SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-KSB
(Mark
One)
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x
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Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 for the fiscal year ended September 30,
2007
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OR
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o
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Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 for the transition period from ___ to
___
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Commission
File Number: 000-19061
USCORP
(Exact
name of the Company as specified in its charter)
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Nevada
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87-0403330
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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4535
W. Sahara Ave, Suite 204, Las Vegas, NV 89102
(Address
of principal executive offices)
(702)
933-4034
(The
Company’s telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
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Title
of Each Class
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Names
of each exchange
on
which registered
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None
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None
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Securities
registered pursuant to Section 12(g) of the Act:
Common
Shares, $0.01 Par Value
Indicate
by check mark whether the Company (l) 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 Company was required
to
file such reports), and (2) has been subject to such filing requirements for
the
past 90 days. Yes x
No
o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of The Company’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment
to
this Form 10-KSB. x
Indicate
by check mark whether the Company is a shell company (as defined in Rule 12b-2
of the Act). Yes o
No x
State
the
issuer’s revenues for its most recent fiscal year. $0.0
State
the
aggregate market value of the voting stock held by non-affiliates computed
by
reference to the price at which the stock was sold, or the average bid and
asked
price of such stock, as of a specified date within the past 60 days. As of
December 31, 2007, the value of such stock was $4,188,519. Shares of common
stock held by each executive officer and director and by certain persons who
own
5% or more of the outstanding common stock have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.
Number
of
shares outstanding of Issuer’s class A common stock, $0.01 par value,
outstanding on December 31, 2007: 51,709,470. Number of shares outstanding
of
Issuer’s class B common stock, $0.001 par value, outstanding on December 31,
2007: 5,000,000.
Documents
Incorporated by Reference: NONE
***
FORM
10-KSB
September
30, 2006
USCORP
TABLE
OF CONTENTS
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FORWARD
LOOKING STATEMENTS
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2
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PART
I
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ITEM
1
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Description
of Business
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2
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ITEM
2
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Description
of Property
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17
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ITEM
3
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Legal
Proceedings
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17
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ITEM
4
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Submission
of Matters to a Vote of Security Holders
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17
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PART
II
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ITEM
5
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Market
for The Company’s Common Equity and Related Stockholder Matters
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18
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ITEM
6
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Management’s
Discussion and Analysis of Financial Condition and Results of Operations
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19
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ITEM
7
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Financial
Statements
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22
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ITEM
8
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Changes
in and Disagreements with Accountants
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38
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ITEM
8A
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Controls
and Procedures
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38
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ITEM
8B
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Other
Information
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39
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PART
III
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ITEM
9
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Directors,
Executive Officers, Promoters and Control Persons
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39
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ITEM
10
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Executive
Compensation
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40
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ITEM
11
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Security
Ownership of Certain Beneficial Owners and Management
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40
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ITEM
12
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Certain
Relationships and Related Transactions
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41
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ITEM
13
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Exhibits
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41
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ITEM
14
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Principal
Accountant Fees and Services
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41
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Signatures
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42
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PART
F/S
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Financial
Statements
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||
FORWARD
LOOKING STATEMENTS
Some
of
the information contained in this Annual Report may constitute forward-looking
statements or statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on current
expectations and projections about future events. The words “estimate”, “plan”,
“intend”, “expect”, “anticipate” and similar expressions are intended to
identify forward-looking statements which involve, and are subject to, known
and
unknown risks, uncertainties and other factors which could cause The Company’s
actual results, financial or operating performance, or achievements to differ
from future results, financial or operating performance, or achievements
expressed or implied by such forward-looking statements. Projections and
assumptions contained and expressed herein were reasonably based on information
available to The Company at the time so furnished and as of the date of this
filing. All such projections and assumptions are subject to significant
uncertainties and contingencies, many of which are beyond The Company’s control,
and no assurance can be given that the projections will be realized. Potential
investors are cautioned not to place undue reliance on any such forward-looking
statements, which speak only as of the date hereof. The Company undertakes
no
obligation to publicly release any revisions to these forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
PART
I
ITEM
1. DESCRIPTION OF BUSINESS
BACKGROUND
USCorp
(hereafter, the “Company”, “we” and “our” refer to USCorp) was formed in May
1989 in the state of Nevada as The Movie Greats Network, Inc. In August 1992,
the Company changed its name to The Program Entertainment Group, Inc. In August
1997, the Company changed its name to Santa Maria Resources, Inc. In September
2000, the Company changed its name to Fantasticon, Inc. and in January 2002
the
Company changed its name to USCorp.
In
April
2002, the Company acquired USMetals, Inc. (“USMetals”), a Nevada corporation, by
issuing 24,200,000 shares of Company Common Stock. USMetals became a wholly
owned subsidiary of the Company.
Southwest
Resource Development, Inc. (“Southwest”) was formed and organized under the laws
of the State of Nevada on April 3, 2004 as a wholly owned subsidiary of USCorp.
On or about May 29, 2004, Southwest acquired 8 lode and 21 placer mining claims
(the “Mining Claims”) formerly known as the Chocolate Mountain Region Claims and
the Picacho Area Claims.
Subsequently
both USMetals and Southwest have acquired additional mining claims and performed
significant exploration work, including the completion of feasibility studies,
as described more fully below (See “USMETALS
- Summary of Organization and Business” and “SOUTHWEST
RESOURCE DEVELOPMENT, INC.
-
Summary of Organization and Business”).
OVERVIEW
USCorp
is
an “exploration stage” company. The Company’s operations center on completing
exploration and beginning development of USMetals’ mining property known as the
Twin Peaks Project, and Southwest’s mining properties formerly known as the
Chocolate Mountain Region claims which the Company now refers to collectively
as
the Picacho Salton Project. The Company has realized no revenues from operations
to date.
All
of
the Company’s mining business activities are conducted at this time through its
subsidiaries, USMetals, Inc. (“USMetals”) and Southwest Resource Development,
Inc. (“Southwest”).
2
The
Company, through its wholly-owned subsidiary, USMetals, owns 143 Lode Mining
Claims in the Eureka Mining District of Yavapai County, Arizona, called the
Twin
Peaks Project; and through its wholly-owned subsidiary, Southwest, owns a total
of 106 claims, 84 Lode and 22 Placer Claims in the Mesquite Mining District
of
Imperial County, California, which the Company refers to as the Picacho Salton
Project.
A.
RECENT DEVELOPMENTS.
On
September 29, 2006 the Company’s Registration Statement on Form SB-2 was
declared effective by the US Securities and Exchange Commission registering
6,700,000 shares of the Company’s Class A common stock for resale pursuant to an
equity line arrangement with Dutchess Private Equities Fund, LP. The total
dollar amount under the equity line is $10,000,000. As of the date of the Annual
Report the Company has not submitted any puts to Dutchess.
On
November 2, 2006 we announced in a press release the addition of new lode and
placer claims to our California claims in the Mesquite Mining District of
Imperial County. We now have 106 claims in this area which we refer to
collectively as the Picacho Salton Project. These claims consist of three
separate groups of contiguous claims in close proximity to each other. Most
of
the claims are predominantly gold properties. 140 acres of these new claims,
the
equivalent of seven claims, contain a deposit of Pink Rhyolite (decorative
rock)
and construction grade aggregate.
During
2007 USMetals added two claims to the Twin Peaks Project bringing the total
to
143 contiguous claims.
In
the
spring of 2007 the Company’s transfer agent, US Stock Transfer Corporation was
acquired by ComputerShare, the world’s largest transfer agency.
On
May 2,
2007 we announced in a press release a $1.2 million commitment by a private
Swiss fund. The fourth and final traunch of $300,000 was received in early
October, 2007, completing the commitment. Subsequent to the period of this
Annual Report the first debenture was converted to 2,400,000 shares of common
stock. These shares are restricted from resale under rule 144.
On
May 9,
2007 we announced in a press release a Notice of Intent to drill has been
prepared for the BLM for the Twin Peaks Property. Surface geochemical sampling,
GPS coordinated claim and structural mapping of the area are underway.
Radionuclide survey samples have been taken from the northeast quadrant of
the
property that exhibit promising levels of radioactivity. We are also examining
the deposits of titanium magnetite on the property for possible
development.
On
July
26, 2007 we announced in a press release the completion of the Twin Peaks
Feasibility Study and the availability of its summary on our web site.
On
August
28, 2007 we announced in a press release the completion of a Feasibility Study
on the Picacho Salton Property and the availability of its summary on our web
site.
In
August
and September of 2007 we received $620,000 from a private east coast finance
group as the result of a private placement. The Company offered one unit for
$0.75 per unit consisting of one share of common stock and one warrant to
purchase ½ share of common stock at an exercise price of $0.40 per one full
share. The exercise period is two years, expiring in October 2009.
On
November 8, 2007 we announced in a press release the results of a recent report
prepared for the Company by Geological Support Services regarding the titanium
magnetite deposits at the Twin Peaks Project, which stated in part:
“The
magnetite of the twin peaks has been sampled and sent off for assay…ore grade
shows it to have saleable levels of TiO
[titanium oxide]”.
3
B.
DESCRIPTION OF CURRENT BUSINESS OPERATIONS.
The
Company’s plan of operation and business objectives will be to engage in (a) the
precious metals exploration, mining, and refining business, and (b) the
acquisition of qualified candidates engaged in businesses that would compliment
the Company’s existing or proposed operations. All of the Company’s business
operations are conducted through its subsidiaries
USMETALS
- Summary of Organization and Business.
USMetals
(“USMetals”) was formed and organized under the laws of the State of Nevada on
May 3, 2000. On or about April 2, 2002, the Company acquired USMetals; including
its 141 lode mining claims (the “Mining Claims”). The purpose of USMetals is to
engage in the business of acquiring and developing mineral properties, exploring
for gold, silver, and other non-ferrous metals and minerals within the
contiguous United States. It is the further intention of USMetals to mine and
to
process any commercially-proven resources developed at its
properties.
The
Mining Claims of USMetals are located in West-Central Arizona, in the Eureka
Mining District of Yavapai County, Arizona, approximately 42 miles west of
Prescott, Arizona. Within the boundaries of USMetals’ Mining Claims, more
commonly referred to as the “Twin Peaks Project,” are the historic sites of the
Crosby, Hayes, Swiss Belle and Gloryhole Mines, past producers of gold and
silver. The claims are geographically located in the southwestern division
of
the Eureka Mining District, which includes many significant mines and prospects.
There are tungsten mines in the Camp Wood area, to the northeast, the existing
historic gold mines and prospects, which abut USMetals’ property to the
southeast along the Santa Maria River, and tungsten, copper, and zinc mines
to
the south and southeast. The area has a long history of mining activities.
Mining companies and prospectors can obtain experienced labor, affordable
housing, equipment repair, and mining services within the district.
The
Santa
Maria River traverses the Mining Claims and USMetals is the only company that
holds water rights to that section of the river, a valuable asset for a mining
company in this arid country.
All
of
USMetals’ mining properties are unpatented mining claims; consequently, the
Company has only possessory title with respect to such properties. The claims
were duly transferred by official deed from the prior owner to USMetals on
March
22, 2002. The real property upon which USMetals’ claims are located is subject
to a paramount lien by the United States of America; all of USMetals’ claims are
subject to the applicable rules and regulations of the United States Department
of the Interior, Bureau of Land Management, which administers USMetals’ use and
activities on said Mining Claims. USMetals has paid all of the required fees
in
order to maintain the 143 Mining Claims, which USMetals owns, for the current
periods. All of the necessary documents and affidavits have been filed with
the
Yavapai County Recorder, as was mentioned hereinabove.
The
Company and USMetals have had a number of strategic working relationships with
various independent contractors in order to develop its Mining Claims. USMetals
further relies on the declarations and valuations formed and given in past
geological exploration and geochemical studies. USMetals has had consulting
and/or independent contractor relationships with Boart Longyear, LLC, Geological
Support Services, LLC, Biozone, Inc. and Wondjina Research Institute. It should
be noted that if USMetals was forced to disassociate itself with one or more
of
the abovementioned independent contractors, it could readily secure the services
of other individuals or entities to perform the work or services of equal or
greater quality; the loss of any one or all of the abovementioned contractors
would not cause USMetals material adverse effects; however, each of these firms
has demonstrated its capability and reliability in assisting The Company and
USMetals to develop the Mining Claims, and, to date, the abovementioned
companies have provided invaluable assistance to The Company’s senior executive
management in evaluating the potential represented by USMetals’ Mining
Claims.
Geological
Support Services, LLC recently completed a feasibility study on the Twin Peaks
Project that identified proven reserves of 612,000 ounces of gold and 2,160,000
ounces of silver in 3.6 million tons of ore, grading at .17 oz. gold per ton
and
.6 oz. silver per ton and a revenue cutoff grade of .03 per ton, using a gold
price of $600 per Troy ounce and a silver price of $12 per Troy ounce. And
Geological Support Services, LLC also completed a feasibility study on of the
Picacho Salton Project that identified proven resources of 231,513 ounces of
gold in 6,614,666 tons of ore grading at .035 oz per ton with a cutoff grade
of
.015 using a gold price of $600 per troy ounce gold.
4
On
February 14, 2005 the Company filed a Form 8-K with the Securities and Exchange
Commission reporting that the Company concluded the acquisition of 2 additional
gold mining claims located near Kingman, Arizona from a private corporation.
Under
the
direction of our consulting geophysicist, we fully explored and tested the
property. Based on the exploration and test results, however, Management
determined it was not economically viable to pursue exploration or development
of this property. Due to certain conditions not being met, title to the claims
reverted back to the prior claim holder.
SOUTHWEST
RESOURCE DEVELOPMENT, INC.
- Summary of Organization and Business
Southwest
Resource Development, Inc. (“Southwest”) was formed and organized under the laws
of the State of Nevada on April 3, 2004 as a wholly owned subsidiary of USCorp.
On or about May 29, 2004, Southwest acquired 8 lode and 21 placer mining claims
(the “Mining Claims”) formerly known as the Chocolate Mountain Region Claims and
the Picacho Area Claims. In 2007 this claims group was expanded to a total
of
106 claims consisting of 22 placers and 84 lodes, on 4,600 acres, which the
Company now refers to collectively as the Picacho Salton Project. The purpose
of
Southwest is to engage in the business of acquiring and developing mineral
properties, exploring for gold, silver, and other non-ferrous metals and
minerals within the contiguous United States. It is the further intention of
Southwest to mine and to process any commercially-proven resources developed
at
its properties.
In
lieu
of cash payment for the original 8 lode and 21 placer claims acquired in 2004
the Company entered into what is essentially a joint venture with the former
owners whereby the former owners are entitled to receive 20% of all net smelter
returns of gold after expenses, whether paid in cash or in kind. The remaining
77 claims are wholly owned by USCorp’s subsidiary, Southwest.
