UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549



                                   FORM 10-QSB


      QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
          ACT OF 1934 for the quarterly period ended December 31, 1998


                       Commission File Number 33-24608-LA

                        USA INTERNATIONAL CHEMICAL, INC.
             (Exact name of Registrant as specified in its charter)


                                                                              
             DELAWARE                                         95-4068292  
  ----------------------------------                    ----------------------
  (State of other jurisdiction of                          (I.R.S. Employer 
  incorporation or organization)                         Identification Number)
                  


   15915 Ventura Boulevard, Suite 301
           Encino, California                                     91436
 --------------------------------------                   ---------------------

(Address of Principal Executive Offices)                       (Zip Code)

Registrant's telephone number including area code:            (818) 783-0393
                                                          ---------------------
                                



Indicate by check mark whether the issuer (1) has filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the preceding 12 months (or for such shorter period that the issuer was required
to file such reports),  and (2) has been subject to such filing requirements for
the past 90 days:

       YES    X       NO        
           -------       ------


Common stock, $.00001 par value,  1,346,809 issued and outstanding as of
January 15, 1999.

-------------------------------------------------------------------------------



<PAGE>2

                                      INDEX

                                                                           PAGE

PART I - FINANCIAL INFORMATION

     ITEM 1.  Financial Statements (Unaudited)..............................  3

     ITEM 2.  Management's Discussion and Analysis..........................  8


PART II - OTHER INFORMATION

     ITEM 1.  Legal Proceedings............................................  10

     ITEM 2.  Changes in Securities........................................  10

     ITEM 3.  Defaults upon Senior Securities..............................  10

     ITEM 4.  Submission of Matters to a Vote of Security Holders..........  10

     ITEM 5.  Other Information............................................  10

     ITEM 6.  Exhibits and Reports on Form 8-K.............................  10



<PAGE>3



     PART I - FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS



<PAGE>4



                        USA INTERNATIONAL CHEMICAL, INC.
                                 BALANCE SHEET
                               DECEMBER 31, 1998
                                   (UNAUDITED)


                                     ASSETS


Current Assets

         Cash                                                  $       635
                                                               -------------

         Total Assets                                          $       635
                                                               =============



                       LIABILITIES AND STOCKHOLDERS EQUITY


Current Liabilities                                            $       - 0 -

Stockholders' Equity (Notes 1 and 2)

         Common stock, $.00001 par value, authorized
         50,000,000 shares, issued and outstanding
         1,346,809 shares                                               13
         Additional paid-in capital                                328,167
         Accumulated deficit                                      (327,545)
                                                              -------------

         Total Stockholders Equity                                     635
                                                              -------------
         Total Liabilities and Stockholders' Equity           $        635
                                                              =============




See accompanying notes.



<PAGE>5



                        USA INTERNATIONAL CHEMICAL, INC.
                     STATEMENTS OF OPERATIONS FOR THE THREE
                 AND SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997
                                   (UNAUDITED)

<TABLE>
<S>                                                        <C>            <C>           <C>                 <C>    

                                                             Three Months Ended                  Six Months Ended
                                                                September 30,                      December 31,
                                                            --------------------          -----------------------------
                                                  
                                                              1998           1997             1998             1997 
                                                             ------         ------           ------            ------             
                                   
Sales    ..........................................        $       -      $       -        $        -        $     - 
                                                           ----------     ----------       -----------       ----------
General Administrative Expenses....................            2,391          1,519             9,175            8,367
                                                           ----------     ----------        ----------       ----------
     Loss from Operations..........................           (2,391)        (1,519)           (9,175)          (8,367)  
                                                           ----------     ----------        ----------       ----------
     Loss Before Income Tax Provisions.............           (2,391)        (1,519)           (9,175)          (8,367)    
                                                           ----------     ----------        ----------       -----------
Provision for Income Tax...........................                0              0               800              800
                                                           ----------     ----------        ----------       -----------
Net Loss...........................................        $  (2,391)        (1,519)           (9,975)          (9,167)
                                                           ==========     ==========        ==========       ==========
Net Loss Per Share ................................        $       -      $        -        $    (.01)       $    (.01)      
                                                           ==========     ==========        ==========       ========== 
Weighted Average Shares Outstanding................         1,346,809     1,341,809         1,346,809        1,341,809

</TABLE>

                                                         
See accompanying notes.


<PAGE>6


                        USA INTERNATIONAL CHEMICAL, INC.
                            STATEMENTS OF CASH FLOWS
                   SIX MONTHS ENDED DECEMBER 31, 1998 AND 1997


(UNAUDITED)




                                                          Six Months Ended
                                                              December 31,
                                                           ----------------
                                                       1998               1997
                                                     --------           -------

Operating Activities: 
                                  
     Net Cash Used in Operating Activities          $(7,975)           $(9,167)

     Financing Activities:

          Capital Contributions                       5,000              6,000
                                                    -------            --------
     Net Cash Provided by Financing Activities        5,000              6,000
                                                    -------            --------
                                                                             
Net Increase (Decrease) in Cash                      (2,975)            (3,167)

Cash at beginning of period                           3,610              5,524
                                                    -------            --------
Cash at end of period                               $   635            $ 2,357
                                                   ========            ========


See accompanying notes


<PAGE>7



                        USA INTERNATIONAL CHEMICAL, INC.
                          NOTES TO FINANCIAL STATEMENTS
                       SIX MONTHS ENDED DECEMBER 31, 1998


NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting  principles for interim financial information
pursuant  to  Regulation  S-B.  Accordingly,  they  do  not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation have been included.  Operating results for the three months and six
months ended  December 31, 1998 are not  necessarily  indicative  of the results
that may be expected for the year ending June 30, 1999. For further  information
refer to the financial  statements and footnotes thereto included in Form 10-KSB
for the year ended June 30, 1998 filed by the Company.

