U.S. SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, D.C. 20549


                          Form 10-QSB

                     Quarterly Report Under
               the Securities Exchange Act of 1934

                For Quarter Ended:  February 28, 1997

                  Commission File Number:  0-26920



                       USAsurance Group, Inc.
 (Exact name of small business issuer as specified in its charter)


                              Colorado
    (State or other jurisdiction of incorporation or organization)

                             84-1298212
                  (IRS Employer Identification No.)

                         7345 E. Peakview Ave.
                          Englewood, Colorado
                (Address of principal executive offices)

                                80111
                             (Zip Code)

                           (303) 689-0123
                     (Issuer's Telephone Number)


(Former name, former address and former fiscal year, if changed
since last report)

Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days:
Yes __X__ No _____.

The number of shares of the registrant's only class of common stock
issued and outstanding, as of February 28, 1997, was 1,566,000
shares.



<PAGE>

                              PART I

ITEM 1.   FINANCIAL STATEMENTS.

      The unaudited financial statements for the nine month period
ended February 28, 1997, are attached hereto.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with
the Financial Statements and notes thereto included herein.

      USAsurance Group, Inc. (the "Company"), is a company
incorporated pursuant to the laws of the State of Colorado on
January 15, 1991, for the purpose of engaging as an insurance
brokerage company.  The Company did not undertake any business
activities relevant thereto and in June 1995, the Company's Board
of Directors elected to change the Company's principal business
activities to the viatical settlement industry.  Viatical
settlements are made to persons who are terminally ill and who want
to sell their life insurance to obtain the benefit of the money
provided by the settlement during the remainder of their life.

Results of Operations

Comparison of Results of Operations for the three month period
ended February 28, 1997 and three month period ended February 28,
1996

     The Company's revenues for the three month period ended
February 28, 1997 were $3,487 compared to $12,138 for the three
month period ended February 28, 1996, a decrease of $8,651 (71%). 
This decrease was because no insurance policies owned by the
Company matured during the three months ended February 28, 1997. 
In the three month period ended February 28, 1997, expenses
increased $3,640 (55%) from $4,453 for the three month period ended
February 28, 1996 to $8,093.  This increase was due to costs
associated with increased general and administrative expenses,
including legal and accounting expenses.

     The Company's net operating income decreased from $7,685 to
($4,606), primarily due to a required noncash bookkeeping entry
related to the payment of management salaries.  However, as of the
date of this report, the Company does not pay its management any
salaries, by accrual or otherwise.

                                                                 2

<PAGE>
 
Comparison of Results of Operations for the nine month period ended
February 28, 1997 and nine month period ended February 28, 1996

     The Company's revenues for the nine month period ended
February 28, 1997 were $11,038 compared to $35,860 for the nine
month period ended February 28, 1996, a decrease of $24,822 (69%). 
This decrease was due to the fact that no insurance policies owed
by the Company matured during the period ended February 28, 1997,
while one insurance policy matured during the period ended February
28, 1996.  In the nine month period ended February 28, 1997, the
Company incurred expenses of $41,033, as compared to expenses of
$20,961 for the similar period ended February 28, 1996, an increase
of $20,072 (95%).  This increase was due to costs associated with
increased general and administrative expenses, including legal and
accounting expenses.

     The Company's net operating income decreased from $14,899 to
($29,995), primarily due to the increase of operating activities.

     Interest expense increased by approximately $2,818.  The
increase resulted primarily from interest accruing on notes payable
to the Company's lenders which the Company had borrowed to fund
previous purchases of policies.