The
Company has spent the last 5 years developing a plan that would bring multiple
properties under Company ownership. Through its wholly owned subsidiary,
Southwest, the Company has now acquired for development of a total of 4,600
acres of precious metal properties located in the Chocolate Mountain region
of
the Mesquite Mining District in Imperial County, California: Geological testing
has successfully recovered gold and silver from dry washes and feeder rills.
Laboratory analysis indicates these findings warrant continued development.
Geological Support Services, LLC has completed a feasibility study that
identified proven resources of 231,513 ounces of gold in 6,614,666 tons of
ore
grading at .035 oz per ton with a cutoff grade of .015 using a gold price of
$600 per troy ounce gold on of the Picacho Salton Project.
The
Chocolate Mountains region, located in southeastern Imperial county of
California, includes the Picacho State Park and surrounding areas that has
a
rich history of gold mining activities dating back to 1775. This property is
in
a district that has been producing gold since the 1800s. In 1890 a large stamp
mill was built beside the Colorado River at the town of Picacho. The Picacho
Mine was opened in the Picacho Basin area and a narrow gauge railroad began
hauling ore from the mine to the mill. By 1904, the town of Picacho had a
population of 2,500 people. The ruins of the mill are in the Picacho State
Recreation Area a few miles east of the Picacho Salton Project claims. Thousands
of people visit the old mill ruins each year. To the south and west of the
Picacho Salton Project claims there are ruins of many old placer and lode
workings as well as recently producing major mining operations.
Numerous
discoveries of placer gold throughout Imperial County have remained undeveloped
due to a common problem encountered by small miners. Due to the lack of an
adequate water supply to support placer gold recovery operations in the region,
scores of small and medium size mining operations have failed to successfully
recover precious metals known to exist throughout the region. Southwest believes
it has located a potentially adequate water source. Southwest intends to use
a
state of the art gold recovery system designed and developed for the specific
conditions found on these properties. Based on the recent reports of geologists
and engineers, Southwest believes this property has the potential to develop
into a significant gold producing operation.
Historically,
mining has been carried out in the Mesquite Mining District of Imperial County
using old hard rock mining and placer methods. However, in 1984, new mining
methods (“heap leaching”) were used to develop and mine low-grade ore bodies,
with an economically viable cut-off grade as low as .01 to .02 ounces of gold
per ton. Test production has determined the cutoff grade and the economic
viability of this property. Geological Support Services, LLC recently completed
a feasibility study that has identified proven resources of 231,513 ounces
of
gold in 6,614,666 tons of ore grading at .035 oz per ton with a cutoff grade
of
.015 using a gold price of $600 per troy ounce gold on the Picacho Salton
Project. Southwest intends to go into production as soon as possible after
approvals and financing are obtained.
5
Property
descriptions, locations and nature of ownership.
Picacho
Salton Project Claims in the Mesquite Mining District of Imperial County,
California, U.S.A, Group #1: 640 acres on four contiguous, unpatented Placer
Claims. Access to these claims is by a private dirt road 2 miles north of the
intersection of Highway 78 and Ogilby Road, near Glamis, California.
Picacho
Salton Project Claims in the Mesquite Mining District of Imperial County,
California, U.S.A, Group #2: 17 unpatented Placer Claims. These contiguous
claims cover 2,720 acres. All of these claims are just east of the intersection
of Highway 78 and Ogilby Road. Access to the property is by private dirt
road.
Picacho
Salton Project Claims in the Mesquite Mining District of Imperial County,
California, U.S.A, Group #3: 8 unpatented Lode Claims covering 160 acres. Means
of access to the property is by an unmarked private dirt road, south of Picacho
State Park.
On
November 1, 2006 USCorp announced the acquisition of the additional Mining
Property, through its wholly owned subsidiary Southwest. Situated on 1,280
acres
covering 64 lode mining claims of precious metal properties and located in
the
Mesquite Mining District of Imperial County, California, some of the new
property has common borders to Southwest’s other gold properties. Means of
access to the property is by an unmarked private dirt road, south of Picacho
State Park.
The
143
unpatented lode mining claims, covering 2,860 acres, which the Company refers
to
as the “Twin Peaks Project,” are located in the Eureka Mining District of
Yavapai County, Arizona, U.S.A. Access to the property from the west is by
county maintained and private dirt roads from Highway 93 (connecting Phoenix,
Arizona with Las Vegas, Nevada).
The
Company, through its wholly owned subsidiaries, owns unpatented mining claims
and pays an annual Maintenance Fee payment to the Bureau of Land Management
(BLM) for each of its claims. Maintenance Fee payments of $125 per claim are
due
on or before August 31 each year.
Maps
indicating the locations of our properties.
6
In
the
Map above “1”“2” “3” “4” and “5” represent the approximate locations of the
company’s Picacho Salton Project properties in the Mesquite Mining District of
Imperial County, California. These five locations are represented by the number
“2” in the map below.
7
History
of previous operations.
Twin
Peaks Project claims group, in the Eureka Mining District of Yavapai County,
Arizona: From a historical perspective, Spaniards arrived in the area over
400
years ago and used the Santa Maria River to gain access to the claims area.
According to historical sources, the local Indians used to mine gold and silver
in the area, which was refined and shipped to Spain. More recently, in the
1880’s, John Lawler and Charles Crosby pioneered the Eureka Mining District. In
1883, John Lawler discovered the area was rich in gold, silver, lead, and zinc.
Charles
Crosby first discovered the Crosby Mine and worked his claims from 1906 to
1933.
His works are on a mineralized structure and flat zone. When the Crosby Mine
opened in 1906, it processed 120 ounces of gold per day. It operated a 40-stamp
amolotion mill until World War II. The Crosby group of claims are in the
northeast corner of the Twin Peaks claims group.
From
the
mid-1920s to the mid-1930s, a prospector worked the Gloryhole claim, in the
southwest quadrant of the Company’s Twin Peaks claims group. The ore he mined
ran over 8 ounces of gold per ton. In 1941 and 1942, the claim was yielding
2.6
ounces of gold per ton. At that time, the ore was shipped to the railhead at
Hillside and by train to a smelter in El Paso, Texas.
In
1885,
the Hayes Silver Mine opened. The deposit at the mine was so rich - over 300
ounces of gold and silver per ton - that the owners shipped the ore directly
to
England for smelting and refining. The Hayes claims group are part of the
Company’s Twin Peaks claims group.
Picacho
Salton Project Claims in the Mesquite Mining District of Imperial County,
California: There has been no commercial scale mining on any of the Company’s
claims in this region.
8
The
present condition of the property, the work we have completed on the property,
our proposed program of exploration and development, and the current state
of
exploration and development of the property.
Twin
Peaks Project Claims Group: The Company has conducted exploration work on the
property, including drilling 3,000 feet of core samples (in addition to 10,000
feet drilled by prior owners) and road improvements to repair and create dirt
road accesses to the property, and re-stake all claims using GPS. The Company
relies on geological work of experts performed by us and under prior ownership
in support of our reports of the presence of gold, silver, uranium and other
mineralization on the property. Geological Support Services, LLC recently
completed a feasibility study on the Twin Peaks Project that identified proven
reserves of 612,000 ounces of gold and 2,160,000 ounces of silver in 3.6 million
tons of ore, grading at .17 oz. gold per ton and .6 oz. silver per ton and
a
revenue cutoff grade of .03 per ton, using a gold price of $600 per Troy ounce
and a silver price of $12 per Troy ounce. In December, 2007 we received a
Cultural Resource Survey (an archeological report) for proposed drill sites
as
part of the Company’s application filed in August 2007 with the BLM to conduct
additional drilling to prove up additional resources. The Company is not
conducting mineral extraction operations on this property yet.
On
November 1, 2006 USCorp announced the acquisition of what we then referred
to as
the “Picacho Salton Mining Property”, through its wholly owned subsidiary
Southwest. Situated on 1,280 acres covering 64 mining claims of precious metal
properties and located in the Mesquite Mining District of Imperial County,
California, some of these newly acquired claims have common borders to USCorp’s
Picacho Gold Property. The Company’s California properties are now collectively
known as the Picacho Salton Project.
Regarding
the Picacho Salton Project Claims Groups in the Mesquite Mining District of
Imperial County: The Company has performed exploration work on the property.
The
Company relies on geological work of experts performed by us under prior
ownership in support of our early reports of the presence of gold and silver
on
the property. Geological Support Services, LLC recently completed a feasibility
study that has identified proven resources of 231,513 ounces of gold in
6,614,666 tons of ore grading at. 035 oz per ton with a cutoff grade of .015
using a gold price of $600 per troy ounce gold on the Picacho Salton Project.
There are no current mineral extraction operations on this property. The
proposed program is exploratory in nature.
The
physical condition of the plant and equipment and the source of power utilized
with respect to each property.
At
this
time there are no physical plants on any of the Company’s properties. The
Company owns rights to water on the Santa Maria River which traverses the Twin
Peaks Project property. Power is available on properties adjacent to the Twin
Peaks Project and portable generators can be used as necessary. Power is also
available on properties adjacent to our placer claims in California and portable
generators can be used when necessary. There are natural wells located in
several places on our California claims. We will supplement well water with
trucked water if necessary.
Adequate
roads exist to each of our claims groups. Some existing roads may need to be
repaired or extended.
A
brief description of the rock formations and mineralization of existing or
potential economic significance on the properties, including the identity of
the
principal metallic or other constituents.
In
regards to the Twin Peaks Project, past geologic valuations have been confirmed
by recent geological work as reported in Geological Support Services’
feasibility study on the project indicating mineralized material on claims
within the boundaries of the Twin Peaks on the Crosby claims, Hayes claims
and
Gloryhole claims as follows: 1,200,000 tons of ore at the Crosby with 0.118
ounces of gold per ton and 0.520 ounces of silver per ton; 1,200,000 tons of
ore
at the Hayes with 0.128 ounces of gold per ton and 0.960 ounces of silver per
ton; 1,200,000 tons of ore at the Crosby with 0.258 ounces of gold per ton
and
0.584 ounces of silver per ton. The Company uses these historical and current
reports in support of its determination that economically viable mineralization
is present on the properties.
9
According
to past geologic valuations the Crosby claims are within an area of banded
gray
schist that is surrounded by light-colored granite and intruded by pegmatite,
rhyolite-porhyry, and basic dikes. The vein strikes N10E, and dips 25 to 30
degrees E, and attains a width of up to 18 inches in the old workings. Rich
ore
from the oxidized zone shows brecciated quartz with abundant cellular limonite.
The gold is usually found associated with the oxidized iron minerals. The Hayes
and Gloryhole claims are geologically similar to the Crosby claims, and the
gold
is also found in association with the oxidized iron minerals. Several structural
zones appear to control the mineralization within the claim group. It can be
considered that an alignment of a structural trend exists, with a bearing of
about N2OE between the Hayes Mine and the Crosby Mine, with the Swiss Belle
Mine
at midway along the trend. Another structural zone which is expressed by a
dike
and is reported to run from the Santa Maria River to the base of Hayes Peak,
has
an average bearing of about N53W. The Hayes Shaft was sunk within this dike.
The
dike probably passes slightly west of the Gloryhole Mine and then intersects
a
N2OE structural zone near the base of Hayes Peak. A sample taken at this
intersection assayed 1.167 oz/ton gold and 66.37 oz/ton silver. The structural
zones seem to influence wide areas adjacent to them, which is confirmed by
the
voluminous number of favorable assays and also by the Very Low Frequency
Electromagnetic survey. Cut off grade valuations were not performed.
Geological
Support Services, LLC recently completed a feasibility study on the Twin Peaks
Project that identified proven reserves of 612,000 ounces of gold and 2,160,000
ounces of silver in 3.6 million tons of ore, grading at .17 oz. gold per ton
and
.6 oz. silver per ton and a revenue cutoff grade of .03 per ton, using a gold
price of $600 per Troy ounce and a silver price of $12 per Troy
ounce.
Picacho
Salton Project Claims Groups in the Mesquite Mining District of Imperial County:
A past geochemical sampling program has indicated mineralized material at the
Goldstar placer claims; tonnage and grade valuations were not performed. The
Company used such reports in support of its determination that economically
viable mineralization may be present on the properties as stated in various
historical reports. Geological Support Services, LLC recently completed a
feasibility study that has identified proven resources of 231,513 ounces of
gold
in 6,614,666 tons of ore grading at .035 oz per ton with a cutoff grade of
.015
using a gold price of $600 per troy ounce gold on the Picacho Salton
Project.
On
November 1, 2006 USCorp announced the acquisition of the Picacho Salton Mining
Property, through its wholly owned subsidiary Southwest. Situated on 1,280
acres
covering 64 mining claims of precious metal properties and located in the
Mesquite Mining District of Imperial County, California, some of the recently
acquired claims have common borders to USCorp’s Picacho Gold Property, now
collectively referred to as the Picacho Salton Project Claims.
The
phased nature of the exploration process, and the place in the process our
current exploration activities occupy.
Phase
1
of the exploration process has been completed on a portion of the Hayes group
of
claims within the Twin Peaks Project. Phase I supplemented the previous
exploration effort with additional geological, geochemical and geophysical
surveys, drilling, excavations and road building. We also completed a scoping
study. Phase I was designed to furnish pertinent data for the design of Phase
II
Mining Operation Plan.
Phase
II
has largely been completed as of the date of this Annual Report. We have done
further exploration on our property, and designed a Test Production program
on
selected claims within the Twin Peaks claims group which we plan to initiate
in
fiscal 2008. This will include an electromagnetic flyover of the entire claim
group and completion of a geochemical survey using the boundaries of individual
claims to establish a base grid. This sample grid would be tightened in select
areas. Simultaneously, the geology will be mapped in order to determine the
overall extent of pathfinder mineralization for use in planning additional
drilling, gaining a more detailed understanding of the potential of the entire
site, and solidifying the mineral land position.
We
will
then commence with drilling and assaying in the areas previously targeted in
prior geological reports. The drilling program has been designed to confirm
the
geology and mineralization in the target areas; a broad program is not necessary
due to prior geological work. Extra samples will be retained for metallurgical
testing on promising zones.
The
results of testing the samples has allowed us to plan the conceptual mine and
milling plans, including flow-sheets that were used in the feasibility study
process along with the on-going economic and cost modeling evaluation of the
project. Finally while the results are being evaluated we have begun the
collection of the archeological and environmental data necessary for further
exploration, submission of the Mining Plans of Operations and approvals to
commence mining.
10
We
have
received a Test Production plan and budget for the Picacho Salton Project Claims
in the Mesquite Mining District of Imperial County from one of our Consulting
Geologists is summarized as follows:
Test
Production Program Budget and Plan
To
start
placer testing operations we must first purchase and modify a wash plant. The
pad and setup of the wash plant is next.
The
dirt
access road from the Highway to the site (approximately 2 miles) must be
reworked/repaired. We will also need a Front End Loader (“F.E.L.”) with Back-Hoe
attachment. For continuous hard work excavating trenches, digging test pits
and
carrying alluvial material back to the wash plant for processing on a daily
basis. It would be used for the duration of the test production
program.
