Attached files
file | filename |
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EX-31.1 - USCORP | v211979_ex31-1.htm |
EX-32.1 - USCORP | v211979_ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
quarterly period ended: December 31, 2010
or
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the
transition period from: ______________ to ______________
USCORP
(Exact
name of registrant as specified in its charter)
Nevada
|
000-19061
|
87-0403330
|
(State
or Other Jurisdiction
|
(Commission
|
(I.R.S.
Employer
|
of
Incorporation)
|
File Number)
|
Identification
No.)
|
4535 W.
Sahara Avenue, Suite 200, Las Vegas, NV 89102
(Address
of Principal Executive Office) (Zip Code)
(702)
933-4034
(Registrant’s
telephone number, including area code)
(Former
name, former address and former fiscal year, if changed since last
report)
[Missing Graphic Reference]
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90
days. x Yes ¨ No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
|||
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). ¨ Yes x No
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of December 31, 2010.
153,819,222 shares
of Common Class A Stock and 5,060,500 shares of Common Class B Stock were issued
and outstanding.
USCORP
TABLE OF
CONTENTS
PART
I — FINANCIAL INFORMATION
|
3 | |||
Item
1. Financial Statements
|
3 | |||
Consolidated
Balance Sheet as of December 31, 2010 and December 31, 2009
(unaudited)
|
3 | |||
Consolidated
Statements of Operations for the Three Months and Quarter Ended December
31, 2010 and December 31, 2009 and from Inception, May 1989 through
December 31, 2010 (unaudited)
|
4 | |||
Consolidated
Statements of Cash Flows for the Three Months Ended December 31, 2010 and
December 31, 2009 and from Inception, May 1989 through December 31, 2010
(unaudited)
|
5 | |||
Consolidated
Statements of Changes in Shareholders’ Equity from Inception, May 1989
through December 31, 2010
|
6 | |||
Notes
to Consolidated Financial Statements (unaudited)
|
11 | |||
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
17 | |||
Item
3. Quantitative and Qualitative Disclosures About Market
Risk
|
19 | |||
Item
4T. Controls and Procedures
|
19 | |||
PART
II — OTHER INFORMATION
|
20 | |||
Item
1. Legal Proceedings
|
20 | |||
|
||||
Item
1A. Risk Factors
|
20 | |||
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
20 | |||
Item
3. Defaults Upon Senior Securities
|
20 | |||
Item
4. Submission of Matters to a Vote of Security
Holders
|
20 | |||
Item
5. Other Information
|
20 |
2
PART
I. FINANCIAL INFORMATION
USCorp
(an
Exploration Stage Company)
Balance
Sheet
As
of December 31, 2010 and September 30, 2010
Unaudited
|
||||||||
ASSETS
|
31-Dec-10
|
30-Sep-10
|
||||||
Current
assets:
|
||||||||
Cash
|
$ | 390,460 | $ | 354,019 | ||||
Total
current assets
|
$ | 390,460 | $ | 354,019 | ||||
Other
assets:
|
||||||||
Equipment-
net
|
100 | 376 | ||||||
Total
assets
|
$ | 390,560 | $ | 354,395 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable & accrued expenses
|
$ | 14,707 | $ | 25,298 | ||||
Gold
bullion loan
|
3,245,135 | 3,016,841 | ||||||
Convertible
debenture payable
|
700,000 | 700,000 | ||||||
Subscriptions
payable
|
0 | 0 | ||||||
Total
current liabilities
|
$ | 3,959,842 | $ | 3,742,139 | ||||
Due
to officer
|
27,114 | 40,170 | ||||||
Shareholders'
equity:
|
||||||||
Series
A preferred stock, one share convertible to eight shares of
common;
|
||||||||
par
value $0.001, 10,000,000 shares authorized,
|
||||||||
5,056,250
shares issued and outstanding at September 30, 2010
|
||||||||
and
4,056,250 at December 31, 2010
|
4,304 | 5,365 | ||||||
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,
|
||||||||
141,687
outstanding at September 30, 2010 and December 31, 2010, stated value;
$0.50
|
63,498 | 63,498 | ||||||
Common
stock B: $.001 par value, authorized 250,000,000 shares,
|
||||||||
issued
and outstanding, 5,000,000 shares at September 30, 2010
|
||||||||
and
5,060,500 at December 31, 2010
|
5,060 | 5,060 | ||||||
Common
stock A: $.01 par value, authorized 550,000,000 shares
authorized,
|
||||||||
issued
and outstanding, 135,955,389 shares at September 30, 2010
|
||||||||
and
153,819,222 at December 31, 2010
|
$ | 1,538,193 | $ | 1,359,555 | ||||
Additional
paid in capital
|
12,978,748 | 12,870,994 | ||||||
Accumulated
deficit - exploration stage
|
(18,186,199 | ) | (17,732,386 | ) | ||||
Total
shareholders' deficit
|
(3,669,258 | ) | (3,501,837 | ) | ||||
Total
Liabilities & Shareholders' Deficit
|
$ | 390,560 | $ | 354,395 | ||||
See
the notes to the financial statements.
