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, 2011

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)

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, 2011. 207,796,611 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
Item 1. Financial Statements
Consolidated Balance Sheet as of December 31, 2011 and December 31, 2010 (unaudited)	3
Consolidated Statements of Operations for the Three Months and Quarter Ended December 31, 2011 and December 31, 2010 and from Inception, May 1989 through December 31, 2011 (unaudited)	4
Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2011 and December 31, 2010 and from Inception, May 1989 through December 31, 2011 (unaudited)	5
Consolidated Statements of Changes in Shareholders’ Equity from Inception, May 1989 through December 31, 2011	6
Notes to Consolidated Financial Statements (unaudited)	12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	18
Item 4T. Controls and Procedures	18
PART II — OTHER INFORMATION
Item 1. Legal Proceedings	19
Item 1A. Risk Factors	19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3. Defaults Upon Senior Securities	19
Item 4. Submission of Matters to a Vote of Security Holders	19
Item 5. Other Information	19

 

 

PART I. FINANCIAL INFORMATION

USCorp

(an Exploration Stage Company)

Consolidated Balance Sheets

As of December 31, 2011 and September 30, 2011

 

		31-Dec-11				30-Sep-11
ASSETS
Current assets:
Cash		$	1,318,496			$	1,686,996
Deferred charge			57,785				116,204
Total current assets		$	1,376,281			$	1,803,200
Other assets:
Property & equipment- net			24,748				26,140
Total assets		$	1,401,029			$	1,829,340
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued expenses		$	227,835			$	147,539
Gold bullion loan			3,948,525				4,061,340
Convertible debenture payable			556,700				581,700
Subscriptions payable			96,005				30,500
Total current liabilities		$	4,829,065			$	4,821,079
Shareholders' equity:
Series A preferred stock, one share convertible to eight shares of common; par value $0.001, 30,000,000 shares authorized, 2,943,750 shares issued and outstanding at September 30, 2011 and 22,943,750 at December 31, 2011			24,304				4,304
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, 2011 and December 31, 2011, stated value; $0.50			63,498				63,498
Common stock B- $.001 par value, authorized 250,000,000 shares, issued and outstanding, 5,060,500 shares at September 30, 2011 and 5,060,500 at December 31, 2011			5,060				5,060
Common stock A- $.01 par value, authorized 550,000,000 shares authorized, issued and outstanding, 194,966,611 shares at September 30, 2011 and 207,796,611 at December 31, 2011		$	2,077,967			$	1,949,667
Additional paid in capital			15,917,942				15,804,892
Accumulated deficit - exploration stage			(21,516,807	)			(20,819,160	)
Total shareholders' deficit			(3,520,898	)			(3,064,601	)
Total Liabilities & Shareholders' Deficit		$	1,401,029			$	1,829,340

 

See the notes to the financial statements.

 

 

USCorp

(an Exploration Stage Company)

Consolidated Statements of Operations

For the Quarters Ended December 31, 2011 and December 31, 2010

and from Inception, May 1989 through December 31, 2011

 

										Inception
		31-Dec-11				31-Dec-10				to Date
General and administrative expenses:
Consulting		$	163,932			$	158,722			$	8,012,915
Administration			65,808				58,763				7,295,277
License & claim development expenses			430,917				0				1,046,605
Professional fees			91,574				8,034				914,637
Total general & administrative expenses			752,231				225,519				17,269,434
Net loss from operations		$	(752,231	)		$	(225,519	)		$	(17,269,434	)
Other income (expenses):
Interest income			188				0				8,381
Interest expense			(72,839	)			0				(1,301,197	)
Gain (loss) on unhedged derivative			127,235				(228,294	)			(2,954,557	)
Net loss before provision for income taxes		$	(697,647	)		$	(453,813	)		$	(21,516,807	)
Provision for income taxes			0				0				0
Net loss		$	(697,647	)		$	(453,813	)		$	(21,516,807	)
Basic & fully diluted net loss per common share		$	(0.00	)		$	(0.02	)
Weighted average of common shares outstanding:
Basic & fully diluted			200,511,730				144,875,885

 

See the notes to the financial statements.

 

 

USCorp

(an Exploration Stage Company)

Consolidated Statements of Cash Flows

For the Quarters Ended December 31, 2011 December 31, 2010

and from Inception, May 1989 through December 31, 2011

 

