UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the quarterly period ended December 31, 1998

                          or

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      For the transition period from N/A to N/A

                          Commission File No. 33-29340

                     UNIVERSAL SERVICES & ACQUISITIONS, INC.
             (Exact name of registrant as specified in its charter)

               Colorado, USA                    84-1100774
       (State of Incorporation)        (IRS Employer Identification No.)

           21800 Oxnard Street, #440, Woodland Hills, California 91367
                    (Address of principal executive offices)

                  Registrant's Telephone Number, (818) 598-6780

                       2643 17th Street, Denver, CO 80211
                       ----------------------------------
  (Former name, former address and fiscal year, if changed since last report)

Indicate by check mark if 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 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

              APPLICABLE ONLY TO 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

State number of shares outstanding of each of the issuer=s classes of common
equity, as of the latest practicable date:

      Class                        Outstanding at December 31, 1998
Common Stock, $.001                        2,232,500 shares
     par value                             ----------------
                                        Outstanding Securities

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|

<PAGE>

UNIVERSAL SERVICES & ACQUISITIONS, INC.

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

Financial statements are unaudited and included herein beginning on page F1 and
are incorporated herein by this reference.

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Except for disclosures that report the Company's historical results, the
statements set forth in this section are forward-looking statements. Actual
results may differ materially from those projected in the forward-looking
statements. Additional information concerning factors that may cause actual
results to differ materially from those in the forward-looking statements are in
the Company's annual report on Form 10-K for the year ended March 31, 1998 and
in the Company's other filings with the Securities and Exchange Commission.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company assumes no
obligation to update any forward-looking statements or comments on the reasons
why actual results may differ therefrom.

Universal Services & Acquisitions, Inc. (the "Company") was incorporated under
the laws of the State of Colorado in June 27, 1988 for the purpose of completing
a public offering to raise funds to acquire or merge with an operating business.
Since inception, the Company's primary efforts have been directed to
organizational efforts, obtaining initial financing and the identification and
evaluation of merger/acquisition candidates.

On August 17, 1995, the Company executed a letter of intent to acquire a
privately held operating company in a reverse acquisition. The proposed merger
was never completed and the $50,000 loan made to the proposed merger candidate
was never repaid. Eventually, the Company wrote off the loan. The Company is
seeking a merger candidate.

There were no material changes in financial condition in the current quarter.
The Company's working capital is not sufficient to meet the obligations of
identifying and evaluating prospective merger candidates.

Results of Operations

There were no material changes in the results of operations as compared with the
corresponding period of the previous year.

The Company had no operating revenues, however, it earned interest on its cash
accounts.

The Company realized a net loss of ($23) from operations for the three month
period ended December 30, 1998 compared to a net loss of ($27) for the three
month period ended December 30, 1997. For the three month period ended December
31, 1998, the Company had revenues of $7. The Company had revenues of $8 for the
three month period ended December 31, 1997. The net loss per share for the three
month periods ended December 31, 1998 and 1997 was nil.

The Company realized a net loss of ($2,594) from operations for the nine month
period ended December 31, 1998 compared to a net loss of ($2,515) for the nine
month period ended December 31, 1997. For the nine month period ended December
31, 1998, the Company had revenues of $21, composed mostly of interest income.

<PAGE>

The Company had revenues of $24 for the nine month period ended December 31,
1997. The net loss per share for the nine month periods ended December 31, 1998
and 1997 was ($.001).

The Company had development costs of $30 for the three month period ended
December 31, 1998 compared to development costs and expenses of $35 for the
three month period ended December 31, 1997.

The Company's assets at December 31, 1998 were $890 compared to assets of
approximately $1,001 at December 31, 1997. The Company's liabilities at December
31, 1998 were approximately $7,316 compared to liabilities of approximately
$5,024 at December 31, 1997. The difference is attributable to development
costs.

Total shareholder equity decreased from a deficit of ($4,023) at December 31,
1997 to a deficit of ($6,426) at December 31, 1998.

Liquidity and Capital Resources

As of December 31, 1998 and December 31, 1997, the Company had no working
capital. The Company does not have adequate working capital for its operations.
Presently, the Company has no working capital and is seeking a merger candidate.

Effect of Inflation

Inflation did not have any significant effect on the operations of the Company
during the three months ended December 31, 1998. Further, inflation is not
expected to have any significant effect on future operations of the Company.

PART II OTHER INFORMATION

Items 1, 2, 3, 4 and 5 are Inapplicable.