|
3
USCorp
(an
Exploration Stage Company)
Statements
of Operations
For
the Quarters Ended December 31, 2010 and December 31, 2009
and
from Inception, May 1989 through December 31, 2010
Unaudited
|
Unaudited
|
Inception
|
||||||||||
31-Dec-10
|
31-Dec-09
|
to
Date
|
||||||||||
General
and administrative expenses:
|
||||||||||||
Consulting
|
$ | 158,722 | $ | 64,109 | $ | 7,556,625 | ||||||
Administration
|
58,763 | 49,941 | 6,296,397 | |||||||||
License
expense
|
0 | 0 | 247,559 | |||||||||
Professional
fees
|
8,034 | 6,883 | 722,167 | |||||||||
Total general & administrative expenses
|
225,519 | 120,933 | 14,822,748 | |||||||||
Net
loss from operations
|
$ | (225,519 | ) | $ | (120,933 | ) | $ | (14,822,748 | ) | |||
Other
income (expenses):
|
||||||||||||
Interest
income
|
0 | 0 | 7,908 | |||||||||
Interest
expense
|
0 | (35,006 | ) | (1,048,562 | ) | |||||||
Gain
(loss) on unhedged derivative
|
(228,294 | ) | (336,094 | ) | (2,322,797 | ) | ||||||
Net
loss before provision for income taxes
|
$ | (453,813 | ) | $ | (492,033 | ) | $ | (18,186,199 | ) | |||
Provision
for income taxes
|
0 | 0 | 0 | |||||||||
Net
loss
|
$ | (453,813 | ) | $ | (492,033 | ) | $ | (18,186,199 | ) | |||
Basic
& fully diluted net loss per common share
|
$ | (0.00 | ) | $ | (0.01 | ) | ||||||
Weighted
average of common shares outstanding:
|
||||||||||||
Basic
& fully diluted
|
144,875,885 | 76,043,451 | ||||||||||
See
the notes to the financial statements.
|
4
USCorp
(an
Exploration Stage Company)
Statements
of Cash Flows
For
the Quarters Ended December 31, 2010 and December 31, 2009
and
from Inception, May 1989 through December 31, 2010
Unaudited
|
Unaudited
|
Inception
|
||||||||||
31-Dec-10
|
31-Dec-09
|
to
Date
|
||||||||||
Operating
Activities:
|
||||||||||||
Net
loss
|
$ | (453,813 | ) | $ | (492,033 | ) | $ | (18,186,199 | ) | |||
Adjustments
to reconcile net income items
|
||||||||||||
not requiring the use of cash:
|
||||||||||||
Consulting
fees
|
53,512 | 7,159 | 4,940,975 | |||||||||
Depreciation
expense
|
276 | 277 | 17,455 | |||||||||
Interest
expense
|
0 | 35,006 | 984,989 | |||||||||
Impairment
expense
|
0 | 0 | 3,049,465 | |||||||||
Loss
on unhedged underlying derivative
|
228,294 | 336,094 | 2,322,797 | |||||||||
Changes
in other operating assets and liabilities :
|
||||||||||||
Accounts
payable and accrued expenses
|
(10,591 | ) | 0 | 14,707 | ||||||||
Net
cash used by operations
|
$ | (182,322 | ) | $ | (113,497 | ) | $ | (6,855,811 | ) | |||
Investing
activities:
|
||||||||||||
Purchase
of office equipment
|
$ | 0 | $ | 0 | $ | (17,555 | ) | |||||
Net
cash used by investing activities
|
0 | 0 | (17,555 | ) | ||||||||
Financing
activities:
|
||||||||||||
Issuance
of common stock
|
$ | 232,880 | $ | 105,780 | $ | 5,458,825 | ||||||
Issuance
of preferred stock
|
0 | 0 | 68,863 | |||||||||
Issuance
of common B stock
|
0 | 0 | 5,060 | |||||||||
Issuance
of gold bullion note
|
0 | 0 | 648,282 | |||||||||
Capital
contributed by shareholder
|
0 | 0 | 356,743 | |||||||||
Subscriptions
received (transferred to common stock)
|
(1,061 | ) | 11,470 | (1,061 | ) | |||||||
Issuance
of convertible notes
|
0 | 0 | 700,000 | |||||||||
Advances
received (paid) shareholder
|
(13,056 | ) | 8,656 | 27,114 | ||||||||
Net
cash provided by financing activities
|
218,763 | 125,906 | 7,263,826 | |||||||||
Net
increase (decrease) in cash during the period
|
$ | 36,441 | $ | 12,409 | $ | 390,460 | ||||||
Cash
balance at beginning of the fiscal year
|
354,019 | 18,527 | 0 | |||||||||
Cash
balance at December 31st
|
$ | 390,460 | $ | 30,936 | $ | 390,460 | ||||||
Supplemental
disclosures of cash flow information:
|
||||||||||||
Interest
paid during the year
|
$ | 0 | $ | 0 | $ | 0 | ||||||
Income
taxes paid during the year
|
$ | 0 | $ | 0 | $ | 0 | ||||||
See
the notes to the financial statements.
