rico | | 47-2128828 |
State or Other Jurisdiction of Incorporation or Organization | | I.R.S. Employer Identification No. |
| | | |
404 Ave Constitucion #208 San Juan, Puerto Rico | | 00901-2251 |
| Address of Principal Executive Offices | | Zip Code |
787-900-5048
Registrant’s Telephone Number, Including Area Code
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Indicate by check mark whether the registrant (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 registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ¨ | Accelerated filer ¨ |
| Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company x |
Emerging growth company ¨ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Class | | Outstanding as of August 11, 2017 |
| Common Stock par value $0.001 | | 3,000,000 |
TABLE OF CONTENTS
USA Capital Management, Inc
Condensed Consolidated Balance Sheet
| | | June 30, 2017
(Unaudited) | | | December 31, 2016 | |
| ASSETS | | | | | | | | |
| Current Assets | | | | | | | | |
| Cash | | $ | 2,163,349 | | | $ | 118,532 | |
| Accounts Receivable | | | 450,000 | | | | - | |
| Interest Receivable | | | 371,528 | | | | - | |
| Advances | | | 6,300 | | | | - | |
| Deposits | | | 1,003 | | | | 1,003 | |
| Total Currrent Assets | | | 2,992,180 | | | | 119,535 | |
| | | | | | | | | |
| Note Receivable | | | 12,500,000 | | | | - | |
| | | | | | | | | |
| Property and Equipment: | | | | | | | | |
| Capitalized costs | | | 136,879 | | | | 136,879 | |
| Land | | | 1,529,455 | | | | 1,529,455 | |
| Development Costs | | | 13,650 | | | | - | |
| Building, Improvements and Equipment | | | 275,000 | | | | 275,000 | |
| Less: Accumulated Depreciation | | | (22,500 | ) | | | (17,500 | ) |
| Property and Equipment, net of accumulated depreciation | | | 1,932,484 | | | | 1,923,834 | |
| | | | | | | | | |
| Escrow costs | | | 25,451 | | | | 25,451 | |
| Less: Accumulated Amortization | | | (1,867 | ) | | | (1,405 | ) |
| Escrow Costs, net of accumulated amortization | | | 23,584 | | | | 24,046 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 17,448,248 | | | $ | 2,067,415 | |
| | | | | | | | | |
| LIABILITIES and STOCKHOLDERS' EQUITY | | | | | | | | |
| | | | | | | | | |
| LIABILITIES | | | | | | | | |
| | | | | | | | | |
| Accounts Payable and Accrued Expenses | | $ | 744,054 | | | $ | 359,713 | |
| Total Current Liabilities | | | 744,054 | | | | 359,713 | |
| | | | | | | | | |
| Note Payable | | | 750,000 | | | | 750,000 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 1,494,054 | | | | 1,109,713 | |
| | | | | | | | | |
| STOCKHOLDERS' EQUITY | | | | | | | | |
| Stockholders' Equity: | | | | | | | | |
Preferred stock, $0.0001 par value, 20,000,000 shares authorized;
none issued and outstanding as of March 31, 2017 and
December 31, 2016, respectively. | | | - | | | | - | |
| | | | | | | | | |
Common Stock, $0.0001 par value, 100,000,000 shares authorized;
3,000,000 shares issued and outstanding as of March 31, 2017
and December 31, 2016, respectively | | | 300 | | | | 300 | |
| | | | | | | | | |
| Discount on Common stock | | | (300 | ) | | | (300 | ) |
| | | | | | | | | |
| Additional Paid in Capital | | | 1,331,634 | | | | 1,231,634 | |
| Retained Earnings (Accumulated Deficit) | | | 14,622,560 | | | | (273,932 | ) |
| TOTAL STOCKHOLDERS' EQUITY | | | 15,954,194 | | | | 957,702 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | | $ | 17,448,248 | | | $ | 2,067,415 | |
The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.