     Since June 1995 the Company has purchased, for its own
account, 12 different insurance policies with a face value of
$628,294 from individuals, for an aggregate purchase price of
$565,795.  Four of these policies in the amount of $203,200 have
matured and the proceeds from these policies have been paid to the
Company.  The Company recognizes income (earned discount) on each
purchased policy by accruing, over the period between the
acquisition date of the policy and the Company's estimated date of
collection of the face value of the policy (the accrual period),
the difference (the unearned discount) between (a) the death
benefit payable (face value under the policy less the amount of
fees, if any, payable to a referral source upon collection of the
face value; and (b) the carrying value of the policy.  The carrying
value of each policy is reflected on the Company's balance sheet
under "purchased life insurance policies" and consists of the
purchase price, other capitalized cost and the earned discount on
the policy accrued to the balance sheet date.  The Company
capitalizes as incurred the following costs of a purchased policy: 
(i) the purchased price paid for the policy; (ii) policy premiums,
if any, paid by the Company; (iii) amounts, if any, paid to
referral sources upon acquisition of the policy; and (iv) amounts
paid to retained physicians or other medical consultants who
estimated the insured's life expectancy.  The carrying value of a
policy change over time and is adjusted quarterly to reflect the
earned discounts accrued on the policy, amounts paid for any
additional future increases in coverage, any additional premium
payments and any premium refunds if the policy becomes covered by
premium waiver provisions.  The length of the accrual period is

                                                               3

<PAGE>

determined by the Company based upon its estimate of the date on
which it will collect the face value of the policy.  Such date is
based upon the Company's estimate of the life expectancy of the
insured, after review of the medical records of the insured by the
Company's medical consultants and also takes into account the
historical accuracy of the life expectancies estimated by the
Company's consultants and the typical period (collection period)
between the date of the insured's death and the date on which the
Company collects the face value of the policy.

     The unearned discount is accrued over the accrual period using
the straight line method. Under the straight line method, the
unearned discount is earned evenly throughout the accrual period
and the unearned discount will be fully accrued as earned discount
by the end of the accrual period.

     The weighted average original accrual period of the Company's
portfolio of policies comprising "purchased life insurance
policies" and "matured policies receivable" as of November 30, 1996
was 12.0 months.  At that date, 7.5 months of the accrual period
had elapsed, leaving a weighted average remaining accrual period at
the end of the period of 4.5 months.  The average accrual period
will change as the composition of policies comprising the Company's
portfolio changes.  To the extent the Company purchases policies
insuring lives of individuals with longer life expectancies, the
average accrual period will become longer.  The Company has a
relatively limited operating history and as it accumulates more
experience and data, it may need to revise the accrual periods for
existing and newly acquired policies to reflect more accurately
such experience and data.  In addition, the Company has been using
several consultants to estimate life expectancies of insureds
afflicted with AIDS.  accrual periods may also be revised if (i)
such consultants become more or less accurate in their estimates of
life expectancies of insureds; (ii) the Company uses additional or
different consultants who produce different levels of accuracy ; or
(iii) the Company purchases more non-Aids policies or policies
insuring the lives of individuals with longer life expectancies,
both of which may result in different levels of life expectancy
accuracy.

     Any change in accrual periods will not cause a restatement of
earned discounts in prior periods but will impact earned discounts
in the current and future periods on both policies then owned by
the Company (by either accelerating or decelerating the recognition
of remaining unearned discount) and policies thereafter acquired by
the Company.  The Company cannot predict how any accrual period
will change, if at all, in the future.

Liquidity and Capital Resources

      The Company's primary need for capital has been for the
funding of policy purchases.  Since commencement of its business

                                                                4

<PAGE>

operations in June 1995, the Company has primarily utilized the
proceeds which it derived from its private offering to implement
its business plan of purchasing insurance policies.  Management has
determined after extensive review that the Company should seek
other business opportunities.  Management has reviewed the current
state of treatment for HIV with medical experts and with other
companies active in the funding of the purchase of life insurance
policies and have decided that with the lengthening life
expectancies, the Company can better deploy its assets in other
business areas.

      The Company's management will undertake a review of potential
business opportunities and will make decisions based on such
matters as capital needs of potential business activities.  There
can be no assurance that the Company will be successful in its
efforts to redirect its business plan.  Since additional capital
will be needed to enter into new business activities, and there can
be no assurance that such additional capital will be obtained, the
future of the Company is at risk.

