Unassociated Document
As
filed
with the Securities and Exchange Commission on September 7,
2006
(Registration
No. 333-135346)
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
SB-2
(Amendment
No. 2)
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
USCORP.
(Name
of
small business issuer in its charter)
Nevada
|
1040
|
87-0403330
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
4535
W.
Sahara Avenue, Suite 204
Las
Vegas, NV 89102
(702)
933-4034
(Address
and telephone number of principal executive offices)
Robert
Dultz
Chairman
and Chief Executive Officer
USCorp.
4535
W.
Sahara Avenue, Suite 204
Las
Vegas, NV 89102
Tel:
(702) 933-4034
Fax:
(702) 933-4035
(Name,
address and telephone number of agent for service)
Copy
of
all communications to:
Peter
J.
Gennuso, Esq.
Gersten
Savage LLP
600
Lexington Avenue
New
York,
NY 10022
Ph.
(212)
752-9700
Fax:
(212) 980-5192
Approximate
Date of Commencement of Proposed Sale to the Public: As soon as practicable
after the effective date of this Registration Statement.
If
any of
the securities being registered on this Form are to be offered on a delayed
or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended, check the following box: [X]
If
this
form is filed to register additional securities for an offering pursuant to
Rule
462(b) under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If
this
form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If
this
form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If
delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [_]
CALCULATION
OF REGISTRATION FEE
Title
of Each
Class
of
Securities
to
be Registered
|
Amount
to Be
Registered(1)
|
Proposed
Maximum
Offering
Price
Per
Share
(1)(2)
|
Proposed
Maximum
Aggregate
Offering
Price
(2)
|
Amount
of
Registration
Fee
(3)
|
Common
Stock, $0.001 par
value
|
6,700,000
|
$.065
|
$435,500
|
$46.60
|
|
|
|
Previously
Paid
|
$1,119.97*
|
|
|
|
|
|
*
Previously paid on June 21, 2006.
(1)
The shares of our Common Stock being registered hereunder are being registered
for resale by the selling securityholder named in the prospectus. In accordance
with Rule 416(a), the registrant is also registering hereunder an indeterminate
number of shares that may be issued and resold to prevent dilution resulting
from stock splits, stock dividends or similar transactions. For purposes
of estimating the number of shares of our Common Stock to be included in this
registration statement, we calculated a good faith estimate of the number of
shares that we believe may be issuable pursuant to the equity line financing
to
account for market fluctuations. Should we have insufficient shares, we will
not
rely upon Rule 416, but will file a new registration statement to cover the
resale of such additional shares should that become necessary.
(2)
Estimated solely for the purpose of computing the amount of the registration
fee
pursuant to Rule 457(c) under the Securities Act of 1933, based on the closing
price of $.065 on the OTC Bulletin Board on September 5,
2006.
(3)
In
accordance with Rule 457(g), the registration fee for these shares is calculated
based upon a price which represents the highest of: (i) the price at which
the
warrants or options may be exercised; (ii) the offering price of securities
of
the same class included in this registration statement; or (iii) the price
of
securities of the same class, as determined pursuant to Rule
457(c).
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
The
information in this prospectus is not complete and may be changed. The selling
securityholder may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer
to
buy these securities in any state where the offer or sale is not
permitted.
Subject
to Completion, Dated September 7, 2006
PRELIMINARY
PROSPECTUS
6,700,000 SHARES
USCORP.
CLASS
A
COMMON STOCK
This
prospectus relates to the resale of up to 6,700,000 shares of our Class A Common
Stock, par value $0.01 per share (“Common Stock”) issuable to Dutchess Private
Equities Fund, LP (“Dutchess” or the “Selling Securityholder”). The Selling
Securityholder may sell its common stock from time to time at prevailing market
prices.
Our
Common Stock is registered under Section 12(g) of the Securities Exchange
Act of
1934, as amended, and is quoted on the over-the-counter market and prices
are
reported on the OTC Bulletin Board under the symbol “USCS.” On September 5,
2006, the closing price as reported was $.065.
The
Selling Securityholder, and any participating broker-dealers are “underwriters”
within the meaning of the Securities Act of 1933, as amended, and any
commissions or discounts given to any such broker-dealer may be regarded as
underwriting commissions or discounts under the Securities Act of 1933. The
Selling Securityholder has informed us that it does not have any agreement
or
understanding, directly or indirectly, with any person to distribute their
common stock. We agree to pay the expenses of registering the foregoing
shares of our Common Stock.
INVESTMENT
IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVES A HIGH DEGREE OF RISK.
YOU MAY LOSE YOUR ENTIRE INVESTMENT. CONSIDER CAREFULLY THE “RISK FACTORS”
BEGINNING ON PAGE 6 OF THIS PROSPECTUS BEFORE INVESTING.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION
HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
date
of this prospectus is September __ , 2006
You
should rely only on the information contained in or incorporated by reference
in
this prospectus. We have not, and the Selling Securityholder has not, authorized
anyone, including any salesperson or broker, to give oral or written information
about this offering, USCorp., or the shares of common stock offered hereby
that
is different from the information included in this prospectus. If anyone
provides you with different information, you should not rely on it. We are
not,
and the Selling Securityholder is not, making an offer to sell these securities
in any jurisdiction where the offer or sale is not permitted. You should assume
that the information contained in this prospectus is accurate only as of the
date on the front cover of this prospectus. Our business, financial condition,
results of operations and prospects may have changed since that
date.
This
prospectus is not an offer to sell any securities other than the shares of
common stock offered hereby. This prospectus is not an offer to sell securities
in any circumstances in which such an offer is unlawful.
TABLE
OF
CONTENTS
Prospectus
Summary
|
1
|
The
Company
|
1
|
The
Offering
|
3
|
Transaction
Summary
|
4
|
Summary
Financial Information
|
5
|
Risk
Factors
|
6
|
Special
Note Regarding Forward-Looking Statements
|
15
|
Use
of Proceeds
|
16
|
Market
for Our Shares
|
16
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
17
|
Business
|
22
|
Description
of Property
|
24
|
|
34
|
Legal
Proceedings
|
35
|
Executive
Compensation
|
36
|
Security
Ownership of Certain Beneficial Owners and Management
|
37
|
Certain
Relationships and Related Transactions
|
38
|
Description
of Securities
|
39
|
Transfer
Agent |
39 |
Shares
Eligible for Resale
|
40
|
Selling
Securityholder
|
41
|
Transaction
With Dutchess Private Equities Fund, LP
|
42 |
Plan
of Distribution
|
43
|
Legal
Matters
|
45
|
Experts
|
45
|
Where
You Can find Additional Information
|
45
|
Index
to Financial Statements
|
F-1
|
You
should rely only on the information contained or incorporated by reference
in
this prospectus. We have not authorized anyone to provide you with different
information. We are not making an offer of these securities in any jurisdiction
where the offer is not permitted. The information in this prospectus is
accurate only as of the date of this prospectus regardless of the time of
delivery of this prospectus or of any sale of our
securities.
PROSPECTUS
SUMMARY
Although
it contains all material information, this summary is not complete and may
not
contain all of the information that you should consider before investing in
our
Common Stock. You should read the entire prospectus carefully, including the
more detailed information regarding our company, the risks of purchasing our
common stock discussed under “risk factors,” and our financial statements and
the accompanying notes. In this prospectus, “we”, “us,” “Company” and “our”,
refer to USCorp., and its wholly-owned subsidiaries ,US Metals, Inc. and
Southwest Resource Development, Inc., unless the context otherwise requires.
Unless otherwise indicated, the term “year,” “fiscal year” or “fiscal” refers to
our fiscal year ending September 30th.
Unless we tell you otherwise, the term “common stock” as used in this
prospectus refers to our Common Stock.
THE
COMPANY
BACKGROUND
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 US Corp.
In
April
2002, the Company acquired US Metals, Inc. (“USMetals”), a Nevada corporation,
by issuing 24,200,000 shares of Company Common Stock. US Metals became a wholly
owned subsidiary of the Company.
OVERVIEW
USCorp.
is an "exploration stage" company. The Company's operations center on completing
exploration of USMetals' mining property known as the Twin Peaks Mine, and
Southwest's mining property known as the Chocolate Mountain Region claims.
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. and Southwest Resource Development,
Inc.
The
Company, through its wholly-owned subsidiary, USMetals, owns 141 Lode Mining
Claims in the Eureka Mining District of Yavapai County, Arizona, called the
Twin
Peaks Mine; and through its wholly-owned subsidiary, Southwest Resource
Development, Inc., owns 8 Lode and 21 Placer Claims in the Mesquite Mining
District of Imperial County, California, which the Company refers to as the
Chocolate Mountain Region Claims.
RECENT
EVENTS
On
May
16, 2006, the Company announced that it was informed by the Deutche Borse that
its Class B non-voting Common Shares ("Class B Shares") issued by the Company
have been included in that Exchange trading within the Open Market
(Freiverkehr). The shares of Class B Common Shares were issued by the Company
pursuant to a Regulation S offering. The Exchange trading (Quotation) of the
Class B Common Shares started on May 11, 2006, under the Symbol "U9C" and the
WKN# is A0JEQQ. The Class B Common Shares were issued to a private European
fund
in exchange for up to $17,000,000. It is anticipated that the capitalization
will allow the Company to advance its exploration program so that it can focus
on extracting the mineral resources from its properties that management believes
may result in profitable revenue streams to USCorp. The Class B non-voting
Common Shares will trade outside of the United States and the Company has no
current plans to register these shares for trading in the United States. The
European fund has listed these shares on the Open Market (Freiverkehr) of
Frankfurt Exchange in Germany through a trading member.
On
May 5,
2006, the Company announced the results of exploratory drilling at its Kingman
Area Tailings Property located near Kingman, Arizona. The purpose of the
exploratory drilling and testing was to confirm the presence of economically
viable mineral resources in the tailings. Prior owners and certain documents
provided by prior owners estimated these resources to contain 400,000 tons
of
tailings with valuable mineralization. The drilling was targeted specifically
at
each of the three terraced levels of the tailings. The drilling was done by
Boart Longyear Co.'s Peoria, Ariz., office with a representative of USCorp
present. The drilling was conducted during March 2006 under the supervision
of
Dr. Robert Cameron of Geological Support Services, our consulting geologist
on
this property. Preparation of drill samples were completed by our consulting
geologist, the drillers and observed by a USCorp representative on site. The
samples were sent to two independent laboratories for complete chemical
analysis, atomic absorption and fire assays. The laboratories used were SGS
Minerals Services, Ontario, Canada, and the 125-year-old Jacobs Assay Office
in
Tucson, Arizona. Additional samples were taken by our consulting geologist
from
crevices and holes dug from the top and into the side of the tailings using
a
procedure called "cone and quartering." Based on the GPS measurement of the
tailings by our consulting geologist and the known depth of the tailings
obtained by drilling, the revised estimate of the tonnage is approximately
744,215.5 tons. Based on the exploration and test results, however, it was
determined that it is not economically viable to pursue exploration or
development of this property any longer. In a report to the Company, USCorp's
consulting geologist stated in part: "...Samples were subjected to fire assay
for gold and silver with both Atomic Absorption and Gravimetric Finish.
Additionally, an economic spectrum was performed upon every fifth sample to
establish levels of other economic metals. The results of these tests were
underwhelming..." From a practical standpoint, assuming .006 ounce per ton
gold
and .35 ounce per ton silver, we have ore worth $10.60 per ton. Further, even
if
gold were to reach $2,500 per ounce and silver $60, we still have a product
worth only $36 per ton. Based on currently working operations, were a plant
set
up and operating on site today, wages, water, chemicals and power would still
cost more than $45 per ton. Accordingly, based on the numbers this does not
appear to be an economic proposition. Due to certain conditions not being met,
title to the claims reverted back to prior the claim holder.
Our
headquarters are located at 4535 W. Sahara Avenue, Suite 204, Las Vegas, NV
89102 and our telephone number at that address is (702) 933-4034. Our web site
is www.uscorpnv.com.
The
information on our website is not part of this prospectus.
SHARES
OUTSTANDING
|
|
|
|
PRIOR
TO OFFERING
|
|
|
|
Class
A Common Stock, $0.01 par value
|
33,806,461
|
|
|
Class
B Common Stock, $0.001 par value
|
5,000,000
|
|
|
Class
A Common Stock Offered by Selling Securityholder
|
6,700,000
|
|
|
Use
of Proceeds
|
We
will not receive any proceeds from the sale by the Selling Stockholder
of
shares in this offering, except upon drawdowns made pursuant to
the equity
line. See “Use
of Proceeds.”
|
|
|
Risk
Factors
|
An
investment in our common stock involves a high degree of risk and
could
result in a loss of your entire investment.
|
|
|
OTC
Symbol
|
USCS.OB
|
|
|
Executive
Offices
|
Our
executive offices are located at 4535 W. Sahara Avenue, Suite 204,
Las
Vegas, NV 89102. Our telephone number is (702) 933-4034 and our
website is www.uscorpnv.com
.
The information on our website is not part of this
prospectus.
|
TRANSACTION
SUMMARY
TRANSACTION
WITH DUTCHESS PRIVATE EQUITIES FUND, LP
On
May
12, 2006, we entered into an Investment Agreement (the “Agreement”) with
Dutchess Private Equities Fund, LP (“Dutchess”) to provide us with an equity
line of credit. Pursuant to this Agreement, Dutchess shall commit to purchase
up
to $10,000,000 of the Company’s Stock over the course of thirty six (36) months
(“Line Period”), after a registration statement has been declared effective
(“Effective Date”). The amount that the Company shall be entitled to request
from each of the purchase “Puts”, shall be equal to, at the election of the
Company, either 1) $250,000 or 2) 200% of the averaged daily volume (U.S market
only) (“ADV”), multiplied by the average of the three (3) daily closing prices
immediately preceding the Put Date. The ADV shall be computed using the
ten (10) trading days prior to the Put Date. The Purchase Price for the common
stock identified in the Put Notice shall be set at ninety-five percent (95%)
of
the lowest closing bid price of the common stock during the Pricing Period.
The
Pricing Period is equal to the period beginning on the Put Notice Date and
ending on and including the date that is five (5) trading days after such Put
Notice Date. There are put restrictions applied on days between the Put Date
and
the Closing Date with respect to that Put. During this time, the Company
shall not be entitled to deliver another Put Notice.
The
terms under which funds will be given to us include
(i) this Registration Statement being declared effective and remaining
effective for the resale of the shares of common stock; (ii) the common stock
shall at all times between a Put Notice Date and a Closing Date be listed
or
quoted on the principal market; (iii) we have complied with all of our
obligations under the Agreement and the registration Rights Agreement; (iv)
there are no injunctions issued against us; and (v) the issuance of our common
stock does not violate any shareholder approval requirements.
The
Company shall automatically withdraw that portion of the put notice amount,
if
the Market Price with respect to that Put does not meet the Minimum Acceptable
Price. The Minimum Acceptable Price is defined as seventy-five percent
(75%) of the closing bid price of the common stock for the ten (10) trading
days
prior to the Put Date.
In
addition, the Company is obligated to issue and deliver its shares of common
stock within seven (7) trading days following a Put Notice Date. In the event
that the Company does not issue and deliver any such shares, the Company
is
obligated to make late payments to Dutchess in an amount equal to $100 for
each
day late up to ten (10) days and then $1,000 plus $200 for each
business day late beyond ten (10) days. For example, if for some
reason we issue and deliver the shares of common stock to
Dutchess twenty (20) trading days after the Put Notice Date, we
will be required to pay to Dutchess $1,600 as a late
payment. Moreover, if by the third (3rd) business day after the
Closing Date, the Company fails to deliver any portion of the shares of the
Put
to Dutchess (the "Put Shares Due") and Dutchess purchases, in an open market
transaction or otherwise, shares of common stock necessary to make delivery
of
shares which would have been delivered if the full amount of the shares to
be
delivered to Dutchess by the Company (the "Open Market Share Purchase"),
then
the Company shall pay to Dutchess, in addition to any other amounts due to
Dutchess pursuant to the Put, and not in lieu thereof, the Open Market
Adjustment Amount, which is an amount equal to the excess, if any, of (x)
Dutchess's total purchase price (including brokerage commissions, if any)
for
the Open Market Share Purchase minus (y) the net proceeds (after brokerage
commissions, if any) received by Dutchess from the sale of the Put Shares
Due.