|
5
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders’ Equity
From
Inception in May 1989
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 |
6
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders’ Equity
From
Inception in May 1989
(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 |
7
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders’ Equity
From
Inception in May 1989
(Continued)
Common
|
Common
|
Paid
in
|
Accumulated
|
Stock
|
||||||||||||||||||||
Shares
|
Par
Value
|
Capital
|
Deficit
|
Total
|
Price
*
|
|||||||||||||||||||
Issuance
of common stock
|
103,535 | 1,035 | 611,943 | 612,978 | $ | 0.15 | ||||||||||||||||||
Issued
stock for compensation
|
50,000 | 500 | 19,571 | 20,071 | $ | 0.04 | ||||||||||||||||||
Capital
contributed by shareholder
|
21,719 | 21,719 | ||||||||||||||||||||||
Net
loss fiscal 2001
|
(654,768 | ) | (654,768 | ) | ||||||||||||||||||||
Balance
at September 30, 2001-unaudited
|
453,573 | $ | 4,536 | $ | 2,668,851 | $ | (2,673,387 | ) | $ | 0 | ||||||||||||||
Issued
stock to purchase mining claim
|
24,200,000 | 242,000 | 2,207,466 | 2,449,466 | $ | 0.10 | ||||||||||||||||||
Issued
shares to employees
|
267,500 | 2,675 | (2,675 | ) | 0 | |||||||||||||||||||
Capital
contributed by shareholders
|
143,480 | 143,480 | ||||||||||||||||||||||
Net
loss for the fiscal year
|
(2,591,671 | ) | (2,591,671 | ) | ||||||||||||||||||||
Balance
at September 30, 2002-unaudited
|
24,921,073 | $ | 249,211 | $ | 5,017,122 | $ | (5,265,058 | ) | $ | 1,275 | ||||||||||||||
Issued
stock for services
|
872,000 | 8,720 | 264,064 | 272,784 | $ | 0.31 | ||||||||||||||||||
Beneficial
conversion feature
|
3,767 | 3,767 | ||||||||||||||||||||||
Capital
contributed by shareholders
|
81,472 | 81,472 | ||||||||||||||||||||||
Net
loss for the fiscal year
|
(865,287 | ) | (865,287 | ) | ||||||||||||||||||||
Balance
at September 30, 2003
|
25,793,073 | $ | 257,931 | $ | 5,366,425 | $ | (6,130,345 | ) | $ | (505,989 | ) |
8
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders’ Equity
From
Inception in May 1989
(Continued)
Common
|
Common
|
Paid
in
|
Accumulated
|
Stock
|
||||||||||||||||||||
Shares
|
Par
Value
|
Capital
|
Deficit
|
Total
|
Price
*
|
|||||||||||||||||||
Issuance
of common stock
|
550,000 | 5,500 | 206,500 | 212,000 | $ | 0.39 | ||||||||||||||||||
Issued
stock to pay bills
|
1,069,945 | 10,699 | 460,077 | 470,776 | $ | 0.44 | ||||||||||||||||||
Issued
stock for services
|
2,118,444 | 21,184 | 652,714 | 673,898 | $ | 0.32 | ||||||||||||||||||
Net
loss for the fiscal year
|
(964,108 | ) | (964,108 | ) | ||||||||||||||||||||
Balance
at September 30, 2004
|
29,531,462 | $ | 295,314 | $ | 6,685,716 | $ | (7,094,453 | ) | $ | (113,423 | ) | |||||||||||||
Issuance
of common stock
|
150,000 | 1,500 | 46,500 | 48,000 | $ | 0.32 | ||||||||||||||||||
Issued
stock for services
|
2,840,000 | 28,400 | 331,600 | 360,000 | $ | 0.13 | ||||||||||||||||||
Issued
stock to pay debt
|
400,000 | 4,000 | 50,000 | 54,000 | $ | 0.14 | ||||||||||||||||||
Issuance
of warrants
|
1,817 | 1,817 | ||||||||||||||||||||||
Net
loss for the fiscal year
|
(628,337 | ) | (628,337 | ) | ||||||||||||||||||||
Balance
at September 30, 2005
|
32,921,462 | $ | 329,214 | $ | 7,115,633 | $ | (7,722,790 | ) | $ | (277,943 | ) | |||||||||||||
Issued
stock for services
|
885,000 | 8,850 | 70,800 | 79,650 | $ | 0.09 | ||||||||||||||||||
Net
loss for the period
|
(837,551 | ) | (837,551 | ) | ||||||||||||||||||||
Balance
at September 30, 2006
|
33,806,462 | $ | 338,064 | $ | 7,186,433 | $ | (8,560,341 | ) | $ | (1,035,844 | ) | |||||||||||||
Issued
stock for services
|
50,000 | 500 | 4,500 | 5,000 | $ | 0.10 | ||||||||||||||||||
Issuance
of convertible debt
|
648,098 | 648,098 | ||||||||||||||||||||||
Net
loss for the fiscal year
|
(3,176,745 | ) | (3,176,745 | ) | ||||||||||||||||||||
Balance
at September 30, 2007
|
33,856,462 | 338,564 | 7,839,031 | (11,737,086 | ) | (3,559,491 | ) |
9
USCorp
(an
Exploration Stage Company)
Statement
of Changes in Shareholders’ Equity
From
Inception in May 1989
(Continued)
Common
|
Common
|
Paid
in
|
Accumulated
|
Stock
|
||||||||||||||||||||
Shares
|
Par
Value
|
Capital
|
Deficit
|
Total
|
Price
*
|
|||||||||||||||||||
Issuance
of common stock
|
10,011,879 | 100,119 | 638,559 | 738,678 | $ | 0.07 | ||||||||||||||||||
Issued
stock for services
|
9,517,664 | 95,177 | 2,447,473 | 2,542,650 | $ | 0.27 | ||||||||||||||||||
Conversion
of debentures
|
7,200,000 | 72,000 | 828,000 | 900,000 | $ | 0.13 | ||||||||||||||||||
Conversion
of preferred stock
|
26,626 | 266 | 6,401 | 6,667 | $ | 0.25 | ||||||||||||||||||
Issuance
of convertible debt
|
56,000 | 56,000 | ||||||||||||||||||||||
Net
loss for the fiscal period- as restated