The
sampling method is standard in geological exploration and is confined to dry
arroyo drainages and rills. Grab samples taken outside of the dry river beds
and
rills will be by prospectors pick or regular pick and shovel. Instruments to
be
used will be a VLF unit, an EM unit, microscopes, spectrometer, GPS unit,
possibly an I.R. unit, a magnetometer and miscellaneous sieves. A 10 or 12
kW
generator set will independently power the night lights and camper unit. We
need
to determine if the present wells go down a minimum of 400 feet to reach
adequate water supply to support test production wash plant.
We
will
make a decision whether to proceed with each successive phase of the exploration
program upon completion of the previous phase and upon analysis of the results
of that program.
We
will
follow QA/QC protocols provided by the Society for Mining, Metallurgy and
Exploration Guidance on best practices for Exploration
www.smenet.org.
Recent
Initial Exploration and Exploitation
Although
many companies and individuals are engaged in the mining business, including
large established mining companies, there is a limited supply of desirable
mineral lands available for claim staking, lease, or other acquisition in the
United States and other areas where USCorp contemplates conducting its
exploration and/or production activities. However, it has been determined by
qualified geologists and mining companies that USCorp’s Arizona properties have
mineralization of a variety of precious and non-precious minerals. Historically,
the specific geographic region in which USCorp intends to conduct its
exploratory and mining activities has been the subject of various general
samplings, which were performed by the State of Arizona, the United States
Department of the Interior Bureau of Mines, and the United States Department
of
the Interior Bureau of Land Management.
The
Company has relied upon a number of studies by companies that are not presently
affiliated or associated with USCorp to determine the feasibility and valuation
of USCorp’s pursuit to develop the Mining Claims. These studies are comprised of
several exploration techniques, such as geological and geophysical surveys,
drilling, and excavations, in order to determine the economic potential, and
subsequent exploration and mining, of the Claims. These different firms have
utilized varied means to calculate the potential of the exploration and
development of the Twin Peaks Project’s Mining Claims.
Early
Exploration Conducted and Valuations.
The
Twin
Peaks Project: Past geological studies indicated that beginning in 1981 a
geologist performed certain exploratory drillings in order to obtain samples
of
the contents from the Crosby Mine Site No. 6, located Yavapai County, Arizona
(one of the claims in USMetals’ Twin Peaks Project). The geologist drilled 28
core drill holes on the Crosby Mine site. His report was based on 200-foot
depth
cores. This area was 18,519 cubic yards, or approximately 20,000 tons of
mineralized material. The total area that was drilled was 1,500’ x 600’ x 200’.
A total of 744 core samples were taken from the 6,000-foot of core hole
drillings. The samples were assayed for gold and silver.
11
The
results indicated the presence of mineralization of gold and silver. The core
samples also revealed quartz monzonite porphyry formations throughout the area
of sampling. The many faults located in this area were of considerable
importance in controlling supergene enrichment; the largest quantity and highest
grade of ore occurs when these faults intersect or are closely spaced. There
was
significant evidence of this enrichment recorded from the samples taken from
the
Crosby Mine site area. And, the gold and silver that was found is natural to
the
formations of the enrichment zone.
Recent
Exploration and Samplings
Recent
geological surveys, provided by Geological Support Services, LLC, one of
USMetals’ principal advisors have confirmed prior geological reports. It was
verified that the Twin Peaks Project is on a mineralized structure and flat
zone
with gold and silver carrying mineralization.
Historically,
over 10,000 feet of core drillings were performed and over 1,500 fire assays
were conducted. These assays showed an overall average of .14 ounces of gold
per
ton and .595 ounces of silver per ton, on one area covering 3 claims.
The
geological, geophysical, and geochemical studies stated above were reviewed
and
evaluated by an independent mining, consulting, and geologic firm that was
engaged to evaluate the commercial feasibility of the claims. The report and
economic study recommended the continuation of exploration and the start of
production.
The
geological justification for the exploration project at the Twin Peaks Project
is that numerous past geological studies have found gold and silver
mineralization in economically viable quantities at various locations within
the
boundaries of the claims group. There are also areas within the claims group
that contain uranium and areas containing polymetals.
The
geological justification for the exploration project at the Picacho Salton
Project claims is that there is visible gold in the ground and past geological
studies have found gold and silver in economically viable quantities at various
locations within the boundaries of the claims groups.
In
2007
we conducted additional exploration, testing, surveying and re-staking of all
claims, and adding a total of 77 significant claims to the group of which 70
claims are primarily gold bearing and seven claims, approximately 140 acres,
are
Pink Rhyolite (decorative rock) and construction grade aggregate. Geological
Support Services LLC completed a feasibility study covering the gold claims,
it
says in part: “The feasibility study operating plan assumes an open caste quarry
type operation containing proven reserves of approximately 231,513 ounces of
gold in 6,614,666 tons of ore grading at .035 oz per ton with a cutoff grade
of
.015 using a gold price of $600 per troy ounce gold. The plan anticipates
conventional truck and shovel mining techniques. Processing to be phased
according to ore type and permit approvals. Phase 1 being a wash and
sedimentation gravity system with initial production capacity of 1000 tons
per
day ramping to 6000 tons per day. This type of operation has been proven to
achieve .02 ounce per ton recovery, in the targeted placers. With approval
of
cyanide leach permits, the implementation of leaching facilities will increase
recovery to the 87% target. Also along with the construction of the leaching
facilities, the milling circuit for processing the hard rock lode ore will
be
constructed. This grinding circuit will be designed to crush incoming hard
rock
down to 150- prior to gravity separation and leaching. Although this study
is
based upon production of 6000 tons a day it is anticipated that if additional
water resources are developed production could be increased to greater levels.
Mine life based on indicated reserves is in excess of 20 years. The feasibility
study assumes an economic base case utilizing a $600 per ounce gold price.
At
current fuel and labor prices, cash operating costs, including operating cost
and sustaining capital are estimated to be $260 dollars per ounce of gold
produced. Initial capital costs are anticipated to be $13,790,300 all amounts
are in U.S. Dollars.”
A
breakdown of the exploration timetable and budget, including estimated amounts
that will be required for each exploration activity.
The
six
month exploration timetable and budget for the Twin Peaks Project is as
follows:
12
Initial
capital costs are currently estimated to be $12,974,728. All amounts are in
US
dollars to complete an electromagnetic flyover, a comprehensive drilling
program, road repair and extensions, design and building of a test mill of
50 to
1,000 tons per day capacity. The estimate of six month time period is an
estimate of time need to perform tasks only and does not take into account
delays for governmental review and approval of our mining plan.
The
12
week exploration timetable and budget for the Picacho Salton Project claims
is
as follows:
Initial
capital costs are anticipated to be $13,790,300 all amounts are in U.S. Dollars
to complete an electromagnetic flyover, comprehensive road repair and
extensions, design and purchase of a wash plant of 10 tons per hour capacity.
The estimate of twelve week time period is an estimate of time needed to perform
tasks only and does not take into account delays for governmental review and
approval of our mining plan. At current fuel and labor prices, cash operating
costs, including operating cost and sustaining capital are estimated to be
$260
dollars per ounce of gold produced.
How
the exploration program will be funded.
The
Company anticipates that funding will be by equity or debt financing in the
form
of private placements, working interest joint venture, and/or gold bullion
loans
in the United States, Europe and Asia. To date we have received the proceeds
from a gold bullion loan in the amount of $635,000 as previously reported in
Current Report on Form 8-K dated September 27, 2005, $620,000 in proceeds from
a
private placement and $1,200,000 in proceeds from convertible debentures in
addition to contributions from the Company’s Chairman and CEO.
Identification
of who will be conducting any proposed exploration work, and a discussion of
their qualifications.
The
Company is utilizing the services of Geological Support Services, LLC, Wondjina
Research Institute and Biozone, Inc, for exploration and geological work on
the
Company’s properties. Given adequate financing we intend to use additional
qualified mining consultants and engineers subject to their availability and
willingness and our need, but we have not contracted with any other vendors
as
of the date of this Annual Report. A summary of the qualifications of Geological
Support Services, LLC follows:
Geological
Support Services, LLC, Robert A. Cameron, Ph.D. managing partner, is consulting
exploration geologist to the Company. Cameron has a Ph.D. in Geophysics from
Canterbury University, Kent, England. Since 1987 Cameron has consulted in the
mining industry as a geologist in various capacities for companies and projects
in the private sector in the United States, Mexico, Australia, New Zealand,
West
Germany, Poland and Canada. In addition to private consulting, he has worked
since 2001 as a professor of geology and geosciences.
Specific
Environmental Regulation.
Mining
is
subject to potential risks and liabilities associated with pollution of the
environment and the disposal of waste products occurring as a result of mineral
exploration and production. Environmental liability may result from mining
activities conducted by others prior to USMetals’ ownership of a property.
Insurance for environmental risks (including potential liability for pollution
or other hazards as a result of the disposal of waste products occurring from
exploration and production) is not generally available at a reasonable price
to
companies within the industry. To the extent USMetals is subject to
environmental liabilities, the payment of such liabilities would reduce funds
otherwise available to USMetals and could have a material adverse effect on
USMetals.
In
the
context of environmental compliance and permitting, including the approval
of
reclamation plans, USMetals must comply with standards, laws and regulations
which may entail greater or lesser costs and delays depending on the nature
of
the activity to be permitted, constructed and operated and how stringently
the
regulations are implemented by the applicable regulatory authority. It is
possible that the costs and delays associated with compliance with such laws,
regulations and permits could become such that a company would not proceed
with
the development of a project or the operation or further development of a mine.
Laws, regulations and regulatory policies involving the protection and
remediation of the environment are constantly changing at all levels of
government and are generally becoming more restrictive and the costs imposed
on
the development and operation of mineral properties are increasing as a result
of such changes. USMetals has made, and expects to make in the future,
significant expenditures to comply with such laws and regulations.
13
The
Environmental Protection Agency (“EPA”)
continues the development of a solid waste regulatory program specific to mining
operations under the Resource Conservation and Recovery Act (“RCRA”).
The
difficulty is that many Federal laws duplicate existing state
regulations.
Mining
companies in the United States are also subject to regulations under (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“CERCLA”)
which
regulates and establishes liability for the release of hazardous substances
and
(ii) the Endangered Species Act (“ESA”)
which
identifies endangered species of plants and animals and regulates activities
to
protect these species and their habitats. Revisions to CERCLA and ESA are being
considered by Congress; the impact on USMetals of these revisions is not clear
at this time. Environmental laws and regulations enacted and adopted in the
future may have a significant impact upon USMetals’ future operations.
Reclamation
plans which are approved by various environmental regulatory authorities are
subject to on-going review and modification. Although USMetals’ management
believes that the reclamation plans developed and implemented for its mine
sites
are reasonable under current conditions, any future re-determination of
reclamation conditions or requirements could significantly increase USMetals’
costs of implementation of such plans.
Competition.
There
is
aggressive competition within the minerals industry to discover and acquire
properties considered to have commercial potential. USMetals will compete for
promising gold exploration projects with other entities, many of which have
greater financial and other resources than USMetals. In addition, USMetals
will
compete with other firms in its efforts to obtain financing to explore and
develop mineral properties including the claims its already owns. Further,
the
mining industry is typified by companies with significantly greater financial
resources and market recognition than the Company. At present, the Company
is
not a significant factor within this industry.
Employees
and Independent Contractors.
As
of the
date of this Annual Report, the Company did not employ any persons other than
its executive officers and directors named herein, an Office Manager, Field
Operations, Administrative Assistant, and clerical help.
As
of the
date of this Annual Report, the Company and its wholly owned subsidiaries have
utilized one principal consultant/advisor: Geological Support Services, LLC
under Robert Cameron, PhD; which, in turn, employs subcontractors that perform
work indirectly for The Company and its subsidiaries.
Item
1A. Risk Factors
Lack
of Operating History and Earnings.
The
Company has no operating history or revenues. The Company expects to incur
further losses in the foreseeable future due to significant costs associated
with its business development, and the business development of its subsidiaries,
including costs associated with its acquisition of new mining claims and/or
operations. There can be no assurance that The Company’s operations will ever
generate sufficient revenues to fund its continuing operations that The Company
will ever generate positive cash flow from its operations, or that The Company
will attain or thereafter sustain profitability in any future
period.
Speculative
Nature of The Company’s Proposed Operations; Dependence Upon Management.
The
success of The Company’s operations, independently and through its subsidiaries,
and its proposed plan of operation will depend largely on the operations,
financial condition, and management of The Company. While management intends
to
engage in the business purposes stated herein, there can be no assurance that
it, or any of its subsidiaries, will be successful in conducting such business.
Presently, the Company is totally dependent upon the personal efforts of its
current management. The loss of any officer or director of The Company could
have a material adverse effect upon its business and future prospects. The
Company does not presently have key-man life insurance upon the life of any
of
its officers or directors. None of our management are chemists, metallurgists,
mining engineers or geologists and as such do not have the technical experience
in exploring for, starting, and/or operating a mine. Upon adequate funding
management intends to hire qualified and experienced personnel, including
additional officers and directors, and mining specialists, professionals and
consulting firms to advise management as needed; however there can be no
assurance that management will be successful in raising the necessary funds,
recruiting, hiring and retaining such qualified individuals. Such consultants
have no fiduciary duty to The Company or its shareholders, and may not perform
as expected. The success of The Company will, in significant part, depend upon
the efforts and abilities of management, including such consultants as are
or
may be engaged in the future.
14
Risks
Inherent In Exploration and Mining Operations. Mineral
exploration is highly speculative and capital intensive. Most exploration
efforts are not successful, in that they do not result in the discovery of
mineralization of sufficient quantity or quality to be profitably mined. The
Company’s Mining Claims are also indirectly subject to all hazards and risks
normally incidental to developing and operating mining properties. These risks
include insufficient ore reserves, fluctuations in production costs that may
make mining of reserves uneconomic; significant environmental and other
regulatory restrictions; and the risks of injury to persons, property or the
environment. In particular, the profitability of gold mining operations is
directly related to the price of gold. The price of gold fluctuates widely
and
is affected by numerous factors that are beyond the control of any mining
company. These factors include expectations with respect to the rate of
inflation, the exchange rates of the dollar and other currencies, interest
rates, global or regional political, economic or banking crises, and a number
of
other factors. If the price of gold should drop dramatically, the value of
the
Mining Claims could also drop dramatically, and the Company might then be unable
to recover its investment in those interests or properties. Selection of a
property for exploration or development; the determination to construct a mine
and to place it into production, and the dedication of funds necessary to
achieve such purposes, are decisions that must be made long before the first
revenues from production will be received. Price fluctuations between the time
that such decisions are made and the commencement of production can drastically
affect the economics of a mine. The volatility of gold prices represents a
substantial risk, generally, which no amount of planning or technical expertise
can eliminate.
