USA Opportunity Income One Inc.
USA Opportunity Income One Inc.
09/26/2024 | Press release | Distributed by Public on 09/26/2024 07:00
Special Semiannual Financial Report under Regulation A Form 1 SA
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 1-SA
| ☒ | SEMIANNUAL REPORT PURSUANT TO REGULATION A |
| or | |
| ☐ | SPECIAL FINANCIAL REPORT PURSUANT TO REGULATION A |
For the fiscal semiannual period ended June 30, 2024
USA Opportunity Income One, Inc.
(Exact name of issuer as specified in its charter)
| Puerto Rico | 66-0985204 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
|
|
404 Ave Constitucion # 208 San Juan, Puerto Rico 00901 |
||
| (Full mailing address of principal executive offices) |
(800) 305-5310
(Issuer's telephone number, including area code)
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This semi-annual report on Form 1-SA of USA Opportunity Income One, Inc., a Puerto Rico corporation, contains certain forward-looking statements that are subject to various risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "outlook," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. Our ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth or anticipated in our forward-looking statements. Factors that could have a material adverse effect on our forward-looking statements and upon our business, results of operations, financial condition, funds derived from operations, cash flows, liquidity and prospects include, but are not limited to, the factors referenced in our offering circular dated June 6, 2024, filed pursuant to Rule 253(g)(2), under the caption "RISK FACTORS" and which are incorporated herein by reference (https://www.sec.gov/Archives/edgar/data/1878379/000149315224023019/form253g2.htm).
When considering forward-looking statements, you should keep in mind the foregoing risk factors and other cautionary statements in this report. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this report. The matters summarized below and elsewhere in this report could cause our actual results and performance to differ materially from those set forth or anticipated in forward-looking statements. Accordingly, we cannot guarantee future results or performance. Furthermore, except as required by law, we are under no duty to, and we do not intend to, update any of our forward-looking statements after the date of this report, whether as a result of new information, future events or otherwise.
Item 1. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Unless the context otherwise requires or indicates, references in this Semi-Annual Report on Form 1-SA to "us," "we," "our", "ours" or the "Company" refer to USA Opportunity Income One, Inc., a Puerto Rico corporation. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes and other financial information included elsewhere in this Semi-Annual report.
Formation
We were incorporated under the laws of Puerto Rico, USA on August 3, 2021 under the name USA Opportunity Income Fund, Inc. On October 8, 2021 we issued 3,000 shares of our $0.01 per share par value common stock as founders' shares in exchange for incorporation services provided to Dania Echemendia (1,000 shares), Andrew Murray (1,000 shares), and Richard Meruelo (1,000 shares). On January 26, 2022 the Company changed its name to USA Opportunity Income One, Inc.
Regulation A Offering
We have commenced a "Tier 2 Offering" under Regulation A of the Company's "USA Real Estate Bonds" on a best efforts basis in increments of $1,000. The Company's Form 1-A was originally qualified by the Securities and Exchange Commission on March 9, 2022. The Company filed Post-Qualification Amendment No. 1 on March 9, 2023, and filed Post-Qualification Amendment No. 2 on March 29, 2023, which was qualified by the Securities and Exchange Commission on April 10, 2023, offering up to $75,000,000 ("Maximum Offering Amount") of our "USA Real Estate Bonds" consisting of (i) "7% USA Real Estate Bonds" and (ii) "12% USA Real Estate Bonds" on a best efforts basis in increments of $1,000, in a Tier 2 Offering under Regulation A (the "Offering"). We also filed Post-Qualification Amendment No. 3 on March 6, 2024, Post-Qualification Amendment No. 4 on April 10, 2024, Post-Qualification Amendment No. 5 on May 7, 2024, and Post-Qualification Amendment No. 6 on May 21, 2024, which was qualified by the Securities and Exchange Commission on June 6, 2024.
To date, the Company has sold $1,000 of 7% USA Real Estate Bonds and $170,000 of 12% USA Real State Bonds in the Offering.