|
(2,498,879 | ) | (2,498,879 | ) | ||||||||||||||||||||
Balance
at September 30, 2008
|
60,612,631 | 606,126 | 11,815,464 | (14,235,965 | ) | (1,814,375 | ) | |||||||||||||||||
Issuance
of common stock
|
12,261,765 | 122,618 | 304,845 | 427,463 | $ | 0.03 | ||||||||||||||||||
Issued
stock for services
|
845,064 | 8,451 | 53,939 | 62,390 | $ | 0.07 | ||||||||||||||||||
Issued
stock to settle lawsuit
|
200,000 | 2,000 | 10,000 | 12,000 | $ | 0.06 | ||||||||||||||||||
Conversion
of Preferred A
|
400,000 | 4,000 | (3,933 | ) | 67 | |||||||||||||||||||
Issuance
of convertible debt
|
3,000 | 3,000 | ||||||||||||||||||||||
Net
loss for the year
|
(1,293,237 | ) | (1,293,237 | ) | ||||||||||||||||||||
Balance
at September 30, 2009
|
74,319,460 | 743,195 | 12,183,315 | (15,529,202 | ) | (2,602,692 | ) | |||||||||||||||||
Issuance
of common stock
|
31,680,388 | 316,804 | 426,690 | 743,494 | $ | 0.02 | ||||||||||||||||||
Issued
stock & warrants for services
|
8,778,566 | 87,786 | 214,884 | 302,670 | $ | 0.03 | ||||||||||||||||||
Exercise
of warrants
|
11,776,975 | 117,770 | 140,105 | 257,875 | $ | 0.02 | ||||||||||||||||||
Converted
preferred A
|
9,400,000 | 94,000 | (94,000 | ) | 0 | |||||||||||||||||||
Net
loss for the year
|
(2,203,184 | ) | (2,203,184 | ) | ||||||||||||||||||||
Balance
at September 30, 2010
|
135,955,389 | 1,359,555 | 12,870,994 | (17,732,386 | ) | (3,501,837 | ) | |||||||||||||||||
Issuance
of common stock
|
9,101,333 | 91,013 | 141,867 | 232,880 | $ | 0.03 | ||||||||||||||||||
Issued
shares & warrants for services
|
762,500 | 7,625 | 45,887 | 53,512 | $ | 0.07 | ||||||||||||||||||
Converted
preferred A
|
8,000,000 | 80,000 | (80,000 | ) | 0 | |||||||||||||||||||
Net
loss for the period
|
(453,813 | ) | (453,813 | ) | ||||||||||||||||||||
Balance
at December 31, 2010
|
153,819,222 | $ | 1,538,193 | $ | 12,978,748 | $ | (18,186,199 | ) | $ | (3,669,258 | ) | |||||||||||||
*- Price
adjusted for stock splits
Please
see the notes to the financial statements.
10
USCorp
(an
Exploration Stage Company)
Notes
to the Consolidated Financial Statements
For
the Quarters Ended December 31, 2010 and December 31, 2009
1.
|
Organization
of the Company and Significant Accounting
Principles
|
USCorp
(the “Company”) is a publicly held corporation formed in May 1989 in the state
of Nevada. In April 2002 the Company acquired US Metals, Inc. (“USMetals”), a
Nevada corporation, by issuing 24,200,000 shares of common stock. US Metals
became a wholly owned subsidiary of the Company.
The
Company, through its subsidiary, owns the mineral rights to 172 Lode and Placer
Mining Claims in the Eureka Mining District of Yavapai County, Arizona, called
the Twin Peaks Project; and owns the mineral rights to 198 Lode and Placer
Claims on five properties in the Mesquite Mining District of Imperial County,
California, which the Company collectively refers to as the Picacho Salton
Project.
The
Company has no revenues to date and has defined itself as an “exploration stage”
company.
Exploration Stage Company-
the Company has no operations or revenues since its inception and therefore
qualifies for treatment as an Exploration Stage company as per the accounting
guidance. Financial transactions are accounted for as per generally
accepted accounted principles. Costs incurred during the development
stage are accumulated in “accumulated deficit- exploration stage” and are
reported in the Stockholders’ Deficit section of the balance sheet.
Consolidation- the
accompanying consolidated financial statements include the accounts of the
company and its wholly owned subsidiary. All significant
inter-company balances have been eliminated.
Use of Estimates- The
preparation of the consolidated financial statements in conformity with
generally accepted accounting principles requires management to make reasonable
estimates and assumptions that affect the reported amounts of the assets and
liabilities and disclosure of contingent assets and liabilities and the reported
amounts of revenues and expenses at the date of the financial statements and for
the period they include. Actual results may differ from these
estimates.
Cash and interest bearing
deposits- For the purpose of calculating changes in cash flows, cash
includes all cash balances and highly liquid short-term investments with an
original maturity of three months or less.
Long Lived Assets- The
Company reviews for the impairment of long-lived assets whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and its eventual
disposition is less than its carrying amount.
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 generally accepted accounting
principles which 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.