Item 6. Exhibits and Reports on Form 8-K

No reports on Form 8-K were filed for the relevant period.

                                   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.

                                    UNIVERSAL SERVICES & ACQUISITIONS, INC.


Date January 31, 2001               /s/ Mehrdad Alborz
                                    ---------------------------------
                                    Mehrdad Alborz, CEO, CFO
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                              FINANCIAL STATEMENTS
                                DECEMBER 31, 1998

<PAGE>

                                    TABLE OF CONTENTS

                                                                        Page No.
                                                                        --------

INDEPENDENT ACCOUNTANTS' REVIEW REPORT............................         1

FINANCIAL STATEMENTS

       Balance Sheet..............................................         2

       Statements of Operations...................................         3

       Statement of Changes in Stockholders' Equity (Deficit).....       4 - 5

       Statements of Cash Flows...................................       6 - 7

       Notes to Financial Statements..............................       8 - 11

<PAGE>

                     INDEPENDENT ACCOUNTANTS' REVIEW REPORT

To the Board of Directors and Stockholders
Universal Services and Acquisitions, Inc.
(A Development Stage Company)
Woodland Hills, California

We have reviewed the accompanying balance sheet of Universal Services and
Acquisitions, Inc. as of December 31, 1998, and the related statements of
operations, changes in stockholders' equity (deficit) and cash flows for the
three and nine months then ended and for the period from June 27, 1988 (Date of
Inception) to December 31, 1998, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants. All information included in these financial statements is
the representation of the management of Universal Services and Acquisitions,
Inc.

A review consists principally of inquiries of company personnel and analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.


Moffitt & Company, P.C.
Scottsdale, Arizona

May 1, 2000


<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                                DECEMBER 31, 1998
                                   (UNAUDITED)

                                     ASSETS

CURRENT ASSETS
       Cash and cash equivalents                     $        890
                                                     ------------

            TOTAL ASSETS                             $        890
                                                     ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
       Accounts payable                              $      4,316
       Compensation payable, officer                        3,000
                                                     ------------

              TOTAL CURRENT LIABILITIES              $      7,316

STOCKHOLDERS' EQUITY (DEFICIT)
       Preferred stock, par value $0.001 per share
          Authorized - 40,000,000 shares
          Issued and outstanding - 0 - shares                   0
       Common stock, par value $0.001 per share
          Authorized 100,000,000 shares
          Issued and outstanding - 2,232,500 shares         2,233
       Paid in capital in excess of par value of stock     70,373
       Deficit accumulated during the development
          stage                                           (79,032)
                                                     ------------

            TOTAL STOCKHOLDERS' EQUITY (DEFICIT)           (6,426)
                                                     ------------

            TOTAL LIABILITIES AND STOCKHOLDERS'
              EQUITY (DEFICIT)                       $        890
                                                     ============

           See Accompanying Notes and Independent Accountants' Review Report.


                                       2
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                            STATEMENTS OF OPERATIONS
              FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1998
                      AND FOR THE PERIOD FROM JUNE 27, 1988
                    (DATE OF INCEPTION) TO DECEMBER 31, 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                         Three                Nine             June 27, 1988
                                        Months                Months             (Date of
                                         Ended                Ended            Inception) to
                                   December 31, 1998    December 31, 1998    December 31, 1998
                                   -----------------    -----------------    -----------------
<S>                                <C>                  <C>                  <C>
REVENUE - INTEREST INCOME          $              7     $             21     $         14,729

DEVELOPMENT COST                                 30                2,615               93,761
                                   ----------------     ----------------     ----------------

NET (LOSS)                         $            (23)    $         (2,594)    $        (79,032)
                                   ================     ================     ================

NET (LOSS) PER
   COMMON SHARE                    $          (.000)    $          (.001)
                                   ================     ================

WEIGHTED AVERAGE NUMBER
   OF COMMON SHARES
   OUTSTANDING

     Basic and diluted                     2,232,500            2,232,500
                                   =================    =================
</TABLE>

       See Accompanying Notes and Independent Accountants' Review Report.