      In the event the Company is unable to obtain additional
capital, management intends to continue to fund the Company's
acquisition of insurance policies through the proceeds derived from
operations, if any.  There can be no assurances that the Company
will generate profits from its current operations, or if profits
are generated, that the Company will be able to significantly
increase the number of policies it purchases.  If possible, the
Company may explore the possibility of obtaining loans from
established financial institutions.  However, while the Company has
had informal discussions with various financial institutions to
obtain loans, as of the date hereof there is no agreement between
the Company and any financial entity wherein the Company will
obtain any additional funding, either equity or debt.

     The Company's cash requirements have been and will continue to
be significant in order to finance its policy purchases.  As a
result of accruing income on each purchased policy prior to
collecting the face value, the amount of earned discount recognized
is not related to the collection of cash by the Company on
policies.  Net cash flows provided by operating activities has
decreased by $96,879.  This was due to an decrease in policies
purchased.

     Of the policies purchased by the Company since June 1995, all
of these policies have been purchased from individuals diagnosed
with Human Immunodeficiency Virus (HIV).  In deference to new
treatments involving combinations of various drugs for treating HIV
positive patients, the Company has temporarily slowed down its
activities relating to the purchasing of policies which insure
people afflicted with AIDS and HIV will not take an aggressive
approach to such acquisitions until additional information can be
obtained and analyzed relating to the effect these new treatments. 

                                                                5

<PAGE>

At the present, management is of the opinion that insufficient
information is available to allow the Company to make decisions on
accrual periods or in the methodology for income recognition.  The
Company is continuing to analyze available data regarding new
treatments and cannot, as of the date of this report, predict what
impact this situation will have on its business, prospects, results
of operations or financial position. Additionally, the Company has
not determined the implication of these recent developments on the
Company's strategic direction.  Until management is satisfied as to
the future treatment of AIDS, the Company will not utilize any
additional debt capital to purchase insurance policies from
individuals diagnosed as HIV positive or with AIDS.  However, the
Company will consider purchasing insurance policies of persons
afflicted with other terminal diseases.

     It is not anticipated that the Company will expend any of its
present financial resources on the purchase of any significant
equipment in the future, nor is it anticipated that the number of
employees of the Company will increase to any significant degree in
the future.

     Inflation has not had and is not expected to have a
significant impact on the Company's financial position or operating
results.

     The Company's common stock shares are currently traded on the
NASDAQ over the counter Bulletin Board using the trading symbol
"UASG".


                         PART II.  OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS - None

ITEM 2.     CHANGES IN SECURITIES - NONE

ITEM 3.     DEFAULTS UPON SENIOR SECURITIES - NONE

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - 
            NONE.

ITEM 5.     OTHER INFORMATION - NONE.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (a)  Exhibits
                 EX-27     Financial Data Schedule

            (b)  Reports on Form 8-K - None.

                                                                6

<PAGE>

<TABLE>

USAsurance Group, Inc.
Balance Sheet
-----------------------------------------------------------------
<CAPTION>

                                             Unaudited   Audited
                                             February      May
                                             28, 1997   31, 1996
                                             ---------  ---------
<S>                                          <C>        <C>
ASSETS

Current Assets:

Cash                                            $7,861   $124,540
Other Receivables                               15,000     12,000
Purchased Life Insurance Policies              445,929    389,405
A/R - Insurance Company                         38,476          0
                                             ---------  ---------
Total Current Assets                           507,266    525,945
                                             ---------  ---------
Equipment (net of depreciation)                  2,025      2,430
                                             ---------  ---------
Other Assets - Deferred Tax Asset                 6100       6100
                                             ---------  ---------
TOTAL ASSETS                                  $515,391   $534,475
                                             =========  =========