In
connection with the Agreement, we entered into a Registration Rights Agreement
with Dutchess (“Registration Agreement”). Pursuant to the Registration
Agreement, we are obligated to file a registration statement with the Securities
and Exchange Commission covering the shares of common stock underlying the
Investment Agreement within thirty (30) days after the closing date. In
addition, we are obligated to use all commercially reasonable efforts to
have
the registration statement declared effective by the SEC within one hundred
and
twenty (120) days after the filing of this registration statement. In the
event
that the Company is deemed to be in default under its registration obligations
as provided in the Registration Agreement, the Company shall be obligated
to pay
liquidated damages, that is not deemed to constitute a penalty, in an amount
not
to exceed the maximum amount permitted under any applicable
law.
At
this
time, we are only registering 6,700,000 shares of common stock underlying
the
Dutchess equity line and may in the future. File additional registration
statements to cover additional shares of common stock underlying the equity
line.
SUMMARY
FINANCIAL INFORMATION
The
following tables set forth the summary financial information for our company.
You should read this information together with the financial statements and
the
notes thereto appearing elsewhere in this prospectus and the information under
“Management's Discussion and Analysis of Financial Condition and Results of
Operations.”
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS DATA
|
|
For
the nine
Months
Ended
June
30, 2006
(Unaudited)
|
|
For
the nine
Months
Ended
June
30, 2005
(Unaudited)
|
|
For
the Year
Ended
September
30,
2005
(Audited)
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
operating expenses
|
|
|
398,886
|
|
|
419,071
|
|
|
592,469
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss from operations
|
|
|
(398,886
|
)
|
|
(419,071
|
)
|
|
(592,469
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense), net
|
|
|
(202,972
|
)
|
|
(2,660
|
)
|
|
(23,249
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(601,858
|
)
|
$
|
(445,731
|
)
|
$
|
(628,337
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share - basic and diluted
|
|
$
|
(0.02
|
)
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
33,813,281
|
|
|
30,577,709
|
|
|
31,082,723
|
|
Condensed
Consolidated Balance Sheet Data
|
|
As
of June 30,
2006
(Unaudited)
|
|
As
of June 30,
2005
(Unaudited)
|
|
As
of
September
30,
2005
(Audited)
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
$
|
170,109
|
|
$
|
25,540
|
|
$
|
627,372
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
173,493
|
|
$
|
30,099
|
|
$
|
631,378
|
|
|
|
|
|
|
|
|
|
|
|
|
Working
capital (definciency)
|
|
$
|
113,424
|
|
$
|
17,964
|
|
$
|
575,251
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
$
|
56,685
|
|
$
|
7,576
|
|
$
|
52,121
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity (deficit)
|
|
$
|
(800,151
|
)
|
$
|
(62,672
|
)
|
$
|
(277,943
|
)
|
RISK
FACTORS
You
should carefully consider the risks described below before buying shares of
our
Common Stock in this offering. The risks and uncertainties described below
are
not the only risks we face. Additional risks and uncertainties not currently
known to us or that we currently deem immaterial may impair our business
operations. If any of the adverse events described in this risk factors section
actually occur, our business, results of operations and financial condition
could be materially adversely affected, the trading price of our common stock
could decline and you might lose all or part of your investment. We have had
operating losses to date and cannot assure that we will be profitable in the
foreseeable future. We make various statements in this section which
constitute “forward-looking” statements under Section 27A of the Securities
Act.
RISKS
RELATED TO OUR BUSINESS
WE
INCURRED HISTORICAL LOSSES AND HAVE A WORKING CAPITAL DEFICIT. AS A RESULT,
WE
MAY NOT BE ABLE TO GENERATE PROFITS, SUPPORT OUR OPERATIONS, OR ESTABLISH A
RETURN ON INVESTED CAPITAL.
We
incurred net losses in fiscal 2005 of $628,337. We also incurred losses in
the nine months of fiscal 2006 of $601,858. As of September 30, 2005, we
had a working capital deficit of $734,690. As of June 30, 2006, we had a
net
loss per share of $(0.02). In addition, we expect to increase our infrastructure
and operating expenses to fund our anticipated growth. We cannot assure you
that
any of our business strategies will be successful or that revenues or
profitability will ever be achieved or, if they are achieved, that they can
be
consistently sustained or increased on a quarterly or annual
basis.
WE
EXPECT OUR OPERATING LOSSES TO CONTINUE
The
Company expects to incur increased operating expenses during the next year.
The
amount of net losses and the time required for the Company to reach and sustain
profitability are uncertain. The likelihood of the Company's success must be
considered in light of the problems, expenses, difficulties, and delays
frequently encountered in connection with the exploration and mining of gold.
There can be no assurance that the Company will ever generate revenue or achieve
profitability at all or on any substantial basis.
WE
HAVE A MINIMAL OPERATING HISTORY, WHICH RAISES SUBSTANTIAL DOUBT AS TO OUR
ABILITY TO SUCCESSFULLY DEVELOP PROFITABLE BUSINESS
OPERATIONS.
We
have a
limited operating history and our business and prospects must be considered
in
light
of
the risks and uncertainties to which companies in the gold mining industry
are
exposed. We cannot provide assurances that our business strategy will be
successful or that we will successfully address those risks and the risks
described herein. Most importantly, if we are unable to secure future capital,
we will be unable to continue our operations. We may incur losses on a quarterly
or annual basis for a number of reasons, some within and others outside our
control. The growth of our business will require the commitment of substantial
capital resources. If funds are not available from operations, we will need
additional funds. We may seek such additional funding through public and private
financing, including debt or equity financing. Adequate funds for these
purposes, whether through financial markets or from other sources, may not
be
available when we need them. Even if funds are available, the terms under which
the funds are available to us may not be acceptable to us. Insufficient funds
may require us to delay, reduce or eliminate some or all of our planned
activities. To successfully execute our current strategy, we will need to
improve our working capital position. The report of our independent auditors
accompanying our financial statements includes an explanatory paragraph
indicating there is a substantial doubt about the Company's ability to continue
as a going concern due to recurring losses. We plan to overcome the
circumstances that impact our ability to remain a going concern through a
combination of equity and debt financings. However, no assurances can be given
that we will be able to do so.
We
have a
limited amount of available cash and will likely require additional capital
to
successfully implement our business plan. The Dutchess equity line
described herein would add additional working capital to the extent of the
Put
Amounts which will sustain our operations for an extended period of time;
however, certain draw down restrictions pertaining to the Puts apply which
could
shorten this period of time. There can be no assurance that we will be able
to
obtain additional funding when needed, or that such funding, if available,
will
be obtainable on terms acceptable to us. In the event that our operations do
not
generate sufficient cash flow, or we cannot obtain additional funds if and
when
needed, we may be forced to curtail or cease our activities, which would likely
result in the loss to investors of all or a substantial portion of their
investment.
WE
MAY FAIL TO CONTINUE AS A GOING CONCERN, IN WHICH EVENT YOU MAY LOSE YOUR ENTIRE
INVESTMENT IN OUR SHARES.
Our
audited financial statements have been prepared on the assumption that we will
continue as a going concern. Our independent auditor has indicated that in
its
report on our 2005 financial statements that our recurring losses from
operations and our difficulties in generating sufficient cash flow to meet
our
obligations and sustain our operations raise substantial doubt about our ability
to continue as a going concern. If we fail to continue in business, you will
lose your investment in the shares you acquire in this offering.
WE
RELY HEAVILY ON OUR MANAGEMENT, THE LOSS OF WHICH COULD HAVE A MATERIAL ADVERSE
EFFECT ON OUR BUSINESS, OPERATING RESULTS AND FINANCIAL
CONDITION.
Our
future success is dependent on having capable seasoned executives with the
necessary business knowledge and relationships to execute our business plan.
Accordingly, the services of our management and our board of directors, in
particular Mr. Robert Dultz, are deemed essential to establishing and
maintaining the continuity of our operations. If we were to lose their services,
our business could be materially adversely affected. Our performance will also
depend on our ability to find, hire, train, motivate and retain other executive
officers and key employees.
We
must
continually implement and improve our services, operations, operating procedures
and quality controls on a timely basis, as well as expand, train, motivate
and
manage our work force in order to accommodate anticipated growth and compete
effectively in our market segment. Successful implementation of our strategy
also requires that we establish and manage a competent, dedicated work force
and
employ additional key employees. There can be no assurance that our personnel,
systems, procedures and controls will be adequate to support our existing and
future operations. Any failure to implement and improve such operations could
have a material, adverse effect on our business, operating results and financial
condition.
Our
future results of operations involve a number of risks and uncertainties. With
any business undertaking and their inherent unforeseeable risk in conducting
business, the following paragraphs discuss a number of risks that could impact
the company's financial condition and results of operations.
WE
ARE IN EARLY STAGE OF DEVELOPMENT AND MAY HAVE TO COMPETE WITH COMPANIES WITH
GREATER RESOURCES.
We
have
little operating history that permits you to evaluate our business and our
prospects based on prior performance. You must consider your investment in
light
of the risks, uncertainties, expenses and difficulties that are usually
encountered by companies in their early stages of development. The Company
will
have to compete with larger companies who have greater funds available for
expansion, exploration and development. There can be no assurance that the
Company become competitive, or if we become competitive, will remain
competitive, should this occur and increased competition could materially
adversely affect our operation and financial condition.
OUR
FUTURE PERFORMANCE IS DEPENDENT ON OUR ABILITY TO RETAIN KEY
PERSONNEL
We
do not
currently maintain key-man insurance on these executives. Our future success
is
also dependent on our ability to identify, hire, train and retain other
qualified managerial and other employees. Competition for these individuals
is
intense and increasing. The loss of any of their services would be
detrimental to us and could have an adverse effect on our business
development
INCREASED
COSTS COULD AFFECT PROFITABILITY.
Cash
costs at any particular mining location frequently are subject to great
variation from one year to the next due to a number of factors, such as changing
ore grade, metallurgy and revisions to mine plans in response to the physical
shape and location of the ore body. In addition, cash costs are affected by
the
price of commodities, such as fuel and electricity. Such commodities are at
times subject to volatile price movements, including increases that could make
production at certain operations less profitable. A material increase in costs
at any one location may have a significant effect on our
profitability.
MANAGEMENT
CANNOT BE CERTAIN THAT OUR ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES
WILL BE COMMERCIALLY SUCCESSFUL.
Substantial
expenditures are required to acquire existing gold properties, to establish
ore
reserves through drilling and analysis, to develop metallurgical processes
to
extract metal from the ore and, in the case of new properties, to develop the
mining and processing facilities and infrastructure at any site chosen for
mining. There can be no assurance that any gold reserves or mineralized material
acquired or discovered will be in sufficient quantities to justify commercial
operations or that the funds required for development can be obtained on a
timely basis.
A
SUBSTANTIAL OR EXTENDED DECLINE IN GOLD PRICES MAY HAVE A MATERIAL ADVERSE
EFFECT ON OUR OPERATIONS.
Our
business is heavily dependent on the price of gold, which may be affected by
numerous factors beyond our control. Factors tending to put downward pressure
on
the price of gold include:
|
o |
sales
or leasing of gold by governments and central
banks;
|
|
o |
global
and regional recession or reduced economic
activity;
|
|
o |
decreased
demand for gold for industrial uses, use in jewelry and investment;
|
|
o |
high
supply of gold from production, disinvestment, scrap and hedging;
|
|
o |
sales
by gold producers in forward transactions and other hedging transactions;
and
|
|
o |
devaluing
of the South African Rand (relative to gold priced in U.S. dollars)
leading to lower production costs and higher production in certain
major gold-producing regions.
|
Any
drop
in the price of gold will adversely impact our revenues, profits and cash flows.
We have not recorded any asset write-downs in recent years as a result of
sustained periods of low gold prices; however, no assurance can be given that
we
will not experience any asset impairment as a result of low gold prices in
the
future.
In
addition, sustained low gold prices may:
|
o |
reduce
revenues further through production cutbacks due to cessation of
the mining of deposits or portions of deposits that have become
uneconomic
at the then-prevailing gold price;
|
|
o |
halt
or delay the development of new
projects;
|
|
o |
reduce
funds available for exploration, with the result that depleted
reserves are not replaced; and
|
|
o |
reduce
existing reserves, by removing ores from reserves that cannot be
economically mined or treated at prevailing
prices.
|
OCCURRENCE
OF EVENTS FOR WHICH WE ARE NOT INSURED MAY AFFECT OUR CASH FLOW AND OVERALL
PROFITABILITY.
We
maintain insurance to protect ourselves against certain risks related to our
operations. We maintain insurance in amounts that we believe to be reasonable
depending upon the circumstances surrounding each identified risk. However,
we
may elect not to have insurance for certain risks because of the high premiums
associated with insuring those risks or for various other reasons; in other
cases, insurance may not be available for certain risks. Some concern
always
exists with respect to investments in parts of the world where civil unrest,
war, nationalist movements, political violence or economic crisis are possible.
These countries may also pose heightened risks of expropriation of assets,
business interruption, increased taxation and a unilateral modification of
concessions and contracts. We do not maintain insurance against political risk.
Occurrence of events for which we are not insured may affect our cash flow
and
overall profitability.
GOLD
PRODUCERS MUST CONTINUALLY OBTAIN ADDITIONAL RESERVES.
Gold
producers must continually replace gold reserves depleted by production.
Depleted reserves must be replaced by expanding known ore bodies or by locating
new deposits in order for gold producers to maintain production levels over
the
long term. Gold exploration is highly speculative in nature, involves many
risks
and frequently is unproductive. No assurance can be given that any of our new
or
ongoing exploration programs will result in new mineral producing operations.
Once mineralization is discovered, it may take many years from
the
initial phases of drilling until production is possible, during which time
the
economic feasibility of production may change.
ESTIMATES
OF PROVEN AND PROBABLE RESERVES ARE UNCERTAIN.
Estimates
of proven and probable reserves are subject to considerable uncertainty. Such
estimates are, to a large extent, based on interpretations of geologic data
obtained from drill holes and other sampling techniques. Gold producers use
feasibility studies to derive estimates of cash operating costs based upon
anticipated tonnage and grades of ore to be mined and processed, the predicted
configuration of the ore body, expected recovery rates of metals from the ore,
comparable facility, equipment, and operating costs, and other factors. Actual
cash operating costs and economic returns on projects may differ significantly
from original estimates. Further, it may take many years from the initial phase
of drilling before production is possible and, during that time, the economic
feasibility of exploiting a discovery may change.
WE
MAY BE UNABLE TO ADEQUATELY PROTECT OUR MINES FROM CRIMINAL ACTIVITY WHICH
MAY
HINDER OUR OPERATIONS.
Although
we intend to employ security personnel to guard our mines and facilities, our
security measures may be insufficient to prevent widespread theft or vandalism.
In addition, our employees may face intimidation by local gangs and may be
unwilling to continue to work under such conditions. As a result, we may be
unable to continue exploration, development and productions.
OLD
MINING COMPANIES ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL LAWS AND
REGULATIONS.
Our
exploration, mining and processing operations will be regulated in all areas
in
which we operate under various federal, state, provincial and local laws
relating to the protection of the environment, which generally include air
and
water quality, hazardous waste management and reclamation. Delays in obtaining
or failure to obtain government permits and approvals may adversely impact
our
operations. The regulatory environment in which we operate may change in ways
that would substantially increase costs to achieve compliance. In addition,
significant changes in regulation could have a material adverse effect on our
operations or financial position.
OUR
SUCCESS MAY DEPEND ON OUR SOCIAL AND ENVIRONMENTAL
PERFORMANCE.
Our
ability to operate successfully in communities will likely depend on our ability
to develop, operate and close mines in a manner that is consistent with the
health and safety of our employees, the protection of the environment, and
the
creation of long-term economic and social opportunities in the communities
in
which we operate. We have implemented a management system designed to promote
continuous improvement in health and safety, environmental performance and
community relations. However, our ability to operate may be adversely impacted
by accidents or events detrimental (or perceived to be detrimental) to the
health and safety of our employees or the communities in which we
operate.
MINING
ACCIDENTS OR OTHER MATERIAL ADVERSE EVENTS AT OUR MINING LOCATIONS MAY REDUCE
OUR PRODUCTION LEVELS.
At
any
one of our various mines, production may fall below historic or estimated levels
as a result of mining accidents, such as, a pit wall failure in an open pit
mine, cave-ins or flooding at underground mines. In addition, production may
be
unexpectedly reduced at a location if, during the course of mining, unfavorable
ground conditions or seismic activity are encountered; ore grades are lower
than
expected; the physical or metallurgical characteristics of the ore are less
amenable to mining or treatment than expected; or our equipment, processes
or
facilities fail to operate properly or as expected.
MINING
EXPLORATION, DEVELOPMENT AND OPERATING ACTIVITIES ARE INHERENTLY
HAZARDOUS.