										Inception
		31-Dec-11				31-Dec-10				to Date
Operating Activities:
Net loss		$	(697,647	)		$	(453,813	)		$	(21,516,807	)
Adjustments to reconcile net income items not requiring the use of cash:
Consulting fees			44,250				53,512				5,345,782
Depreciation expense			1,674				276				22,905
Interest expense			0				0				1,250,199
Impairment expense			0				0				3,049,465
Loss on unhedged underlying derivative			(127,235	)			228,294				2,954,557
Changes in other operating assets and liabilities :
Deferred charge			58,419				0				(57,785	)
Accounts payable and accrued expenses			80,296				(10,591	)			227,835
Net cash used by operations		$	(640,243	)		$	(182,322	)		$	(8,723,849	)
Investing activities:
Purchase of office equipment		$	(282	)		$	0			$	(47,653	)
Net cash used by investing activities			(282	)			0				(47,653	)
Financing activities:
Issuance of common stock		$	197,100			$	232,880			$	8,330,625
Issuance of preferred stock			20,000				0				88,863
Issuance of common B stock			0				0				5,060
Issuance of gold bullion note			14,420				0				662,702
Capital contributed by shareholder			0				0				356,743
			65,505				(1,064	)			96,005
Issuance (payment) of convertible notes			(25,000	)			0				550,000
Advances received (paid) shareholder			0				(13,056	)			0
Net cash provided by financing activities			272,025				218,763				10,089,998
Net increase (decrease) in cash		$	(368,500	)		$	36,441			$	1,318,496
Cash balance at beginning of the fiscal year			1,686,996				354,019				0
Cash balance at December 31st		$	1,318,496			$	390,460			$	1,318,496
Supplemental disclosures of cash flow information:
Interest paid		$	0			$	0
Income taxes		$	0			$	0

 

See the notes to the financial statements.

 

 

USCorp

(an Exploration Stage Company)

Consolidated 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

 

 

USCorp

(an Exploration Stage Company)

Consolidated 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

 

 

USCorp

(an Exploration Stage Company)

Consolidated 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	)

 

 

USCorp

(an Exploration Stage Company)

Consolidated 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	)

 

 

USCorp

(an Exploration Stage Company)

Consolidated 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			43,457,363				434,574				566,795								1,001,369			$	0.02
Issued stock for services			8,778,566				87,786				214,884								302,670			$	0.03
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			41,594,631				415,946				2,491,634								2,907,580			$	0.07
Issued stock for services			5,016,591				50,166				308,264								358,430			$	0.07
Issued stock to extend debt maturities			3,200,000				32,000				176,000								208,000			$	0.07
Issued stock to pay debenture			800,000				8,000				42,000								50,000			$	0.06
Converted preferred A stock			8,400,000				84,000				(84,000	)							0
Net loss for the year															(3,086,774	)			(3,086,774	)
Balance at September 30, 2011			194,966,611			$	1,949,667			$	15,804,892			$	(20,819,160	)		$	(3,064,601	)

 

 

USCorp

(an Exploration Stage Company)

Consolidated 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			11,830,000				118,300				78,800								197,100			$	0.02
Issued stock for services			1,000,000				10,000				34,250								44,250			$	0.04
Net loss for the period															(697,647	)			(697,647	)
Balance at December 31, 2011, 2011			207,796,611			$	2,077,967			$	15,917,942			$	(21,516,807	)		$	(3,520,898	)

 

*- Price adjusted for stock splits

 

Please see the notes to the financial statements.

 

 

USCorp

(an Exploration Stage Company)

Notes to the Consolidated Financial Statements

For the Quarters Ended December 31, 2011 and December 31, 2010

 

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 USMetals, Inc. (“USMetals”), a Nevada corporation, and its 141 unpatented mining claims known as the Twin Peaks Project in Yavapai County Arizona. The Twin Peaks Project now consists of 268 unpatented Lode and 8 Placer Claims. In addition, The Company, through its subsidiary Southwest Resource Development, Inc., owns 200 unpatented 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.

 

In April 2002 the Company acquired USMetals, Inc. (“USMetals”), a Nevada corporation, by issuing 24,200,000 shares of common stock. USMetals became a wholly owned subsidiary of the Company.

 

On March 22, 2011 the Company through its wholly owned subsidiary USMetals entered into an Asset Funding/Operation and Shareholders Agreement, and exhibits thereto with Arizona Gold Corp., a private British Columbia Corporation (“AGC”) and its wholly owned subsidiary, AGC Corp, a private Arizona company (“AGCAZ”), providing for the sale of 172 Arizona mining claims known as the Twin Peaks Project to AGCAZ in exchange for 90,200,000 shares or 61.34% of AGC’s common stock . The Twin Peaks Project now consists of 268 Lode and 8 Placer Claims.

 

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 subsidiaries. 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- 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 on equipment 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 the consolidated 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 September 30, 2011, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements. All tax returns from tax years 2007 to 2010 are subject to IRS audit.

 

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, 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:

 

* Obtain the necessary approvals and permits to complete exploration and begin test production on our properties as warranted. An application for drilling on Picacho Salton Project has been submitted by us to the Bureau of Land Management and is being reviewed by them. A drilling plan for the newly expanded Twin Peaks Project has been approved and commenced in November 2011.

 

* Complete the recently approved revised drilling program currently underway on the Twin Peaks property with expected completion in March 2012;

 

* Receive BLM permit for Picacho Salton Project in California; Drill the Picacho Salton Project.

 

* Receive and analyze the Twin Peaks assays and drill reports and Picacho Salton assays and drill reports;

 

* Review the results of the drilling programs on each of the sites when completed. After consideration of the nature of the ore bodies of the properties, Management will make decisions regarding further development of the properties, including beginning commercial scale operations when exploration is completed on the Twin Peaks Project and the Picacho Salton Project.