Uncertainty
of Reserves and Mineralization Estimates. There
are
numerous uncertainties inherent in estimating proven and probable reserves
and
mineralization, including many factors beyond The Company’s control. The
estimation of reserves and mineralization is a subjective process and the
accuracy of any such estimates is a function of the quality of available data
and of engineering and geological interpretation and judgment. Results of
drilling, metallurgical testing and production and the evaluation of mine plans
subsequent to the date of any estimate may justify revision of such estimates.
No assurances can be given that the volume and grade of reserves recovered
and
rates of production will not be less than anticipated. Assumptions about prices
are subject to great uncertainty and gold prices have fluctuated widely in
the
past. Declines in the market price of gold or other precious metals also may
render reserves or mineralization containing relatively lower grades of ore
uneconomic to exploit. Changes in operating and capital costs and other factors
including, but not limited to, short-term operating factors such as the need
for
sequential development of ore bodies and the processing of new or different
ore
grades, may materially and adversely affect reserves.
Environmental
Risks. Mining
is
subject to potential risks and liabilities associated with pollution of the
environment and the disposal of waste products occurring as a result of mineral
exploration and production. Insurance against environmental risks (including
potential liability for pollution or other hazards as a result of the disposal
of waste products occurring from exploration and production) is not generally
available to The Company (or to other companies within the gold industry) at
a
reasonable price. To the extent The Company becomes subject to environmental
liabilities, the satisfaction of any such liabilities would reduce funds
otherwise available and could have a material adverse effect on The Company.
Laws and regulations intended to ensure the protection of the environment are
constantly changing, and are generally becoming more restrictive.
Proposed
Federal Legislation. Over
the
past twelve years, the U.S. Congress has adopted revisions of the General Mining
Law of 1872, which governs the creation of mining claims and related activities
on Federal public lands in the United States. Similarly, the U. S. Congress
and
the Clinton Administration eliminated the U.S. Bureau of Mines, which was the
agency responsible for gathering and maintaining data on mines throughout the
United States. Beyond changes to the existing laws, the Congress or the Bush
Administration may propose or adopt new laws; any such revisions could also
impair USMetals’ and Southwest’s ability to develop, in the future, any mineral
prospects that are located on unpatented mining claims on Federal
lands.
15
Title
to Properties. The
validity of unpatented mining claims, which constitute all of The Company’s
property holdings, is often uncertain and such validity is always subject to
contest. Unpatented mining claims are unique property interests and are
generally considered subject to greater title risks than patented mining claims,
or other real property interests that are owned in fee simple. The Company
has
not filed any patent applications for any of its properties that are located
on
Federal public lands in the United States, (specifically, in the States of
Arizona and California), and, under changes to the General Mining Law, patents
may not be available for such properties. Although management believes it has
taken requisite action to acquire satisfactory title to its undeveloped
properties, it does not intend to go to the expense to obtain title opinions
until financing is secured to develop the property, with the attendant risk
that
title to some properties, particularly title to undeveloped properties, may
be
defective.
Competition.
There
is
aggressive competition within the minerals industry to discover and acquire
properties considered to have commercial potential. The Company will compete
for
promising gold exploration projects with other entities, many of which have
greater financial and other resources than The Company. In addition, the Company
will compete with other firms in its efforts to obtain financing to explore
and
develop mineral properties.
The
Company’s Financial Statements Contain a “Going Concern
Qualification.”
The
Company may not be able to operate as a going concern. The independent auditors’
report accompanying its financial statements contains an explanation that The
Company’s financial statements have been prepared assuming that it will continue
as a going concern. Note 1 to these financial statements indicates that The
Company is in the development stage and needs additional funds to implement
its
plan of operations. This condition raises substantial doubt about its ability
to
continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. The
Company’s audit report and financial statements are included herein as “PART
F/S”.
Uncertainty
As To Management’s Ability To Control Costs And Expenses. With
respect to The Company’s development of its mining properties and the
implementation of commercial operations, management cannot accurately project
or
give any assurance, with respect to its ability to control development and
operating costs and/or expenses. Consequently, if management is not able to
adequately control costs and expenses, such operations may not generate any
profit or may result in operating losses.
No
Dividends.
The
Company has not paid any dividends nor, by reason of its present financial
status and contemplated financial requirements, does it anticipate paying any
dividends in the foreseeable future.
Risks
of Low-Priced Stocks And Possible Effect of “Penny Stock” Rules on
Liquidity.
Currently The Company’s stock is defined as a “penny stock” under Rule 3a51-1
adopted by the Securities and Exchange Commission under the Securities Exchange
Act of 1934, as amended. In general, a “penny stock” includes securities of
companies which are not listed on the principal stock exchanges or the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”) or
National Market System (“NASDAQ NMS”) and have a bid price in the market of less
than $5.00; and companies with net tangible assets of less than $2,000,000
($5,000,000 if the issuer has been in continuous operation for less than three
years), or which has recorded revenues of less than $6,000,000 in the last
three
years. “Penny stocks” are subject to rule 15g-9, which imposes additional sales
practice requirements on broker-dealers that sell such securities to persons
other than established customers and “accredited investors” (generally,
individuals with net worth in excess of $1,000,000 or annual incomes exceeding
$200,000, or $300,000 together with their spouses, or individuals who are
officers or directors of the issuer of the securities). For transactions covered
by Rule 15g-9, a broker-dealer must make a special suitability determination
for
the purchaser and have received the purchaser’s written consent to the
transaction prior to sale. Consequently, this rule may adversely affect the
ability of broker-dealers to sell The Company’s stock, and therefore, may
adversely affect the ability of The Company’s stockholders to sell stock in the
public market.
Shares
Eligible for Future Sale.
A total
of 33,856,459 shares of Common Stock are issued and outstanding as of the date
of this Annual Report, of which approximately 17,746,775 shares thereof are
“restricted securities” as that term is defined under the Securities Act.
Therefore, all such restricted shares must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from
registration becomes available. One exemption that may be available in the
future is Rule 144 adopted under the Securities Act. Generally, under Rule
144
any person holding restricted securities for at least one year may publicly
sell
in ordinary brokerage transactions, within a 3 month period, the greater of
one
(1%) percent of the total number of a company’s shares outstanding or the
average weekly reported volume during the four weeks preceding the sale, if
certain conditions of Rule 144 are satisfied by the company and the seller.
Furthermore, with respect to sellers who are “non-affiliates” of the company, as
that term is defined in Rule 144, the volume sale limitation does not apply
and
an unlimited number of shares may be sold, provided the seller meets a holding
period of 2 years. However, the SEC recently revised Rule 144, effective
February 15, 2008, which will shorten the holding period to six months in some
cases and remove the volume restrictions for any such sales. Sales under Rule
144 may have a depressive effect on the market price of The Company’s
securities, should a public market be available for The Company’s shares.
16
Safe
Harbor Statement:
Under
the United States Private Securities Litigation Reform Act of 1995, except
for
the statements of historical fact contained herein, the information presented
constitutes “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements,
including but not limited to those with respect to the price of gold, the timing
of the exploration of the Company’s properties, the timing of the development of
the Company’s properties, the timing and amount of estimated future production,
costs of production, mineralization and “reserve” determination involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the actual
results of current exploration and development activities, conclusions of
economic evaluations, changes in project parameters as plans continue to be
refined, future prices of gold, silver or other metals and minerals. Although
the Company has attempted to identify important factors that could cause actual
results to differ materially, there may be other factors that cause results
not
to be as anticipated, estimated or intended. There can be no assurance that
such
statements will prove to be accurate as actual results and future events could
differ materially from those anticipated in such statements. Accordingly,
readers should not place undue reliance on forward-looking
statements.
(See
“Forward Looking Statements”, PART I).
(D)
Reports to Security Holders
The
public may read and copy any materials filed with the SEC at the SEC’s Public
Reference Room at 450 Fifth Street, N.W, Washington, D.C. 20549. The public
may
obtain information on the operation of the Public Reference Room by calling
the
SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC. The address of that SEC internet site is
http://www.sec.gov.
ITEM
2. DESCRIPTION OF PROPERTY
The
Company’s principle executive offices are located at 4535 W. Sahara Ave, Suite
204, Las Vegas, NV 89102 and its telephone number is (702)
933-4034.
ITEM
3. LEGAL PROCEEDINGS
On
December 22, 2006, a Mr. Glenn E. Martin filed suit against the Company in
the
Arizona Justice Court, Pima county (Case No. C20066833) alleging that the
Company failed to pay him wages and expenses pursuant to certain labor laws
dating back to March, 2004. Mr. Martin is seeking damages in the amount of
$149,000 plus interest and attorney’s fees. On January 23, 2007, the Company
filed a notice of removal of action to have Mr. Martin’s claim moved from state
to federal court and such motion was granted. The Company believes that there
is
no merit to Mr. Martin’s claim and plans to defend this suit vigorously.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On
January 19, 2007 the shareholders voted to authorize the Board of Directors
to
raise money from the public via equity or debt financing under terms and
conditions to be determined by the Board. And the shareholders voted to approve
the actions of the Board of Directors for the fiscal year ended September 30,
2006.
17
PART
II
ITEM
5. MARKET FOR THE COMPANY’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The
Company’s securities are quoted on the OTC Bulletin Board and as of December 23,
2003 the Company’s shares are also traded on the Third Segment of the Berlin
Stock Exchange under symbol UCP.BER, WKN number A0BLBB. As of May 11, 2006
USCorp’s Class B Non-Voting Common Shares have been included in the Deutche
Borse Exchange trading within the Open Market (Freiverkehr) under the Symbol
“U9C.F” and the WKN# is A0JEQQ.
The
following table sets forth for the periods indicated the range of high and
low
closing price quotations for the Company’s common stock during the past two
fiscal years. These quotations represent inter-dealer prices without retail
mark-up, mark-down or commission and may not represent actual
transactions:
|
PERIOD
|
HIGH
|
LOW
|
|||||
|
Quarter
ended December 31, 2005
|
$
|
0.15
|
$
|
0.11
|
|||
|
Quarter
ended March 30, 2006
|
$
|
0.14
|
$
|
0.07
|
|||
|
Quarter
ended June 30, 2006
|
$
|
0.14
|
$
|
0.08
|
|||
|
Quarter
ended September 30, 2006
|
$
|
0.12
|
$
|
0.06
|
|||
|
Quarter
ended December 31, 2006
|
$
|
0.12
|
$
|
0.07
|
|||
|
Quarter
ended March 30, 2007
|
$
|
0.09
|
$
|
0.07
|
|||
|
Quarter
ended June 30, 2007
|
$
|
0.11
|
$
|
0.08
|
|||
|
Quarter
ended September 30, 2007
|
$
|
0.42
|
$
|
0.09
|
|||
On
December 31, 2007 the reported closing price for the Company’s common stock was
$0.26 per share; there were approximately 535 record holders of the Company’s
shares.
The
Company has not paid any dividends and there are presently no plans to pay
any
such dividends in the foreseeable future. The declaration and payment of
dividends in the future will be determined by the Board of Directors in light
of
conditions then existing, including earning, financial condition, capital
requirements and other factors. There are no contractual restrictions on the
Company’s present or future ability to pay dividends. Further, there are no
restrictions on any of the Company’s subsidiaries which would, in the future,
adversely affect the Company’s ability to pay dividends to its
shareholders.
Recent
Sales of registered and unregistered securities.
During
fiscal year 2007, the Company issued an aggregate of 50,000 shares of Class
A
common stock for legal services rendered.
In
August
of 2007 the Company accepted $620,000 in subscriptions for 8,273,332 units
consisting of one common A share and one warrant to purchase ½ common A share at
an exercise price of $0.40 per full share, the exercise period being two years
and expiring on October 4, 2009.
In
June
2004, the Company commenced a private placement of 6 million units of its
securities with each unit consisting of one share of preferred stock and one
warrant to purchase an additional share of preferred stock at a price of $0.50
per unit. The offer has been extended until October 2008. Each preferred share
is convertible into two common shares at any time at the election of the
preferred shareholder. Each warrant represents the right of the holder to
purchase one additional preferred share at a price of $0.50 during the two-year
period following the date of their issuance. The two-year period was extended
until October 2007 and has now expired.
The
preferred shares accrue interest at the rate of 10% per annum of the purchase
price of $0.50, or $0.05 per year, payable annually in arrears. The Company
may
elect to make payment of interest in the form of common shares. In which case
the number of common shares payable will equal the amount of interest payable
divided by the closing price of the common shares on the date the dividend
is
declared by the Company.
18
The
preferred shares are redeemable by the Company at any time after one year from
the date of their issuance provided that the common shares have sustained a
trading price of not less than $1.00 per common share for at least 20
consecutive trading days. If the Company elects to redeem the Shares, the
redemption price shall be determined as follows:
|
(i)
|
During
the second year after their issuance at $0.575 per preferred
share;
|
|
|
|
|
|
|
(ii)
|
During
the third year after their issuance at $0.55 per preferred
share;
|
|
|
|
|
|
|
(iii)
|
During
the fourth year after their issuance at $0.525 per preferred
share;
|
|
|
|
|
|
|
(iv)
|
After
the fourth year after their issuance at $0.50 per preferred
share.
|
During
September 2004, the Company received $55,175 of subscriptions for 155,000 units
in this private placement.
ITEM
6.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You
should read the following discussion and analysis in conjunction with the
Consolidated Financial Statements and Notes thereto, and the other financial
data appearing elsewhere in this Annual Report.
The
information set forth in Management’s Discussion and Analysis of Financial
Condition and Results of Operations (“MD&A”) contains certain
“forward-looking statements” within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934,
as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected changes in the Company’s revenues and profitability,
(ii) prospective business opportunities and (iii) the Company’s strategy for
financing its business. Forward-looking statements are statements other than
historical information or statements of current condition. Some forward-looking
statements may be identified by use of terms such as “believes”, “anticipates”,
“intends” or “expects”. These forward-looking statements relate to the plans,
objectives and expectations of the Company for future operations. Although
the
Company believes that its expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this Annual Report should not be regarded as
a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.
The
Company’s revenues and results of operations could differ materially from those
projected in the forward-looking statements as a result of numerous factors,
including, but not limited to, the following: (i) changes in external
competitive market factors, (ii) termination of certain operating agreements
or
inability to enter into additional operating agreements, (iii) inability to
satisfy anticipated working capital or other cash requirements, (iv) changes
in
or developments under domestic or foreign laws, regulations, governmental
requirements or in the mining industry, (v) changes in the Company’s business
strategy or an inability to execute its strategy due to unanticipated changes
in
the market, (vi) various competitive factors that may prevent the Company from
competing successfully in the marketplace, and (ix) the Company’s lack of
liquidity and its ability to raise additional capital. In light of these risks
and uncertainties, there can be no assurance that actual results, performance
or
achievements of the Company will not differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. The foregoing review of important factors should not be construed
as
exhaustive. The Company undertakes no obligation to release publicly the results
of any future revisions it may make to forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence
of
unanticipated events.