The Company's Board of Directors decided to extend the Offering period for an additional 90 days from September 4, 2024, until December 3, 2024.
Results of Operations
As of June 30, 2024, the Company had commenced its Offering but had not commenced making loans and investments. For the six months ended June 30, 2024, our total income from other interest income was $1,696. Operating costs for the same period including mostly organization fees shown as "General and administrative expense" were $67,108. Net loss for the period was $75,293. For the six months ended June 30, 2023, our total income from other interest income was $103. Operating costs for the same period including mostly organization fees shown as "General and administrative expense" were $62,853. Net loss for the period was $62,750.
The Company was formed on August 3, 2021.
Liquidity and Capital Resources
At June 30, 2024 we had cash on hand of $49,020. At December 31, 2023 we had cash on hand of $102,067. We do not have any external sources of capital and are dependent upon advances from our shareholders and/or affiliates of our shareholders to provide funds for our operations until we begin receiving sufficient proceeds from the sale of USA Real Estate Bonds in the Offering. Our shareholders and/or affiliates of our shareholders, however, are under no obligation to advance us any funds. The Company has entered into an oral agreement with a lender (the "Lender"), an affiliate of Richard Meruelo who is currently a 33% shareholder of the Company, to reimburse the Lender for advances made to the Company by the Lender for initial organizational and offering expenses. Such reimbursement is to be made by the Company as cash becomes available to the Company and such reimbursement is planned to be made using a portion of the proceeds of the Offering. As of June 30, 2024, advances to the Company by the Lender totaled $469,079. As of December 31, 2023, advances to the Company by the Lender totaled $467,432. These advances have no maturity date or interest rate.
To date, the Company has sold $1,000 of 7% USA Real Estate Bonds and $170,000 of 12% USA Real State Bonds in the Offering.
Potential future sources of capital include secured or unsecured financings from banks or other lenders and establishing additional lines of credit. Note that, currently, we have not identified any additional source of financing, other than the proceeds from our Offering, and there is no assurance that such sources of financing will be available on favorable terms or at all.
Going Concern
This Semi-Annual Report has been prepared assuming that the Company will continue as a going concern. The Company has generated very limited income and has no operating history. These conditions raise substantial doubt about the Company's ability to continue as a going.
We are dependent on advances from our shareholders and/or affiliates of our shareholders and proceeds from the Offering to provide capital for our operations. Our shareholders and/or affiliates of our shareholders are not obligated to provide advances to us and there are no assurances that we will be successful in raising proceeds in the Offering. The financial statements do not include adjustments related to the recoverability and classifications of assets or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Contingent Liabilities
We may be subject to lawsuits, investigations and claims (some of which may involve substantial dollar amounts) that can arise out of our normal business operations. We would continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as potential amounts or ranges of probable losses, and recognize a liability, if any, for these contingencies based on a thorough analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Because most contingencies are resolved over long periods of time, liabilities may change in the future due to new developments (including new discovery of facts, changes in legislation and outcomes of similar cases through the judicial system), changes in assumptions or changes in our settlement strategy. There were no contingent liabilities as of September 26, 2024.
Income Taxes
As of September 26, 2024, we had no federal and state income tax expense.
Off-Balance Sheet and Other Arrangements
As of September 26, 2024, we did not have any material off-balance sheet arrangements.
Significant Accounting Policies
Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or "GAAP." The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with GAAP, we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Our significant accounting policies are fully described in Note 2 to our audited financial statements appearing elsewhere in this Form 1-SA, and we believe those accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements.
Item 2. Other Information.
None.
Item 3. Financial Statements.
INDEX TO FINANCIAL STATEMENTS
| Page | ||
| Balance Sheets (Unaudited) | F-2 | |
| Statements of Operations (Unaudited) | F-3 | |
| Statements of Changes in Shareholder's Equity (Deficit) (Unaudited) | F-4 | |
| Statements of Cash Flows (Unaudited) | F-5 | |
| Notes to the Financial Statements (Unaudited) | F-6 |
| F-1 |
USA Opportunity Income One, Inc.