Mineral
exploration involves many risks that even a combination of experience, knowledge
and careful evaluation may not be able to overcome. Operations in which we
have
direct or indirect interests will be subject to all the hazards and risks
normally incidental to exploration, development and production of gold, any
of
which could result in work stoppages, damage to property and possible
environmental damage. The nature of these risks is such that liabilities might
exceed any liability insurance policy limits. It is also possible that the
liabilities and hazards might not be insurable, in which event, we may incur
significant costs that could have a material adverse effect on our financial
condition.
WE
FACE INTENSE COMPETITION IN THE MINING INDUSTRY.
The
mining industry is intensely competitive in all of its phases. As a result
of
this competition, some of which is with large established mining companies
with
substantial capabilities and with greater financial and technical resources
than
us, we may be unable to acquire additional attractive mining claims or financing
on terms management considers acceptable. We compete with other mining companies
in the recruitment and retention of qualified managerial employees and other
employees with technical skills and experience in the mining industry. If we
are
unable to successfully compete for qualified employees, our exploration
and development programs may be slowed down or suspended. We compete with other
gold companies for capital. If we are unable to raise sufficient capital, our
exploration and development programs may be jeopardized or we may not be able
to
acquire, develop or operate gold projects. There can be no assurance that we
will continue to attract and retain skilled and experienced employees, or to
acquire additional rights to mine properties.
RISKS
RELATED TO HOLDING OUR SECURITIES
EXISTING
STOCKHOLDERS MAY EXPERIENCE SIGNIFICANT DILUTION FROM THE SALE OF OUR COMMON
STOCK PURSUANT TO THE INVESTMENT AGREEMENT.
The
sale
of our common stock to Dutchess Private Equities Fund, LP in
accordance with the Investment Agreement may have a
dilutive impact on our shareholders. As a result, our net
income per share could decrease in future periods and the market
price of our common stock could decline. In addition, the lower our stock
price
is at the time we exercise our put option, the more shares of our common
stock
we will have to issue to Dutchess Private Equities Fund, LP in order
to drawdown on the Equity Line. If our stock price decreases, then our existing
shareholders would experience greater dilution. At a
stock price of $.065 or less, we would have to issue in the aggregate
approximately 161,812,298 shares of our common stock in one
or more registration statements in order to drawdown on the full Equity
Line.
The
perceived risk of dilution may cause our stockholders to sell their shares,
which would contribute to a decline in the price of our common stock. Moreover,
the perceived risk of dilution and the resulting downward pressure on our stock
price could encourage investors to engage in short sales of our common stock.
By
increasing the number of shares offered for sale, material amounts of short
selling could further contribute to progressive price declines in our common
stock.
DUTCHESS
PRIVATE EQUITIES FUND LP WILL PAY LESS THAN THE THEN-PREVAILING MARKET PRICE
OF
OUR COMMON STOCK WHICH COULD CAUSE THE PRICE OF OUR COMMON STOCK TO
DECLINE.
Our
common stock to be issued under the Investment
Agreement will be purchased at a five percent (5%)
discount to the lowest closing bid price during
the five trading days immediately following our notice to Dutchess Private
Equities Fund, LP of our election to exercise our "put" right. Since
the
amount of shares we issue is based upon a discount to the then prevailing
market
price, the lower our stock price is at the time we exercise our put option,
the
more shares of our common stock we will have to issue to them. To the extent
that Dutchess Private Equities Fund as selling securityholder receives and
then
sells its common stock, the price of our common stock may decrease due to
additional shares in the market. This could allow Dutchess Private Equities
Fund
to receive even greater amounts of our common stock, the sales of which could
even further depress our stock price. Dutchess Private Equities Fund, LP
has a
financial incentive to sell our shares immediately upon receiving
the shares to realize the profit between the discounted price and
the market price. If Dutchess Private Equities Fund, LP sells our shares,
the price of our common stock may decrease. If our stock price
decreases, Dutchess Private Equities Fund, LP may have a
further incentive to sell such shares. Accordingly, the
discounted sales price in the Investment Agreement may cause
the price of our common stock to decline.
OUR
STOCK IS THINLY TRADED, AS A RESULT YOU MAY BE UNABLE TO SELL AT OR NEAR ASK
PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR SHARES.
The
shares of our common stock are thinly-traded on the OTC Bulletin Board, meaning
that the number
of
persons interested in purchasing our common shares at or near ask prices at
any
given time may be relatively small or non-existent. This situation is
attributable to a number of factors, including the fact that we are a small
company which is relatively unknown to stock analysts, stock brokers,
institutional investors and others in the investment community that generate
or
influence
sales volume, and that even if we came to the attention of such persons, they
tend to be risk-averse and would be reluctant to follow an unproven, early
stage
company such as ours or purchase or recommend the purchase of our shares until
such time as we became more seasoned and viable. As a consequence, there may
be
periods of several days or more when trading activity in
our
shares is minimal or non-existent, as compared to a seasoned issuer which has
a
large and steady volume of trading activity that will generally support
continuous sales without an adverse effect on share price. We cannot give you
any assurance that a broader or more active public trading market for our common
shares will develop or be sustained, or that current trading levels will be
sustained. Due to these conditions, we can give investors no assurance that
they
will be able to sell their shares at or near ask prices or at all if you need
money or otherwise desire to liquidate their shares.
OUR
COMMON STOCK COULD BE CONSIDERED A "PENNY STOCK."
Our
common stock could be considered to be a "penny stock" if it meets one or more
of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g)
of the Securities Exchange Act of 1934, as amended. These include but are not
limited to, the following: (i) the stock
trades at a price less than $5.00 per share; (ii) it is not traded on a
"recognized" national exchange; (iii) it is not quoted on The Nasdaq Stock
Market, or even if quoted, has a price less than $5.00 per share; or (iv) is
issued by a company with net tangible assets less than $2.0 million, if in
business more than a continuous three years, or with average revenues of less
than $6.0 million for the past three years. The principal result or effect
of
being designated a "penny stock" is that securities broker-dealers cannot
recommend the stock but must trade it on an unsolicited basis.
BROKER-DEALER
REQUIREMENTS MAY AFFECT TRADING AND LIQUIDITY.
Section
15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the SEC require broker-dealers dealing in penny stocks
to provide potential investors with a document disclosing the risks of penny
stocks and to obtain a manually signed and dated written receipt of the document
before effecting any transaction in a penny stock for the investor's account.
Potential investors in our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stocks." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for transactions in such stocks before selling
any
penny stock to that investor. This procedure requires the broker-dealer to
(i)
obtain from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience
as to
be reasonably capable of evaluating the risks of penny stock transactions;
(iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that
it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for holders of our common stock to resell their shares to third
parties or to otherwise dispose of them in the market or otherwise.
OUR
COMMON STOCK MAY BE VOLATILE, WHICH SUBSTANTIALLY INCREASES THE RISK THAT YOU
MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE PRICE THAT YOU MAY PAY
FOR
THE SHARES.
Because
of the limited trading market expected to develop for our common stock, and
because of the possible price volatility, you may not be able to sell your
shares of common stock when you desire to do so. The inability to sell your
shares in a rapidly declining market may substantially increase your risk of
loss because of such illiquidity and because the price for our common stock
may
suffer greater declines because of its price volatility.
The
price
of our common stock that will prevail in the market after this offering may
be
higher or lower than the price you may pay. Certain factors, some of which
are
beyond our control, that may cause our share price to fluctuate significantly
include, but are not limited to, the following:
·
variations
in our quarterly operating results;
·
loss
of a
key relationship or failure to complete significant transactions;
·
additions
or departures of key personnel; and
·
fluctuations
in stock market price and volume.
Additionally,
in recent years the stock market in general, and the over-the-counter markets
in
particular, have experienced extreme price and volume fluctuations. In some
cases, these fluctuations are unrelated or disproportionate to the operating
performance of the underlying company. These market and industry factors may
materially and adversely affect our stock price, regardless of our operating
performance.
In
the
past, class action litigation often has been brought against companies following
periods of volatility in the market price of those companies' common stock.
If
we become involved in this type of litigation in the future, it could result
in
substantial costs and diversion of management attention and resources, which
could have a further negative effect on your investment in our
stock.
MANY
OF OUR SHARES OF COMMON STOCK WILL IN THE FUTURE BE AVAILABLE FOR RESALE. ANY
SALES OF OUR COMMON STOCK, IF IN SIGNIFICANT AMOUNTS, ARE LIKELY TO DEPRESS
THE
MARKET PRICE OF OUR SHARES.
Assuming
all of the 6,700,000 shares of common stock we are offering under this
prospectus are sold in our offering, and all of the shares of common stock
issued and issuable to the selling securityholder are sold, we would
have 17,599,845 shares that are freely tradable without the requirement of
registration under the Securities Act of 1933. 23,156,616 shares of our common
stock are “restricted securities” as defined under Rule 144 of the Securities
Act of 1933. Of these shares, approximately 53.4% of our shares are owned
by our
officers, directors or other “affiliates.” These individuals may only sell their
shares, absent registration, in accordance with the provisions of Rule 144.
Restricted
securities may only be publicly sold pursuant to registration under the
Securities Act of 1933, or pursuant to Rule 144 or some other exemption that
may
be available from the registration requirements of the Securities Act of 1933.
Rule 144 entitles each person holding restricted securities for a period of
one
year, and affiliates who own non-restricted shares of our common stock, to
sell
every three months in ordinary brokerage transactions an amount of shares which
does not exceed the greater of 1% of the shares of our common stock outstanding
or, assuming the shares of common stock are then traded on Nasdaq, the average
weekly trading volume during the four calendar weeks prior to said sale. Any
substantial sales pursuant to Rule 144, including the potential sale of our
affiliates’ shares of our common stock, may have an adverse effect on the market
price of shares of our common stock, and may hinder our ability to arrange
subsequent equity or debt financing or affect the terms and time of such
financing.
WE
HAVE NOT PAID CASH DIVIDENDS AND MAY OR MAY NOT PAY CASH DIVIDEND IN THE
FORESEEABLE FUTURE.
We
have
not paid any cash dividends on our common stock and
do
not intend to pay cash dividends in the foreseeable future. We intend to retain
future earnings, if any, for reinvestment in the development and expansion
of
our business. Dividend payments in the future may also be limited by other
loan
agreements or covenants contained in other securities which we may issue. Any
future determination to pay cash dividends will be at the discretion of our
board of directors and depend on our financial condition, results of operations,
capital and legal requirements and such other factors as our board of directors
deems relevant.
OTHER
RISK FACTORS
There
are
several risks and uncertainties, including those relating to the Company's
ability to raise money and grow its business. These risks and uncertainties
can
materially affect the results predicted. Other risks include the Company's
limited operating history, the limited financial resources, domestic or global
economic conditions, activities of competitors and the presence of new or
additional competition, and changes in Federal or State laws and conditions
of
equity markets.
The
Company's future operating results over both the short and long term will be
subject to annual and quarterly fluctuations due to several factors, some of
which are outside the control of the Company. These factors include but are
not
limited to fluctuating market demand for our services, and general economic
conditions.
This
prospectus contains “forward-looking statements” and information relating to our
business that are based on our beliefs as well as assumptions made by us or
based upon information currently available to us. When used in this prospectus,
the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,”
“plan,” “project”, “should” and similar expressions are intended to identify
forward-looking statements. These forward-looking statements include, but are
not limited to, statements relating to our performance in “Business” and
“Management’s Discussion and Analysis of Financial Condition and Results of
Operation”. These statements reflect our current views and assumptions with
respect to future events and are subject to risks and uncertainties. Actual
and
future results and trends could differ materially from those set forth in such
statements due to various factors. Such factors include, among others: general
economic and business conditions; industry capacity; industry trends;
competition; changes in business strategy or development plans; project
performance; the commercially viability of our products and offerings;
availability, terms, and deployment of capital; and availability of qualified
personnel. These forward-looking statements speak only as of the date of this
prospectus. Subject at all times to relevant federal and state securities law
disclosure requirements, we expressly disclaim any obligation or undertaking
to
disseminate any update or revisions to any forward-looking statement contained
herein to reflect any change in our expectations with regard thereto or any
changes in events, conditions or circumstances on which any such statement
is
based. In addition, we cannot assess the impact of each factor on our business
or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statements.
USE
OF PROCEEDS
We
will
not receive any proceeds from the sale of the shares of our common stock by
the
selling securityholder. The proceeds received from any “Puts”
tendered to Dutchess under the Equity Line of Credit will be used for payment
of
general corporate and operating purposes, includingcompleting exploration of
the
Twin Peaks Mine and the Chocolate Mountain Region claim, and payment of
consulting and legal fees.
Our
Class
A Common Stock generally trades on the OTC Bulletin Board system under the
symbol "USCS.OB". 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. Further, on
May
16, 2006, the Company announced that it was informed by the Deutche Borse that
its Class B Common Shares issued by the Company have been included in the
Exchange trading within the Open Market (Freiverkehr). The Exchange trading
(Quotation) of the Class B Common Shares started on May 11, 2006, under the
Symbol "U9C" and the WKN# is A0JEQQ.
PERIOD
|
|
HIGH
|
|
LOW
|
|
Quarter
ended December 31, 2003
|
|
$
|
0.55
|
|
$
|
0.23
|
|
Quarter
ended March 30, 2004
|
|
$
|
0.50
|
|
$
|
0.31
|
|
Quarter
ended June 30, 2004
|
|
$
|
0.63
|
|
$
|
0.34
|
|
Quarter
ended September 30, 2004
|
|
$
|
0.44
|
|
$
|
0.25
|
|
Quarter
ended December 31, 2004
|
|
$
|
0.26
|
|
$
|
0.11
|
|
Quarter
ended March 30, 2005
|
|
$
|
0.20
|
|
$
|
0.09
|
|
Quarter
ended June 30, 2005
|
|
$
|
0.16
|
|
$
|
0.06
|
|
Quarter
ended September 30, 2005
|
|
$
|
0.16
|
|
$
|
0.09
|
|
Quarter
ended December 31, 2005
|
|
$
|
0.15
|
|
$
|
0.12
|
|
Quarter
ended March 31, 2006
|
|
$
|
0.14
|
|
$
|
0.06
|
|
Quarter
ended June 30, 2006
|
|
$
|
0.15
|
|
$
|
0.08
|
|
Thru
September 5, 2006 |
|
$
|
0.12 |
|
$
|
0.05 |
|
On
September 5, 2006 the reported closing price for the Company's Class A Common
Stock on the OTC Bulletin Board was $.065 per share; there were approximately
171 record holders of the Company's common stock; the reported closing price
for
the Company’s common stock on the Third Segment of the Berlin Stock Exchange was
0.072 Euro; and the reported closing price for the Class B Common Shares
on the
Deutche Borse was 0.001 Euro and there was 1 record holder of the Company's
Class B Common Shares.
The
source of these high and low prices was the OTC Bulletin Board. These quotations
reflect inter-dealer prices, without retail mark-up, markdown or commissions
and
may not represent actual transactions. The high and low prices listed have
been
rounded up to the next highest two decimal places.
The
market price of our common stock is subject to significant fluctuations in
response to variations in our quarterly operating results, general trends
in the
market for the products we distribute, and other factors, over many of which
we
have little or no control. In addition, broad market fluctuations, as well
as
general economic, business and political conditions, may adversely affect
the
market for our common stock, regardless of our actual or projected
performance.
DIVIDENDS
The
Company has not paid any dividends and may or may not 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.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
Forward-Looking
Statements
This
discussion contains forward-looking information that involves risks and
uncertainties. Our actual results could differ materially from those anticipated
by this forward-looking information. This discussion should be read in
conjunction with our financial statements and the related notes thereto set
forth elsewhere in this registration statement.
ITEM
2.
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 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 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.
Significant
Accounting Policies and Estimates
Management's
Discussion and Analysis of Financial Condition and Results of Operations
discusses the Company's consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles. The
preparation of these financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at
the date of the financial statements and the reported amounts of revenues
and
expenses during the reporting period. On an on-going basis, management
evaluates
its estimates and judgments, including those related to reserves and intangible
assets. Management bases its estimates and judgments on historical
experiences and on various other factors that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. The most significant
accounting estimates inherent in the preparation of the Company's financial
statements include estimates as to the appropriate carrying value of certain
assets which are not readily apparent from other sources, primarily allowance
for the cost of the Mineral Properties based on the successful efforts
method of
accounting. These accounting policies are described at relevant sections
in this discussion and analysis and in the notes to the consolidated financial
statements included in our Annual Report on Form l0-KSB for the fiscal
year
ended September 30, 2005.
Results
of Operations
Comparison
of operating results for the nine months ended June 30, 2006 and June 30,
2005:
The
Company has no revenues through the date of this report.