OVERVIEW
The
Company is an “exploration stage” company. During fiscal year ended September
30, 2007, the Company’s activities centered on the exploration of USMetals’
mining property known as the Twin Peaks Project in the Eureka Mining District
of
Yavapai County, Arizona, the exploration of the Picacho Salton Project Claims
in
the Mesquite Mining District of Imperial County, California. During the fiscal
year, the Company did not engage in any commercially viable operations and
realized no revenues from its activities. The annual costs incurred to date
were
primarily for the continued exploration of the Company’s mining properties,
expansion and maintenance of the Company’s website, legal and accounting costs
in conjunction with the Company’s general and administrative expenses in
anticipation of completing exploration and commencing a test production program
on the Company’s mining properties. The annual maintenance fee payment for the
249 claims owned by the Company is $125 per claim for a total annual cost of
$
31,125.
19
All
of
the Company’s mining business activities are conducted at this time through its
subsidiaries, USMetals, Inc. and Southwest Resource Development, Inc. Geological
Support Services, LLC, has agreed to continue to supervise and direct the work
of the Twin Peaks Project Team through completion of permitting.
The
Company, through its wholly owned subsidiary, USMetals, owns 143 unpatented
contiguous mining claims totaling 2,860 acres in the Eureka Mining District
of
Yavapai County, Arizona. These claims have a history of mining activity from
the
middle of the 19th century to the beginning of World War II. Gold, silver,
copper and other minerals were recovered in important quantities. The previous
owners started acquisition of this claim group in the early 1940’s and by the
mid-1980’s the claims group totaled 134 claims. Exploration, drilling and
assessment work was done and several geological reports were completed
indicating the presence of economically viable deposits of precious metals
and
complex ores.
In
2007
we have conducted exploration, testing, surveying and re-staking of all claims,
and added two significant claims to the group. The results of this work is
the
feasibility study prepared by Geological Support Services, LLC, which states
in
part: “The feasibility study operating plan assumes an open cast quarry type
operation containing proven reserves of approximately 612,000 ounces of gold
and
2,160,000 ounces of silver in 3.6 million tons of ore, grading at .17 oz. gold
per ton and .6 oz. silver per ton and a revenue cutoff grade of .03 per ton,
using a gold price of $600 per Troy ounce and a silver price of $12 per Troy
ounce. The project anticipates utilizing conventional truck and shovel mining
methods with the processing of ore at full production of 800 tons per day for
the first year, yielding an annual production of 34,748 oz. of gold and 126,000
oz. of silver the first year. Estimated mine life is 12.9 years. Production
levels [and mine life] will increase as proven reserve amounts increase. The
feasibility study assumes an economic base case, utilizing $600 per ounce gold
and $12 per ounce silver. At such prices cash operating costs, including
operating costs and initial sustaining capital are estimated at $250 dollars
per
ounce of gold. Initial capital costs are currently estimated to be $12,974,728.
All amounts are in US dollars.”
The
Company, through its wholly owned subsidiary Southwest Resource development,
Inc, (“Southwest”) owns 84 unpatented lode and 22 unpatented placer mining
claims totaling approximately 4,600 acres in eastern Imperial County, California
which the Company refers to as the Picacho Salton Project Claims in the Mesquite
Mining District of Imperial County. These claims and the surrounding Mesquite
Mining District have a history of mining activity going back almost 200 years.
The exploration, drilling and assessment work at the Picacho Salton Project
Claims in the Mesquite Mining District of Imperial County, was done and
geological reports were completed by prior owners and indicated the presence
of
economically viable deposits of precious metals.
In
2007
we conducted additional exploration, testing, surveying and re-staking of all
claims, and added a total of 77 significant claims to the group of which 70
claims are primarily gold bearing and seven claims, approximately 140 acres,
are
Pink Rhyolite (decorative rock) and construction grade aggregate. Geological
Support Services LLC completed a feasibility study covering the gold claims,
it
says in part: “The feasibility study operating plan assumes an open caste quarry
type operation containing proven reserves of approximately 231,513 ounces of
gold in 6,614,666 tons of ore grading at .035 oz per ton with a cutoff grade
of
.015 using a gold price of $600 per troy ounce gold. The plan anticipates
conventional truck and shovel mining techniques. Processing to be phased
according to ore type and permit approvals. Phase 1 being a wash and
sedimentation gravity system with initial production capacity of 1000 tons
per
day ramping to 6000 tons per day. This type of operation has been proven to
achieve .02 ounce per ton recovery, in the targeted placers. With approval
of
cyanide leach permits, the implementation of leaching facilities will increase
recovery to the 87% target. Also along with the construction of the leaching
facilities, the milling circuit for processing the hard rock lode ore will
be
constructed. This grinding circuit will be designed to crush incoming hard
rock
down to 150- prior to gravity separation and leaching. Although this study
is
based upon production of 6000 tons a day it is anticipated that if additional
water resources are developed production could be increased to greater levels.
Mine life based on indicated reserves is in excess of 20 years. The feasibility
study assumes an economic base case utilizing a $600 per ounce gold price.
At
current fuel and labor prices, cash operating costs, including operating cost
and sustaining capital are estimated to be $260 dollars per ounce of gold
produced. Initial capital costs are anticipated to be $13,790,300 all amounts
are in U.S. Dollars.”
20
Impairment
Expense
We
acquired the Twin Peaks Project asset in 2002 and have been conducting
exploration work on it, with the goal of commencing mineral production, for
five
years. Exploration activities have confirmed the presence of mineralization
on
this property. However, we did not commence mining activities in the past due
to
a lack of funding. Consequently, per our accounting policy regarding impairment
charges, we decided to impair this asset and take it off the balance sheet.
However, we are still aggressively pursing the financing necessary to proceed
with our plans to commence mining activity now that we have completed a
feasibility study on the property due to persistence and our improved financial
position. The feasibility study prepared by Geological Support Services, LLC,
in
part: “The feasibility study operating plan assumes an open cast quarry type
operation containing proven reserves of approximately 612,000 ounces of gold
and
2,160,000 ounces of silver in 3.6 million tons of ore, grading at .17 oz. gold
per ton and .6 oz. silver per ton and a revenue cutoff grade of .03 per ton,
using a gold price of $600 per Troy ounce and a silver price of $12 per Troy
ounce.”
I.
Results of Operations
Comparison
of operating results.
The
Company has not yet commenced commercial operations and has had no revenues
from
operations.
General
and administrative expense for fiscal 2007 was $2,853,391 compared to $502,201
for last year, an increase of approximately 500%. The main area of increase
was
in consulting costs ($2,436,469 for fiscal 2007 compared to $125,358 last year).
Administration expenses increased ($337,847 for fiscal 2007 compared to $289,271
last year). The increase in consulting was due to the cost of raising capital,
marketing, public relations and exploration work conducted by consulting
professionals. The increase in administration expense was due to the increase
in
salaries and space rental costs.
As
a
result of general and administrative costs, the Company experienced a loss
from
operations of $2,853,391 for the year ended September 30, 2007 compared to
loss
from operations of $502,201 for the same period last year.
After
interest expense in fiscal 2007 of $154,327, compared to $61,771 in the prior
year, the Company realized a net loss for fiscal 2007 of $3,176,745 as compared
to a net loss of $837,551 for the prior fiscal year. This loss translated into
a
loss of $.09 per share for fiscal 2007, compared to a loss of $.03 for fiscal
2006.
II.
Discussion of Financial Condition: Liquidity and Capital
Resources
At
September 30, 2007 cash on hand was $1,541,001 as compared with $83,573 at
September 30, 2006. The Company received services in the aggregate amount of
$4,500 through the issuance of additional shares of common stock.
See,
“Recent Sales of Unregistered Securities”
above.
The
Company used these cash proceeds to pay for its business operations.
Total
assets at September 30, 2007 were $1,546,432 as compared to $91,813 at September
30, 2006.
The
Company’s total stockholders’ equity changed from -$1,035,844 September 30, 2006
to -$3,559,491 at September 30, 2007. The decrease in total stockholders’ equity
was due to the loss from operations and the issuance of shares for services
rendered.
Impact
of Inflation
The
general level of inflation has been relatively low during the last several
fiscal years and has not had a significant impact on the
Company.
21
Off
Balance Sheet Arrangements
None
ITEM
3.
CONTROLS AND PROCEDURES
Under
the
supervision and with the participation of the Company’s management, including
the Chief Executive Officer and acting Chief Financial Officer, the Company
has
evaluated the effectiveness of the design and operation of its disclosure
controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended) as of the end of the period covered
by this quarterly report. Based upon that evaluation, the Chief Executive
Officer and acting Chief Financial Officer concluded that, as of the end of
the
period covered by this quarterly report, the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed
in
the reports that the Company files or submits under the Securities Exchange
Act,
of 1934 as amended, is recorded, processed, summarized and reported, within
the
time periods specified in the Securities and Exchange Commission’s rules and
forms.
There
has
been no change in the Company’s internal control over financial reporting during
the most recent fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
ITEM
7.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management's
Report on Internal Control Over Financial Reporting
Management
of the Company is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting
is
defined in Rules 13-a-15(f) and 15d-15(f) under the Exchange Act of 1934, as
amended, as a process designed by, or under the supervision of, the Company's
principal executive and principal financial officers and effected by the
Company's board of directors, management and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
U.S. generally accepted accounting principles and includes those policies and
procedures that:
*
pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
Company;
*
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorization of management and directors
of
the Company; and
*
provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company's assets that could have a
material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may
not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management
assessed the effectiveness of the Company's internal control over financial
reporting as of December 21, 2007. In making this assessment, management used
the criteria established in "Internal Control-Integrated Framework," issued
by
the Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
Based
on
this assessment, management believes that, as of September 30, 2007 the
Company's internal control over financial reporting is effective.
There
have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act of 1934, as amended) that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
22
DONAHUE
ASSOCIATES, LLC
Certified
Public Accountants
27
Beach Road Suite CO5A
Monmouth
Beach, NJ 07750
Tel.
732-229-7723
Report
of Independent Registered Public Accounting Firm
To
the
Board of Directors and Stockholders of USCorp.
We
have
completed the audits of the consolidated financial statements of USCorp and
its
internal control over financial reporting as of September 30, 2007 and September
30, 2006 in accordance with the standards of the Public Company Accounting
Oversight Board (United States).
In
our
opinion, the consolidated financial statements present fairly, in all material
respects, the financial position of USCorp
at
September 30, 2007 and September 30, 2006 and the results of its operations,
cash flows, and changes in shareholders’ equity for the years then ended in
conformity with accounting principles generally accepted in the United States
of
America. These consolidated financial statements are the responsibility of
the
Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We
conducted our audits of these statements in accordance with the standards of
the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement.
An audit of consolidated financial statements includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Also,
in
our opinion, management’s assessment, included in Management’s Report on
Internal Control Over Financial Reporting, that the Company maintained effective
internal control over financial reporting as of September 30, 2007 and September
30, 2006 based on criteria established in Internal
Control - Integrated Framework
issued
by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”), is fairly stated, in all material respects, based on those criteria.
Furthermore, in our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of September 30, 2007
and
September 30, 2006 based on criteria established in Internal
Control - Integrated Framework
issued
by the COSO.
The
Company’s management is responsible for maintaining effective internal control
over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express opinions
on
management’s assessment and on the effectiveness of the Company’s internal
control over financial reporting based on our audit. We conducted our audit
of
internal control over financial reporting in accordance with the standards
of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained
in
all material respects. An audit of internal control over financial reporting
includes obtaining an understanding of internal control over financial
reporting, evaluating management’s assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing such other
procedures as we consider necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinions.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of consolidated financial statements for external purposes
in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures
that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of
the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of consolidated financial statements
in accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the consolidated financial statements.
23
Because
of its inherent limitations, internal control over financial reporting may
not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
As
more fully discussed in Note 2 to the consolidated
financial statements, there are significant matters concerning the Company
that
raise substantial doubt as to the ability of the Company to continue as a going
concern. Management’s plans with regard to these matters are also described in
Note 2 to the consolidated
financial statements. The consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets or the amounts and
classifications of recorded liabilities that might be necessary in the event
that the Company cannot continue in existence.
Monmouth
Beach, New Jersey
December
21, 2007
24
USCorp
(an
Exploration Stage Company)
Balance
Sheet
As
of September 30, 2007 and September 30, 2006
|
|
30-Sep-07
|
30-Sep-06
|
|||||
| ASSETS | |||||||
|
Current
assets:
|
|||||||
|
Cash
|
$
|
1,541,001
|
$
|
83,573
|
|||
|
Total
current assets
|
$
|
1,541,001
|
$
|
83,573
|
|||
|
Other
assets:
|
|||||||
|
Equipment-
net
|
5,431
|
8,240
|
|||||
|
Total
assets
|
$
|
1,546,432
|
$
|
91,813
|
|||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable & accrued expenses
|
$
|
2,410,918
|
$
|
73,317
|
|||
|
Subscriptions
payable
|
569,323
|
0
|
|||||
|
Total
current liabilities
|
$
|
2,980,241
|
$
|
73,317
|
|||
|
Gold
bullion loan
|
1,205,484
|
979,175
|
|||||
|
Convertible
debenture payable
|
639,770
|
0
|
|||||
|
Advances
payable to shareholder
|
205,263
|
0
|
|||||
|
Shareholders'
equity:
|
|||||||
|
Series
A preferred stock, one share convertible to eight shares of common;
10%
stated dividend, stated value $0.50, 10,000,000 shares authorized,
no
shares outstanding at September 30, 2007
|
0
|
0
|
|||||
|
Series
B preferred stock, one share convertible to two shares of common;
10%
cumulative stated dividend, stated value $0.50, 50,000,000 shares
authorized, 155,000 shares outstanding
|
70,165
|
70,165
|
|||||
|
Common
stock B- $.001 par value, authorized 250,000,000 shares, issued and
outstanding, 5,000,000 shares at September 30, 2006 and 5,000,000
at
September 30, 2007, non-voting
|
5,000
|
5,000
|
|||||
|
Common
stock A- $.01 par value, authorized 550,000,000 shares, issued and
outstanding, 33,806,462 shares at September 30, 2006 and 33,856,462
at
September 30, 2007
|
$
|
338,564
|
$
|
338,064
|
|||
|
Additional
paid in capital
|
7,839,031
|
7,186,433
|
|||||
|
Accumulated
deficit - exploration stage
|
(11,737,086
|
)
|
(8,560,341
|
)
|
|||
|
Total
shareholders' deficit
|
(3,559,491
|
)
|
(1,035,844
|
)
|
|||
|
Total
Liabilities & Shareholders' Deficit
|
$
|
1,546,432
|
$
|
91,813
|
|||
See
the notes to the financial statements.