                                       3
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
             STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
              FOR THE PERIOD FROM JUNE 27, 1988 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           Paid in       Deficit
                                                                                         Capital in    Accumulated
                                     Preferred Stock               Common Stock           Excess of    During the
                              --------------------------   --------------------------     Par Value    Development
                                  Shares        Amount        Shares         Amount       of Stock        Stage
                              ------------  ------------   ------------  ------------    ------------  ------------
<S>                                      <C><C>              <C>         <C>             <C>           <C>
AT DATE OF INCEPTION                     0  $          0              0  $          0    $          0  $          0

ISSUANCE OF COMMON
   STOCK FOR CASH
   $.01 - JUNE 27, 1988                  0             0      1,500,000         1,500          20,500             0

NET INCOME FOR THE
   PERIOD ENDED
   MARCH 31, 1989                        0             0              0             0               0           538
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1989                  0             0      1,500,000         1,500          20,500           538

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1990                  0             0              0             0               0        (2,128)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1990                  0             0      1,500,000         1,500          20,500        (1,590)

ISSUANCE OF COMMON
   STOCK FOR CASH
   $.10 - MARCH 31, 1991,
   NET OF COSTS OF $24,646               0             0        732,500           733          47,873             0

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1991                  0             0              0             0               0        (6,415)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1991                  0             0      2,232,500         2,233          68,373        (8,005)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1992                  0             0              0             0               0        (3,809)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1992                  0             0      2,232,500         2,233          68,373       (11,814)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1993                  0             0              0             0               0        (2,770)
                              ============  ============   ============  ============    ============  ============

BALANCE, MARCH 31, 1993                  0             0      2,232,500         2,233          68,373       (14,584)
</TABLE>

           See Accompanying Notes and Independent Accountants' Review Report.


                                       4

<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
       STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
              FOR THE PERIOD FROM JUNE 27, 1988 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1998
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                           Paid in       Deficit
                                                                                         Capital in    Accumulated
                                     Preferred Stock               Common Stock           Excess of    During the
                              --------------------------   --------------------------     Par Value    Development
                                  Shares        Amount        Shares         Amount       of Stock        Stage
                              ------------  ------------   ------------  ------------    ------------  ------------
<S>                                      <C><C>              <C>         <C>             <C>           <C>
NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1994                  0  $          0              0  $          0    $          0  $     (1,034)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1994                  0             0      2,232,500         2,233          68,373       (15,618)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1995                  0             0              0             0               0        (1,072)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1995                  0             0      2,232,500         2,233          68,373       (16,690)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1996                  0             0              0             0               0       (25,857)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1996                  0             0      2,232,500         2,233          68,373       (42,547)

CAPITAL CONTRIBUTION                     0             0              0             0           2,000             0

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1997                  0             0              0             0               0       (31,567)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1997                  0             0      2,232,500         2,233          70,373       (74,114)

NET (LOSS) FOR THE YEAR
   ENDED MARCH 31, 1998                  0             0              0             0               0        (2,324)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE, MARCH 31, 1998                  0             0      2,232,500         2,233          70,373       (76,438)

NET (LOSS) FOR THE NINE
   MONTHS ENDED
   DECEMBER 31, 1998                     0             0              0             0               0        (2,594)
                              ------------  ------------   ------------  ------------    ------------  ------------

BALANCE,
   DECEMBER 31, 1998                     0 $           0      2,232,500  $      2,233    $     70,373   $   (79,032)
                              ============  ============   ============  ============    ============  ============
</TABLE>

       See Accompanying Notes and Independent Accountants' Review Report.


                                       5
<PAGE>

                        UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                              (A DEVELOPMENT STAGE COMPANY)
                                STATEMENTS OF CASH FLOWS
                       FOR THE NINE MONTHS ENDED DECEMBER 31, 1998
                          AND FOR THE PERIOD FROM JUNE 27, 1988
                        (DATE OF INCEPTION) TO DECEMBER 31, 1998
                                       (UNAUDITED)

<TABLE>
<CAPTION>
                                                                   Nine                     June 27, 1988
                                                                   Months                     (Date of
                                                                   Ended                    Inception) to
                                                             December 31, 1998            December 31, 1998
                                                             -----------------            -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                          <C>                          <C>
       Net (loss)                                            $          (2,594)           $         (79,032)
       Adjustments to reconcile net (loss) to
          net cash (used) by operating activities:
             Allowance for doubtful accounts                                 0                       50,000
             Amortization                                                    0                          500
       Changes in operating assets and liabilities
          Accounts payable                                                   0                        7,316
                                                             -----------------            -----------------

               NET CASH (USED) BY
                  OPERATING ACTIVITIES                                  (2,594)                     (21,216)
                                                             -----------------            -----------------

CASH FLOWS FROM INVESTING ACTIVITIES
       Loan to merger candidate                                              0                      (50,000)
                                                             -----------------            -----------------