General
and administrative expenses were $398,886 compared to $419,081 for the same
period a year ago. Consulting costs decreased from $314,765 to $164,970 in
the
nine months ended June 30, 2006 which is mainly due to the significant decrease
in the issuances of common stock to pay for consulting fees in 2006. General
administration costs increased $128,791 in the nine months ended June 30,
2006
to $223,622. General administrative costs are detailed as
follows:
|
|
30-Jun-06
|
|
30-Jun-05
|
|
Promotion
|
|
$
|
13,508
|
|
$
|
1,877
|
|
Automobile
|
|
|
12,995
|
|
|
13,192
|
|
General
office
|
|
|
28,328
|
|
|
26,607
|
|
Depreciation
|
|
|
1,626
|
|
|
1,439
|
|
Filings
& printing
|
|
|
6,430
|
|
|
1,242
|
|
Insurance
|
|
|
9,682
|
|
|
1,835
|
|
Mine
development
|
|
|
82,722
|
|
|
350
|
|
Postage
|
|
|
4,382
|
|
|
1,975
|
|
Transfer
agent
|
|
|
6,102
|
|
|
24,770
|
|
Rent
& utilities
|
|
|
20,188
|
|
|
9,710
|
|
Repairs
|
|
|
13,902
|
|
|
460
|
|
Clerical
fees
|
|
|
2,890
|
|
|
0
|
|
Storage
|
|
|
5,758
|
|
|
0
|
|
Telephone
|
|
|
6,645
|
|
|
7,931
|
|
Travel
|
|
|
8,464
|
|
|
3,443
|
|
Total
|
|
$
|
223,622
|
|
$
|
94,831
|
|
As
a
result of general and administrative costs, the Company experienced a loss
from
operations of $601,858 for the nine months ended June 30, 2006, compared
to loss
from operations of $419,071 for the same period last year.
Interest
expense increased $44,694 during the first nine months of fiscal 2006 compared
to the first nine months of fiscal year 2005 as a result of the Gold Bullion
Loan borrowed at the end of September 2005. The loan is payable in gold
bullion
at the prevailing rate price and is not hedged. The Company's loss on the
unhedged loan is $155,618 for the first nine months of fiscal year
2006.
In
September 2003, the Company issued convertible debt at no interest to
shareholders in the Company and received proceeds of $40,000. The debt
matured
in September 2004 and entitled the shareholders to convert the debt into
100,000
shares of common stock at an exercise price of $0.40 per share. The Company
recorded a beneficial conversion feature of $3,767 as a result of the
transaction and amortized the beneficial conversion feature to interest
expense
during fiscal year 2004. This debt and the attendant detachable warrants
were
extinguished by the Company in February 2005 by issuing 400,000 shares
of common
stock.
The
Company recognized a loss on the retirement of this debt of $24,000, net
of tax,
in the statement of operations in the first nine months of fiscal
2005.
Net
loss
for the first nine months of fiscal year 2006 was $601,858, or $0.02 per
share
compared to a loss of $445,731, or $.01 per share for the same period last
year.
Comparison
of operating results for the three months ended June 30, 2006 and June
30,
2005:
General
and administrative expenses were $110,799 for Q3 2006 compared to $278,383
for
the same period a year ago. The decrease in consulting fees was the main
reason
for the significant decrease. In April 2005, the Company issued 1,910,000
shares
of common stock valued at $248,300 to pay consulting fees. The Company
issued no
stock to consultants this quarter.
As
a
result of general and administrative costs, the Company experienced a loss
from
operations of $110,799 for the nine months ended June 30, 2006, compared
to loss
from operations of $278,383 for the same period last year.
Interest
expense for Q3 2006 was $15,715 during the first nine months of fiscal
2006
compared to $266 for the first nine months of fiscal year 2005. The Gold
Bullion
Loan borrowed at the end of September 2005 is the reason for the increase
in
interest expense. The loan is payable in gold bullion at the prevailing
rate
price and is not hedged. Because of the decrease in gold bullion prices
during
Q3 2006, the Company experienced a loss on the unhedged loan of
$45,018.
Net
loss
for Q3 2006 was $171,532, or $0.01 per share compared to a loss of $278,649,
or
$.01 per share for Q3 2005.
Discussion
of Financial Condition: Liquidity and Capital
Resources
At
June
30, 2006 cash on hand was $170,109 as compared with $627,372 at September
30,
2005. During the first nine months of fiscal year 2006, the Company used
$316,089 for its operations, purchased $1,004 of office equipment, and
paid in
full a loan to a shareholder of $135,606.
At
June
30, 2006, the Company had working capital of $113,424 compared to a working
capital of $575,251 at September 30, 2005. The decrease is due to the use
of the
proceeds of the gold bullion loan from a shareholder. The gold bullion
loan is
not payable until 2007 and is therefore excluded from the calculation of
working
capital.
Total
assets at June 30, 2006 were $173,493 as compared to $631,378 at September
30,
2005. The decrease is due to the use of the proceeds of the gold bullion
loan
from a shareholder.
The
Company's total stockholders' equity decreased to a deficit of $800,151
at June
30, 2006. The decrease in stockholders' equity was the result of operating
losses of $601,858 for the nine months ended June 30, 2006 and issuance
of
common stock to consultants valued at $79,650 for the same
period.
Under
the
supervision and with the participation of the Company's management, including
the Chief Executive Officer and 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
Exchange Act) as of the end of the period covered by this quarterly report.
Based upon that evaluation, the Chief Executive Officer and 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 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.
GENERAL
USCorp.
is an "exploration stage" company. The Company's operations center on completing
exploration of USMetals' mining property known as the Twin Peaks Mine, and
Southwest's mining property known as the Chocolate Mountain Region claims.
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 and Southwest Resource Development, Inc.
The
Company, through its wholly-owned subsidiary, USMetals, owns 141 Lode Mining
Claims in the Eureka Mining District of Yavapai County, Arizona, called the
Twin
Peaks Mine; and through its wholly-owned, subsidiary Southwest Resource
Development, Inc., owns 8 Lode and 21 Placer Claims in the Mesquite Mining
District of Imperial County, California, which the Company refers to as the
Chocolate Mountain Region Claims.
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 complement
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 Mine,” are the historic sites of the
Crosby, Hayes, Swiss Belle and Glory Hole 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. 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 141 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
relationships with International Energy and Resources, Inc. 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.
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
known as the Chocolate Mountain Region Claims and the Picacho Area Claims.
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 claims the Company entered into what is essentially
a
joint venture with the former owners whereby the former owners entitled to
receive 20% of all net smelter returns of gold after expenses, whether paid
in
cash or in kind.
The
Company has spent the last 3 years developing a plan that would bring multiple
properties under Company ownership. Through its wholly owned subsidiary,
Southwest, the Company has acquired for development a total of 3,520 acres
of
precious metal properties located in the Chocolate Mountain region of 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.
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 a few miles from USCorp's
newly acquired claims near the Picacho State Recreation Area. Thousands of
people visit the old mill ruins each year. To the south and west of the 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 by the Company's
Process Engineer 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. The geology and history of this area indicate it is rich in gold
deposits. Test production will determine the cutoff grade and the economic
viability of this property . Southwest intends to go into production as soon
as
possible after approvals and financing are obtained.
Property
descriptions, locations and nature of ownership.
Chocolate
Mountain Region 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.
Chocolate
Mountain Region 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.
Chocolate
Mountain Region 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.
The
141
unpatented lode mining claims, covering 2,820 acres, which the the Company
refers to as the “Twin Peaks Mine,” 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.
In
the
Map above “1”“2” and “3” represent the approximate locations of the company's
properties in the Mesquite Mining District of Imperial County, California.
These
three locations are represented by the number “2” in the map below.
History
of previous operations.
Twin
Peaks Mine 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.
Chocolate
Mountain Region 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.
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 Mine Claims Group: The Company has completed limited 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. The Company relies on geological work of
experts performed under prior ownership in support of our reports of the
presence of gold, silver, uranium and other mineralization on the property.
The
Company is not conducting mineral extraction operations on this property at
this
time.
Chocolate
Mountain Region Claims Groups in the Mesquite Mining District of Imperial
County: The Company has performed very limited work on the property. The Company
relies on geological work of experts performed under prior ownership in support
of our reports of the presence of gold and silver on the property. 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 Mine property. Power is available on properties adjacent to the Twin
Peaks
Mine and portable generators will be used as necessary. Power is also available
on properties adjacent to our placer claims in California and portable
generators will be used when necessary. There are capped wells on our California
claims. We will supplement well water with trucked water as
necessary.
Adequate
roads exist to each of our claims groups. Some existing roads may need to be,
repaired or extended.
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 Mine property. Power is available on properties adjacent to the Twin
Peaks
Mine and portable generators can be used as necessary. Power is also available
on properties adjacent to our placer claims in California. There are natural
wells located in several places on our California claims. We will supplement
well water with trucked water as necessary.
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 Mine, past geologic valuations have indicated
mineralized material on claims within the boundaries of the Twin Peaks on the
Crosby claims, Hayes claims and Glory Hole 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 reports in support of its determination that economically viable
mineralization is present on the properties as stated in various historical
reports.
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 Glory Hole 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 Glory Hole 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.
Chocolate
Mountain Region 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 uses such reports in support of its determination that economically
viable mineralization may be present on the properties as stated in various
historical reports.
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 mine. 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.
In
Phase
II we intend to do further exploration on our property, and design and initiate
a Test Production program on selected claims within the Twin Peaks claims group.
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 will be 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 will allow us to plan the conceptual mine and
milling plans, including flow-sheets that will be used in the feasibility study
process along with the on-going economic and cost modeling evaluation of the
project. Finally when the results have been evaluated we will begin the
collection of the environmental data necessary for further exploration,
completion of the feasibility study and mining.
We
have
received a Test Production plan and budget for the Chocolate Mountain Region
Claims in the Mesquite Mining District of Imperial County from our Consulting
Geologist, Quantum GeoConsultants, LLC, 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 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. The estimated
budget for this is up to $205,000 for a 12 week program.
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.
The
cutoff grade will be determined as part of the feasibility study
process.
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 Mine's Mining Claims.
Early
Exploration Conducted and Valuations.
The
Twin
Peaks Mine: 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 Mine). 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.
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 International Energy and Resources, Inc.,
(IERI), one of USMetals' principal advisors have confirmed prior geological
reports. It was verified that the Twin Peaks Mine 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 firmthat 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 Mine
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 complex ores.
The
geological justification for the exploration project at the Chocolate Mountain
Region 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.
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 Mine is as
follows:
The
total
cost is projected to be up to $2.4 million to complete a 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 Chocolate Mountain Region claims
is as follows:
The
total
cost is projected to be up to $205,000 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.
How
the exploration program will be funded.
We
are
seeking funding via 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 on form 8-K dated September
27,
2005.
Identification
of who will be conducting any proposed exploration work, and a discussion of
their qualifications.
To
date
the Company has contracted with International Energy and Resources, Inc., and
Quantum GeoConsultants, LLC, for limited 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 report. A summary of the qualifications of Quantum
GeoConsultants, LLC and International Energy and Resources, Inc., a wholly
owned
subsidiary of US American Resources, Inc. follows:
Quantum
GeoConsultants, LLC.
Edwin
Arbar, Managing Partner: Bachelor Degree: Bioscience, Geoscience, Western State
College, Colorado, U.S.A.
Certificates:
Advanced Environmental Engineering: Mining industry waste and water pollution
control and remediation. University of Concepcion, Concepcion,
Chile.
Gemstone
Certifications: Gemological Institute of America, Los Angeles, California.
Certificates for Diamond Grading, Diamond Appraisal, and Colored
Gemstones
Registered
Environmental Assessor; State of California, Registered #REA-03167
SUMMARY
OF EXPERIENCE: Retired from Fluor Mining and Metals division of Fluor
Corporation as a Senior Manager after 40 years of project engineering and field
management of domestic and international world class E.P.C.M. projects in the
following categories: Geophysical exploration; Drilling/blasting; O/P and U/G
mine development/production; Mass excavations; Crushing/conveyor systems; Ore
processing plants; Heap leach pads; Open and closed circuit SX/EW units;
Precious metal placer development and recovery systems; Tailings ponds; Toxic
waste water treatment; Salt water conversion plants; Environmental
assessment/remediation; Microwave/fiber optic communication systems; Crude
oil
refineries w/LNG facilities; Petrochemical plants; Power generation plants
and
hi-power transmission lines; Major oil, gas and mineral concentrates pipelines;
Railroads and back-country air ports; Offshore oil/gas production platforms
and
marine pipelines; High-tech research and development centers; Diamond
exploration and recovery systems.
METALS
EXPLORATION/DEVELOPMENT CONSULTANT: August 2002 to present
Perform
professional services as a member of a mining industry consulting group:
Performing audits on technical and due diligence reports by conducting on-site
studies and review of historical and new data including, but not limited to:
Geological surveys; Geochemical tests; Geophysical surveys; 3-D aerial photo
studies; Review satellite photos; Perform assays and/or verify historical assay
test reports; Review core drilling logs and reports; Conduct/review laboratory
tests and feasibility studies; Prepare/review pilot plant flow sheets and
reports; Title search and review; Review/verify water rights and legal data;
Review right-of-way easements; Review B.L.M. permits; Review E.I.R.'s and
related data; Review status of fees/taxes paid for patented and un-patented
mineral claims; Review safety, cost and schedules: for multi-national owners
and/or investors based in the U.S.A., Canada, Argentina, Chile, Brazil, Bolivia,
Peru, Alaska and Mexico.
International
Energy and Resources, Inc., a wholly owned subsidiary of US American Resources,
Inc., Sub-Contractors, Subsidiaries and Consultants include:
HILBRANDS
AND WESTERN MINING COMPANY
Ted
Hilbrands, and Arie Hilbrands, Owner Operators. Hilbrands and Western is an
Arizona-based mining company with 30 years of experience in mining, drilling,
and exploration. Expert witness for U.S. Mineral Surveyor, worked extensively
on
construction projects with the US Army Corps of Engineers. They have extensive
knowledge in land survey, mine ownership and leaching, mill construction and
management.
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. The Company does not believe that we have any significant risk
exposure in this geographic region.
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.
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.
The
Company currently has two employees.
The
Company and its wholly owned subsidiaries have utilized three principal
consultants/advisors: Boart
Longyear Company,
Quantum, GeoConsultants, LLC, under its managing partner, Edwin Arbar and
International Energy and Resources, Inc. (IERI) which, in turn, employs
subcontractors that perform work indirectly for the Company and its
subsidiaries. These
consultants assist the Company with limited 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 report.
The
following table sets forth the name, age and position of each of the members
of
our board of directors, executive officers and promoters as of June 23,
2006:
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.
Name
|
|
Age
|
|
Position
Held
|
Robert
Dultz
|
|
64
|
|
Chief
Executive Officer, Acting Chief Financial Officer and
Chairman
|
Larry
Dietz
|
|
58
|
|
President,
Secretary, Treasurer and Director
|
|
|
|
|
|
Carl
W. O'Baugh
|
|
74
|
|
Director
|
Judith
Ahrens
|
|
65
|
|
Director
|
Robert
Dultz has
been
USCorp's Chairman and CEO since January 2002 and has a 25-year association
with
the Twin Peaks property and is a former owner of a portion of the claims which
make up the Twin Peaks property. Mr. Dultz assumed the position of Acting Chief
Financial Officer to fill the vacancy created by the resignation of Mr. Spencer
Eubanks in June 2006. Mr. Dultz is a 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
has been
the Company's President and Director since January 2002, 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. Mr. Dietz assumed the position of
Secretary and Treasurer to fill the vacancy created by the resignation of Mr.
Spencer Eubanks in June 2006. He served as President of Dietz and Associates,
a
mining consultancy, since 1982 and he is an expert in Arizona's geology. Mr.
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
PacificCare at the Arizona State Retirement System. He devotes less than 5%
of
his time to USCorp.
Carl
W. O' Baugh
has been
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 has
been
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. Since 2000, Ms. Ahrens has worked full time for
National Grants Conferences. She devotes less than 10% of her time to
USCorp.
Family
relationships.
There
are
no family relationships among the officers or directors.
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.
Adoption
of Code of Ethics.
On
September 22, 2004 USCorp adopted a Code of Ethics for officers and directors
of
the Company.
EXECUTIVE
COMPENSATION
The
following table sets forth all compensation paid by the Company during 2003,
2004 and 2005, to those persons who were employed during such year as (i) the
chief executive officer and (ii) an executive (other than the chief executive
officer) whose annual compensation exceeded $100,000.