25
USCorp
(an
Exploration Stage Company)
Statements
of Operations
For
the Years Ended September 30, 2007 and September 30, 2006
and
from Inception, May 1989 through September 30, 2007
|
Inception
|
||||||||||
|
30-Sep-07
|
30-Sep-06
|
to
Date
|
||||||||
|
General
and administrative expenses:
|
||||||||||
|
Consulting
|
$
|
2,436,469
|
$
|
125,358
|
$
|
5,688,336
|
||||
|
Administration
|
337,847
|
289,271
|
4,043,800
|
|||||||
|
License
expense
|
30,125
|
29,250
|
190,684
|
|||||||
|
Professional
fees
|
48,878
|
58,322
|
493,327
|
|||||||
|
Total
general & administrative expenses
|
2,853,319
|
502,201
|
10,416,147
|
|||||||
|
Net
loss from operations
|
$
|
(2,853,319
|
)
|
$
|
(502,201
|
)
|
$
|
(10,416,147
|
)
|
|
|
Other
income (expenses):
|
||||||||||
|
Interest
expense
|
(154,327
|
)
|
(61,771
|
)
|
(253,389
|
)
|
||||
|
Loss
on unhedged derivative
|
(169,099
|
)
|
(273,579
|
)
|
(454,931
|
)
|
||||
|
(Loss)
gain on mining claim
|
0
|
0
|
(600,000
|
)
|
||||||
|
Net
loss before provision for income taxes
|
$
|
(3,176,745
|
)
|
$
|
(837,551
|
)
|
$
|
(11,724,467
|
)
|
|
|
Provision
for income taxes
|
0
|
0
|
0
|
|||||||
|
Net
loss before extraordinary item
|
$
|
(3,176,745
|
)
|
$
|
(837,551
|
)
|
$
|
(11,724,467
|
)
|
|
|
Extraordinary
item:
|
||||||||||
|
Loss
on early extinguishment of debt (net of tax)
|
0
|
0
|
(12,619
|
)
|
||||||
|
Net
loss
|
$
|
(3,176,745
|
)
|
$
|
(837,551
|
)
|
$
|
(11,737,086
|
)
|
|
|
Basic
& fully diluted net loss per common share
|
$
|
(0.09
|
)
|
$
|
(0.03
|
)
|
||||
|
Weighted
average of common shares outstanding:
|
||||||||||
|
Basic
& fully diluted
|
33,844,237
|
33,811,557
|
||||||||
See
the notes to the financial statements.
26
USCorp
(an
Exploration Stage Company)
Statements
of Cash Flows
For
the Years Ended September 30, 2007 and September 30, 2006
and
from Inception, May 1989 through September 30, 2007
|
|
Inception
|
|||||||||
|
30-Sep-07
|
30-Sep-06
|
to
Date
|
||||||||
|
Operating
Activities:
|
||||||||||
|
Net
loss
|
$
|
(3,176,745
|
)
|
$
|
(837,551
|
)
|
$
|
(11,737,086
|
)
|
|
|
Adjustments
to reconcile net income items not
requiring the use of cash:
|
||||||||||
|
Loss
on sale of mining claim
|
0
|
0
|
600,000
|
|||||||
|
Consulting
fees
|
5,000
|
79,650
|
1,922,520
|
|||||||
|
Depreciation
expense
|
4,474
|
3,434
|
10,483
|
|||||||
|
Interest
expense
|
154,327
|
61,771
|
253,389
|
|||||||
|
Impairment
expense
|
0
|
0
|
2,449,465
|
|||||||
|
Loss
on early extinguishment of debt (net of tax)
|
0
|
0
|
12,619
|
|||||||
|
Loss
on unhedged underlying derivative
|
169,099
|
273,579
|
454,931
|
|||||||
|
Changes
in other operating assets and liabilities :
|
||||||||||
|
Accounts
payable and accrued expenses
|
2,337,601
|
26,196
|
2,410,918
|
|||||||
|
Net
cash used by operations
|
$
|
(506,244
|
)
|
$
|
(392,921
|
)
|
$
|
(3,622,761
|
)
|
|
|
Investing
activities:
|
||||||||||
|
Purchase
of office equipment
|
$
|
(1,665
|
)
|
$
|
(7,668
|
)
|
$
|
(15,914
|
)
|
|
|
Net
cash used by investing activities
|
(1,665
|
)
|
(7,668
|
)
|
(15,914
|
)
|
||||
|
Financing
activities:
|
||||||||||
|
Issuance
of common stock
|
$
|
0
|
$
|
0
|
$
|
2,151,768
|
||||
|
Issuance
of preferred stock
|
0
|
0
|
70,165
|
|||||||
|
Issuance
of gold bullion note
|
0
|
0
|
635,663
|
|||||||
|
Subscriptions
received
|
569,323
|
0
|
569,323
|
|||||||
|
Issuance
of convertible notes
|
1,200,000
|
0
|
1,200,000
|
|||||||
|
Advances
received (paid) shareholder
|
196,014
|
(143,210
|
)
|
196,014
|
||||||
|
Capital
contributed by shareholder
|
0
|
0
|
356,743
|
|||||||
|
Net
cash provided by financing activities
|
1,965,337
|
(143,210
|
)
|
5,179,676
|
||||||
|
Net
increase (decrease) in cash during the period
|
$
|
1,457,428
|
$
|
(543,799
|
)
|
$
|
1,541,001
|
|||
|
Cash
balance at beginning of the fiscal year
|
83,573
|
627,372
|
0
|
|||||||
|
Cash
balance at September 30th
|
$
|
1,541,001
|
$
|
83,573
|
$
|
1,541,001
|
||||
|
Supplemental
disclosures of cash flow information:
|
||||||||||
|
Interest
paid during the fiscal year
|
$
|
0
|
$
|
0
|
$
|
0
|
||||
|
Income
taxes paid during the fiscal year
|
$
|
0
|
$
|
0
|
$
|
0
|
||||
See
the notes to the financial statements.
27
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to September 30, 2007
|
Common
|
Common
|
Paid
in
|
Accumulated
|
Stock
|
|||||||||||||||
|
Shares
|
Par
Value
|
Capital
|
Deficit
|
Total
|
Price
*
|
||||||||||||||
|
Inception
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||||||
|
Issuance
of common stock
|
84,688
|
847
|
1,185,153
|
1,186,000
|
$
|
0.07
|
|||||||||||||
|
Net
income fiscal 1990
|
|
|
|
520,000
|
520,000
|
||||||||||||||
|
Balance
at September 30, 1990-unaudited
|
84,688
|
$
|
847
|
$
|
1,185,153
|
$
|
520,000
|
$
|
1,706,000
|
||||||||||
|
Net
income fiscal 1991
|
|
|
|
1,108,000
|
1,108,000
|
||||||||||||||
|
Balance
at September 30, 1991-unaudited
|
84,688
|
$
|
847
|
$
|
1,185,153
|
$
|
1,628,000
|
$
|
2,814,000
|
||||||||||
|
Issuance
of common stock
|
472
|
5
|
32,411
|
32,416
|
$
|
0.22
|
|||||||||||||
|
Net
income fiscal 1992
|
466,000
|
466,000
|
|||||||||||||||||
|
Balance
at September 30, 1992-unaudited
|
85,160
|
$
|
852
|
$
|
1,217,564
|
$
|
2,094,000
|
$
|
3,312,416
|
||||||||||
|
Net
loss fiscal 1993
|
|
|
|
(3,116,767
|
)
|
(3,116,767
|
)
|
||||||||||||
|
Balance
at September 30, 1993-unaudited
|
85,160
|
$
|
852
|
$
|
1,217,564
|
$
|
(1,022,767
|
)
|
$
|
195,649
|
|||||||||
|
Net
loss fiscal 1994
|
|
|
|
(63,388
|
)
|
(63,388
|
)
|
||||||||||||
|
Balance
at September 30, 1994-unaudited
|
85,160
|
$
|
852
|
$
|
1,217,564
|
$
|
(1,086,155
|
)
|
$
|
132,261
|
|||||||||
|
Net
income fiscal 1995
|
|
|
|
(132,261
|
)
|
(132,261
|
)
|
||||||||||||
|
Balance
at September 30, 1995-unaudited
|
85,160
|
$
|
852
|
$
|
1,217,564
|
$
|
(1,218,416
|
)
|
$
|
0
|
|||||||||
|
Net
loss fiscal 1996
|
|
|
|
0
|
0
|
||||||||||||||
|
Balance
at September 30, 1996-unaudited
|
85,160
|
$
|
852
|
$
|
1,217,564
|
$
|
(1,218,416
|
)
|
$
|
0
|
|||||||||
28
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to September 30, 2007
(Continued)
|
Common
|
Common
|
Paid
in
|
Accumulated
|
Stock
|
|||||||||||||||
|
Shares
|
Par
Value
|
Capital
|
Deficit
|
Total
|
Price
*
|
||||||||||||||
|
Stock
issued for mining claim
|
150,000
|
1,500
|
598,500
|
600,000
|
$
|
0.20
|
|||||||||||||
|
Issuance
of common stock
|
50,000
|
500
|
59,874
|
60,374
|
$
|
0.06
|
|||||||||||||
|
Stock
issued for services
|
14,878
|
149
|
29,608
|
29,757
|
$
|
0.10
|
|||||||||||||
|
Net
loss fiscal 1997
|
|
|
|
(90,131
|
)
|
(90,131
|
)
|
||||||||||||
|
Balance
at September 30, 1997-unaudited
|
300,038
|
$
|
3,001
|
$
|
1,905,546
|
$
|
(1,308,547
|
)
|
$
|
600,000
|
|||||||||
|
Capital
contributed by shareholder
|
58,668
|
58,668
|
|||||||||||||||||
|
Net
loss fiscal 1998
|
|
|
|
(58,668
|
)
|
(58,668
|
)
|
||||||||||||
|
Balance
at September 30, 1998-unaudited
|
300,038
|
$
|
3,001
|
$
|
1,964,214
|
$
|
(1,367,215
|
)
|
$
|
600,000
|
|||||||||
|
Capital
contributed by shareholder
|
28,654
|
28,654
|
|||||||||||||||||
|
Net
income fiscal 1999
|
|
|
|
(26,705
|
)
|
(26,705
|
)
|
||||||||||||
|
Balance
at September 30, 1999-unaudited
|
300,038
|
$
|
3,001
|
$
|
1,992,868
|
$
|
(1,393,920
|
)
|
$
|
601,949
|
|||||||||
|
Capital
contributed by shareholder
|
22,750
|
22,750
|
|||||||||||||||||
|
Net
loss fiscal 2000
|
|
|
|
(624,699
|
)
|
(624,699
|
)
|
||||||||||||
|
Balance
at September 30, 2000-unaudited
|
300,038
|
$
|
3,001
|
$
|
2,015,618
|
$
|
(2,018,619
|
)
|
$
|
0
|
|||||||||
29
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to September 30, 2007
(Continued)
|
Common
|
Common
|
Paid
in
|
Accumulated
|
Stock
|
|||||||||||||||
|
Shares
|
Par
Value
|
Capital
|
Deficit
|
Total
|
Price
*
|
||||||||||||||
|
Issuance
of common stock
|
103,535
|
1,035
|
611,943
|
612,978
|
$
|
0.15
|
|||||||||||||
|
Issued
stock for compensation
|
50,000
|
500
|
19,571
|
20,071
|
$
|
0.04
|
|||||||||||||
|
Capital
contributed by shareholder
|
21,719
|
21,719
|
|||||||||||||||||
|
Net
loss fiscal 2001
|
|
|
|
(654,768
|
)
|
(654,768
|
)
|
||||||||||||
|
Balance
at September 30, 2001-unaudited
|
453,573
|
$
|
4,536
|
$
|
2,668,851
|
$
|
(2,673,387
|
)
|
$
|
0
|
|||||||||
|
Issued
stock to purchase mining claim
|
24,200,000
|
242,000
|
2,207,466
|
2,449,466
|
$
|
0.10
|
|||||||||||||
|
Issued
shares to employees
|
267,500
|
2,675
|
(2,675
|
)
|
0
|
||||||||||||||
|
Capital
contributed by shareholders
|
143,480
|
143,480
|
|||||||||||||||||
|
Net
loss for the fiscal year
|
|
|
|
(2,591,671
|
)
|
(2,591,671
|
)
|
||||||||||||
|
Balance
at September 30, 2002-unaudited
|
24,921,073
|
$
|
249,211
|
$
|
5,017,122
|
$
|
(5,265,058
|
)
|
$
|
1,275
|
|||||||||
|
Issued
stock for services
|
872,000
|
8,720
|
264,064
|
272,784
|
$
|
0.31
|
|||||||||||||
|
Beneficial
conversion feature
|
3,767
|
3,767
|
|||||||||||||||||
|
Capital
contributed by shareholders
|
81,472
|
81,472
|
|||||||||||||||||
|
Net
loss for the fiscal year
|
|
|
|
(865,287
|
)
|
(865,287
|
)
|
||||||||||||
|
Balance
at September 30, 2003
|
25,793,073
|
$
|
257,931
|
$
|
5,366,425
|
$
|
(6,130,345
|
)
|
$
|
(505,989
|
)
|
||||||||
30
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to September 30, 2007
(Continued)
|
Common
|
Common
|
Paid
in
|
Accumulated
|
|
Stock
|
||||||||||||||
|
Shares
|
Par
Value
|
Capital
|
Deficit
|
Total
|
Price
*
|
||||||||||||||
|
Issuance
of common stock
|
550,000
|
5,500
|
206,500
|
212,000
|
$
|
0.39
|
|||||||||||||
|
Issued
stock to pay bills
|
1,069,945
|
10,699
|
460,077
|
470,776
|
$
|
0.44
|
|||||||||||||
|
Issued
stock for services
|
2,118,444
|
21,184
|
652,714
|
673,898
|
$
|
0.32
|
|||||||||||||
|
Net
loss for the fiscal year
|
|
|
|
(964,108
|
)
|
(964,108
|
)
|
||||||||||||
|
Balance
at September 30, 2004
|
29,531,462
|
$
|
295,314
|
$
|
6,685,716
|
$
|
(7,094,453
|
)
|
$
|
(113,423
|
)
|
||||||||
|
Issuance
of common stock
|
150,000
|
1,500
|
46,500
|
48,000
|
$
|
0.32
|
|||||||||||||
|
Issued
stock for services
|
2,840,000
|
28,400
|
331,600
|
360,000
|
$
|
0.13
|
|||||||||||||
|
Issued
stock to pay debt
|
400,000
|
4,000
|
50,000
|
54,000
|
$
|
0.14
|
|||||||||||||
|
Issuance
of warrants
|
1,817
|
1,817
|
|||||||||||||||||
|
Net
loss for the fiscal year
|
|
|
|
(628,337
|
)
|
(628,337
|
)
|
||||||||||||
|
Balance
at September 30, 2005
|
32,921,462
|
$
|
329,214
|
$
|
7,115,633
|
$
|
(7,722,790
|
)
|
$
|
(277,943
|
)
|
||||||||
|
Issued
stock for services
|
885,000
|
8,850
|
70,800
|
79,650
|
$
|
0.09
|
|||||||||||||
|
Net
loss for the period
|
|
|
|
(837,551
|
)
|
(837,551
|
)
|
||||||||||||
|
Balance
at September 30, 2006
|
33,806,462
|
$
|
338,064
|
$
|
7,186,433
|
$
|
(8,560,341
|
)
|
$
|
(1,035,844
|
)
|
||||||||
|
Issued
stock for services
|
50,000
|
500
|
4,500
|
5,000
|
$
|
0.10
|
|||||||||||||
|
Beneficial
conversion feature
|
648,098
|
648,098
|
|||||||||||||||||
|
Net
loss for the fiscal year
|
|
|
|
(3,176,745
|
)
|
(3,176,745
|
)
|
||||||||||||
|
Balance
at September 30, 2007
|
33,856,462
|
$
|
338,564
|
$
|
7,839,031
|
$
|
(11,737,086
|
)
|
$
|
(3,559,491
|
)
|
||||||||
*-
Prices
adjusted for stock splits.