The Company has a history of losses and is evaluating  various  alternatives  to
recapitalize  the Company which may provide the  opportunity  for the Company to
continue as a going concern.

It is not possible to predict the success of management's efforts. If management
is unable to achieve any of its goals,  the Company  will find it  necessary  to
undertake  actions as may be appropriate to continue  operations.  The financial
statements do not reflect any adjustments  that might result from the outcome of
this uncertainty.

NOTE 2 - SHAREHOLDERS' DEFICIT

During the six months ended December 31, 1998 principal shareholders contributed
$5,000 to the Company.





<PAGE>8



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

         This discussion,  other than the historical financial information,  may
consist of  forward-looking  statements  that involve  risks and  uncertainties,
including when the Company may resume business operations.
Consequently, actual results may vary from management's expectations.

         Operating Activities
         ----------------------

         There were no sales for the six month period ended December 31, 1998 or
1997. Since the change of control of the Company in September, 1994, the Company
has not pursued any of the Company's  former business.  Consequently,  until the
Company's  current  management  develops  or acquires  new  business  lines,  no
operating revenues are expected.

         Operating  expenses  totaled  $2,391 for the quarter ended December 31,
1998,  and $9,175 for the six months  ended  December 31,  1998,  which  include
$2,000 paid for  services by issuing  5,000  shares of common  stock.  Operating
expenses  for the  quarter  consisted  primarily  of legal and  accounting  fees
relating to the Company's  quarterly and annual reports and the material for the
Company's annual  shareholders  meeting.  Operating  expenses totaled $1,519 and
$8,367 for the comparable periods in 1997. The similar level of expenses reflect
comparable fees for services rendered in both periods for 1998 and 1997.

         During the six months ended  December 31, 1998,  net cash of $7,975 was
used by operations compared to $9,167 for the same period in 1997.

         Net loss  totaled  $2,391  for the three  months and $9,975 for the six
months ended  December 31, 1998,  compared to a net loss of $1,519 for the three
months and $9,167 for the six months ended  December 31,  1997.  The  relatively
similar net loss incurred for both six month periods  reflect  similar levels of
administrative expenses recognized in such periods.

         In  light  of  the   foregoing,   the  Company  will  attempt  to  keep
administrative expenses to a minimum. However,  operating losses are anticipated
until the Company establishes new lines of business.

         Many companies have older  computer  programs which  recognize only the
last two  digits of the year in any date (i.e.  "98" for  "1998"),  which  could
cause  such  software  to fail to  operate  in the year 1999 or 2000  unless the
software  is  preprogramed  or  replaced  (the "Year 2000  Problem").  Since the
Company has no active business operations, the Year 2000 Problem is not expected
to affect the Company's current limited  operations.  Consequently,  the Company
believes  that the cost of  addressing  the Year  2000  Problem  will not have a
material  effect on the Company's  financial  position,  liquidity or results of
operations.

         For the foreseeable  future, the Company's sole activity is expected to
be the  identification and evaluation of suitable business  opportunities  which
could result in an acquisition by or combination with the Company.  There can be
no assurance,  however,  that the Company will be successful in its efforts,  or
that other types of business transactions might not be considered.

<PAGE>9


         Capital Resources and Liquidity

         Since  September  30, 1994,  the Company has generated no revenues from
operations.  During the six months ended December 31, 1998, capital was provided
for operations from $5,000 in contributions from two of the Company's  principal
stockholders.  During  the six months  ended  December  31,  1997,  capital  for
operations  was  provided  from  $6,000 in  contributions  from these  principal
shareholders or other affiliates of the Company. The Company expects to fund its
ongoing  capital needs through  investments in or advances to the Company by its
principal stockholders or other affiliates of the Company.



<PAGE>10



         PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         There are no legal  proceedings  against the  Company,  or to which the
Company or any of its officers or directors are a party, and to the knowledge of
the Company's management, no claims have been made against the Company.


ITEM 2.  CHANGES IN SECURITIES

         None


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None


ITEM 5.  OTHER INFORMATION

         None


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)     No Exhibits

         (b) No reports on Form 8-K were filed during the quarter for which this
report is filed.




<PAGE>11



                                   SIGNATURES


         In accordance with the  requirements of the Securities  Exchange Act of
1934,  the  Registrant  has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                          USA INTERNATIONAL CHEMICAL, INC.


Dated:  January 25, 1999                  /s/ HAROLD S. FLEISCHMAN
                                          --------------------------------
                                          Harold S. Fleischman
                                          President and Chief Financial Officer
                                          (Principal Accounting Person)