The
Company follows the accounting requirements associated with uncertainty in
income taxes using the provisions of Financial Accounting Standards Board (FASB)
ASC 740, Income Taxes.
Using that guidance, tax positions initially need to be recognized in the
financial statements when it is more likely than not the positions will be
sustained upon examination by the tax authorities. It also provides
guidance for derecognition, classification, interest and penalties, accounting
in interim periods, disclosure and transition. As of December 31,
2010, the Company has no uncertain tax positions that qualify for either
recognition or disclosure in the financial statements. All tax
returns from tax years 2008 to 2010 are subject to IRS audit.
11
Mineral Properties- Costs
incurred to acquire mineral interest in properties, to drill and equip
exploratory sites within the claims groups, to conduct exploration and assay
work are expensed as incurred.
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.
2.
|
Going
Concern
|
The
accompanying consolidated financial statements have been presented in accordance
with generally accepted accounting principles, which assume the continuity of
the Company as a going concern. However, the Company has incurred
significant losses since its inception and has no revenues and continues to rely
on the issuance of shares and warrants to raise capital to fund its business
operations.
Management’s
plans with regard to this matter are as follows:
*
Continue fundraising efforts including joint-venture, merger, acquisition or
other business combinations whose purpose is development of the Company’s
California and Arizona properties by or with well-financed and highly
experienced miners.
*
Complete exploration and begin production on our properties as warranted. Phases
1 and 2 of our 3-phase drilling program have been completed. The California
Desert District BLM Office has completed review of our application and we are
awaiting approval. Other permits for commercial mining are being prepared and
reviewed for submission to Federal, State and local authorities.
* USCorp
plans to begin commercial scale operations on one or more of its properties as
soon as all of the required permits and approvals have been granted and funding
obtained. Due to the nature of the ore bodies of the Company’s current
properties Management expects to begin commercial scale operations on our
Picacho Salton Project first; then Management expects to begin commercial scale
operations on the Twin Peaks Project.
* With
adequate funding management intends to hire qualified and experienced personnel,
including additional officers and directors, and mining specialists,
professionals and consulting firms to advise management as needed to handle
mining operations, acquisitions, mergers, joint ventures and other business
combinations in order to fulfill our business plan regarding development of
existing and future mineral resource properties.
* Form a
strategic alliance of consultants, engineers, contractors and joint venture
partners with an information and communication network that allows the alliance
to function effectively.
* Acquire
additional properties and/or corporations with properties as subsidiaries to
advance the company's growth plans or be acquired by a company that fulfills
this.
* The
company has uploaded proprietary information about the company and our
properties to a secure section of our web site for the purpose of raising
additional capital in order to continue our exploration and development
efforts.
* USCorp
may choose to voluntarily delist from the OTC Bulletin Board and then trade on
the OTC Markets PinkSheets.
12
3.
Concentrations of Credit
The
Company heavily relies upon the efforts of the Company’s chief executive officer
and majority shareholder for the success of the Company. A withdrawal
of the chief executive’s officer efforts would have a material adverse effect on
the Company’s financial condition.
4.
Fair values of Financial Instruments
Cash,
accounts payable and accrued expenses, subscriptions payable, gold bullion loan
payable, convertible debentures payable and the advances payable to shareholder
in the balance sheet are estimated to approximate fair market value at December
31, 2010 and September 30, 2010.
5.
Gold Bullion Promissory Note
In
September 2005, the Company issued a promissory note to a shareholder and
received proceeds of $648,282. The note requires the Company to pay the
shareholder 1,634 ounces of Gold Bullion (.999 pure). Originally, the promissory
note came due in September 2007. In September 2007, the holder of the promissory
note agreed to extend the maturity date of the note to September
2009. In September 2009, the holder of the promissory note extended
the maturity date to January 2010 at the previous terms, and is extending the
maturity date on an informal ongoing basis. The loan is currently in default
however, the Company continues to calculate the loan at fair value.
The loss
on the underlying gold derivative on the promissory note has been calculated as
follows.
Carrying
value of loan
|
$ | 936,758 | ||
Fair
value of loan
|
3,245,135 | |||
Life
to date loss on unhedged underlying derivative
|
$ | (2,308,377 | ) |
6.
Convertible Debentures
During
the fiscal year 2007, the Company issued convertible debentures with a face
value of $1,200,000. The debentures were convertible into common stock at $0.125
per share. The debentures had an interest rate of 5% and a maturity
date from December 2009 to September 2010. During the fiscal year 2008, the
holder of these debentures converted $900,000 of the debentures to 7,200,000
shares of common stock. The remaining $300,000 of 2007 debentures was
convertible into common stock at $0.125 per share, matured in September 2010,
and had an interest rate of 5%
In fiscal
year 2008 the Company issued an additional convertible debenture to the same
holder and received proceeds of $200,000. This debenture matured in
March 2010, was exercisable into common stock at $0.125 per share, and had an
interest rate of 4%.
In fiscal
year 2009 the Company issued an additional convertible debenture to the same
holder and received proceeds of $200,000. This debenture matured in
April 2010, was exercisable into common stock at $0.125 per share, and had an
interest rate of 4%.
All of
the debentures are currently in default and the holders are extending the
maturity date on an informal ongoing basis. The Company ceases
recording an interest expense on the debentures at the date of the maturity of
the debenture.