Name
and Principal
|
|
|
|
Annual
|
|
Position
|
|
Year
|
|
Compensation
|
|
Robert
Dultz
|
|
|
2005
|
|
$
|
0
|
|
Chairman,
Chief Executive
|
|
|
2004
|
|
$
|
0
|
|
Officer,
Acting Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Larry
Dietz
|
|
|
2005
|
|
$
|
0
|
|
President,
Secretary,
|
|
|
2004
|
|
$
|
0
|
|
Treasurer
and Director
|
|
|
|
|
|
|
|
COMMITTEES
AND MEETINGS OF THE BOARD OF DIRECTORS:
BOARD
OF
DIRECTORS
During
the year ended September 30, 2005, there were no formal meetings of the
Company's Board of Directors. Other actions in 2005 were conducted by means
of
unanimous written consents.
DIRECTOR
COMPENSATION
Directors
who are also employees and/or officers of the Company do not receive any
additional compensation in connection with their service on the Company's Board
of Directors or committees of the Board of Directors. In addition, the Company
currently does not have any specific compensation arrangement to pay
non-employee Directors for service on the Company's Board of Directors although
the Company anticipates that it may develop such a program in the
future consisting of cash, stock, and/or a combination of cash and stock, to
compensate non-employee Directors for attending meetings of the Board and/or
committees of the Board in person and/or telephonically.
STOCK
PLANS
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth information regarding the beneficial ownership
of the
Company's Class A Common Stock as of June 21, 2006 by (i) each person known
by
the Company to be the beneficial owner of more than five percent of its Common
Stock; (ii) each director; and (iii) all directors and executive officers
as a
group. Beneficial ownership is determined in accordance with the rules of
the
Securities and Exchange Commission and includes voting or investment power
with
respect to the securities. Shares of common stock that may be acquired by
an
individual or group within 60 days of September 5, 2006, pursuant to the
exercise of options or warrants are deemed to be outstanding for the purpose
of
computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person shown in the table. Percentage of ownership is based
on 33,806,461 shares of common stock outstanding.
Except
as
indicated in the footnotes to this table, we believe that the stockholders
named
in this table have sole voting and investment power with respect to all shares
of common stock shown to be beneficially owned by them based on information
provided to us by such shareholders.
Title
of Class
|
|
Name
and Address of Beneficial Owner
|
|
Amount
of Ownership
|
|
Percentage
of Ownership
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Robert
Dultz c/o USCorp, (1)
4535
W. Sahara Ave., Suite 204,
|
|
|
17,595,525
|
|
|
52.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Dultz
Family Trust, Robert Dultz Trustee (1)
c/o
USCorp,
4535
W. Sahara Ave., Suite 204,
|
|
|
17,595,525 |
|
|
52.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Larry
Dietz c/o USCorp,
4535
W. Sahara Ave., Suite 204,
|
|
|
51,000 |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Spencer
Eubank (2)
c/o
USCorp,
4535
W. Sahara Ave., Suite 204,
|
|
|
446,250 |
|
|
1.31 |
% |
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Carl
O'Baugh c/o USCorp,
4535
W. Sahara Ave., Suite 204,
|
|
|
50,250 |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Judith
Ahrens c/o USCorp,
4535
W. Sahara Ave., Suite 204,
|
|
|
50,000 |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
|
Officers,
Directors and Affiliates as a group
|
|
|
18,193,025
|
|
|
53.4
|
%
|
______________
*
Represents less than 1%.
(1)
Mr.
Robert Dultz, our Chairman and Chief Executive Officer, is deemed to be the
beneficial owner of (i) 7,595,525 shares of Class A Common Stock; and (ii)
10,000,000 shares of Class A Common Stock held by the Dultz Family Trust,
a
trust which Mr. Dultz is the Trustee.
(2)
Mr.
Spencer Eubanks resigned from the Company in June, 2006.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company is provided office equipment and space by the Chief Executive Officer
and majority shareholder at a cost to the Company of approximately $30,000
per
year.
The
Company has paid to Mr. Spencer Eubanks, the former Acting Chief Financial
Officer, Secretary, Treasurer and a Director of the Company approximately $3,500
per month in consulting fees and expenses.
The
Company has paid to Mr. Larry Dietz, President, Secretary, Treasurer and a
Director, and a Director of the Company approximately $500 per month in
consulting fees and expenses.
The
Company's authorized capital stock consists of 550,000,000 shares of class
A
common stock, par value of $0.01 per share, of which 33,806,461
are
issued and outstanding as of September 5, 2006;
10,000,000 shares of Series A Preferred Stock authorized with no shares issued
or outstanding as of June 21, 2006; 50,000,000 shares of Series B Preferred
Stock of which 155,000 shares issued and outstanding as of June 21, 2006.
Further, the Company has authorized 250,000,000 shares of non-voting Class
B
Common Shares, $0.001 par value per share, of which 5,000,000 are issued
and
outstanding as of June 21, 2006. The
holders of shares of our class A common stock are entitled to elect all of
the
directors and to one vote per share on all matters submitted to shareholder
vote. Holders of our Class A Common Stock are entitled to receive ratably
dividends, subject to the rights of the holders of Preferred Stock (if any),
as
may be declared by our Board of Directors out of funds legally available
therefore.
All
of
the shares of our authorized capital stock, when issued for such consideration
as our board of directors may determine, shall be fully paid and non-assessable.
Our board of directors has the discretion and may, by adoption of a resolution,
designate one or more series of preferred stock and has the power to determine
the conversion and/or redemption rights, preferences and privileges of each
such
series of preferred stock provided that such conversion and/or redemption
rights, preferences and privileges of any series of preferred stock does not
subordinate or otherwise limit the conversion and/or redemption rights,
preferences and/or privileges of any previously issued series of preferred
stock.
TRANSFER
AGENT
The
transfer agent and registrar for our common stock is U.S. Stock Transfer
Corporation, 1745 Gardena Avenue, Glendale, CA 91204-2991.
Future
sales of a substantial number of shares of our common stock in the public market
could adversely affect market prices prevailing from time to time. Under the
terms of this offering, the shares of common stock offered may be resold without
restriction or further registration under the Securities Act of 1933, except
that any shares purchased by our "affiliates," as that term is defined under
the
Securities Act of 1933, may generally only be sold in compliance with Rule
144
under the Securities Act of 1933.
SALE
OF
RESTRICTED SHARES. Certain shares of our outstanding common stock were issued
and sold by us in private transactions in reliance upon exemptions from
registration under the Securities Act of 1933 and have not been registered
for
resale. Additional shares may be issued pursuant to outstanding warrants and
options. There are10,899,845 shares of our class A common stock that are not
restricted by Rule 144 because they are in the public float. Resales of the
remainder of our issued and outstanding shares of common stock are restricted
under Rule 144. There are 21,846,171 shares of our class A common stock that
are
restricted, including shares subject to outstanding warrants to purchase, or
notes convertible into, common stock (excluding any conversions of notes to
date). Such shares may be sold only pursuant to an effective registration
statement filed by us or an applicable exemption, including the exemption
contained in Rule 144 promulgated under the Securities Act of 1933.
In
general, under Rule 144 as currently in effect, a shareholder, including one
of
our affiliates, may sell shares of common stock after at least one year has
elapsed since such shares were acquired from us or our affiliate. The number
of
shares of common stock which may be sold within any three-month period is
limited to the greater of: (i) one percent of our then outstanding common stock,
or (ii) the average weekly trading volume in our common stock during the four
calendar weeks preceding the date on which notice of such sale was filed under
Rule 144. Certain other requirements of Rule 144 concerning availability of
public information, manner of sale and notice of sale must also be satisfied.
In
addition, a shareholder who is not our affiliate, who has not been our affiliate
for 90 days prior to the sale, and who has beneficially owned shares acquired
from us or our affiliate for over two years may resell the shares of common
stock without compliance with many of the foregoing requirements under Rule
144.
We
agreed
to register for resale shares of common stock by the selling securityholder
listed below. The selling securityholder may from time to time offer and sell
any or all of their shares that are registered under this prospectus. The
selling securityholder, and any participating broker-dealers are “underwriters”
within the meaning of the Securities Act of 1933, as amended. All expenses
incurred with respect to the registration of the common stock will be borne
by
us, but we will not be obligated to pay any underwriting fees, discounts,
commissions or other expenses incurred by the selling securityholder in
connection with the sale of such shares.
The
following table sets forth information with respect to the maximum number of
shares of common stock beneficially owned by the selling securityholder named
below and as adjusted to give effect to the sale of the shares offered hereby.
The shares beneficially owned have been determined in accordance with rules
promulgated by the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. The information in the table below
is current as of the date of this prospectus. All information contained in
the
table below is based upon information provided to us by the selling
securityholder and we have not independently verified this information. The
selling securityholder are not making any representation that any shares covered
by the prospectus will be offered for sale. The selling securityholder may
from
time to time offer and sell pursuant to this prospectus any or all of the common
stock being registered.
Except
as
indicated below, none of the selling securityholder has held any position or
office with us, nor are any of the selling securityholder associates or
affiliates of any of our officers or directors. Except as indicated below,
no
selling stockholder is the beneficial owner of any additional shares of common
stock or other equity securities issued by us or any securities convertible
into, or exercisable or exchangeable for, our equity securities. No selling
stockholder is a registered broker-dealer or an affiliate of a
broker-dealer.
For
purposes of this table, beneficial ownership is determined in accordance with
SEC rules, and includes voting power and investment power with respect to shares
and shares owned pursuant to warrants exercisable within 60 days. The "Number
of
Shares Beneficially Owned After the Offering” column assumes the sale of all
shares offered.
As
explained below under “Plan of Distribution,” we have agreed with the selling
securityholder to bear certain expenses (other than broker discounts and
commissions, if any) in connection with the registration statement, which
includes this prospectus.
Name
|
|
Number
of
Shares
Beneficially
Owned
Prior to
Offering(1)
|
|
Number
of
Shares
Offered
|
|
Number
of Shares
Beneficially
Owned
After
the
Offering
|
|
|
|
|
|
|
|
|
|
Dutchess
Private Equities
Fund,
LP (2)
|
|
|
6,700,000
|
|
|
|
|
|
0
|
|
____________
(1) |
The
actual number of shares of common stock offered in this prospectus, and
included in the registration statement of which this prospectus
is a part,
includes such additional number of shares of common stock as
may be issued
or issuable upon draws under the Dutchess Equity
Line.
|
(2) |
Michael
Novielli and Douglas Leighton are the managing members of Dutchess
Capital
Management, LLC, which is the general partner to Dutchess Private
Equities
Fund II, LP.
|
TRANSACTION
WITH DUTCHESS PRIVATE EQUITIES FUND, LP
On
May
12, 2006, we entered into an Investment Agreement (the “Agreement”) with
Dutchess Private Equities Fund, LP (“Dutchess”) to provide us with an equity
line of credit. Pursuant to this Agreement, Dutchess shall commit to purchase
up
to $10,000,000 of the Company’s Stock over the course of thirty six (36) months
(“Line Period”), after a registration statement has been declared effective
(“Effective Date”). The amount that the Company shall be entitled to request
from each of the purchase “Puts”, shall be equal to, at the Company’s election,
either 1) $250,000 or 2) 200% of the averaged daily volume (U.S market only)
(“ADV”), multiplied by the average of the three (3) daily closing prices
immediately preceding the Put Date. The ADV shall be computed using the
ten (10) trading days prior to the Put Date. The Purchase Price for the common
stock identified in the Put Notice shall be set at ninety-five percent (95%)
of
the lowest closing bid price of the common stock during the Pricing Period.
The
Pricing Period is equal to the period beginning on the Put Notice Date and
ending on and including the date that is five (5) trading days after such Put
Notice Date. There are put restrictions applied on days between the Put Date
and
the Closing Date with respect to that Put. During this time, the Company
shall not be entitled to deliver another Put Notice.
The
terms under which funds will be given to us include
(i) this Registration Statement being declared effective and remaining
effective
for the resale of the shares of common stock; (ii) the Common Stock shall
at all
times between a Put Notice Date and a Closing Date be listed or quoted
on the
principal market; (iii) we have complied with all of our obligations under
the
Agreement and the registration Rights Agreement, (iv) there are no injunctions
issued against us; and (v) the issuance of our common stock does not violate
any
shareholder approval requirements.
The
Company shall automatically withdraw that portion of the put notice amount,
if
the Market Price with respect to that Put does not meet the Minimum Acceptable
Price. The Minimum Acceptable Price is defined as seventy-five percent
(75%) of the closing bid price of the common stock for the ten (10) trading
days
prior to the Put Date.
In
addition, the Company is obligated to issue and deliver its shares of common
stock within seven (7) trading days following a Put Notice Date. In the
event
that the Company does not issue and deliver any such shares, the Company
is
obligated to make late payments to Dutchess in an amount equal to $100
for each
day late up to ten (10) days and then $1,000 plus $200 for each
business day late beyond ten (10) days. For example, if for some
reason we issue and deliver the shares of common stock to Dutchess
twenty (20) trading days after the Put Notice Date, we will be
required to pay to Dutchess $1,600 as a late
payment. Moreover, if by the third (3rd) business day after the
Closing Date, the Company fails to deliver any portion of the shares of
the Put
to Dutchess (the "Put Shares Due") and Dutchess purchases, in an open market
transaction or otherwise, shares of common stock necessary to make delivery
of
shares which would have been delivered if the full amount of the shares
to be
delivered to Dutchess by the Company (the "Open Market Share Purchase"),
then
the Company shall pay to Dutchess, in addition to any other amounts due
to
Dutchess pursuant to the Put, and not in lieu thereof, the Open Market
Adjustment Amount, which is an amount equal to the excess, if any, of (x)
Dutchess's total purchase price (including brokerage commissions, if any)
for
the Open Market Share Purchase minus (y) the net proceeds (after brokerage
commissions, if any) received by Dutchess from the sale of the Put Shares
Due.
In
connection with the Agreement, we entered into a Registration Rights Agreement
with Dutchess (“Registration Agreement”). Pursuant to the Registration
Agreement, we are obligated to file a registration statement with the Securities
and Exchange Commission covering the shares of common stock underlying
the
Investment Agreement within thirty (30) days after the closing date. In
addition, we are obligated to use all commercially reasonable efforts to
have
the registration statement declared effective by the SEC within one hundred
and
twenty (120) days after the filing of this registration statement. In the
event
that the Company is deemed to be in default under its registration obligations
as provided in the Registration Agreement, the Company shall be obligated
to pay
liquidated damages, that is not deemed to constitute a penalty, in an amount
not
to exceed the maximum amount permitted under any applicable
law.
At
this time, we are only registering 6,700,000 shares
of common stock underlying the Dutchess equity line, we may in the future
file additional registration statements to cover additional shares of common
stock underlying the equity line.
PLAN
OF DISTRIBUTION
The
selling securityholder and any of its respective pledges, donees, assignees
and
other successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be
at
fixed or negotiated prices. The selling securityholder may use any one or more
of the following methods when selling shares:
· ordinary
brokerage transactions and transactions in which the broker-dealer solicits
purchasers;
· block
trades in which the broker-dealer will attempt to sell the shares as agent,
but
may position and resell a portion of the block as principal to facilitate the
transaction;
· purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
· an
exchange distribution in accordance with the rules of the applicable
exchange;
· privately
negotiated transactions;
· short
sales after this registration statement becomes effective;
· broker-dealers
may agree with the selling securityholder to sell a specified number of such
shares at a stipulated price per share;
· through
the writing of options on the shares;
· a
combination of any such methods of sale; and
· any
other
method permitted pursuant to applicable law.
The
selling securityholder may also sell shares under Rule 144 under the Securities
Act of 1933, if available, rather than under this prospectus. The selling
securityholder will have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to
be
unsatisfactory at any particular time.
The
selling securityholder or its respective pledgees, donees, transferees or other
successors in interest, may also sell the shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves
or
their customers. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling securityholder and/or
the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and
at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. The
selling securityholder cannot assure that all or any of the shares offered
in
this prospectus will be issued to, or sold by, the selling securityholder.
The
selling securityholder and any brokers, dealers or agents, upon effecting the
sale of any of the shares offered in this prospectus, are "underwriters" as
that
term is defined under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, or the rules and regulations under such acts.
In such event, any commissions received by such broker-dealers or agents and
any
profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
Discounts,
concessions, commissions and similar selling expenses, if any, attributable
to
the sale of shares will be borne by a selling stockholder. The selling
securityholder may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the shares if liabilities are
imposed on that person under the Securities Act of 1933.