Balance Sheets
| June 30, | December 31, | |||||||
|
2024 (unaudited) |
2023 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Unrestricted cash | $ | 49,020 | $ | 102,667 | ||||
| Restricted cash | - | - | ||||||
| Accounts receivable | - | - | ||||||
| Prepaid expenses | - | - | ||||||
| Total Current Assets | 49,020 | 102,667 | ||||||
| Due to/from related parties | - | - | ||||||
| Capitalized bond issuance costs | - | - | ||||||
| FF&E | - | - | ||||||
| First trust deed mortgages | - | - | ||||||
| Other trust deed mortgages | - | - | ||||||
| Unsecured loans receivable | - | - | ||||||
| Preferred equity interests | - | - | ||||||
| TOTAL ASSETS | $ | 49,020 | $ | 102,667 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 0 | $ | 0 | ||||
| Advances from related party | 469,079 | 467,432 | ||||||
| Total Current Liabilities | 469,079 | 467,432 | ||||||
| Bonds issued and outstanding at par | 171,000 | 151,000 | ||||||
| Commitments and contingencies | - | - | ||||||
| Common stock at par | 30 | 30 | ||||||
| Additional paid in capital | - | - | ||||||
| Retained earnings | (591,090 | ) | (515,796 | ) | ||||
| Total Equity | (591,060 | ) | (515,766 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) | $ | 49,020 | $ | 102,667 |
| F-2 |
USA Opportunity Income One, Inc.
Statements of Operations
| For the six months ended | ||||||||
| June 30, | June 30, | |||||||
|
2024 (unaudited) |
2023 (unaudited) |
|||||||
| Revenues | ||||||||
| Interest income | $ | 0 | $ | 0 | ||||
| Preferred equity dividends | - | - | ||||||
| Originations points and related fees | - | - | ||||||
| Other fee income | - | - | ||||||
| Total Revenues | - | - | ||||||
| Operating Expenses | ||||||||
| Marketing expense | - | - | ||||||
| Underwriting expense | - | - | ||||||
| Servicing expense | - | - | ||||||
| Bad debt expense | - | - | ||||||
| General & administrative expense | (67,108 | ) | (62,853 | ) | ||||
| Amortization of issuance costs | - | - | ||||||
| Interest expense on bonds | (9,881 | ) | - | |||||
| Total Operating Expenses | (76,989 | ) | (62,853 | ) | ||||
| Operating Income | (76,989 | ) | (62,853 | ) | ||||
| Other Income (Expense) | ||||||||
| Other Interest Income | 1,696 | 103 | ||||||
| Income/(Loss) before income taxes | (75,293 | ) | (62,750 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net Income/(Loss) | $ | (75,293 | ) | $ | (62,750 | ) | ||
| Net Income per share (basic and fully diluted) | $ | (25.10 | ) | $ | (20.92 | ) | ||
| Shares outstanding (basic and fully diluted) | 3,000 | 3,000 |
| F-3 |
USA Opportunity Income One, Inc.