USA Capital Management, Inc
Condensed Consolidated Statements of Operations
| | | For the Three Months Ended June 30, 2017
(Unaudited) | | | For the Six Months Ended June 30, 2017
(Unaudited) | | | For the Three Months Ended June 30, 2016 (Unaudited) | | | For the Six Months Ended June 30, 2016
(Unaudited) | |
| | | | | | | | | | | | | |
| Revenues | | $ | 600,000 | | | $ | 15,800,000 | | | $ | 300,000 | | | $ | 600,000 | |
| | | | | | | | | | | | | | | | | |
| Operating Expenses: | | | | | | | | | | | | | | | | |
| Salaries and Wages | | $ | 7,000 | | | $ | 14,000 | | | $ | 7,000 | | | $ | 14,000 | |
| Payroll Taxes | | | 850 | | | | 1,750 | | | | 653 | | | | 1,321 | |
| Payroll Processing fees | | | - | | | | - | | | | 125 | | | | 150 | |
| Utilities | | | 2,259 | | | | 4,416 | | | | 2,482 | | | | 4,297 | |
| Property Taxes | | | 3,812 | | | | 7,624 | | | | 3,510 | | | | 7,062 | |
| Tax and Licenses | | | 4,094 | | | | 7,300 | | | | 7,157 | | | | 7,157 | |
| Municipal and State taxes | | | 11 | | | | 21 | | | | 130 | | | | 130 | |
| Legal and Professional fees | | | 18,230 | | | | 21,400 | | | | 29,719 | | | | 37,144 | |
| Review and Audit fees | | | 5,775 | | | | 11,550 | | | | 3,675 | | | | 7,350 | |
| Depreciation and Amortization | | | 2,732 | | | | 5,463 | | | | 2,732 | | | | 5,463 | |
| Office supplies | | | - | | | | - | | | | 997 | | | | 997 | |
| Bank Charges | | | 146 | | | | 508 | | | | 161 | | | | 316 | |
| Total Operating Expenses | | $ | 44,909 | | | $ | 74,032 | | | $ | 58,341 | | | $ | 85,387 | |
| | | | | | | | | | | | | | | | | |
| Other Income (Expenses): | | | | | | | | | | | | | | | | |
| Interest Income | | | 315,972 | | | | 371,528 | | | | - | | | | - | |
| Interest Expense | | | (9,479 | ) | | | (18,854 | ) | | | 9,479 | | | | 18,958 | |
| Total Other Income (Expenses) | | | 306,493 | | | | 352,674 | | | | 9,479 | | | | 18,958 | |
| | | | | | | | | | | | | | | | | |
| Net Income before income taxes | | $ | 861,584 | | | $ | 16,078,642 | | | $ | 232,180 | | | $ | 495,655 | |
| | | | | | | | | | | | | | | | | |
| Provision for Income taxes | | | 36,282 | | | | 645,650 | | | | 10,934 | | | | 21,473 | |
| | | | | | | | | | | | | | | | | |
| Net Income | | $ | 825,302 | | | $ | 15,432,992 | | | $ | 221,246 | | | $ | 474,182 | |
| | | | | | | | | | | | | | | | | |
| Earnings Per Share - basic and diluted | | $ | 0.28 | | | $ | 5.14 | | | $ | 0.07 | | | $ | 0.16 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares - basic and diluted | | | 3,000,000 | | | | 3,000,000 | | | | 3,000,000 | | | | 3,000,000 | |
The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.
USA Capital Management, Inc.
Condensed Consolidated Statement of Cash Flows
| | | For the Six Months
Ended June 30, 2017 | | | For the Six Months
Ended June 30, 2016 | |
| OPERATING ACTIVITIES | | | | | | | | |
| Net Income | | $ | 15,432,992 | | | $ | 474,182 | |
| Non-cash adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
| Depreciation and amortization | | | 5,463 | | | | 5,463 | |
| Changes in Operating Assets and Liabilities: | | | | | | | | |
| Increase in accounts receivable | | | (450,000 | ) | | | (400,000 | ) |
| Increase in interest receivable | | | (371,528 | ) | | | - | |
| Increase in advances | | | (6,300 | ) | | | - | |
| Increase (Decrease) in accounts payable and accrued expenses | | | 384,340 | | | | (461,202 | ) |
| Total adjustments to reconcile net income to net cash | | | (438,025 | ) | | | (855,739 | ) |
| | | | | | | | | |
| Net cash provided by (used in) operating activities | | $ | 14,994,967 | | | $ | (381,557 | ) |
| | | | | | | | | |
| INVESTING ACTIVITIES | | | | | | | | |
| Increase in capitalized/development costs | | | (13,650 | ) | | | (51,827 | ) |
| Increase in note receivable | | | (12,500,000 | ) | | | - | |
| Net cash used in investing activities | | $ | (12,513,650 | ) | | $ | (51,827 | ) |
| | | | | | | | | |
| | | | | | | | | |
| FINANCING ACTIVITIES | | | | | | | | |
| Proceeds from stockholders contribution | | | 100,000 | | | | 38,388 | |
| Dividends paid | | | (536,500 | ) | | | - | |
| Net cash (used) provided by financing activities | | $ | (436,500 | ) | | $ | 38,388 | |
| | | | | | | | | |
| Net increase (decrease) in cash | | | 2,044,817 | | | | (394,996 | ) |
| | | | | | | | | |
| Cash, beginning of year | | | 118,532 | | | | 593,611 | |
| | | | | | | | | |
| Cash, end of year | | $ | 2,163,349 | | | $ | 198,615 | |
The accompanying condensed notes are an integral part of these unaudited condensed consolidated financial statements.
NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
USA Capital Management, Inc. ("USA Capital" or "the Company") was incorporated on September 25, 2014 and is a Puerto Rican corporation with its principal place of business in San Juan, Puerto Rico. The Company’s operations include management consulting services and the acquisition of various properties for development. The Company has been granted tax benefits in Puerto Rico under ACT 20-2012. This allows the Company to benefit from significant income tax advantages, including a 4% tax on taxable income. The Company will pursue other fee generating management and consulting contracts which may include carried interest, outside of Puerto Rico. USA Capital Management, Inc. intends to provide management and consulting services to Limited Liability Companies that are formed to promote, invest and operate business opportunities globally.
BASIS OF PRESENTATION
The summary of significant accounting policies presented below is designed to assist in understanding the Company's unaudited condensed financial statements. Such unaudited condensed financial statements and accompanying notes are the representations of the Company's management, who are responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America ("GAAP") in all material respects, and have been consistently applied in preparing the accompanying unaudited condensed financial statements.
Certain information and footnote disclosures normally present in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP") were omitted pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Annual Report on Form 10-K filed with the SEC on March 27, 2017. The results for the six months ended June 30, 2017, are not necessarily indicative of the results to be expected for the year ending December 31, 2017.
USE OF ESTIMATES
The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
REVENUE RECOGNITION
Revenue recognition is based on accrual accounting in accordance with GAAP and is recognized when earned. Consulting fees are based on a percentage of the value of the managed project.
CASH
Cash and cash equivalents include cash on hand and on deposit at banking institutions as well as all highly liquid short-term investments with original maturities of 90 days or less. The Company had cash of $2,163,349 as of June 30, 2017 and $118,532 as of December 31, 2016. The Company has no cash equivalents.
CONCENTRATION OF RISK
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high quality banking institutions. The Company did have cash balances in excess of the Federal Deposit Insurance Corporation limit as of June 30, 2017 of $1,785,030. During the year 2016, cash balances did, from time to time, exceed such limits. However, such limits were not exceeded at December 31, 2016.
Accounts receivable potentially exposes the Company to a concentration of credit risk. Management reviews its accounts receivable periodically to determine its collectability. The company expects to collect on its receivable and does not believe an allowance is necessary at June 30, 2017. The accounts receivable balance at June 30, 2017 is as follows:
INCOME TAXES
Under ASC 740, "Income Taxes," deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Valuation allowances are established when it is more likely than not that some or all of the deferred tax assets will not be realized. As of June 30, 2017 there were no deferred taxes due to the uncertainty of the realization of net operating loss or carry forward prior to expiration.
EARNINGS PER COMMON SHARE
Basic earnings per common share excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. As of June 30, 2017, there were no outstanding dilutive securities.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows guidance for accounting for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the condensed financial statements (unaudited) on a recurring basis. Additionally, the Company adopted guidance for fair value measurement related to nonfinancial items that are recognized and disclosed at fair value in the condensed financial statements (unaudited) on a nonrecurring basis. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1that are observable for the asset or liability, either directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
The carrying amounts of financial assets such as cash and accounts receivable approximate their fair values because of the short maturity of these instruments. In addition, the notes receivable and notes payable carrying amounts also approximate their fair values.
NOTE 2 – STOCKHOLDERS' EQUITY
The Company is authorized to issue 100,000,000 shares of common stock and 20,000,000 shares of the preferred stock, 3,000,000 shares of common stock and no preferred stock were issued and outstanding as of June 30, 2017 and December 31, 2016, respectively. The total outstanding 3,000,000 shares of common stock are issued to a sole shareholder as follows:
| Richard Meruelo | | | 3,000,000 (or 100% of shares outstanding) | |
NOTE 3 – PROPERTY
The Company has purchased the following through June 30, 2017:
| Description | | Purchase Date | | Purchase Amount | |
| Building | | 04/01/15 | | $ | 275,000 | |
| Land | | 07/09/15 | | $ | 1,267,115 | |
| Land | | 08/31/16 | | $ | 262,340 | |
| Accumulated Depreciation | | | | $ | (22,500 | ) |
| | | | | $ | 1,781,955 | |
These purchases were funded by paid in capital by its sole shareholder and were purchased under Rebuild San Juan-Puerta de Tierra, LLC and Rebuild San Juan-Puerta De Tierra II, LLC. These are single member LLC’s with USA Capital Management, Inc. as its only member.