LIABILITIES AND SHAREHOLDERS' EQUITY
 
LIABILITIES

Current Liabilities:

Accounts Payable                                  $500     $1,534
Deferred Tax Liability                           8,900     10,900
Interest Payable                                 6,159      9,205
                                             ---------  ---------
Total Current Liabilities                       15,559     21,639
                                             ---------  ---------
Long-Term Debt - Related Party                  75,000     75,000
Long-Term Debt - Other                         100,340    100,340
                                             ---------  ---------
Long-Term Liabilities                          175,340    175,340
                                             ---------  ---------
TOTAL LIABILITIES                              190,899    196,979
                                             ---------  ---------
SHAREHOLDERS' EQUITY                                    
Common Stock, $.0001 Par Value                          
Authorized 900,000,000 Shares;
Issued And Outstanding 1,566,000 Shares            157        157

Capital Paid In Excess Of                               
Par Value Of Common Stock                      390,841    364,991

                                                                7

<PAGE>

Preferred Stock, $.01 Par Value, Non Voting
Authorized 1,000,000 Shares;
Issued And Outstanding -0- Shares                    0          0

Retained Earnings (Deficit)                    (66,506)   (27,652)
                                              --------  ---------
TOTAL SHAREHOLDERS' EQUITY                     324,492    337,496
                                              --------  ---------
TOTAL LIABILITIES AND 
SHAREHOLDERS' EQUITY                          $515,391   $534,475
                                              ========   ========
<FN>

          The Accompanying Notes Are An Integral Part Of These 
Unaudited Financial Statements.

</TABLE>

                                                                8

<PAGE>

<TABLE>

USAsurance Group, Inc.
Statement Of Operations
-----------------------------------------------------------------
<CAPTION>

                                        Unaudited     Unaudited
                                         9 Month       9 Month
                                       Period Ended  Period Ended
                                        February      February
                                        28, 1997      29, 1996
                                       ------------  ------------
<S>                                    <C>           <C>               
                                        
Income:

Earned Discount On Life
  Insurance Policies                        $11,038       $35,860
                                       ------------  ------------
Expenses:

Depreciation                                    405           135
Legal And Accounting                         13,560        10,682
Licenses And Fees                                 0         3,800
Office                                          223         1,510
Officers Compensation                        24,750             0
Professional Dues                                 0         2,750
Rent                                          1,100             0
Stock Transfer                                    0           552
Telephone                                       995             0
Travel                                            0         1,532
                                       ------------  ------------
Total                                        41,033        20,961
                                       ------------  ------------
Net (Loss) Profit From Operations           (29,995)       14,899

Other Income (Expense):

Interest Income                                  96            25
Interest (Expense)                           (8,955)       (6,137)
                                       ------------  ------------
Total                                        (8,859)       (6,112)
                                       ------------  ------------
Net (Loss) Profit                          ($38,854)       $8,787
                                       ============  ============

Net (Loss) Profit Per Common Share           ($0.02)        $0.01

Weighted Average Common Shares 
  Outstanding                             1,566,000     1,566,000

<FN>

          The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.

</TABLE>

                                                                9

<PAGE>

<TABLE>

USAsurance Group, Inc.
Statement Of Operations
-----------------------------------------------------------------

<CAPTION>
                                        Unaudited     Unaudited
                                         3 Month       3 Month
                                       Period Ended  Period Ended
                                        February      February
                                        28, 1997      29, 1996
                                       ------------  ------------
<S>                                    <C>           <C>               
                                        
Income:

Earned Discount On
  Life Insurance Policies                    $3,487       $12,138
                                       ------------  ------------
Expenses:

Depreciation                                    135           135
Legal And Accounting                         (1,412)        2,060
Licenses And Fees                                 0         1,095
Office                                            0           610
Officers Compensation                         8,250             0
Professional Dues                                 0             0
Rent                                            500             0
Stock Transfer                                    0           553
Telephone                                       620             0
Travel                                            0             0
                                       ------------  ------------
Total                                         8,093         4,453
                                       ------------  ------------
Net (Loss) Profit From Operations            (4,606)        7,685