Statements of Changes in Stockholders' Equity/(Deficit)
For the six months ended June 30, 2023 and June 30, 2024
(unaudited)
| Total | ||||||||||||||||||||
| Additional | Stockholders' | |||||||||||||||||||
| Common Stock | Paid In | Retained | Equity/ | |||||||||||||||||
| Shares | Amount | Capital | Earnings | (Deficit) | ||||||||||||||||
| Balance at Dec 31, 2023 | 3,000 | $ | 30 | $ | 0 | $ | (515,796 | ) | $ | (515,766 | ) | |||||||||
| Issuance of Common Stock | - | - | - | - | - | |||||||||||||||
| Net Income/(Loss) | - | - | - | (75,293 | ) | (75,293 | ) | |||||||||||||
| Balance at June 30, 2024 | 3,000 | $ | 30 | $ | 0 | $ | (591,090 | ) | $ | (591,060 | ) | |||||||||
| Balance at Dec 31, 2022 | 3,000 | $ | 30 | $ | 0 | $ | (372,015 | ) | $ | (371,985 | ) | |||||||||
| Issuance of Common Stock | - | - | - | - | - | |||||||||||||||
| Net Income/(Loss) | - | - | - | (62,750 | ) | (62,750 | ) | |||||||||||||
| Balance at June 30, 2023 | 3,000 | $ | 30 | $ | 0 | (434,765 | ) | $ | (434,735 | ) | ||||||||||
| Issuance of Common Stock | - | - | - | - | - | |||||||||||||||
| Net Income/(Loss) | - | - | - | (143,781 | ) | (143,781 | ) | |||||||||||||
| Balance at Dec 31, 2023 | 9,000 | $ | 90 | $ | 0 |
For the years ended December 31, 2022 and December 31, 2023
| Total | ||||||||||||||||||||
| Additional | Stockholders' | |||||||||||||||||||
| Common Stock | Paid In | Retained | Equity/ | |||||||||||||||||
| Shares | Amount | Capital | Earnings | (Deficit) | ||||||||||||||||
| Balance at Dec 31, 2021 | 3,000 | $ | 30 | $ | 0 | $ | (131,150 | ) | $ | (131,120 | ) | |||||||||
| Issuance of Common Stock | - | - | - | - | - | |||||||||||||||
| Net Income/(Loss) | - | - | - | (240,865 | ) | (240,865 | ) | |||||||||||||
| Balance at Dec 31, 2022 | 3,000 | $ | 30 | $ | 0 | $ | (372,015 | ) | $ | (371,985 | ) | |||||||||
| Issuance of Common Stock | - | - | - | - | - | |||||||||||||||
| Net Income/(Loss) | - | - | - | - | - | |||||||||||||||
| Balance at Dec 31, 2023 | 3,000 | $ | 30 | $ | 0 |
| F-4 |
USA Opportunity Income One, Inc.
Statements of Cash Flows
| For the six months ended | ||||||||
| June 30, | June 30, | |||||||
|
2024 (unaudited) |
2023 (unaudited) |
|||||||
| Cash Flows from Operating Activities | ||||||||
| Net income/(loss) | $ | (75,293 | ) | $ | (62,750 | ) | ||
| Increase/(Decrease) in accounts payable | - | - | ||||||
| Increase/(Decrease) in due to/from related parties | 1,647 | 53,872 | ||||||
| (Increase)/Decrease in accounts receivable/prepaid expenses | - | 5,000 | ||||||
| Net Cash Used in Operating Activities | (73,646 | ) | (3,878 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Originations of loans | - | - | ||||||
| Repayments of loans | - | - | ||||||
| Net Cash Used in Investing Activities | - | - | ||||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds of issuance of common stock | - | - | ||||||
| Proceeds from issuance of unsecured bonds | 20,000 | 50,000 | ||||||
| Net Cash Provided by Financing Activities | 20,000 | 50,000 | ||||||
| Net Change in Cash | (53,646 | ) | $ | 46,122 | ||||
| Cash at beginning of period | 102,667 | 1,137 | ||||||
| Cash at end of period | $ | 49,020 | $ | 47,259 |
| F-5 |
USA Opportunity Income One, Inc.
Notes to the Unaudited Financial Statements
As of June 30, 2024
Note 1 - Formation and Organization
USA Opportunity Income One, Inc. (the "Company") is a corporation organized under the laws of the State of Puerto Rico on August 3, 2021. As of December 31, 2023 and June 30, 2024, the Company has commenced capital raising operations. These financial statements are for the semi-annual period ended June 30, 2024. The Company's fiscal year end is December 31.
The Company was organized to identify and originate mortgages and other liens on and interests in real estate in primary and secondary metropolitan markets in the state of Florida.