The
selling securityholder may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the pledgee or secured parties
may offer and sell the shares of common stock from time to time under this
prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or any other applicable provision of the Securities Act of 1933
amending the list of selling securityholder to include the pledgee, transferee
or other successors in interest as selling securityholder under this
prospectus.
The
selling securityholder also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors
in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list
of
selling securityholder to include the pledgee, transferee or other successors
in
interest as selling securityholder under this prospectus.
We
are
required to pay all fees and expenses incident to the registration of the shares
of common stock. We have agreed to indemnify the selling securityholder against
certain losses, claims, damages and liabilities, including liabilities under
the
Securities Act of 1933.
The
selling securityholder acquired the securities offered hereby in the ordinary
course of business and have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed
sale
of shares of common stock by any selling stockholder. If we are notified by
any
selling stockholder that any material arrangement has been entered into with
a
broker-dealer for the sale of shares of common stock, if required, we will
file
a supplement to this prospectus. If the selling securityholder use this
prospectus for any sale of the shares of common stock, they will be subject
to
the prospectus delivery requirements of the Securities Act of 1933.
The
anti-manipulation rules of Regulation M under the Securities Exchange Act of
1934 may apply to sales of our common stock and activities of the selling
securityholder.
The
validity of the issuance of the common stock offered hereby will be passed
upon
for us by Gersten Savage LLP, New York, New York.
The
financial statements of USCorp as of and for the period from September 30,
2005
to September 30, 2004, appearing in this prospectus have been audited by Donahue
Associates, LLC, our Independent Registered Public Accounting Firm, as set
forth
in their report thereon appearing elsewhere herein, and are included in reliance
upon such reports given upon the authority of such firm as experts in accounting
and auditing.
We
have
filed with the SEC under the Securities Act of 1933 a registration statement
on
Form SB-2 with respect to the shares being offered in this offering. This
prospectus does not contain all of the information set forth in the registration
statement, certain items of which are omitted in accordance with the rules
and
regulations of the SEC. The omitted information may be inspected and copied
at
the Public Reference Room maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549. You can obtain information about operation
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
also
maintains an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC at http://www.sec.gov. Copies of such material can be obtained
from
the public reference section of the SEC at prescribed rates. Statements
contained in this prospectus as to the contents of any contract or other
document filed as an exhibit to the registration statement are not necessarily
complete and in each instance reference is made to the copy of the document
filed as an exhibit to the registration statement, each statement made in this
prospectus relating to such documents being qualified in all respect by such
reference.
For
further information with respect to us and the securities being offered hereby,
reference is hereby made to the registration statement, including the exhibits
thereto and the financial statements, notes, and schedules filed as a part
thereof.
TABLE
OF
CONTENTS
For
the Quarter Ended June 30, 2006
Independent
Auditor’s Report
|
|
Consolidated
Balance Sheet as of June 30, 2006 and June 30, 2005
(unaudited)
|
F-2
|
Consolidated
Statements of Operations for the Nine Months & Quarter Ended June 30,
2006 and June 30, 2005 and from Inception, May 1989 through June
30, 2006
(unaudited)
|
F-3
|
|
|
Consolidated
Statements of Cash Flows for the Nine Months Ended June 30, 2006 and
June 30, 2005 and from Inception, May 1989 through June 30, 2006
As
Restated (unaudited)
|
F-4
|
Consolidated
Statements of Changes in Shareholders' Equity from Inception,
May 1989
through June 30, 2006 as restated
|
F-5
|
Notes
to Consolidated Financial Statements (unaudited)
|
F-9
|
For
the Year Ended September 30, 2005
Independent
Auditor’s Report
|
|
Consolidated
Balance Sheet as of September 30, 2005 and September 30, 2004
(audited)
|
F-15
|
Statements
of Operations For the Years Ended September 30, 2005 and September
30,
2004and from Inception, May 1989 through September 30,
2005
|
F-16
|
|
|
Statements
of Cash Flows For the Years Ended September 30, 2005 and September
30,
2004 and from Inception, May 1989 through September 30,
2005
|
F-17
|
Statement
of Changes in Shareholders' Equity From Inception, May 1989 to
September 30, 2005 As Restated
|
F-18
|
|
|
Notes
to the Consolidated Financial Statements For the Years Ended September
30,
2005 and September 30, 2004
|
F-22
|
USCorp.
(an
Exploration Stag Company)
Balance
Sheet
As
of June 30, 2006 and September 30, 2005
|
|
Unaudited
|
|
|
|
|
|
30-Jun-06
|
|
30-Sep-05
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
170,109
|
|
$
|
627,372
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
170,109
|
|
|
627,372
|
|
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
Equipment-
net
|
|
|
3,384
|
|
|
4,006
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
173,493
|
|
$
|
631,378
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable & accrued expenses
|
|
$
|
56,685
|
|
$
|
52,121
|
|
Total
current liabilities
|
|
|
56,685
|
|
|
52,121
|
|
|
|
|
|
|
|
|
|
Note
payable- shareholder
|
|
|
846,794
|
|
|
651,429
|
|
Advances
payable shareholders
|
|
|
0
|
|
|
135,606
|
|
|
|
|
|
|
|
|
|
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
|
|
|
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- $.01 par value, authorized 800,000,000 shares,issued
and
outstanding, 32,921,431 shares at September 30, 2005 and 34,056,459
at
June 30, 2006
|
|
|
330,099
|
|
|
329,214
|
|
Additional
paid in capital
|
|
|
7,194,398
|
|
|
7,115,633
|
|
Accumulated
deficit
|
|
|
(8,324,648
|
)
|
|
(7,722,790
|
)
|
Total
shareholders' equity
|
|
|
(800,151
|
)
|
|
(277,943
|
)
|
|
|
|
|
|
|
|
|
Total
Liabilities & Shareholders' Equity
|
|
$
|
173,493
|
|
$
|
631,378
|
|
See
the notes to the financial statements.
USCorp.
(an
Exploration Stage Company)
Unaudited
Statements of Operations
For
the Nine Months & Quarter Ended June 30, 2006 and June 30,
2005
and
from Inception, May 1989 through June 30, 2006
|
|
9
Months
30-Jun-06
|
|
9
Months
30-Jun-05
|
|
3
Months
30-Jun-06
|
|
3
Months
30-Jun-05
|
|
Inception
to
Date
|
|
General
and administrative expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
142,470
|
|
$
|
314,765
|
|
$
|
6,241
|
|
$
|
260,576
|
|
$
|
3,268,979
|
|
Administration
|
|
|
223,622
|
|
|
94,831
|
|
|
86,688
|
|
|
15,207
|
|
|
3,658,665
|
|
License
expense
|
|
|
590
|
|
|
245
|
|
|
0
|
|
|
200
|
|
|
131,899
|
|
Professional
fees
|
|
|
32,204
|
|
|
9,230
|
|
|
17,870
|
|
|
2,400
|
|
|
418,331
|
|
Total
general & administrative expenses
|
|
|
398,886
|
|
|
419,071
|
|
|
110,799
|
|
|
278,383
|
|
|
7,477,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss from operations
|
|
|
(398,886
|
)
|
|
(419,071
|
)
|
|
(110,799
|
)
|
|
(278,383
|
)
|
|
(7,477,874
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(47,354
|
)
|
|
(2,660
|
)
|
|
(15,715
|
)
|
|
(266
|
)
|
|
(66,284
|
)
|
Loss
on unhedged underlying
|
|
|
(155,618
|
)
|
|
0
|
|
|
(45,018
|
)
|
|
0
|
|
|
(167,871
|
)
|
(Loss)
gain on mining claim
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(600,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before provision for income taxes
|
|
|
(601,858
|
)
|
|
(421,731
|
)
|
|
(171,532
|
)
|
|
(278,649
|
)
|
|
(8,312,029
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before extraordinary item
|
|
|
(601,858
|
)
|
|
(421,731
|
)
|
|
(171,532
|
)
|
|
(278,649
|
)
|
|
(8,312,029
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Extraordinary
item:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
on early extinguishment of debt (net of tax)
|
|
|
0
|
|
|
(24,000
|
)
|
|
0
|
|
|
0
|
|
|
(12,619
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
($601,858
|
)
|
|
($445,731
|
)
|
|
($171,532
|
)
|
|
($278,649
|
)
|
|
($8,324,648
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
& fully diluted net loss per common share
|
|
|
($0.02
|
)
|
|
($0.01
|
)
|
|
($0.01
|
)
|
|
($0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
& fully diluted
|
|
|
33,813,281
|
|
|
30,577,709
|
|
|
33,904,776
|
|
|
32,088,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
the notes to the financial statements.
USCorp.
(an
Exploration Stage Company)
Unaudited
Statements of Cash Flows
From
Inception, May 1989 to June 30, 2006
|
|
30-Jun-06
|
|
30-Jun-05
|
|
Inception
to
Date
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
($601,858
|
)
|
|
($445,731
|
)
|
|
($8,324,648
|
)
|
Adjustments
to reconcile net income items not requiring the use of
cash:
|
|
|
|
|
|
|
|
|
|
|
Loss
on sale of mining claim
|
|
|
0
|
|
|
0
|
|
|
600,000
|
|
Consulting
fees
|
|
|
79,650
|
|
|
312,500
|
|
|
2,386,142
|
|
Depreciation
expense
|
|
|
1,626
|
|
|
1,439
|
|
|
4,201
|
|
Interest
expense
|
|
|
39,747
|
|
|
2,660
|
|
|
55,634
|
|
Impairment
expense
|
|
|
0
|
|
|
0
|
|
|
2,449,466
|
|
Loss
on early extinguishment of debt (net of tax)
|
|
|
0
|
|
|
24,000
|
|
|
12,619
|
|
Loss
on unhedged underlying
|
|
|
155,618
|
|
|
0
|
|
|
170,914
|
|
Changes
in other operating assets and liabilities :
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
4,564
|
|
|
(31,221
|
)
|
|
(293,399
|
)
|
Net
cash used by operations
|
|
|
(320,653
|
)
|
|
(136,353
|
)
|
|
(2,939,071
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
Purchase
of office equipment
|
|
|
(1,004
|
)
|
|
(3,581
|
)
|
|
(7,585
|
)
|
Net
cash used by investing activities
|
|
|
(1,004
|
)
|
|
(3,581
|
)
|
|
(7,585
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock
|
|
|
0
|
|
|
48,000
|
|
|
2,138,356
|
|
Issuance
of preferred stock
|
|
|
0
|
|
|
27,843
|
|
|
20,508
|
|
Issuance
of note payable to shareholder
|
|
|
0
|
|
|
0
|
|
|
635,663
|
|
Subscriptions
received
|
|
|
0
|
|
|
0
|
|
|
55,175
|
|
Placement
fees
|
|
|
0
|
|
|
(5,518
|
)
|
|
(1,750
|
)
|
Advances
received (paid) shareholder
|
|
|
(135,606
|
)
|
|
78,368
|
|
|
37,269
|
|
Capital
contributed by shareholders
|
|
|
0
|
|
|
0
|
|
|
231,544
|
|
Net
cash provided by financing activities
|
|
|
(135,606
|
)
|
|
148,693
|
|
|
3,116,765
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash during the fiscal year
|
|
|
(457,263
|
)
|
|
8,759
|
|
|
170,109
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
balance at beginning of the fiscal year
|
|
|
627,372
|
|
|
16,781
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
balance at June 30th
|
|
$
|
170,109
|
|
$
|
25,540
|
|
$
|
170,109
|
|
|
|
|
|
|
|
|
|
|
|
|
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
notes to financial statements.
USCorp.
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to June 30, 2006
As
Restated
|
|
Common
Shares
|
|
Common
Par
Value
|
|
Paid
in
Capital
|
|
Accumulated
Deficit
|
|
Total
|
|
Stock
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
|
|
|
|
|
USCorp.
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to June 30, 2006
As
Restated
(Continued)
|
|
Common
Shares
|
|
Common
Par
Value
|
|
Paid
in
Capital
|
|
Accumulated
Deficit
|
|
Total
|
|
Stock
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
|
|
|
|
|
USCorp.
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to June 30, 2006
As
Restated
(Continued)
|
|
Common
Shares
|
|
Common
Par
Value
|
|
Paid
in
Capital
|
|
Accumulated
Deficit
|
|
Total
|
|
Stock
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
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
|
|
|
USCorp.
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to June 30, 2006
As
Restated
(Continued)
|
|
Common
Shares
|
|
Common
Par
Value
|
|
Paid
in
Capital
|
|
Accumulated
Deficit
|
|
Total
|
|
Stock
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
|
|
|
2,118,441
|
|
|
21,184
|
|
|
652,714
|
|
|
|
|
|
673,898
|
|
$
|
0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the fiscal year
|
|
|
|
|
|
|
|
|
|
|
|
(964,108
|
)
|
|
(964,108
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2004
|
|
|
29,531,459
|
|
$
|
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
|
|
|
32,921,459
|
|
|
329,214
|
|
|
7,115,633
|
|
|
(7,722,790
|
)
|
|
(277,943
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
stock for services
|
|
|
885,000
|
|
|
885
|
|
|
78,765
|
|
|
|
|
|
79,650
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
|
|
|
|
|
|
|
|
|
|
(601,858
|
)
|
|
(601,858
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at June 30, 2006
|
|
|
33,806,459
|
|
$
|
330,099
|
|
$
|
7,194,398
|
|
|
($8,324,648
|
)
|
|
($800,151
|
)
|
|
|
|
*-
Adjusted for stock splits.
Please
see the notes to the financial statements.
USCorp.
(an
Exploration Stage Company)
Notes
to the Financial Statements
For
the Nine Months Ended June 30, 2006 and June 30, 2005
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 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 US Corp.
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, through its wholly owned subsidiary, USMetals, owns 141 Lode
Mining
Claims in the Eureka Mining District of Yavapai County, Arizona, called
the Twin
Peaks Mine; and through its wholly owned subsidiary Southwest Resource
Development, Inc., owns 8 Lode and 21 Placer Claims in the Mesquite
Mining
District of Imperial County, California, which the Company refers to
as the
Chocolate Mountain Region Claims.
The
Company has no business operations to date.
Use
of Estimates- The preparation of the 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.
Shareholder
Loans 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.
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.
Exploration
Stage Company- the Company has had 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 “losses accumulated during the development stage” and are
reported in the Stockholders' Equity section of the balance sheet.
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 the
issuance of shares to raise capital to fund its business
operations.
Management's
plans with regard to this matter are as follows:
-
|
Raise
capital to complete the company's mining plan of
operations.
|
-
|
Complete
exploration and drilling on claims of the Twin Peaks Mine
and Chocolate
Mountain Region Claims.
|
-
|
Complete
testing operations on all
properties.
|
-
|
Complete
reports and feasibility studies on the Twin Peaks Mine and
Chocolate
Mountain Region Claims.
|
-
|
Bring
the Twin Peaks Mine and Chocolate Mountain Region Claims
to full-scale
commercial mining.
|
-
|
Obtain
a credit facility based in part on the value of its proven
reserves when
necessary and if appropriate given market
conditions.
|
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. At June 30, 2006, there were 155,000 shares of preferred
stock and 155,000 preferred warrants convertible into 620,000 shares
of common
stock, however these financial instruments have been excluded from
the
calculation of loss per share because their inclusion would be
anti-dilutive.
Loss
per
share has been calculated as follows:
|
|
30-Jun-06
|
|
30-Jun-05
|
|
Net
loss before cumulative preferred dividend
|
|
|
($601,858
|
)
|
|
($445,731
|
)
|
Cumulative
dividend preferred
|
|
|
(11,275
|
)
|
|
0
|
|
Net
loss
|
|
|
($613,133
|
)
|
|
($445,731
|
)
|
Weighted
average
|
|
|
33,813,281
|
|
|
30,577,709
|
|
Basic
& fully diluted net loss per common share
|
|
|
($0.02
|
)
|
|
($0.01
|
)
|
4.
Related Party Transactions
During
the nine months ended June 30, 2006 and June 30, 2005, the Company
was provided
office space by the chief executive officer and majority shareholder
at a cost
of $14,585 and $7,396.
During
the nine months ended June 30, 2006, the Company repaid $135,606 of
advances
from a shareholder. The Company imputed interest of 9% on the outstanding
advance balance based on the Company's current borrowing rate, and
recorded
interest of $4,464 in the statement of operations.
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.
The note
is unsecured and carries interest of 9%. As a result of the transaction,
the
Company recorded interest expense of $42,790 and a loss on the underlying
derivative gold contract of $37,574 in the statement of operations
for the nine
months ended June 30, 2006.
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.
The loss
on the underlying derivative gold contract has been calculated as
follows.