The
balance of the convertible debt at December 31, 2010 and September 30, 2010 is
as follows:
31-Dec-10
|
30-Sep-10
|
|||||||
Net
convertible debt payable
|
$ | 700,000 | $ | 700,000 |
13
7.
Issuances of Common Stock
During
the first quarter of fiscal year 2010, the Company issued 3,633,956 shares of
common stock and received proceeds of $105,780.
In
December 2009, the Company issued 238,636 shares of commons stock to consultants
for services rendered valued at $7,159.
In the
first quarter of fiscal year 2011, the Company issued 9,101,333 common shares
with 29,249,999 warrants attached convertible into the same amount of common
shares at exercise prices ranging from three to thirty cents per share expiring
in 6 months to two years. The Company received proceeds of
$232,880.
In the
first quarter of fiscal year 2011, the Company issued 763,500 shares of common
stock to consultants for services rendered valued by the Company at
$53,512.
In the
first quarter of fiscal year 2011, a holder of the preferred A stock converted 1
million preferred A into 8 million shares of common stock.
8. Common Stock
Warrants
During
the first quarter of fiscal 2011, the Company issued 65,000 warrants to purchase
65,000 shares of common stock at six cents per share expiring in November 2011.
The Company applies ASC 718, “Accounting for Stock-Based Compensation” to
account for its option issues. Accordingly, all options granted are
recorded at fair value using a generally accepted option pricing model at the
date of the grant. For purposes of determining the option value at
issuance, the fair value of each option granted is measured at the date of the
grant by the option pricing model with the following assumptions:
2010
|
2009
|
|||||||
Dividend
yield
|
0.00 | % | 0.00 | % | ||||
Risk
free interest rate
|
1.00 | % | 0.50 | % | ||||
Volatility
|
25.00 | % | 39.00 | % |
The fair
values generated by option pricing model may not be indicative of the future
values, if any, that may be received by the option holder.
The
following is a summary of common stock warrants outstanding at December 31,
2010:
Wgtd
Avg
|
Wgtd
Years
|
|||||||||||
Amount
|
Exercise
Price
|
to
Maturity
|
||||||||||
Outstanding
at September 30, 2009
|
9,491,303 | $ | 0.33 | 0.54 | ||||||||
Issues
|
104,684,063 | |||||||||||
Exercises
|
(11,776,975 | ) | ||||||||||
Expired
|
(1,818,907 | ) | ||||||||||
Outstanding
at September 30, 2010
|
100,579,484 | $ | 0.06 | 1.42 | ||||||||
Issues
|
29,264,999 | |||||||||||
Exercises
|
(650,000 | ) | ||||||||||
Expired
|
(1,850,000 | ) | ||||||||||
Outstanding
at December 31, 2010
|
127,344,483 | $ | 0.08 | 1.22 |
14
9.
Stock Incentive Plan
The
Company provides for a Stock Incentive Plan for its employees. The
plan provides for incentive stock options and non-qualified stock options. The
Board of Directors will determine whether an option is an incentive stock option
or a non-qualified stock option when it grants the option and the option will be
evidenced by an agreement describing the material terms of the option. The Board
of Directors will determine the exercise price of an employee’s option at the
date of the grant. The exercise price of an incentive stock option may not be
less than the fair market value of the common stock on the date of the grant, or
less than 110% of the fair market value if the participant owns more than 10% of
the outstanding common stock. The Board of Directors will also determine the
term of an option at the date of the grant. The term of an incentive stock
option or non-qualified stock option may not exceed ten years from the date of
grant, but any incentive stock option granted to a participant who owns more
than 10% of the outstanding common stock will not be exercisable after the
expiration of five years after the date the option is granted. Subject to any
further limitations in the applicable agreement, if a participant’s employment
terminates, an incentive stock option will terminate and expire no later than
three months after the date of termination of employment.
Incentive
stock options are also subject to the further restriction that the aggregate
fair market value, determined as of the date of the grant, of the market value
of the common Stock as to which any incentive stock option first becomes
exercisable in any calendar year is limited to $100,000 per recipient. If
incentive stock options covering more than $100,000 worth of the common stock
first become exercisable in any one calendar year, the excess will be
non-qualified options. For purposes of determining which options, if any, have
been granted in excess of the $100,000 limit, options will be considered to
become exercisable in the order granted.
10.
Class B Common Shares
The Class
B Common shares are non-voting shares that trade on the Frankfurt stock exchange
under the symbol U9CB.F. There are 250,000,000 shares authorized and 5,060,500
issued and outstanding. The par value of these shares is $0.001. These shares do
not trade in the United States on any market and the Company has no plans to
register these shares for trading in the U.S.
11. Income Tax
Provision
Provision
for income taxes is comprised of the following:
|
||||||||
31-Dec-10
|
31-Dec-09
|
|||||||
Net
loss before provision for income taxes
|
$ | (453,813 | ) | $ | (492,033 | ) | ||
Current
tax expense:
|
||||||||
Federal
|
$ | 0 | $ | 0 | ||||
State
|
0 | 0 | ||||||
Total
|
$ | 0 | $ | 0 | ||||
Less
deferred tax benefit:
|
||||||||
Tax
loss carryforwards
|
2,456,010 | (2,421,827 | ) | |||||
Allowance
for recoverability
|
(2,456,010 | ) | 2,421,827 | |||||
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:
|
||||||||
Tax
loss carryforwards
|
$ | 2,456,010 | $ | 2,421,827 | ||||
Allowance
for recoverability
|
(2,456,010 | ) | (2,421,827 | ) | ||||
Deferred
tax benefit
|
$ | 0 | $ | 0 | ||||
Note: The
deferred tax benefits arising from the timing differences begin to expire
in fiscal years
|
||||||||
2011
to 2030 and may not be recoverable upon the purchase of the Company under
current IRS statutes.