The Company has filed an offering statement on Form 1-A with the Securities and Exchange Commission ("SEC") with respect to an offering of up to $75 million in bonds. consisting of (i) "7% USA Real Estate Bonds" and (ii) "12% USA Real Estate Bonds" The terms of these bonds are as follows:
7% USA Real Estate Bonds:
| ● | are priced at $1,000 each; | |
| ● | represent a full and unconditional obligation of our company; | |
| ● | bear interest at 7% per annum; | |
| ● | mature on December 31, 2031; | |
| ● | are subject to repayment (i) at the demand of a bondholder beginning in the first month after the second anniversary of the date of purchase of USA Real Estate Bonds by such bondholder and (ii) in the case of a bondholder's death, bankruptcy or total permanent disability, each subject to notice, discounts and other provisions contained in the Company's offering circular; | |
| ● | are subject to an interest reserve fund for the repayment of bondholders which shall be funded with an amount equal to one year's interest payments up to a maximum of 7% of the total amount of USA Real Estate Bonds sold; | |
| ● | are subject to redemption by the Company at any time after the second anniversary of the first sale of USA Real Estate Bonds; provided that a partial redemption complies with applicable tender offer rules; | |
| ● | rank equally with all of our other unsecured debt unless such debt is senior to or subordinate to the USA Real Estate Bonds by their terms; | |
| ● | are transferable; | |
| ● | are unsecured; and | |
| ● | are governed and construed in accordance with the laws of Puerto Rico |
12% USA Real Estate Bonds:
| ● | are priced at $1,000 each; | |
| ● | represent a full and unconditional obligation of our company; | |
| ● | bear interest at 12% per annum.; | |
| ● | mature 3 years from the issue date; | |
| ● | are subject to repayment in the case of a bondholder's death, bankruptcy or total permanent disability, each subject to notice, discounts and other provisions contained in the Company's offering circular; | |
| ● | are subject to redemption by the Company at any time after the second anniversary of the issue date of a bondholder's bond; provided that a partial redemption complies with applicable tender offer rules; | |
| ● | rank equally with all of our other unsecured debt unless such debt is senior to or subordinate to the USA Real Estate Bonds by their terms; | |
| ● | are transferable; | |
| ● | are unsecured; and | |
| ● | are governed and construed in accordance with the laws of Puerto Rico |
The following table sets forth information regarding the USA Real Estate Bonds currently outstanding:
| Number of Bonds | Bond Principal | Interest Rate | Maturity Year | ||||||||||
| 1 | $ | 1,000 | 7.00 | % | 2031 | ||||||||
| 2 | 170,000 | 12.00 | % | 2026 |
Principal Repayment Schedule
| 2024 | - | |||
| 2025 | - | |||
| 2026 | $ | 170,000 | ||
| 2027 | - | |||
| 2028 | 0 | |||
| Thereafter | 1,000 |
Note 2 - Summary of Significant Accounting Policies and Practices
| (a) | Basis of Presentation |
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP").
| (b) | Use of Estimates |
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
| (c) | Risks and Uncertainties |
The Company does not have an operating history and has not generated any revenue through the origination of mortgages and other liens on and interests in real estate. The Company's business and operations are sensitive to general business and economic conditions, including the impact of the COVID-19 pandemic, along with any related local, state and federal government policy decisions. Factors beyond the Company's control could cause fluctuations in these conditions, including the ability to raise funds to acquire real estate investments, the availability of real estate investments to acquire, and changes to Regulation A Tier 2 requirements. Adverse developments in these general business and economic conditions could have a material adverse effect on the Company's financial condition and the results of its operations.
| F-6 |
| (d) | Cash and Cash Equivalents |
Cash consists of amounts the Company has on deposit with a major commercial financial institution. Cash equivalents include short term investments, stated at cost plus interest, which approximates fair value, with an original maturity of less than 90 days.
Cash may at times exceed the Federal Deposit Insurance Corporation deposit insurance limit and the Company mitigates credit risk by placing cash with major financial institutions.
| (e) | Organization and Offering Costs |
Organizational and offering expenses in connection with the offering include all expenses to be paid by the Company in connection with the offering. Organization costs will be expensed as incurred and syndication costs will be reflected as a reduction of stockholder's equity.