Carrying
value of loan
|
|
$
|
678,923
|
|
Fair
value of loan
|
|
|
846,794
|
|
Life
to date loss on unhedged underlying derivative
|
|
$
|
167,871
|
|
6.
Property and Equipment
A
summary
of equipment is as follows:
|
|
30-Jun-06
|
|
30-Sep-05
|
|
Office
equipment
|
|
$
|
7,585
|
|
$
|
6,581
|
|
Accumulated
depreciation
|
|
|
(4,201
|
)
|
|
(2,575
|
)
|
Net
property & equipment
|
|
$
|
3,384
|
|
$
|
4,006
|
|
7.
Transactions of Common stock
During
the first nine months of fiscal year 2006, the Company issued 885,000
shares of
common stock to consultants for services.
In
April
2006, the Company amended the articles of incorporation to increase the
number
of authorized common shares to 800,000,000 shares, of which 250,000,000
are
non-voting shares.
In
December 2004, the Company issued 150,000 shares of common stock and
received
proceeds of $48,000. In addition, the Company issued 330,000 shares of
common
stock to consultants for services rendered. In April 2005, the Company
issued
1,910,000 shares of common stock for services.
At
June
30, 2006, common stock warrants outstanding were comprised as
follows:
|
|
Amount
|
|
Wgtd
Avg Exercise Price
|
|
Wgtd
Years
to
Maturity
|
|
Outstanding
at September 30, 2005
|
|
|
155,000
|
|
|
|
|
|
|
|
Issued
|
|
|
0
|
|
|
|
|
|
|
|
Outstanding
at June 30, 2006
|
|
|
155,000
|
|
$
|
0.50
|
|
|
0.55
|
|
Provision
for income taxes is comprised of the following:
|
|
30-Jun-06
|
|
30-Jun-05
|
|
Net
loss before provision for income taxes
|
|
|
($398,886
|
)
|
|
($419,071
|
)
|
Current
tax expense:
|
|
|
|
|
|
|
|
Federal
|
|
$
|
0
|
|
$
|
0
|
|
State
|
|
|
0
|
|
|
0
|
|
Total
|
|
$
|
0
|
|
$
|
0
|
|
Less
deferred tax benefit:
|
|
|
|
|
|
|
|
Timing
differences
|
|
|
(2,273,143
|
)
|
|
(1,652,589
|
)
|
Allowance
for recoverability
|
|
|
2,273,143
|
|
|
1,652,589
|
|
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
|
|
$
|
2,273,143
|
|
$
|
1,652,589
|
|
Allowance
for recoverability
|
|
|
(2,273,143
|
)
|
|
(1,652,589
|
)
|
Deferred
tax benefit
|
|
$
|
0
|
|
$
|
0
|
|
Note:
The
deferred tax benefits arising from the timing differences begin to expire
in
fiscal year 2010 and may not be recoverable upon the purchase of the
Company
under current IRS statutes.
DONAHUE
ASSOCIATES, LLC
Certified
Public Accountants
27
Beach Road Suite CO5A
Monmouth
Beach, NJ 07750
Tel.
732-229-7723
Independent
Auditor’s Report
The
Shareholders
USCorp
(an
Exploration Stage Company)
We
have
audited the accompanying consolidated balance sheets of USCorp. as of September
30, 2005 and September 30, 2004 and the related consolidated statements of
operations and consolidated statements of changes in shareholders’ equity and
cash flows for the years then ended. These financial statements are the
responsibility of management. Our responsibility is to express an opinion
on
these financial statements based on our audit.
We
conducted our audit in accordance with auditing standards generally accepted
by
the Public Company Accounting Oversight Board in the United States. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In
our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of USCorp. as of September 30,
2005
and September 30, 2004 and the related consolidated statements of operations
and
consolidated statement of changes in shareholders’ equity and cash flows for the
years then ended then ended in conformity with generally accepted accounting
principles generally accepted in the United States of America.
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
1, 2005
USCorp
(an
Exploration Stage Company)
Consolidated Balance Sheet
As
of September 30, 2005 and September 30, 2004
|
|
|
|
As
Restated
|
|
ASSETS
|
|
30-Sep-05
|
|
30-Sep-04
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash
|
|
$
|
627,372
|
|
$
|
16,781
|
|
|
|
|
|
|
|
|
|
Total
current assets
|
|
|
627,372
|
|
|
16,781
|
|
|
|
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
|
|
|
Equipment-
net
|
|
|
4,006
|
|
|
2,417
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
631,378
|
|
$
|
19,198
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable & accrued expenses
|
|
$
|
52,121
|
|
$
|
42,964
|
|
Note
payable to shareholder
|
|
|
0
|
|
|
40,000
|
|
Subscriptions
payable-net
|
|
|
0
|
|
|
49,657
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
52,121
|
|
|
132,621
|
|
|
|
|
|
|
|
|
|
Note
payable- shareholder
|
|
|
651,429
|
|
|
0
|
|
Advances
payable shareholders
|
|
|
135,606
|
|
|
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
|
|
|
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
|
|
|
0
|
|
Common
stock- $.01 par value, authorized 300,000,000 shares,
|
|
|
|
|
|
|
|
issued
and outstanding, 29,531,459 shares at September 30, 2004
|
|
|
|
|
|
|
|
and
32,921,431 at September 30, 2005
|
|
|
329,214
|
|
|
295,314
|
|
Additional
paid in capital
|
|
|
7,115,633
|
|
|
6,685,716
|
|
Accumulated
deficit
|
|
|
(7,722,790
|
)
|
|
(7,094,453
|
)
|
Total
shareholders' equity
|
|
|
(277,943
|
)
|
|
(113,423
|
)
|
|
|
|
|
|
|
|
|
Total
Liabilities & Shareholders' Equity
|
|
$
|
631,378
|
|
$
|
19,198
|
|
|
|
|
|
|
|
|
|
See
the notes to the Consolidated financial
statements.
|
|
|
|
|
|
|
|
USCorp
(an
Exploration Stage Company)
Statements
of Operations
For
the Years Ended September 30, 2005 and September 30, 2004
and
from Inception, May 1989 through September 30, 2005
|
|
|
|
|
|
As
Restated
|
|
|
|
|
|
|
|
Inception
|
|
|
|
30-Sep-05
|
|
30-Sep-04
|
|
to
Date
|
|
General
and administrative expenses:
|
|
|
|
|
|
|
|
Consulting
|
|
$
|
373,720
|
|
$
|
730,657
|
|
$
|
3,126,509
|
|
Administration
|
|
|
145,464
|
|
|
149,048
|
|
|
3,435,043
|
|
License
expense
|
|
|
21,777
|
|
|
26,289
|
|
|
131,309
|
|
Professional
fees
|
|
|
51,508
|
|
|
50,180
|
|
|
386,127
|
|
Total
general & administrative expenses
|
|
|
592,469
|
|
|
956,174
|
|
|
7,078,988
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss from operations
|
|
|
(592,469
|
)
|
|
(956,174
|
)
|
|
(7,078,988
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expenses):
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(7,953
|
)
|
|
(7,934
|
)
|
|
(15,887
|
)
|
Loss
on unhedged underlying
|
|
|
(15,296
|
)
|
|
0
|
|
|
(15,296
|
)
|
Loss
on mining claim
|
|
|
0
|
|
|
0
|
|
|
(600,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before provision for income taxes
|
|
|
(615,718
|
)
|
|
(964,108
|
)
|
|
(7,710,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss before extraordinary item
|
|
|
(615,718
|
)
|
|
(964,108
|
)
|
|
(7,710,171
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Extraordinary
item:
|
|
|
|
|
|
|
|
|
|
|
Loss
on early extinguishment of debt (net of tax)
|
|
|
(12,619
|
)
|
|
0
|
|
|
(12,619
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
($628,337
|
)
|
|
($964,108
|
)
|
|
($7,722,790
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
& fully diluted net loss per common share
|
|
|
($0.02
|
)
|
|
($0.04
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average of common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
& fully diluted
|
|
|
31,082,723
|
|
|
27,352,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
the notes to the Consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
USCorp
(an
Exploration Stage Company)
Statements
of Cash Flows
For
the Years Ended September 30, 2005 and September 30, 2004
and
from Inception, May 1989 through September 30, 2005
|
|
|
|
|
|
As
Restated
|
|
|
|
|
|
|
|
Inception
|
|
|
|
30-Sep-05
|
|
30-Sep-04
|
|
to
Date
|
|
Operating
Activities:
|
|
|
|
|
|
|
|
Net
loss
|
|
|
($628,337
|
)
|
|
($964,108
|
)
|
|
($7,722,790
|
)
|
Adjustments
to reconcile net income items
|
|
|
|
|
|
|
|
|
|
|
not
requiring the use of cash:
|
|
|
|
|
|
|
|
|
|
|
Loss
on sale of mining claim
|
|
|
0
|
|
|
0
|
|
|
600,000
|
|
Consulting
fees
|
|
|
360,000
|
|
|
673,898
|
|
|
2,306,492
|
|
Depreciation
expense
|
|
|
1,992
|
|
|
583
|
|
|
2,575
|
|
Interest
expense
|
|
|
7,953
|
|
|
7,934
|
|
|
15,887
|
|
Impairment
expense
|
|
|
0
|
|
|
0
|
|
|
2,449,466
|
|
Loss
on early extinguishment of debt (net of tax)
|
|
|
12,619
|
|
|
0
|
|
|
12,619
|
|
Loss
on unhedged underlying
|
|
|
15,296
|
|
|
0
|
|
|
15,296
|
|
Changes
in other operating assets and liabilities :
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
5,786
|
|
|
(19,738
|
)
|
|
(297,963
|
)
|
Net
cash used by operations
|
|
|
(224,691
|
)
|
|
(301,431
|
)
|
|
(2,618,418
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
|
|
|
|
|
|
Purchase
of office equipment
|
|
|
(3,581
|
)
|
|
(3,000
|
)
|
|
(6,581
|
)
|
Net
cash used by investing activities
|
|
|
(3,581
|
)
|
|
(3,000
|
)
|
|
(6,581
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock
|
|
|
49,817
|
|
|
212,000
|
|
|
2,138,356
|
|
Issuance
of preferred stock
|
|
|
20,508
|
|
|
0
|
|
|
20,508
|
|
Issuance
of note payable to shareholder
|
|
|
635,663
|
|
|
0
|
|
|
635,663
|
|
Subscriptions
received
|
|
|
0
|
|
|
55,175
|
|
|
55,175
|
|
Placement
fees
|
|
|
0
|
|
|
(5,518
|
)
|
|
(1,750
|
)
|
Advances
from shareholders
|
|
|
132,875
|
|
|
0
|
|
|
172,875
|
|
Capital
contributed by shareholders
|
|
|
0
|
|
|
0
|
|
|
231,544
|
|
Net
cash provided by financing activities
|
|
|
838,863
|
|
|
261,657
|
|
|
3,252,371
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash during the fiscal year
|
|
|
610,591
|
|
|
(42,774
|
)
|
|
627,372
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
balance at beginning of the fiscal year
|
|
|
16,781
|
|
|
59,555
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
balance at end of the fiscal year
|
|
$
|
627,372
|
|
$
|
16,781
|
|
$
|
627,372
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Consolidated financial
statements.
|
|
|
|
|
|
|
|
|
|
|
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders Equity
From
Inception, May 1989 to September 30, 2005
As
Restated
|
|
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
|
|
|
|
|
See
the notes to the Consolidated financial statements.
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders' Equity
From
Inception, May 1989 to September 30, 2005
As
Restated
(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
|
|
|
|
|
See
the notes to the Consolidated financial statements.
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders' Equity
From
Inception, May 1989 to September 30, 2005
As
Restated
(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
|
|
$0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
See
the notes to the Consolidated financial statements.
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders' Equity
From
Inception, May 1989 to September 30, 2005
As
Restated
(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
|
|
2,118,441
|
|
21,184
|
|
652,714
|
|
|
|
673,898
|
|
$0.32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the fiscal year
|
|
|
|
|
|
|
|
(964,108)
|
|
(964,108)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at September 30, 2004
|
|
29,531,459
|
|
$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
|
|
32,921,459
|
|
$329,214
|
|
$7,115,633
|
|
($7,722,790)
|
|
($277,943)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*-
Price adjusted for splits.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
the notes to the Consolidated financial statements.
USCorp
(an
Exploration Stage Company)
Notes
to the Consolidated Financial Statements
For
the Years Ended September 30, 2005 and September 30, 2004
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 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 US Corp.
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, through its wholly owned subsidiary, USMetals, owns 141 Lode Mining
Claims in the Eureka Mining District of Yavapai County, Arizona, called the
Twin
Peaks Mine; and through its wholly owned subsidiary Southwest Resource
Development, Inc., owns 8 Lode and 21 Placer Claims in the Mesquite Mining
District of Imperial County, California, which the Company refers to as the
Chocolate Mountain Region Claims.
The
Company has no business operations to date.
Use
of Estimates-
The
preparation of the 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.
Shareholder
Loans 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.
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.
Exploration
Stage Company-
the
Company has had 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 exploration stage are accumulated in “losses
accumulated during the exploration stage” and are reported in the Stockholders’
Equity section of the balance sheet.
Recent
Accounting Pronouncements-
EITF
03-16: In
March 2004, the EITF reached a consensus regarding Issue No. 03-16,
"Accounting for Investments in Limited Liability Companies" ("EITF 03-16").
EITF
03-16 requires investments in limited liability companies ("LLCs") that have
separate ownership accounts for each investor to be accounted for similar
to a
limited partnership investment under Statement of Position No. 78-9,
"Accounting for Investments in Real Estate Ventures." Investors are required
to
apply the equity method of accounting to their investments at a much lower
ownership threshold than the 20% threshold applied under APB No. 18, "The
Equity Method of Accounting for Investments in Common Stock." The adoption
of
EITF 03-16 did not have a material impact on the financial condition or results
of operations.
EITF
04-1:
In
September 2004, the EITF reached a consensus regarding Issue No. 04-1,
"Accounting for Preexisting Relationships Between the Parties to a Business
Combination" ("EITF 04-1"). EITF 04-1 requires an acquirer in a business
combination to evaluate any preexisting relationship with the acquiree to
determine if the business combination in effect contains a settlement of
the
preexisting relationship. A business combination between parties with a
preexisting relationship should be viewed as a multiple element transaction.
EITF 04-1 is effective for business combinations after October 13, 2004,
but requires goodwill resulting from prior business combinations involving
parties with a preexisting relationship to be tested for impairment by applying
the guidance in the consensus. The adoption of EITF 04-1 did not have a material
impact on the financial condition or results of operations.
SFAS
No. 123R: In
December 2004, the FASB issued SFAS No. 123 (revised 2004),
"Share-Based Payment" ("SFAS No. 123R"), which replaces SFAS No. 123,
"Accounting for Stock-Based Compensation" ("SFAS No. 123") and supercedes
APB Opinion No. 25, "Accounting for Stock Issued to Employees." SFAS
No. 123R requires all share-based payments to employees, including grants
of employee stock options, to be recognized in the financial statements based
on
their fair values, beginning with the first interim or annual period after
June 15, 2005, with early adoption encouraged. In addition, SFAS
No. 123R will cause unrecognized expense (based on the amounts in our pro
forma footnote disclosure) related to options vesting after the date of initial
adoption to be recognized as a charge to results of operations over the
remaining vesting period. The adoption of SFAS No. 123R did not have a material
impact on the financial condition or results of operations.
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 the
issuance of shares to raise capital to fund its business operations.
Management’s
plans with regard to this matter are as follows:
-
Raise
capital to complete the company’s mining plan of operations.
-
Complete exploration and drilling on claims of the Twin Peaks Mine and Chocolate
Mountain Region Claims.
-
Complete testing operations on all properties.
-
Complete reports and feasibility studies on the Twin Peaks Mine and Chocolate
Mountain Region Claims.
-
Bring
the Twin Peaks Mine and Chocolate Mountain Region Claims to full-scale
commercial mining.
-
Obtain
a credit facility based in part on the value of its proven reserves when
necessary and if appropriate given market conditions.
-
Determine the value and recoverability of its tailings near Kingman
Arizona.
3.
Fair values of Financial Instruments
Cash,
accounts payable and accrued expenses, note payable to shareholder and advances
payable to shareholder in the balance sheet are estimated to approximate
fair
market value at September 30, 2005 and September 30, 2004.
4.
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. At September 30,
2005,
there were 155,000 shares of preferred stock and 155,000 preferred warrants
convertible into that were convertible into 620,000 shares of common stock,
however these financial instruments have been excluded from the calculation
of
loss per share because their inclusion would be anti-dilutive.