Additionally, the Company has capitalized legal costs of future purchases in the amount of $136,879 and incurred development costs of $13,650.
The Company had $5,000 of depreciation expense for June 30, 2017 and June 30, 2016.
NOTE 4 – NOTE RECEIVABLE
In March, 2017 the Company, as manager to a related entity that will be developing a parcel of land, provided an unsecured note of five years for $12,500,000 at a rate of 10%. Interest is due and payable at the end of each calendar year. The note and any remaining accrued interest is due in March, 2022. The Company has accrued interest at June 30, 2017 of $371,528.
NOTE 5 – NOTE PAYABLE
The Company took a note for $750,000 at 5% per annum on one of the purchased parcels of land, with interest accruing yearly. The note, which commenced on July 8, 2015, is for 36 months (due and payable on July 8, 2018). It is collaterized by the real estate purchased.
NOTE 6 – RELATED PARTY TRANSACTIONS
The land acquisitions were purchased under Rebuild San Juan-Puerta De Tierra, LLC and Rebuild San Juan-Puerta De Tierra II, LLC, single member LLC’s incorporated in Puerto Rico (with the Company as its only member). USA Capital acquired the LLC’s by its capital contributions of $250,000 and $260,000 respectively.
The cost of land purchased under each entity were as follows:
| Rebuild San Juan-Puerta De Tierra, LLC | | $ | 1,007,115 | |
| Rebuild San Juan-Puerta De Tierra II, LLC | | $ | 522,340 | |
The consulting fees generated by the Company of $15,800,000 as of June 30, 2017 are with entities affiliated/related to the sole shareholder and Chief Executive Officer of USA Capital Management, Inc.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated events that have occurred after the balance sheet date and through the date of this filing and have concluded that there are no reportable subsequent events.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
USA Capital Management, Inc. (formally known as Oak Valley Acquisition Corp.) was incorporated on September 25, 2014 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. USA Capital Management, Inc. ("USA Capital" or the "Company") is a blank check company and qualifies as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act which became law in April, 2012.
On May 6, 2015, the Company changed its name from Oak Valley Acquisition Corporation to USA Capital Management, Inc. and effected a change in control.
On May 5, 2015, the following events occurred:
1. The Company redeemed and cancelled an aggregate of 20,000,000 of the then 20,000,000 shares of outstanding stock at a redemption price of $.0001 per share and cancelled such shares. The then current officers and directors resigned.
2. Richard Meruelo was named President, Secretary and Chief Financial Officer of the Company.
Richard Meruelo was named Director of the Company.
Richard Meruelo serves as the Chief Executive Officer, Secretary, Chief Financial Officer and Director of the Company. From 2011 to the present, Mr. Meruelo has served as the manager of Rebuild Miami, LLC. From 2000 to 2011, Mr. Meruelo was chairman and CEO of Meruelo Maddux Properties, Inc. Mr. Meruelo received his Bachelor of Arts Degree from the University of Southern California in 1986.
3. On May 6, 2015, the Company issued 3,000,000 shares of its common stock at par representing 100% of the total outstanding 3,000,000 shares of common stock to Richard Meruelo, the sole officer and director of the Company.
The Company is now generating consulting revenues as its principal source of income and continues its business objective to provide management services to stateside businesses.
The anticipated structure also involves the Company managing Limited Liability Company’s (LLC’s) that are formed to promote, invest and operate business opportunities globally.
On June 23, 2016 the Company was granted tax benefits provided by Act 20 in Puerto Rico which allows a reduced 4% income tax rate and 60% municipal license tax exemption for a 20 year period together with the total income tax exemption on dividends. Advisory services on matters relating to any trade or business; investment banking and other financial services; advertising and public relations; economic, environmental, technological scientific, management, marketing, human resources, information and audit consulting, professional services; development of computer programs and research are among the services that qualify for Act 20 tax benefits.