Please
see the notes to the financial statements.
31
USCorp
(an
Exploration Stage Company)
Notes
to the Consolidated Financial Statements
For
the Years Ended September 30, 2007 and September 30, 2006
1.
Organization
of the Company and Significant Accounting
Principles
USCorp
(the “Company”) is a publicly held corporation formed in May 1989 in the state
of Nevada. In April 2002 the Company acquired US Metals, Inc. (“USMetals”), a
Nevada corporation, by issuing 24,200,000 shares of common stock. US Metals
became a wholly owned subsidiary of the Company.
The
Company owns the mineral rights to 143 Lode Mining Claims in the Eureka Mining
District of Yavapai County, Arizona, called the Twin Peaks Project; and owns
the
mineral rights to 22 Placer and 84 Lode Claims on five properties in the
Mesquite Mining District of Imperial County, California, which the Company
collectively refers to as the Picacho Salton Project.
The
Company has no business operations to date and has defined itself as an
“exploration stage” company.
Exploration
Stage Company-
the
Company has no operations or revenues since its inception and therefore
qualifies for treatment as an Exploration Stage company as per Statement of
Financial Accounting Standards (SFAS) No. 7. As per SFAS No.7, financial
transactions are accounted for as per generally accepted accounted principles.
Costs incurred during the development stage are accumulated in “accumulated
deficit- exploration stage” and are reported in the Stockholders’ Equity section
of the balance sheet.
Consolidation-
the
accompanying consolidated financial statements include the accounts of the
company and its wholly owned subsidiary. All significant inter-company balances
have been eliminated.
Use
of Estimates-
The
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make reasonable
estimates and assumptions that affect the reported amounts of the assets and
liabilities and disclosure of contingent assets and liabilities and the reported
amounts of revenues and expenses at the date of the financial statements and
for
the period they include. Actual results may differ from these
estimates.
Cash
and interest bearing deposits-
For the
purpose of calculating changes in cash flows, cash includes all cash balances
and highly liquid short-term investments with an original maturity of three
months or less.
Long
Lived Assets-
The
Company reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not
be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and its eventual
disposition is less than its carrying amount.
Convertible
Debentures Payable- The
Company applies Emerging Issues Task Force (EITF) No. 98-5, Accounting
for Convertible Debt Issued with Beneficial Conversion
Features.
EITF No.
98-5 requires that a beneficial conversion feature be recognized upon the
issuance of the debt with a favorable conversion feature, and the resultant
debt
discount be amortized to interest expense during the period from the date of
issuance to the date the securities become convertible.
Property
and Equipment-
Property
and equipment are stated at cost. Depreciation expense is computed using the
straight-line method over the estimated useful life of the asset, which is
estimated at three years.
Income
taxes- The
Company accounts for income taxes in accordance with the Statement of Accounting
Standards No. 109 (SFAS No. 109), "Accounting
for Income Taxes".
SFAS
No. 109 requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between financial statement and income tax
bases of assets and liabilities that will result in taxable income or deductible
expenses in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets and liabilities to the amount expected to be realized. Income tax expense
is the tax payable or refundable for the period adjusted for the change during
the period in deferred tax assets and liabilities.
32
Mineral
Properties-
The
Company uses the successful efforts method of accounting for mineral properties.
Costs incurred to acquire mineral interest in properties, to drill and equip
exploratory sites within the claims groups are capitalized. Costs to conduct
exploration and assay work that does not find proved reserves, geological and
geophysical costs and costs of carrying and retaining unproved sites are
expensed. Potential mineral properties are periodically assessed for impairment
of value and a loss will be recognized at the time of impairment.
Revenue
Recognition-
Mineral
sales will result from undivided interests held by the Company in mineral
properties. Sales of minerals will be recognized when delivered to be picked
up
by the purchaser. Mineral sales from marketing activities will result from
sales
by the Company of minerals produced by the Company (or affiliated entities)
and
will be recognized when delivered to purchasers. Mining revenues generated
from
the Company’s day rate contracts, included in mine services revenue, will be
recognized as services are performed or delivered.
Recent
accounting pronouncements:
SFAS
155,
"Accounting
for Certain Hybrid Financial Instruments”—an
amendment of FASB Statements No. 133 and 140" (`SFAS No. 155"). This Statement
shall be effective for all financial instruments acquired, issued, or subject
to
a re-measurement (new basis) event occurring after the beginning of an entity's
first fiscal year that begins after September 15, 2006. The fair value election
provided for in paragraph 4(c) of this Statement may also be applied upon
adoption of this Statement for hybrid financial instruments that had been
bifurcated under paragraph 12 of Statement 133 prior to the adoption of this
Statement. Earlier adoption is permitted as of the beginning of an entity's
fiscal year, provided the entity has not yet issued financial statements,
including financial statements for any interim period, for that fiscal year.
Management does not expect adoption of SFAS No. 155 to have a material impact
on
the Company's consolidated financial statements.
SFAS
157,
"Fair
Value Measurements",
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is
the
relevant measurement attribute. Accordingly, this Statement does not require
any
new fair value measurements. However, for some entities, the application of
this
Statement will change current practice. Management does not expect adoption
of
SFAS No. 157 to have a material impact on the Company's consolidated financial
statements.
In
June
2005, the Emerging Issues Task Force reached a consensus on Issue No. 05-6
("EITF No. 05-6"), "Determining
the Amortization Period for Leasehold Improvements Purchased after Lease
Inception or Acquired in a Business Combination."
EITF
No. 05-6 clarifies that the amortization period for leasehold improvements
acquired in a business combination or placed in service significantly after
and
not contemplated at or near the beginning of the lease term should be amortized
over the shorter of the useful life of the assets or a term that includes the
required lease periods and renewals that are reasonably assured of exercise
at
the time of the acquisition. EITF No. 05-6 is to be applied prospectively to
leasehold improvements purchased or acquired in reporting periods beginning
after June 29, 2005. The adoption of EITF No. 05-6 did not have a material
impact on the Company's consolidated financial statements.
In
June
2006, the FASB issued FASB Interpretation ("FIN") No. 48, "Accounting
for Uncertainty in Income Taxes - an Interpretation of FASB Statement No.
109"
("FIN
No. 48"). FIN No. 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB
Statement No. 109, "Accounting for Income Taxes". Fin No. 48 is effective for
fiscal years beginning after December 15, 2005. Management does not expect
adoption of FIN No. 48 to have a material impact on the Company's consolidated
financial statements.
33
2.
Going Concern
The
accompanying financial statements have been presented in accordance with
generally accepted accounting principals, which assume the continuity of the
Company as a going concern. However, the Company has incurred significant losses
since its inception and has no business operations and continues to rely on
financing and the issuance of shares and warrants to raise capital to fund
its
business operations.
Management’s
plans with regard to this matter are as follows:
*
Obtain
the necessary approvals and permits to complete exploration and begin test
production on our properties as warranted. An application for drilling on Twin
Peaks Project has been submitted to theBureau of Land Management and is being
reviewed by them. Additional applications are being prepared for the Twin Peaks
Project and the Picacho Salton Project and are being reviewed for submission
to
Federal, State and local authorities.
*
USCorp
plans to begin commercial scale operations on one or more of its properties
as
soon as the required permits and approvals have been granted. Due to the nature
of the ore bodies of the Company’s current properties Management believes it
will begin commercial scale operations on our Picacho Salton Project. Then
Management plans to begin commercial scale operations on the Twin Peaks
Project.
*
Continue exploration and ramp up permitting process to meet ongoing and
anticipated demand for gold, silver, uranium, aggregate, decorative rock and
polymetalic ores resulting from our planned commercial scale production
activities.
*
Augment
our mining exploration team with quality and results-oriented people as needed.
Upon adequate funding management intends to hire qualified and experienced
personnel, including additional officers and directors, and mining specialists,
professionals and consulting firms to advise management as needed to handle
mining operations, acquisitions and development of existing and future mineral
resource properties.
*
Put
together a strategic alliance of consultants, engineers, contractors as well
as
joint venture partners when appropriate, and set up an information and
communication network that allows the alliance to function effectively under
USCorp's management.
*
In
calendar 2008 Management will launch an investor awareness and public relations
campaign including coordinated and periodic release of information to the public
via press releases, company newsletter and updates to the company’s web
sites
*
Attend
and exhibit at industry and investment trade shows
*
Acquire
additional properties and/or corporations with properties as subsidiaries to
advance the company's growth plans.
*
Rearrange our finances for better return and insured coverage.
3.
Net Loss per Share
The
Company applies SFAS No. 128, “Earnings
per Share” to
calculate loss per share. In accordance with SFAS No. 128, basic net loss per
share has been computed based on the weighted average of common shares
outstanding during the years, adjusted for the financial instruments outstanding
that are convertible into common stock during the years. The effects of the
preferred and common stock warrants and the debentures convertible into shares
of common stock, however, have been excluded from the calculation of loss per
share because their inclusion would be anti-dilutive. At September 30, 2007,
the
convertible financial instruments outstanding are convertible into 9,910,000
shares of common stock.
34
Loss
per
share has been calculated as follows:
|
30-Sep-07
|
30-Sep-06
|
||||||
|
Net
loss before cumulative preferred dividend
|
$
|
(3,176,745
|
)
|
$
|
(837,551
|
)
|
|
|
Cumulative
dividend preferred
|
(20,978
|
)
|
(13,228
|
)
|
|||
|
Net
loss
|
$
|
(3,197,723
|
)
|
$
|
(850,779
|
)
|
|
|
Weighted
average
|
33,844,237
|
33,811,557
|
|||||
|
Basic
& fully diluted net loss per common share
|
$
|
(0.09
|
)
|
$
|
(0.03
|
)
|
|
4.
Concentrations of Credit
The
Company has deposits at a bank that are approximately $1.4 million in excess
of
insured amounts.
5.
Gold Bullion Promissory Note
In
September 2005, the Company issued a promissory note to a shareholder and
received proceeds of $635,663. The note requires the Company to pay the
shareholder 1,634 ounces of Gold Bullion (.999 pure) in September 2007. In
September 2007, the holder of the promissory note extended the maturity date
until September 27, 2009 at the previous terms. The loss on the underlying
derivative gold contract has been calculated as follows.
|
30-Sep-07
|
30-Sep-06
|
||||||
|
Carrying
value of loan
|
$
|
750,553
|
$
|
693,343
|
|||
|
Fair
value of loan
|
1,205,484
|
979,175
|
|||||
|
Life
to date loss on un-hedged underlying derivative
|
$
|
(454,931
|
)
|
$
|
(285,832
|
)
|
|
6.
Equipment
A
summary
of equipment at September 30, 2007 and September 30, 2006 is as
follows:
|
30-Sep-07
|
30-Sep-06
|
||||||
|
Office
equipment
|
$
|
15,914
|
$
|
14,249
|
|||
|
Accumulated
depreciation
|
(10,483
|
)
|
(6,009
|
)
|
|||
|
Net
equipment
|
$
|
5,431
|
$
|
8,240
|
|||
Depreciation
expense for fiscal years 2007 and 2006 was $4,474 and $3,434,
respectively.
35
7.
Fair values of Financial Instruments
Cash,
accounts payable and accrued expenses, subscriptions payable, Gold Bullion
loan
payable, convertible debentures payable and the advances payable to shareholder
in the balance sheet are estimated to approximate fair market value at September
30, 2007 and September 30, 2006.
8.
Issuances of Common Stock and Preferred Stock
During
fiscal year 2006, the Company issued 885,000 shares of common stock to
consultants for services rendered.
During
fiscal year 2007, the Company issued 50,000 shares of stock to legal consultants
for services rendered.
In
the
fourth quarter of fiscal year 2007, the Company opened an offering of 8,000,000
shares of Class A common stock to the public under Regulation D of the
Securities Exchange Act of 1934, as amended. Each unit consisting of one share
of Class A common stock and a warrant to purchase one half of one share of
Class
A common stock was offered for sale at $.075. The holder of two warrants would
enable the holder to purchase one share of Class A common stock for forty cents
extending for a period of two years. The offering was closed by September 30,
2007 and the Company received net subscription proceeds of $569,323. In October
2007, the Company issued 8,273,332 shares of Class A common stock and warrants
to purchase 4,136,666 shares of Class A common stock to the subscribers.
The
Class
B Common shares are non-voting shares that trade on the Frankfurt stock exchange
under the symbol U9C.F. There are 250,000,000 shares authorized and 5,000,000
issued and outstanding. The par value of these shares is $0.001. These shares
do
not trade in the United States on any market and the Company has no plans to
register these shares for trading on any U.S. market.
9. Preferred
Stock Warrants Outstanding
The
following is a summary of preferred stock warrants outstanding at September
30,
2007:
Preferred
B Warrants Outstanding
|
Wgtd
Avg
|
Wgtd
Years
|
|||||||||
|
Amount
|
Exercise Price
|
To
Maturity
|
||||||||
|
Outstanding
at September 30, 2004
|
0
|
|||||||||
|
Issued
|
155,000
|
|||||||||
|
Outstanding
at September 30, 2005
|
155,000
|
$
|
0.25
|
2.29
|
||||||
|
Issued
|
0
|
|||||||||
|
Outstanding
at September 30, 2006
|
155,000
|
$
|
0.25
|
1.55
|
||||||
|
Issued
|
0
|
|||||||||
|
Outstanding
at September 30, 2007
|
155,000
|
$
|
0.25
|
0.02
|
||||||
36
10.