Loss
per
share has been calculated as follows:
|
|
30-Sep-05
|
|
30-Sep-04
|
|
|
|
|
|
|
|
Net
loss before cumulative preferred dividend
|
|
|
($628,337
|
)
|
|
($964,108
|
)
|
|
|
|
|
|
|
|
|
Cumulative
dividend preferred
|
|
|
(5,478
|
)
|
|
0
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
($633,815
|
)
|
|
($964,108
|
)
|
|
|
|
|
|
|
|
|
Weighted
average
|
|
|
31,082,723
|
|
|
25,352,944
|
|
|
|
|
|
|
|
|
|
Basic
& fully diluted net loss per common share
|
|
|
($0.02
|
)
|
|
($0.04
|
)
|
|
|
|
|
|
|
|
|
5.
Related Party Transactions
During
fiscal years 2005 and 2004, the Company was provided office space by the
chief
executive officer and majority shareholder at no cost to the
Company.
In
September 2003, the Company issued convertible debt at no interest to
shareholders in the Company and received proceeds of $40,000. The debt matured
in September 2004 and entitled the shareholders to convert the debt into
100,000
shares of common stock at an exercise price of $0.40 per share. The Company
recorded a beneficial conversion feature of $3,767 as a result of the
transaction and amortized the beneficial conversion feature to interest expense
during fiscal year 2004. This debt and the attendant detachable warrants
were
extinguished by the Company in February 2005 by issuing 400,000 shares of
common
stock. The Company recognized a loss on the retirement of this debt of $22,619,
net of tax, in the statement of operations.
During
fiscal year 2005, the Company’s shareholders advanced the Company $135,606 at no
interest. The Company imputed interest of 9%, based on the Company’s current
borrowing rate, and recorded interest of $6,102 in the statement of operations
for fiscal 2005.
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. The
note
is unsecured and carries interest of 9%. As a result of the transaction,
the
Company recorded interest expense of $470 and a loss on the underlying
derivative gold contract of $15,296 in the statement of operations for fiscal
year 2005.
6.
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. As
a
result of the transaction, the Company recorded interest expense of $470
and a
loss on the underlying derivative gold contract of $15,296 in the statement
of
operations for fiscal year 2005. The loss on the underlying derivative gold
contract has been calculated as follows.
Fair
Value of loan payable
|
|
$
|
651,429
|
|
|
|
|
|
|
Carrying
value of loan payable
|
|
|
636,133
|
|
|
|
|
|
|
Loss
on underlying
|
|
|
($15,296
|
)
|
|
|
|
|
|
7.
Property and Equipment
A
summary
of equipment is as follows:
|
|
30-Sep-05
|
|
30-Sep-04
|
|
|
|
|
|
|
|
Office
equipment
|
|
|
6,581
|
|
|
3,000
|
|
Accumulated
depreciation
|
|
|
(2,575
|
)
|
|
(583
|
)
|
|
|
|
|
|
|
|
|
Net
property & equipment
|
|
$
|
4,006
|
|
$
|
2,417
|
|
8.
Issuances of Common stock
During
fiscal year 2004, the Company issued 1,069,945 shares of common stock to
vendors
to pay outstanding invoices of $470,776.
During
fiscal year 2004, the Company issued 550,000 shares of common stock and received
proceeds of $212,000.
During
fiscal year 2004, the Company issued 2,118,441 shares of common stock to
consultants for services rendered valued at $673,898.
During
fiscal year 2005, the Company issued 150,000 shares of common stock and received
proceeds of $48,000.
During
fiscal year 2005, the Company issued 2,840,000 shares of common stock to
consultants for services rendered.
During
fiscal year 2005, the Company issued 400,000 shares of common stock to creditors
to settle outstanding debt.
9.
Issuance of Preferred Stock
In
June
2004, the Company offered a private placement of 6 million units. Each unit
of
the private placement contained one share of series B preferred stock and
one
warrant at a price of $0.50 per unit. The offer terminated in January
2005.
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 Company may call
the
warrants at any time at a redemption price of $0.001 per warrant provided
the
price of its common stock has traded above $1 for 20 consecutive days.
The
Series B preferred shares accumulate dividends at the rate of 10% per annum
of
the purchase price of $0.50, or $0.05 per year. 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.
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:
(v) |
During
the second year after their issuance at $0.575 per preferred
share;
|
(vi) |
During
the third year after their issuance at $0.55 per preferred
share;
|
(vii) |
During
the fourth year after their issuance at $0.525 per preferred
share;
|
(viii) |
After
the fourth year after their issuance at $0.50 per preferred
share.
|
The
Company sold 155,000 units and received net proceeds of $71,982. The Company
allocated $1,817 of the proceeds received to equity representing the estimated
value of the preferred stock warrants.
The
Company applied the Black-Scholes option pricing model to determine the fair
value of the detachable preferred stock warrants issued in fiscal year 2005.
The
following assumptions were used in the model. The dividend yield is 0%,
volatility is 20%, and a risk-free interest rate of 2%. The fair values
generated by the Black-Scholes model may not be indicative of the future
values,
if any, that may be received by the warrant holder.
The
following is a summary of preferred stock warrants outstanding at September
30,
2005.
|
|
|
|
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
|
|
$
|
0.50
|
|
|
1.29
|
|
|
|
|
|
|
|
|
|
|
|
|
The
preferred stock warrants are convertible into 310,000 shares of common
stock.
10.
Income Tax Provision
Provision
for income taxes is comprised of the following:
|
|
|
|
|
|
|
|
30-Sep-05
|
|
30-Sep-04
|
|
|
|
|
|
|
|
Net
loss before provision for income taxes
|
|
|
($592,469
|
)
|
|
($964,108
|
)
|
|
|
|
|
|
|
|
|
Current
tax expense:
|
|
|
|
|
|
|
|
Federal
|
|
$
|
0
|
|
$
|
0
|
|
State
|
|
|
0
|
|
|
0
|
|
Total
|
|
$
|
0
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
Less
deferred tax benefit:
|
|
|
|
|
|
|
|
Timing
differences
|
|
|
(2,111,196
|
)
|
|
(1,870,653
|
)
|
Allowance
for recoverability
|
|
|
2,111,196
|
|
|
1,870,653
|
|
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
|
|
$
|
2,111,196
|
|
$
|
1,870,653
|
|
Allowance
for recoverability
|
|
|
(2,111,196
|
)
|
|
(1,870,653
|
)
|
Deferred
tax benefit
|
|
$
|
0
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
Note:
The deferred tax benefits arising from the timing differences begin
to
expire in fiscal year
|
2010
and may not be recoverable upon the purchase of the Company under
current
IRS statutes.
|
|
|
|
|
|
|
|
|
10.
Restatement
Subsequent
to the issuance of the report for fiscal 2004, management determined that
the
mining claim asset acquired in 2002 should have been impaired in the year
it was
acquired because the estimate of the future cash flows discounted to the
present
could not be reasonably estimated nor assured. The restatement affected total
assets and total shareholders’ deficit as follows:
|
|
As
Restated
|
|
As
Reported
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
30,099
|
|
$
|
2,479,565
|
|
Shareholders'
Deficit
|
|
|
($62,672
|
)
|
$
|
2,386,794
|
|
NO
DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN
THIS PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
STOCKHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE
SPECIFICALLY OFFERED HEREBY OR AN OFFER TO SELL OR A SOLICITATION
OF AN
OFFER TO BUY ANY OF THESE SECURITIES IN ANY JURISDICTION TO ANY PERSON
TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. EXCEPT WHERE
OTHERWISE INDICATED, THIS PROSPECTUS SPEAKS AS OF THE EFFECTIVE DATE
OF
THE REGISTRATION STATEMENT. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR
ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE
PROSPECTUS DATE HEREOF.
|
|
UNTIL
[_______] 2006 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS) ALL DEALERS
THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOR PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN
ADDITION TO THE DEALER’S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
|
TABLE
OF CONTENTS
|
|
Page
|
|
|
|
|
|
Prospectus
Summary
|
|
1
|
|
The
Company
|
|
1
|
|
The
Offering
|
|
3
|
USCORP.
|
Transaction
Summary
|
|
4
|
|
Summary
Financial Information
|
|
5
|
6,700,000 SHARES
|
Risk
Factors
|
|
6
|
|
Special
Note Regarding Forward-Looking Statements
|
|
15
|
|
Use
of Proceeds
|
|
16
|
|
Market
for Our Shares
|
|
16
|
|
Management’s
Discussion and Analysis of
|
|
|
|
Financial
Condition and Results of Operations
|
|
17
|
|
Business
|
|
22
|
PROSPECTUS
|
Description
of Property
|
|
24
|
|
|
|
|
|
Legal
Proceedings
|
|
35
|
|
Executive
Compensation
|
|
36
|
|
Security
Ownership of Certain Beneficial Owners and Management
|
|
37
|
[_____________],
2006
|
Certain
Relationships and Related Transactions
|
|
38
|
|
Description
of Securities
|
|
39
|
|
Transfer
Agent |
|
39
|
|
Shares
Eligible for Resale
|
|
40
|
|
Selling
Securityholders
|
|
|
|
Transaction
With Dutchess Private Equities Fund, LP
|
|
42
|
|
Plan
of Distribution
|
|
43
|
|
Legal
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Where
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45
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Index
to Consolidated Financial Statements
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F-1
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PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under
Nevada law, a corporation may indemnify any person who was or is a party or
is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he:
(a) Is
not
liable pursuant to NRS 78.138; or
(b) Acted
in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful.
The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person is liable pursuant to NRS 78.1.38
or did not act in good faith and in a manner which he reasonably believed to
be
in or not opposed to the best interests of the corporation, or that, with
respect to any criminal action or proceeding, he had reasonable cause to believe
that his conduct was unlawful.
Under
our
Articles of Incorporation and Bylaws, the corporation shall indemnify any
individual made a party to a proceeding because he is or was an officer,
director, employee or agent of the corporation against liability incurred in
the
proceeding, all pursuant to and consistent with the provisions of NRS 78.751,
as
amended from time to time.
The
expenses of officers and directors incurred in defending a civil or criminal
action, suit or proceeding shall be paid by the corporation as they are incurred
and in advance of the final deposition of the action, suit or proceeding, but
only after receipt by the corporation of an undertaking by or on behalf of
the
officer or director on terms set by the Board of Directors, to repay the
expenses advanced if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the
corporation.
The
indemnification permitted herein is intended to be to the fullest extent
permissible under the laws of the State of Nevada, and any amendments
thereto.
Insofar
as indemnification for liabilities arising under the Securities Act might be
permitted to directors, officers or persons controlling our company under the
provisions described above, we have been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is therefore unenforceable.
ITEM
25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth an estimate of the costs and expenses, other than
the
underwriting discounts and commissions, payable by the Company in connection
with the issuance and distribution of the common stock being
registered.
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SEC
registration fee
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$
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46.60
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Legal
fees and expenses
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30,000
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Accountants’
fees and expenses
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0
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Printing
expenses
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1,500
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Total
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$
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31,546.60
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___________
All
amounts except the SEC registration fee are estimated. All of the expenses
set
forth above are being paid by us.
ITEM
26. RECENT SALES OF UNREGISTERED SECURITIES
The
following is a list of our securities that have been sold or issued by us during
the past three years. Each of these securities was sold without registration
under the Securities Act of 1933, in reliance on Regulation D of the Securities
Act of 1933. There were no underwriting discounts or commissions paid in
connection with the sale of these securities, except as noted.
In
February 2006, the Company issued 5,000,000 shares of its Class B Non-voting
Common Stock to a European-based fund for up to $17,000,000.This offering was
conducted pursuant to Regulation S of the Securities Act of 1933, as amended,
and the Class B shares have been listed
by
the fund on the Open Market (Freiverkehr) of Frankfurt Exchange in Germany
through a trading member. The
Company expects to receive 0.068 Euros per share upon consummation of the
offering. The
money
received from the sale of the shares will be used for advancing the Company’s
exploration program so the Company can focus on extracting the mineral resources
of its properties. The
proceeds received from the sale of the Class B Shares will be used for payment
of general corporate and operating purposes, including completing exploration
of
the Twin Peaks Mine and the Chocolate Mountain Region claim, and payment of
consulting and legal fees.
During
fiscal year 2005, the Company issued (i) 400,000 shares of common stock to
vendors to pay outstanding debt; (ii) 150,000 shares of common stock and
received proceeds of $48,000.
Additionally,
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 terminates in January 2005. 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 Company may call the warrants at
any
time at a redemption price of $0.001 per warrant provided the price of its
common stock has traded above $1 for 20 consecutive days.
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.
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)
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During
the second year after their issuance at $0.575 per preferred
share;
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(ii)
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During
the third year after their issuance at $0.55 per preferred
share;
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(iii)
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During
the fourth year after their issuance at $0.525 per preferred
share;
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(iv)
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After
the fourth year after their issuance at $0.50 per preferred
share.
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During
September 2004, the Company received $55,175 of subscriptions for 112,500 units
in this private placement.
Finally,
the Company issued registered shares as follows: 2,118,441 shares of common
stock to consultants for services rendered valued at $673,898.
ITEM
27. EXHIBITS
(a)
Exhibits
3.1
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Amended
and Restated Certificate of Incorporation of Registrant
(1)
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3.2
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Amended
and Restated By-Laws of Registrant (filed as Exhibit 3.2 to Annual
Report
on Form 10-KSB for year ended September 30, 2000, filed on December
29,
2000 and incorporated herein by reference).
*
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5.1
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Consent
of Gersten Savage LLP (1)
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10.1
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Investment
Agreement, dated May 30, 2006, by and between the Registrant and
Dutchess
Private Equities Fund, LP (filed as Exhibit 10.1 to Current Report
on Form
8-K, filed on June 1, 2006 and incorporated herein by
reference)*
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10.2
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Registration
Rights Agreement, dated May 30, 2006, by and between the Registrant
and
Dutchess Private Equities Fund, L.P. (filed as Exhibit 10.2 to
Current
Report on Form 8-K, filed on June 1, 2006 and incorporated herein
by
reference)*
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10.3
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2004
Stock Incentive Plan (filed as Exhibit 10 to Form S-8 filed on
May 19,
2004 and incorporated herein by
reference)*
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10.4
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Form
of Stock Option (Filed as Exhibit 10.2.1 to Current Report on Form
8-K
filed June 13, 2002 and incorporated herein by
reference)*
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14.1
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Code
of Ethics (file as Exhibit 14.1 to Form 10-KSB for the year ended
September 30, 2004 filed November 26, 2004 and incorporated herein
by
reference)*
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23.1
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Consent
of Gersten Savage LLP (included in Exhibit 5.1
hereto)(1)
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23.2
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Consent
of Donahue Associates, LLC (1)
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_______________________________
*
Previously filed as indicated therein.
(1)
Filed
herewith
ITEM
28. UNDERTAKINGS
Insofar
as indemnification for liabilities arising under the Securities Act of 1933,
as
amended, may be permitted to directors, officers and controlling persons of
the
registrant pursuant to any provision of the certificate of incorporation,
bylaws, contract arrangements, statute, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of
1933, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the
securities being registered, the registrant issuer will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a
court of appropriate jurisdiction the question whether such indemnification
by
it is against public policy as expressed in the Securities Act of 1933, and
will
be governed by the final adjudication of such issue.
The
undersigned registrant hereby undertakes that:
(1)
It
will file, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i)
Include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii)
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii)
Include any additional or changed material information on the plan of
distribution;
(2)
For
determining liability under the Securities Act of 1933, it will treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona
fide offering; and
(3)
It
will file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4)
For
determining any liability under the Securities Act of 1933, it will treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933, as part of this registration statement
as of the time the Commission declared it effective.
(5)
For
determining any liability under the Securities Act of 1933, it will treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
In
accordance with the requirements of the Securities Act of 1933, as amended,
the
registrant certifies that it has reasonable grounds to believe that it meets
all
of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in Las Vegas, Nevada
on
this 7th day
of September 2006.
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USCORP.
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By:
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/s/ Larry
Dietz
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Larry
Dietz
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President,
Secretary, Treasurer and Director
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Pursuant
to the requirements of the Securities Exchange Act of 1934, this registration
statement has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature
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Date
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/s/
Robert Dultz
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Chairman,
Chief
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September
7, 2006
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Robert
Dultz
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Executive
Officer and Acting Chief Financial Officer
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/s/
Larry Dietz
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President,
Secretary, Treasurer and Director
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September
7, 2006
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Larry
Dietz
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/s/
Carl O'Baugh
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Vice
President and Director
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September
7, 2006
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Carl
O'Baugh
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/s/
Judith Ahrens
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Director
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September
7, 2006
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Judith
Ahrens
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