The Company converted from a Delaware to a Puerto Rico corporation and moved its principal place of business to San Juan, Puerto Rico. The Company amended its certificate of incorporation to reflect the change in its situs and filed a Form 8-K reporting the change.
Results of Operations for the three months ended June 30, 2017 and June 30, 2016.
The Company had net income of $825,302 and $221,246 for the three months ended June 30, 2017 and June 30 31, 2016, respectively. The current quarter reflects consulting revenues of $600,000 and $300,000 for the prior year quarter. The increase in revenues for the current quarter is mainly due to increased fees from one of its managed properties. The quarterly operating expenses for the three months ended June 30, 2017 and June 30, 2016 are $44,909 and $58,341. A decrease in current quarter legal fees accounted for most of the decrease. All other costs were comparable to the prior year quarter.
Results of Operations for the six months ended June 30, 2017 and June 30, 2016.
The Company had net income of $15,432,992 and $474,182 for the six months ended June 30, 2017 and June 30 31, 2016, respectively. The current quarter reflects consulting revenues of $15,800,000 and $600,000 for the prior year quarter. The increase in revenues for the current quarter is comprised of $12,600,000 of fees generated from the sale of one of its managed properties. The quarterly operating expenses for the six months ended June 30, 2017 and June 30, 2016 are $74,302 and $85,387. A decrease in the current year legal fees accounted for most of the decrease. All other costs were comparable to the prior year.
Liquidity and Capital Resources
The Company’s operating activities provided $14,994,967 for the six months ended June 30, 2017 and used $381,557 for the six months ended June 30, 2016. The cash provided in the current quarter was mostly a result of the one-time fee of $12,600,000 from the sale of one of the managed properties. The company continues to fund its operations from fees generated and receivable collections. Any further capital expenditures will be provided by funds from its operations or capital contributions from its sole stockholder.
In the six months ended June 30, 2017, the Company used $12,513,650 in investing activities. $12,500,000 was to provide a note receivable to one of the properties it manages. It used $51,287 for such investing activities at June 30, 2016, mostly for capitalized costs.
For the six month period ended June 30, 2017, USA Capital used $436,500 from financing activities. This was primarily a result of a $536,500 in dividends paid (offset in part by a $100,000 contribution from its sole shareholder). The Company had proceeds of $38,388 from financing activities for the six months ended June 30, 2016 as a result of shareholder contribution.
The Company had working capital of $2,248,126 and a working capital deficiency of $240,178 at June 30, 2017 and December 31, 2016, respectively.
| ITEM 3. | Quantitative and Qualitative Disclosures About Market Risk. |
Information not required to be filed by Smaller reporting companies.
| ITEM 4. | Controls and Procedures. |
Disclosures and Procedures
Pursuant to Rules adopted by the Securities and Exchange Commission, the Company carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rules. This evaluation was done as of the end of the period covered by this report under the supervision and with the participation of the Company's principal executive officer (who was also the principal financial officer).
Based upon that evaluation, he believes that the Company's disclosure controls and procedures are not effective in gathering, analyzing and disclosing information needed to ensure that the information required to be disclosed by the Company in its periodic reports is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
This Quarterly Report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this Quarterly Report.
Changes in Internal Controls
There was no change in the Company's internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II – OTHER INFORMATION
There are no legal proceedings against the Company and the Company is unaware of such proceedings contemplated against it.
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
From inception (September 25, 2014), the Company has issued 20,000,000 common shares pursuant to Section 4(2) of the Securities Act of 1933 for an aggregate purchase price of $2,000 as follows:
On September 25, 2014, the Company issued the following shares of its common stock:
| Name | | Number of Shares | |
| | | | |
| James Cassidy | | | 10,000,000 | |
| James McKillop | | | 10,000,000 | |
On May 5, 2015, the Company redeemed and cancelled the 20,000,000 shares of outstanding common stock.
On May 6, 2015, the Company issued 3,000,000 shares of common stock to its sole officer and director, Richard Meruelo.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
Not applicable.
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
Not applicable.
| (b) | Item 407(c)(3) of Regulation S-K: |
During the quarter covered by this Report, there have not been any material changes to the procedures by which security holders may recommend nominees to the Board of Directors.
| 31 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32 | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | USA CAPITAL MANAGEMENT, INC. |
| | | | |
| | | | |
| | By: | /s/ Richard Meruelo | |
| | President, Chief Financial Officer | |
| | | |
| Dated: August 11, 2017 | | | |