Initial organization and offering expenses will be paid by founders and/or affiliates of the founders of the Company. The Company will reimburse the founders and/or affiliates of the Company an amount up to $1,125,000 from the gross bond offering proceeds for these initial expenses.
As of December 31, 2023, founders and/or affiliates of the founders of the Company have paid $467.432 of organizational and offering costs on behalf of the Company. As of June 30, 2024, founders and/or affiliates of the founders of the Company have paid $469,079 of organizational and offering costs on behalf of the Company.
The Company has entered into an oral agreement with an affiliate of a founder to reimburse from Company cash when available any initial organizational and offering expenses paid by this affiliate of a founder.
| (f) | Income Taxes |
No provision for federal income taxes has been made in the accompanying financial statements. In certain instances, the Company may be subject to certain state and local taxes depending on the location and jurisdiction of any real estate investments made by the Company.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurements are reflected in the period in which the change in judgment occurs. As of December 31, 2023 and June 30, 2024, the Company had no material unrecognized tax benefits.
| (g) | Liquidity and Going Concern: |
The Company has issued a limited amount of Bonds as of December 31, 2023 and June 30, 2024, has only commenced capital raising operations, and does not have sufficient cash or a source of revenue sufficient to cover future organizational, offering and operation costs. As of December 31, 2023 and June 30, 2024, the Company has not made any significant investments into cash flowing assets and has not generated any significant revenues. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company will be dependent upon the raising of additional capital through issuance of Bonds in order to implement its business plan. There can be no assurance that the Company will be successful in this situation in order to continue as a going concern. The Company is funding its initial expenses from payments of expenses by founders of the Company.
| F-7 |
| (h) | Earnings per share, basic and diluted |
Basic net income per share will be computed by allocating net income to common shares and using the weighted-average number of common shares outstanding during the period.
Diluted net income per share will be computed using the weighted-average number of common shares and, if dilutive, the potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options. The dilutive effect of outstanding stock options is reflected in diluted earnings per share. The Company has no outstanding stock options.
| (i) | New accounting pronouncements - not yet adopted |
The Financial Accounting Standards Board has issued the following Accounting Standard Update ASU No. 2016-01, Financial Instruments, ASU 2016-02, Leases, ASU 2016-13, Financial Instruments - Credit Losses, ASU No. 2016-15, Statement of Cash Flows.
Recent accounting pronouncements that the Company has yet to adopt or that will be required to adopt in the future are summarized below.
In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825- 10), Recognition and Measurement of Financial Assets and Financial Liabilities. The provisions of the update require equity investments to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment. The update also simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. It also eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet. ASU No. 2016-01 requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. It also requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments.
The update requires separate presentation of financial assets and financial liabilities by category and form on the balance sheet or the accompanying notes to the financial statements. In addition, the update clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity's other deferred tax assets.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), Conforming Amendments Related to Leases. This ASU amends the codification regarding leases in order to increase transparency and comparability. The ASU requires companies to recognize lease assets and liabilities on the balance sheet and disclose key information about leasing arrangements. A lessee would recognize a liability to make lease payments and a right-of-use asset representing its right to use the leased asset for the lease term.
| F-8 |
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The amendments introduce an impairment model that is based on expected credit losses ("ECL"), rather than incurred losses, to estimate credit losses on certain types of financial instruments (ex. loans and held to maturity securities), including certain off-balance sheet financial instruments (ex. Commitments to extend credit and standby letters of credit that are not unconditionally cancellable). The ECL should consider historical information, current information, and reasonable and supportable forecasts, including estimates of prepayments, over the contractual term. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. Financial instruments with similar risk characteristics may be grouped together when estimating the ECL. The ASU also amends the current available for sale security impairment model for debt securities whereby credit losses relating to available for sale debt securities should be recorded through an allowance for credit losses.