Other Income (Expense):

Interest Income                                   0             0
Interest (Expense)                           (3,068)       (3,068)
                                       ------------  ------------
Total                                        (3,068)       (3,068)
                                       ------------  ------------
Net (Loss) Profit                           ($7,674)       $4,617
                                       ============  ============

Net (Loss) Profit Per Common Share           ($0.00)        $0.00

Weighted Average Common Shares 
  Outstanding                             1,566,000     1,566,000

<FN>

          The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.

</TABLE>

                                                               10

<PAGE>

<TABLE>

USAsurance Group, Inc.
Statement Of Cash Flows
-----------------------------------------------------------------
<CAPTION>

                                        Unaudited     Unaudited
                                         9 Month       9 Month
                                       Period Ended  Period Ended
                                        February      February
                                        28, 1997      29, 1996
                                       ------------  ------------
<S>                                    <C>           <C>
Net (Loss) Profit                          ($38,854)       $8,787

Adjustments To Reconcile Net
  (Loss) Profit To Net Cash
  Used In Operating Activities:
    Depreciation                                405           135
    Contributed Services And Rent            25,850             0

Changes In Operating Assets
  And Liabilities:
    (Increase) In Other Accounts
      Receivable                            (41,476)            0
    (Increase) In Purchased Life
      Insurance Policies                    (56,524)      (35,860)
    (Decrease) Increase In
      Accounts Payable                       (1,034)        1,000
    (Decrease) In Deferred Tax
      Liability                              (2,000)            0
    (Decrease) In Interest Payable           (3,046)        6,138
                                       ------------  ------------
Net Flows From Operations                  (116,679)      (19,800)

Cash Flows From Investing Activities:
  Equipment Purchased                             0        (2,700)
  Collection Of Matured Policies                  0        65,100
  Purchase Of Life Insurance Policies             0      (447,456)
                                       ------------  ------------
Net Cash Flows From Investing                     0      (385,056)

Cash Flows From Financing Activities:
  Issuance Of Common Stock                        0       330,000
  Funds Received From Loans                       0        75,000
  Advances From Related Parties                   0        58,500
  Payments Made On Loans                          0          (500)

                                       ------------  ------------
Cash Flows From Financing Activities              0       463,000

Net Increase In Cash                       (116,679)       58,144

                                                               11

<PAGE>


Cash At Beginning Of Period                 124,540             0

Cash At End Of Period                        $7,861       $58,144

Summary Of Non-Cash Investing And 
  Financing Activities:

  Inventory Purchased By Related 
  Party as Loan To Related Party            $42,340       $42,340

  Policies Matured Not Collected                  0       $85,194

  Matured Policy Unearned Revenue                $0        $3,521


<FN>

          The Accompanying Notes Are An Integral Part Of These Unaudited
Financial Statements.

</TABLE>

                                                               12

<PAGE>

USAsurance Group, Inc.
Notes To Unaudited Financial Statements
For The Nine Month Period Ended February 28, 1997

Note 1 - Unaudited Financial Information

The unaudited financial information included for the three month and six month
interim periods ended February 28, 1997 and February 29, 1996 were taken from
the books and records without audit. However, such information reflects all
adjustments (consisting only of normal recurring adjustments, which are of the
opinion of management, necessary to reflect properly the results of interim
periods presented). The results of operations for the three month period ended
February 28, 1996 are not necessarily indicative of the results expected for the
fiscal year ended May 31, 1997

Note 2 - Type of Life Insurance Policies and Collection of Proceeds

The Company has purchased both group and individual policies that include term,
whole life, and universal life insurance from various individuals that have life
expectancies of 12 months or less. Upon the maturity of the policies the Company
will receive a cashiers check for the face amount of the policy made out to the
Company within 30 days.