|
15
12. Net
Loss per Share
The
Company applies ASC 260, “Earnings per Share” to
calculate loss per share. In accordance with ASC 260, basic net loss
per share has been computed based on the weighted average of common shares
outstanding during the years, adjusted for the financial instruments outstanding
that are convertible into common stock during the years. The effects
of the common stock options and the debentures convertible into shares of common
stock, however, have been excluded from the calculation of loss per share
because their inclusion would be anti-dilutive. Net loss per share is computed
as follows:
31-Dec-10
|
31-Dec-09
|
|||||||
Net
loss before cumulative preferred dividend
|
$ | (453,813 | ) | $ | (492,033 | ) | ||
Cumulative
dividend preferred payable
|
(42,380 | ) | (37,081 | ) | ||||
Net
loss to common shareholders
|
$ | (496,193 | ) | $ | (529,114 | ) | ||
Weighted
average
|
144,875,885 | 76,043,451 | ||||||
Basic
& fully diluted net loss per common share
|
$ | (0.00 | ) | $ | (0.01 | ) | ||
13.
Subsequent Events
In
January and February of 2011, the Company issued 375,537 shares to in payment
for services rendered to the company and 50,000 shares of series A preferred
stock were converted to 400,000 shares of Common A Stock.
16
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 21 E 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 10-K for the fiscal year ended
September 30, 2010.
17
Results
of Operations
Comparison
of operating results for the three months ended December 31, 2010 and December
31, 2009:
The
Company has no revenues through the date of this report.
General
and administrative expenses were $225,519 compared to $120,933 for the same
period a year ago. Consulting costs increased from $64,109 to $158,722 in the
three months ended December 31, 2010 compared to the same period last year,
which is mainly due to an increase in investor and public relations costs, most
of which were paid for with stock. Administration costs increased from $49, 941
in the three months ended December 31, 2009 to $58,763 for the three months
ended December 31, 2010 due to increased costs for clerical help, office staff,
the value of payments for professional services with Registered S-8 shares, and
the difference between the capitalization received as a result of investors
exercising their warrants and the value of shares issued when the warrants were
exercised by investors during the period.
As a
result of general and administrative costs, the Company experienced a loss from
operations of $225,519 for the three months ended December 31, 2010, compared to
loss from operations of $120,933 for the same period last year.
Interest
expense loss decreased to $0 during the first three months of fiscal 2010
compared to -$35,006 the first three months of fiscal year 2011 as a result of
the Gold Bullion Loan borrowed at the end of September 2005 and the change in
the price of gold compared to the same period one year ago. The loan is payable
in gold bullion at the prevailing price and is not hedged. The Company’s loss on
the unhedged loan is $228,294 for the first three months of fiscal year 2011
compared to a loss of $336,064 for the same period a year ago due to the change
in the price of gold over the past year.
Net loss
for the first three months of fiscal year 2011 was $453,813 or $0.00 per share
compared to a loss of $492,033, or $0.01 per share for the same period last
year.
Discussion
of Financial Condition: Liquidity and Capital Resources
At
December 31, 2010 cash on hand was $390,460 as compared with $354.019 at
September 30, 2010. During the first nine months of fiscal year 2010, the
Company used $453,813 for its operations compared to $865,664 for the first nine
months of fiscal 2009.
At
December 31, 2010, the Company had working capital of $390,430 compared to a
working capital of $354,019 at September 30, 2010. The increase is due to costs
of continuing exploration and preparations for development of Company’s mining
properties offset by the Company’s on-going financing efforts.
Total
assets at December 31, 2010 were $390,560 as compared to $354,395 at September
30, 2010. The increase is due to costs of continuing exploration and
preparations for development of Company’s mining properties offset by the
Company’s on-going financing efforts.
The
Company’s total stockholders’ deficit increased to a deficit of $3,669,258 at
December 31, 2010 compared to a deficit of $3,501,837 at September 30, 2010. The
increase in stockholders’ deficit was the result of an increase in additional
paid in capital and operating losses of $225,519 for the three months ended
December 31, 2010 due to costs for clerical help, office staff, the value of
payments for professional services with Registered S-8 shares, and the
difference between the capitalization received as a result of investors
exercising their warrants and the value of shares issued when the warrants were
exercised by investors during the period.
18
Last
September we announced signing a Letter of Intent with a Chinese agricultural
conglomerate with over USD $700 million in annual revenues. The next step would
have been to complete a definitive agreement spelling out terms and conditions
including major financing for USCorp. In October we announced that we had signed
an Agreement to form a Joint Venture that would initially provide USD $25
million in loans and loan guarantees for development of USCorp’s mining
properties. The Agreement also called for raising USD $100 million publicly or
privately. In November we provided further details with regard to the agreement
to form a joint venture. The purpose of the agreement was to form a joint
venture to complete exploration and begin development of USCorp’s mining
properties. We also reported that the US corporation, holding Chinese assets,
had requested confidentiality even though it was not part of our agreement until
the joint venture was funded with an initial $25 million, and that the funding
would have to take place on or before January 15, 2011. The agreement called for
USCorp to contribute to the joint venture its claims in Arizona and California
after the $25 million had been received by the joint venture. Each entity would
have owned 50 percent of the joint venture. This newly-formed joint venture
entity would have also sought to raise an additional $100 million (USD) to
expand its asset base and for acquisitions; there was no assurance given that
either funding would be successful.