In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify the proper classification for certain cash receipts and cash payments, including clarification on debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, and proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies, among others.
| (j) | Fair value - hierarchy of fair value |
In accordance with FASB ASC 820-10, Fair Value Measurements and Disclosures, the Company discloses the fair value of its assets and liabilities in a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation. FASB ASC820-10-35-39 to 55 provides three levels of the fair value hierarchy as follows:
Level One - Inputs use quoted prices in active markets for identical assets or liabilities of which the Company has the ability to access.
Level Two - Inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
Level Three - Inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset.
Note 3 - Stockholder's Equity/(Deficit)
As of August 3, 2021, 3,000 shares of a single class of common share with a par value of $0.01 per share have been authorized. As of October 8, 2021, the Company issued 3,000 shares, 1,000 shares each to each of the three founders as founders shares.
Note 4 - Related-Party Transactions
No fees will be paid by the Company to any affiliates of the founders of the Company. The Company is only expected to reimburse the founders of the Company for initial organizational and offering expenses such as legal and other professional services paid by the founders of the Company. These advances have no maturity or interest rates associated with them. Such reimbursement shall be treated as expenses of the Company and shall not be deemed to constitute distributions to any stockholders of the Company.
Note 5 - Commitments and Contingencies
The Company may become subject to various legal proceedings. However, as of December 31, 2023 and June 30, 2024, the Company is not subject to any material pending or threatened legal proceedings. Initial organization and offering costs paid by founders of the Company on behalf of the Company are expected to be subject to future reimbursement from the Company. See Note 2 for further information.
| F-9 |
Note 6 - Subsequent Events
The Company has evaluated events through September 26, 2024, and determined that there are no additional subsequent events other than the above that required disclosure.
Item 4. Exhibits.
| No. | Exhibit Description | Form | Date Filed | Number | ||||
| 1.1 | Engagement Agreement with Coastal Equities, Inc. | 1-A | 11/02/2021 | 1.1 | ||||
| 1.2 | Engagement Agreement with Dalmore Group, LLC. | Form 1-A POS | 03/09/2023 | 1.1 | ||||
| 1.3 | Engagement Agreement with First Southern, LLC. | Form 1-A POS | 03/09/2023 | 1.2 | ||||
| 1.4 | Engagement Agreement with Sardona Capital S.A. | Form 1-A POS | 03/06/2024 | 1.3 | ||||
| 2.1 | Amended Articles of Incorporation | 1-A | 11/02/2021 | 2.1 | ||||
| 2.2 | Certificate of Amendment to Articles of Incorporation | 1-A | 02/08/2022 | 2.2 | ||||
| 2.3 | Bylaws | 1-A | 11/02/2021 | 2.2 | ||||
| 3.1 | Form of 7% USA Year Real Estate Bond. | Form 1-A POS | 03/09/2023 | 3.1 | ||||
| 3.2 | Form of 12% USA Real Estate Bond. | Form 1-A POS | 03/09/2023 | 3.2 | ||||
| 4.1 | Form of USA Real Estate Bond Investor Agreement | Form 1-A POS | 03/09/2023 | 4.1 | ||||
| 6.1 | Engagement Agreement with Direct Transfer, LLC | 1-A | 11/02/2021 | 6.1 |
| F-10 |
SIGNATURES
Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly organized.
| Dated: September 26, 2024 | USA Opportunity Income One, Inc. | |
| By: | /s/ Dania Echemendia | |
| Dania Echemendia | ||
| President, principal executive officer |
Pursuant to the requirements of Regulation A, this report has been signed below by the following persons on behalf of the issuer and in the capacities and on the dates indicated.
| Dated: September 26, 2024 | /s/ Dania Echemendia |
| Dania Echemendia | |
| President and director (principal executive officer) | |
| Dated: September 26, 2024 | /s/ Andrew Murray |
| Andrew Murray | |
| Chief Financial Officer and director (principal financial and accounting officer) |