               NET CASH (USED) BY
                  INVESTING ACTIVITIES                                       0                      (50,000)
                                                             -----------------            -----------------

CASH FLOWS FROM FINANCING ACTIVITIES
       Proceeds from issuance of common stock                                0                       97,250
       Offering costs incurred                                               0                      (24,644)
       Acquisition of organization costs                                     0                         (500)
                                                             -----------------            -----------------

               NET CASH PROVIDED BY
                  FINANCING ACTIVITIES                                       0                       72,106
                                                             -----------------            -----------------

NET INCREASE (DECREASE) IN CASH
   AND CASH EQUIVALENTS                                                 (2,594)                        890

CASH AND CASH EQUIVALENTS AT
   BEGINNING OF PERIOD                                                   3,484                           0
                                                             -----------------            -----------------

CASH AND CASH EQUIVALENTS AT
   END OF PERIOD                                             $             890            $             890
                                                             =================            =================
</TABLE>

           See Accompanying Notes and Independent Accountants' Review Report.


                                            6

<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      STATEMENTS OF CASH FLOWS (CONTINUED)
                   FOR THE NINE MONTHS ENDED DECEMBER 31, 1998
                      AND FOR THE PERIOD FROM JUNE 27, 1988
                    (DATE OF INCEPTION) TO DECEMBER 31, 1998
                                   (UNAUDITED)


                                              Nine            June 27, 1988
                                              Months            (Date of
                                              Ended           Inception) to
                                        December 31, 1998   December 31, 1998
                                        -----------------   -----------------

SUPPLEMENTAL DISCLOSURE OF CASH
   FLOW INFORMATION

       Interest paid                     $          0         $          0
                                         ============         ============

       Taxes paid                        $          0         $        132
                                         ============         ============

           See Accompanying Notes and Independent Accountants' Review Report.


                                       7

<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
                                   (UNAUDITED)

NOTE 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Organization and Nature of Business

            The company was incorporated under the laws of the state of Colorado
            on June 27, 1988 for the purpose of acquiring subsidiary companies.

            Cash and Cash Equivalents

            For the purposes of the statement of cash flows, the company
            considers all highly liquid debt instruments purchased with an
            original maturity of three months or less to be cash equivalents.

            Accounting Estimates

            Management uses estimates and assumptions in preparing financial
            statements in accordance with generally accepted accounting
            principles. Those estimates and assumptions affect the reported
            amounts of assets and liabilities, the disclosure of contingent
            assets and liabilities, and the reported revenues and expenses.
            Actual results could vary from the estimates that were used.

            Income Taxes

            Provisions for income taxes are based on taxes payable or refundable
            for the current year and deferred taxes on temporary differences
            between the amount of taxable income and pretax financial income and
            between the tax bases of assets and liabilities and their reported
            amounts in the financial statements. Deferred tax assets and
            liabilities are included in the financial statements at currently
            enacted income tax rates applicable to the period in which the
            deferred tax assets and liabilities are expected to be realized or
            settled as prescribed in FASB Statement No. 109, Accounting for
            Income Taxes. As changes in tax laws or rates are enacted, deferred
            tax assets and liabilities are adjusted through the provision for
            income taxes.

            Net (Loss) Per Share

            The company adopted Statement of Financial Accounting Standards No.
            128 that requires the reporting of both basic and diluted earnings
            per share. Basic earnings per share is computed by dividing net
            income available to common shareowners by the weighted average
            number of common shares outstanding for the period. Diluted earnings
            per share reflects the potential dilution that could occur if
            securities or other contracts to issue common stock were exercised
            or converted into common stock. In accordance with FASB 128, any
            anti-dilutive effects on net loss per share are excluded.

       See Accompanying Notes and Independent Accountants' Review Report.


                                       8

<PAGE>

                        UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                              (A DEVELOPMENT STAGE COMPANY)
                              NOTES TO FINANCIAL STATEMENTS
                                    DECEMBER 31, 1998
                                       (UNAUDITED)


NOTE 1      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Disclosure About Fair Value of Financial Instruments

            The company has financial instruments, none of which are held for
            trading purposes. The company estimates that the fair value of all
            financial instruments at December 31, 1998 as defined in FASB 107,
            does not differ materially from the aggregate carrying values of its
            financial instruments recorded in the accompanying balance sheet.
            The estimated fair value amounts have been determined by the company
            using available market information and appropriate valuation
            methodologies. Considerable judgement is required in interpreting
            market data to develop the estimates of fair value, and accordingly,
            the estimates are not necessarily indicative of the amounts that the
            company could realize in a current market exchange.