Upon the
completion of a funding the claims would have been transferred to the joint
venture and the joint venture was expected to complete the drilling, exploration
and development of the properties. We also reported that in the event that the
necessary initial funding was unable to be raised, the agreement provided that
either party could cancel the Agreement without obligation or liability to
perform under the Agreement.
On
February 2, 2010, we publicly reported that we had elected to terminate the
Joint Venture Agreement between the Company and Yasheng Group, a Chinese
agricultural conglomerate. The Joint Venture Agreement specified certain dates
for providing the initial funding for the Joint Venture which were not met. As a
result of termination of the contemplated Joint Venture the mining properties
continue to remain solely controlled by the Company through its
subsidiaries.
As
discussed previously Robert Dultz, President, Chairman and CEO, and other
members of the management and exploration team have been actively involved in
correspondence, conference calls, site visits, meetings and review of USCorp’s
proprietary data, with a variety of people representing various institutional
funding organizations and various mining companies, including some contacts
directly with their CEOs. The institutional funding organizations are
international in scope and the mining companies range in size from junior to
major, and from regional to international in scope. These communications have as
their object completing one or more of the following: debt or equity financing,
the acquisition of USCorp, or creating a joint venture, merger, or other
business combinations whose purpose is development of the Company’s California
and Arizona properties by well-financed and highly experienced
miners.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Not
applicable.
ITEM
4T. CONTROLS AND
PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (Exchange Act), as of December 31, 2010. Based on this evaluation, our
principal executive officer and principal financial officer concluded that our
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to our Company required to be included in
our reports filed or submitted under the Exchange Act.
Changes
in Internal Controls
There
were no significant changes (including corrective actions with regard to
significant deficiencies or material weaknesses) in our internal controls over
financial reporting that occurred during the quarter ended December 31, 2010,
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
19
PART
II - OTHER INFORMATION
Item
1. Legal Proceedings.
The
Company has received a Cease and Desist Order from Pennsylvania as a result of a
single unauthorized phone call to a potential unaccredited investor contrary to
the Company’s policy. The Company has agreed to refrain from such
solicitations within the State.
Item
1A. Risk Factors
Not
Applicable.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds.
During
first quarter of fiscal year 2011, the Company issued 9,101,333 shares of common
stock and received proceeds of $147,867; 762,500 shares were issued for services
with a value of $45,887; and 1,000,000 Series A Preferred shares were converted
to 8,000,000 Class A Common shares by officers and directors of the
corporation.
During
first quarter of fiscal year 2011, the Company issued 29,264,999 options to buy
its common stock to the purchasers of the common stock described above. The
options expire in fiscal year 2011 and 2012. Also during the first three
quarters, 1,850,000 options to purchase common stock expired
unexercised.
As
previously reported, in fiscal 2008 we received commitments to finance fiscal
2009 operations in the amount of $2.19 million. In the last quarter of fiscal
2008 and the last quarter of calendar 2008 the Company received $400,000 of the
$2.19 million in commitments for fiscal 2009; however no additional payments
were received, in breach of their agreement. We have no expectation the Company
will receive the rest of the committed funds, nor any additional funds from this
source.
As a
result of the failure to meet the commitments to fund USCorp operations in
fiscal 2009 there has been substantial damage done to USCorp. During the first
nine months of fiscal 2009 we were assured on several occasions that the funds
were coming and we delayed seeking other sources of financing while providing
the lender with requested due diligence documentation regarding USCorp, our
properties, historical mining on those properties and our contemporary
exploration efforts on those properties. In addition we were unable to complete
the third phase of the Twin Peaks drilling program and therefore were unable to
update our resource measurements, making it more difficult to obtain additional
financing from other sources, and to complete drilling on our California
properties, causing the inability to pay the bullion loan when due. The bullion
loan due date was extended and after January 31, 2010 it is extended on a
day-to-day basis. We continue to pursue other sources of financing
(see “Discussion of
Financial Condition: Liquidity and Capital
Resources” above).
The
Company claimed an exemption from the registration requirements of the
Securities Act of 1933, as amended (the “Act”) for the private placement of
these securities pursuant to Section 4(2) of the Act and/or Rule 506 of
Regulation D promulgated thereunder since, among other things, the transaction
did not involve a public offering, the Investor was an “accredited investor”
and/or qualified institutional buyers, the Investor had access to information
about the Company and its investment, the Investor took the securities for
investment and not resale, and we took appropriate measures to restrict the
transfer of the securities.
Item
3. Defaults Upon Senior Securities.
None.
Item
4. Submission of Matters to a Vote of Security Holders.
There
were no matters requiring a vote of security holders during this period.
Significant matters voted on were reported in our Form 10-K for period ending
September 30, 2010.
Item
5. Other Information.
None.
20
ITEM
6. EXHIBITS
(a)
Exhibits:
31.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
USCORP
|
|
By:
/s/ ROBERT DULTZ
|
|
Robert
Dultz
|
|
Chairman,
Chief Executive Officer and Acting Chief Financial Officer
Dated:
February 17, 2011
|
21