Convertible Debenture
During
the fiscal year ended September 30, 2007, the Company issued convertible
debentures with a face value of $1,200,000. The debentures are convertible
into
common stock at $0.125 per share. The debentures have an interest rate of 5%
and
mature in December 2009 to September 2010. As a result of the issuance of the
debentures, the Company allocated $648,098 to stockholders’ equity as a result
of the favorable conversion feature of the debentures. The Company is amortizing
the beneficial conversion feature to interest expense over the life of the
debenture.
The
balance of the convertible debt at September 30, 2007 is as
follows:
|
Convertible
debt payable
|
$
|
1,200,000
|
||
|
Unamortized
beneficial conversion feature
|
(560,230
|
)
|
||
|
Net
convertible debt payable
|
$
|
639,770
|
11. Income
Tax Provision
Provision
for income taxes is comprised of the following:
|
30-Sep-07
|
30-Sep-06
|
||||||
|
Net
loss before provision for income taxes
|
$
|
(3,176,745
|
)
|
$
|
(837,551
|
)
|
|
|
Current
tax expense:
|
|||||||
|
Federal
|
$
|
0
|
$
|
0
|
|||
|
State
|
0
|
0
|
|||||
|
Total
|
$
|
0
|
$
|
0
|
|||
|
|
|||||||
|
Less
deferred tax benefit:
|
|||||||
|
Timing
differences
|
(651,774
|
)
|
(442,125
|
)
|
|||
|
Allowance
for recoverability
|
651,774
|
442,125
|
|||||
|
Provision
for income taxes
|
$
|
0
|
$
|
0
|
|||
|
|
|||||||
|
A
reconciliation of provision for income taxes at the statutory rate
to
provision for income taxes at the Company's effective tax rate is
as
follows:
|
|||||||
|
|
|||||||
|
Statutory
U.S. federal rate
|
34
|
%
|
34
|
%
|
|||
|
Statutory
state and local income tax
|
10
|
%
|
10
|
%
|
|||
|
Less
allowance for tax recoverability
|
-44
|
%
|
-44
|
%
|
|||
|
Effective
rate
|
0
|
%
|
0
|
%
|
|||
|
Deferred
income taxes are comprised of the following:
|
|||||||
|
Timing
differences
|
$
|
651,774
|
$
|
442,125
|
|||
|
Allowance
for recoverability
|
(651,774
|
)
|
(442,125
|
)
|
|||
|
Deferred
tax benefit
|
$
|
0
|
$
|
0
|
|||
Note:
The
deferred tax benefits arising from the timing differences begin to expire in
fiscal year
2026
and
2027 and may not be recoverable upon the purchase of the Company under current
IRS statutes.
37
12.
Related Party Transactions
During
fiscal years 2007 and 2006, the chief executive officer and majority shareholder
provided office space to the Company. The Company paid $36,559 and $38,883
in
fiscal years 2007 and 2006, respectively, for the use of the office and storage
space.
During
fiscal year 2007, the chief executive officer and majority shareholder advanced
$196,014 to The Company for use in its operations at no interest. The Company
has imputed interest on the advances at its cost of capital and has recorded
an
interest charge of $9,249 on the advances in the statement of
operations.
During
fiscal years 2007 and 2006, the Company paid $119,830 and 37,874, respectively,
to consultants, some of whom are shareholders, for promotional, marketing,
and
clerical services.
13.
Subsequent Events
In
October 2007, the Company issued 8,273,332 shares of Class A common stock and
warrants to purchase 4,136,666 Class A common stock to the subscribers as
discussed in Note 7.
In
October 2007, 10,000 shares of preferred B stock were converted into 20,000
shares of Class A common stock.
In
addition, in October 2007, all 155,000 of the preferred B stock warrants
expired.
In
October 2007, $300,000 of the convertible debentures was converted into 2.4
million restricted shares of Class A common stock.
In
October 2007, the Company issued 6.8 million shares of common stock to various
consultants for services rendered in the areas of marketing, investor relations,
public relations, technical, professional and corporate advice.
ITEM
8.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
There
are
no changes or disagreements with accountants on accounting and financial
disclosure.
ITEM
8A.
CONTROLS AND PROCEDURES
(a)
Evaluation of disclosure and controls and procedures. Our Chief Executive
Officer and Acting Chief Financial Officer have evaluated the effectiveness
of
the design and operation of our disclosure controls and procedures as of
September 30, 2007. This evaluation was carried out under the supervision and
with the participation of our management, including our principal executive
officer and principal financial officer. Based on this evaluation, these
officers have concluded that the design and operation of our disclosure controls
and procedures are effective.
(b)
Changes in internal controls. There were no significant changes to our internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of their most recent evaluation.
Disclosure
controls and procedures are our controls and other procedures that are designed
to ensure that information required to be disclosed by us in the reports that
we
file or submit under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported, within the time periods specified
in the SEC’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by us in the reports that we file under the Securities
Exchange Act of 1934, as amended, is accumulated and communicated to our
management, including principal executive officer and principal financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.
38
Item
8B.
Other Information
In
October 2004 the shareholders approved a new class of Common Stock, 250,000,000
shares of $.001 par value Series B Common Stock. Effective November 17, 2004,
the Company amended its Articles of Incorporation to create a new series “Class
B” of $.001 par value common stock in the amount of 250,000,000
shares.
PART
III
ITEM
9.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT.
|
Name
|
|
Age
|
|
Position
Held
|
|
Robert
Dultz
|
|
66
|
|
Chief
Executive Officer, acting Chief Financial Officer and
Chairman
|
|
Larry
Dietz
|
|
60
|
|
President,
Secretary, Treasurer and Director
|
|
Carl
W. O’Baugh
|
|
76
|
|
Director
|
|
Judith
Ahrens
|
|
67
|
|
Director
|
Directors
hold office until the next annual shareholders meeting or until their death,
resignation, retirement, removal, disqualification, or until a successor has
been elected and qualified. Vacancies in the Board are filled by majority vote
of the remaining directors. Officers of the Company serve at the will of the
Board of Directors.
BUSINESS
EXPERIENCE OF CURRENT DIRECTORS AND OFFICERS AS OF SEPTEMBER 30,
2006
Robert
Dultz,
USCorp’s Chairman and CEO since January 2002 has a 25-year association with the
Twin Peaks property and as an individual is a former owner of a portion of
the
claims which make up the Twin Peaks property. Former Chairman and President
of a
prior corporate owner of the Twin Peaks claims and since 2000 has been a
majority shareholder of corporate owners of the claims. Mr. Dultz has served
on
the boards of several publicly traded companies. Mr. Dultz spends in excess
of
90% of his time working for USCorp.
Larry
Dietz,
the
Company’s President and Director since January 2002, and Secretary-Treasurer
since June 2006 and has a 20-year association with the Twin peaks property
and
is former President of a prior corporate owner of the Twin Peaks claims. He
served as President of Dietz and Associates, a mining consultancy, since 1982
and He is an expert in Arizona’s geology. Dietz authored the Arizona Mineral
Industry Location System, a database identifying all known mineral occurrences
in the state. He is Registered Expert Witness with the Technical Advisory
Services for Attorneys. Associate member of the Society of Mining Engineers
of
the American Institute of Mining, Metallurgical and Petroleum Engineers. Mr.
Dietz currently works full time for PacifiCare at the Arizona State Retirement
System. He devotes less than 15% of his time to USCorp
Carl
W. O’ Baugh,
an
Independent Director of the Company since January 2002, and has a 20-year
association with the Twin peaks property. Former Vice President of USCorp and
Former President of a prior corporate owner of the Twin Peaks claims. Former
President of Golconda Gems, Inc, a wholesale gem cutting, importing and
distribution company with operations in the United States and Mexico. Extensive
knowledge and experience of gems, minerals and metals. Mr. O’Baugh as been
retired since 2000 and devotes less than 5% of his time to USCorp.
Judith
Ahrens
an
Independent Director of the Company since July 2003. Ms. Ahrens is a former
lobbyist in Washington DC and has worked in public relations for National and
State elected officials. From 2000 to 2006 Ms. Ahrens worked full time for
National Grants Conferences. She is now working full time in Presidential
Campaign work. She devotes less than 10% of her time to USCorp.
(a)
Family relationships.
There
are
no family relationships among the officers or directors.
(b)
Involvement in certain legal proceedings.
There
have been no events under any bankruptcy act, no criminal proceedings and no
judgments or injunctions material to the evaluation of the ability and integrity
of any director or executive officer during the past five years.
39
(c)
Adoption of Code of Ethics.
On
September 22, 2004 USCorp adopted a Code of Ethics for officers and directors
of
the Company, included in this Annual Report as Exhibit 14.
COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s
officers and directors, and persons who own more than ten percent of its common
stock, to file reports of ownership and changes of ownership with the Securities
and Exchange Commission (“SEC”) and each exchange (or market quotation system)
on which the Company’s securities are registered. Officers, directors and
greater than ten-percent stockholders are required by SEC regulation to furnish
the Company with copies of all ownership forms they file.
Based
solely on current management’s review of the copies of such forms received by it
from former management, the Company believes that, during the year ended
September 30, 2007 its officers, directors, and greater than ten-percent
beneficial owners complied with all applicable filing requirements.
ITEM
10.
EXECUTIVE AND DIRECTOR COMPENSATION
During
the fiscal year, USCorp’s officers or directors did not devote their full time
to the affairs of USCorp. As reported in previous Form 10-QSB filings by the
Company they did not receive compensation for their services; however, USCorp’s
officers received shares of the Company’s common stock in consideration of their
agreement to serve.
ITEM
11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding the beneficial
ownership of USCorp’s Class A Common Stock by each person or group that is known
by USCorp to be the beneficial owner of more than five percent of its
outstanding Common Stock, each director of USCorp, each person named in the
Summary Compensation Table, and all directors and executive officers of USCorp
as a group as of December 20, 2006. Unless otherwise indicated, USCorp
believes that the persons named in the table below, based on information
furnished by such owners, have sole voting and investment power with respect
to
the Class A Common Stock beneficially owned by them, where applicable. As
of December 20, 2006, there were 33,806,461 shares of Class A Common
Stock issued and outstanding.
|
Title
of Class
|
Name
and Address of Beneficial Owner
|
Amount
of
Ownership
|
Percentage
of
Ownership
|
|||||||
|
|
|
|
|
|||||||
|
Common
|
Robert
Dultz c/o USCorp,
4535
W. Sahara Ave, Suite 204,
Las
Vegas, NV 89102
|
7,595,525
|
22.47
|
%
|
||||||
|
|
||||||||||
|
Common
|
Dultz
Family Trust, Robert Dultz Trustee
c/o
USCorp,
4535
W. Sahara Ave, Suite 204,
Las
Vegas, NV 89102
|
10,000,000
|
29.58
|
%
|
||||||
|
|
||||||||||
|
Common
|
Larry
Dietz c/o USCorp,
4535
W. Sahara Ave, Suite 204,
Las
Vegas, NV 89102
|
51,000
|
0.15
|
%
|
||||||
|
|
||||||||||
|
Common
|
Carl
O’Baugh c/o USCorp,
4535
W. Sahara Ave, Suite 204,
Las
Vegas, NV 89102
|
50,250
|
0.15
|
%
|
||||||
|
|
||||||||||
|
Common
|
Judith
Ahrens c/o USCorp,
4535
W. Sahara Ave, Suite 204,
Las
Vegas, NV 89102
|
50,000
|
0.15
|
%
|
||||||
|
|
||||||||||
|
Common
|
Officers,
Directors and Affiliates as a group
|
17,746,775
|
52.50
|
%
|
||||||
|
|
||||||||||
|
|
(5
individuals)
|
|||||||||
40
ITEM
12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company is provided office equipment and space by the chief executive officer
and majority shareholder.
PART
IV
ITEM
13.
EXHIBITS
(A)
EXHIBITS
|
14.1
|
|
Code
of Ethics for Chief Executive Officer and Senior Financial
Officers*
|
|
|
|
|
|
23.1
|
|
Consent
of Geological Support Services, LLC
|
|
|
|
|
|
31.1
|
|
Certification
Pursuant to Section 302 of the Sarbanes Oxley Act of
2002
|
|
|
|
|
|
32.1
|
|
Certification
Pursuant to Section 906 of the Sarbanes Oxley Act of
2002
|
*
Previously filed
ITEM
14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
Audit
Committee has adopted a policy regarding the retention of the independent
auditors that requires pre-approval of all services by the Audit Committee
or
the Chairman of the Audit Committee. When services are pre-approved by the
Chairman of the Audit Committee, notice of such approvals is given
simultaneously to the other members of the Audit Committee.
The
Audit
Committee has reviewed and discussed the fees paid to Donahue Associates, LLC
for the reports covering fiscal 2006 and 2007 for audit, audit-related, tax
and
other services.
The
Audit
Committee has reviewed and discussed the audited financial statements with
the
Company’s management; and discussed with Donahue Associates, LLC, independent
auditors for the Company, the matters required to be discussed by Statement
on
Auditing Standards No. 61, Communication with Audit Committees, as
amended.
The
aggregate fees billed for the fiscal years ended September 30, 2006 and
September 30, 2007 for professional services rendered by Donahue Associates,
LLC
for the audit of the Company’s financial statements were $6,300 for fiscal 2006
and $7,500 for audit and quarterly review of interim financial statements filed
on Form 10QSB, respectively, during fiscal 2007.
Audit-Related
Fees
Donahue
Associates, LLC did not bill us for any assurance or related services that
were
related to the performance of the audit of the financial
statements.
Tax
Fees
Donahue
Associates, LLC has provided professional services for tax compliance, tax
advice and tax planning in the amount of $450 during fiscal 2007.
Other
Fees
No
other
fees were paid to Donahue Associates, LLC.
41
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Company has duly caused this amended report to be signed
on its behalf by the undersigned, thereunto duly authorized.
|
|
USCORP.
|
|
|
|
|
|
|
Dated: January
10, 2008
|
By:
|
/s/ Larry
Dietz
|
|
|
Larry
Dietz
|
|
|
|
President,
Secretary-Treasurer and Director
|
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
Annual Report has been signed below by the following persons on behalf of the
Company and in the capacities and on the dates indicated:
|
Signature
|
Title
|
Date
|
||
|
|
|
|
|
|
|
/s/
Robert Dultz
|
|
Chairman
and Chief Executive Officer
|
|
January
10, 2008
|
|
Robert
Dultz
|
|
and
acting Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
/s/
Larry Dietz
|
|
President,
Secretary-Treasurer
|
|
January
10, 2008
|
|
Larry
Dietz
|
|
and
Director
|
|
|
|
|
|
|
|
|
|
/s/
Carl O’Baugh
|
|
Director
|
|
January
10, 2008
|
|
Carl
O’Baugh
|
|
|
|
|
|
|
|
|
|
|
|
/s/
Judith Ahrens
|
|
Director
|
|
January
10, 2008
|
|
Judith
Ahrens
|
|
|
|
|
42