NOTE 2      DEVELOPMENT STAGE OPERATIONS

            As of December 31, 1998, the company was in the development stage of
            operations. According to the Financial Accounting Standards Board of
            the Financial Accounting Foundation, a development stage company is
            defined as a company that devotes most of its activities to
            establishing a new business activity. In addition, planned principle
            activities have not commenced, or have commenced and have not yet
            produced significant revenue.

            FAS-7 requires that all development costs be expensed during the
            development period. The company expensed $2,615 of development costs
            for the nine months ended December 31, 1998 and $93,761 for the
            period from June 27, 1988 (date of development stage) to December
            31, 1998.

NOTE 3      INCOME TAXES

            (Loss) before income taxes                               $   (2,594)
                                                                     ----------

            The provision for income taxes is estimated as follows:
                   Currently payable                                 $        0
                                                                     ----------
                   Deferred                                          $        0
                                                                     ----------

            A reconciliation of the provision for income taxes
              compared with the amounts at the U.S. Federal
              Statutory rates is as follows:
                Tax at U.S. Federal Statutory income tax rates       $        0
                                                                     ----------

           See Accompanying Notes and Independent Accountants' Review Report.


                                       9
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
                                   (UNAUDITED)

NOTE 3      INCOME TAXES (CONTINUED)
            Deferred income tax assets and liabilities reflect
              the impact of temporary differences between amounts
              of assets and liabilities for financial reporting
              purposes and the basis of such assets and
              liabilities as measured by tax laws.
                 The net deferred tax assets is:                     $      0
                                                                     --------
                 The net deferred tax liability is:                  $      0
                                                                     --------

            Temporary differences and carryforwards that gave rise to
              deferred tax assets and liabilities included the following:

<TABLE>
<CAPTION>
                                                                  Deferred Tax
                                                           ---------------------------
                                                              Assets       Liabilities
                                                           ------------   ------------
                <S>                                        <C>            <C>
                Net operating loss                         $     11,855   $          0

                Valuation allowance                              11,855              0
                                                           ------------   ------------

                Total deferred taxes                       $          0   $          0
                                                           ============   ============

            A reconciliation of the valuation allowance is as follows:

                Balance, April 1, 1998                                    $     11,466

                Addition for the nine months ended December 31, 1998               389
                                                                           -----------

                Balance, December 31, 1998                                $     11,855
                                                                          ============
</TABLE>

NOTE 4      TAX CARRYFORWARD

            The company has the following tax carryforwards at December 31, 1998

              Year Ended                Amount            Expiration Date
        --------------------        ---------------    --------------------
            March 31, 1990          $         1,590     March 31, 2005
            March 31, 1991                    6,415     March 31, 2006
            March 31, 1992                    3,809     March 31, 2007
            March 31, 1993                    2,770     March 31, 2008
            March 31, 1994                    1,034     March 31, 2009
            March 31, 1995                    1,072     March 31, 2010

       See Accompanying Notes and Independent Accountants' Review Report.


                                      10
<PAGE>

                    UNIVERSAL SERVICES AND ACQUISITIONS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998
                                   (UNAUDITED)


NOTE 4      TAX CARRYFORWARD (CONTINUED)

              Year Ended                Amount            Expiration Date
        --------------------        ---------------    --------------------
            March 31, 1996          $        25,857     March 31, 2011
            March 31, 1997                   31,567     March 31, 2012
            March 31, 1998                    2,324     March 31, 2013
                                    ---------------

                                    $        76,438
                                    ===============

            Future changes in ownership may limit the ability of the company to
            utilize its net operating loss carryforwards prior to their
            expiration.

NOTE 5      STOCK WARRANTS

            The company has outstanding A warrants and B warrants in the amounts
            of 10,465,000 and 3,732,500, respectively. The A warrants entitle
            holders to purchase one share of the company's $.001 par value
            common stock for $.25 per share and expire on December 31, 1999. The
            B warrants entitle holders to purchase one share of the company's
            $.001 par value common stock for $.40 per share and expire on
            December 31, 2000.

NOTE 6      PREFERRED STOCK

            No rights or preferences have been assigned to the preferred stock.

NOTE 7      UNAUDITED FINANCIAL INFORMATION

            The accompanying financial information as of December 31, 1998 is
            unaudited. In managements opinion, such information includes all
            normal recurring entries necessary to make the financial information
            not misleading.

       See Accompanying Notes and Independent Accountants' Review Report.


                                       11