Note 3 - Purchased Life Insurance Policies

The Company recognizes income (earned discount) on each purchased policy by
accruing, over the period between the acquisition date of the policy and the
Company's estimated date of collection of the face value of the policy (the
Accrual Period), the difference (the unearned discount) between, (a) the death
benefit payable (face value) under the policy less the amount of fees, if any,
payable to a referral source upon collection of the face value, and (b) the
carrying value of the policy. The carrying value of each policy is reflected on
the Company's balance sheet under "purchased life insurance policies" and
consists of the purchase price, other capitalized costs, and the earned discount
on the policy accrued to the balance sheet date. The Company capitalizes as
incurred the following costs of a purchased policy: (I) the purchase price paid
for the policy, (ii) policy premiums, if any, paid by the Company, (iii)
amounts, If any, paid to referral sources upon acquisition of the policy, and
(iv) amounts paid to Company retained physicians or other medical consultants
who estimated the insured's life expectancy. The carrying value of a policy
will change over time, and is adjusted quarterly to reflect the earned 
discounts accrued on the policy, amounts paid for any additional future
increases in coverage, any additional premium payments and any premium
refunds if the policy becomes covered by premium waiver provisions. The
length of the Accrual Period is determined by the Company based upon its
estimate of the date on which it will collect the face value of the policy.
Such estimate is based upon the Company's estimate of the life expectancy of
the insured, after review of the medical records of the insured by one or
more Consultants, and also take into account the historical accuracy of the
life expectancies estimated by the Company's Consultants and the typical
period (collection period) between the date of the insured's death and the
date on which the Company collects the face value of the policy.

The unearned discount is accrued over the accrual period using the straight line
method, regardless of when the Company collects the face value. Under the
straight line method, the unearned discount is earned evenly throughout the
accrual period and the unearned discount will be fully accrued as earned
discount by the end of the accrual period.

Differences will arise between the timing of estimated and actual collections.
The Company recalculates the accrual periods on a quarterly basis, using actual
collection experience and, if necessary, adjusts prospectively the period over
which income is recognized.

                                                               13

<PAGE>

USAsurance Group, Inc.
Notes To The Unaudited Financial Statements
For The Nine Month Period Ended February 28, 1997
 

Note 3 - Continued

Purchased life insurance policies consist of the following as of February 28,
1997:

      Capitalized costs of purchased life
        insurance policies                            $405,811
      Earned Discount                                   40,118
                                                      --------
      Purchased life insurance policies               $445,929

Purchased life insurance policies included in the above table for which the
discount has been fully earned, but for which the Company has not yet received
notification of the insured's death, consist of the following at February 28,
1997:

      Capitalized costs of purchased life
        insurance policies                             $328,806
      Earned discount                                    27,194

      Included in purchased life insurance policies    $356,000

Note 4 - Unearned Discount

As of February 28, 1997 there were $ 3,507  in  unearned discounts. All policies
at February 28, 1997 were expected to mature in 12 months or less, however one
policy has been in affect for 24 months.

Note 5 - Officer Compensation And Facility Rent

During the nine month interim period the Company's management contributed
$24,750 of services and $1,100 of facility rent both of which have been
recorded as a contribution of equity and as general and administrative
expenses.

                                                               14

<PAGE>

                          SIGNATURES


           Pursuant to the requirements of Section 12 of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                   USAsurance Group, Inc.
                                   (Registrant)

                                   Dated:  April 21, 1997


                                   By:  s/Matthew J. Kavanagh III
                                      Matthew J. Kavanagh, III
                                      Secretary

                                                               15

<PAGE>

                          USAsurance Group, Inc.

             Exhibit Index to Quarterly Report on Form 10-QSB
                  For the Quarter Ended February 28, 1997

EXHIBITS                                                 Page No.

  EX-27     Financial Data Schedule . . . . . . . . . . .     17


                                                               16