 

* Continue exploration and ramp up transitioning to development and production in order to meet ongoing and anticipated demand for gold and silver.

 

* Continue to augment our mining exploration team and strategic business relationships with quality and results-oriented people as needed: professionals and consulting firms to advise management to handle mining operations, acquisitions and development of existing and future mineral resource properties.

 

* Continue to recruit strategic business alliances with consultants, engineers, contractors as well as joint venture partners when appropriate, and set up an information and communication network that allows the alliance to function effectively to develop the properties.

 

* Draw up and Submit to the BLM the final Mining Plan of Operations ("MPO") for the Twin Peaks; Submit the MPO to the BLM;

 

* Submit the Final MPO on the Picacho Salton Project to the BLM.

 

* Begin commercial scale operations on one or more of the properties as soon as the required permits and approvals have been granted, or be acquired by a major gold mining company.

 

* Continue to acquire additional properties and/or from strategic business relationships with entities owning properties in the form of joint ventures or as subsidiaries in order to advance the Company’s growth plans.

 

 

3.

Property and Equipment

 

Property and equipment at December 31, 2011 and September 30, 2011 is comprised as follows.

 

		31-Dec-11				30-Sep-11
Office equipment		$	21,588			$	21,305
Vehicle			16,065				16,065
Land deposit			10,000				10,000
Accumulated depreciation			(22,905	)			(21,230	)
Property & equipment- net		$	24,748			$	26,140

 

4. 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 2,507 ounces of Gold Bullion (.999 pure). Originally, the promissory note came due in September 2007. Subsequently, the holder of the note extending the maturity date on an informal ongoing basis. The loan had been in default but the maturity debt was extended to March 2012 in exchange for 3,200,000 shares of common stock. The Company continues to accrue interest and 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		$	993,968
Fair value of loan			3,948,525
Life to date loss on unhedged underlying derivative		$	(2,954,557	)

 

5. 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%. During the fiscal year 2008, the holder of these debentures converted $900,000 of the debentures to 7,200,000 shares of common stock.

 

In fiscal year 2008 the Company issued an additional convertible debenture to the same holder and received proceeds of $200,000. This debenture is exercisable into common stock at $0.125 per share, and has 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 is exercisable into common stock at $0.125 per share, and has an interest rate of 4%. The Company issued an additional $56,700 debenture during fiscal year 2009 exercisable at $0.15 per share and at an interest rate of 5%.

 

In fiscal year 2011, the Company issued 800,000 shares of common stock (valued at $50,000 toward the principal) and we paid $125,000 in cash for a total of $171,000 toward the debentures. As a result of these payments, the maturity dates were extended to March 2012. In December 2011 the Company paid $25,000 in cash to pay down the debenture balance.

 

 

On February 9, 2012 we announced payment in full of all debentures with a combination of stock and cash. The Investors agreed to accept a final payment of $46,000 in cash and 22,894,100 shares of the common stock of USCorp as payment in full for all USCorp debentures and interest on those debentures held by investors. We have paid a total of $171,000 in cash and issued a total of 23,694,100 shares in order to retire debentures in the amount of $633,823 (principal and interest). (please see Subsequent Events below).

 

6. Income Tax Provision

 

Provision for income taxes is comprised of the following:
		31-Dec-11				31-Dec-10
Net loss before provision for income taxes		$	(697,647	)		$	(453,813	)
Current tax expense:
Federal		$	0			$	0
State			0				0
Total		$	0			$	0
Less deferred tax benefit:
Tax loss carryforwards			(4,890,878	)			(2,456,010	)
Allowance for recoverability			4,890,878				2,456,010
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		$	4,890,878			$	2,456,010
Allowance for recoverability			(4,890,878	)			(2,456,010	)
Deferred tax benefit		$	0			$	0
Note: The deferred tax benefits arising from the timing differences begin to expire in tax years
2011 to 2030 and may not be recoverable upon the purchase of the Company under current IRS statutes.

 

7. Issuances of Common Stock

 

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 one 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.

 

In the first quarter of fiscal year 2012, the Company issued 11,830,000 common shares and received proceeds of $197,100.

 

In the first quarter of fiscal year 2012, the Company issued 1,000,000 shares of common stock to consultants for services rendered valued by the Company at $44,250.

 

In the first quarter of fiscal year 2012, the Company issued 20 million shares of preferred A stock and received proceeds of $20,000.

 

 

8. Common Stock Options

 

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. 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 options outstanding at December 31, 2011:

 

						Wgtd Avg				Wgtd Years
		Amount				Exercise Price				to Maturity
Outstanding at September 30, 2010			100,579,484			$	0.06				1.42
Issues			42,764,999
Exercises			(34,585,000	)
Expired			(28,084,484	)
Outstanding at September 30, 2011			80,674,999			$	0.10				0.71
Issues			0
Exercises			(7,250,000	)
Expired			(3,648,333	)
Outstanding at December 31, 2011			69,776,666			$	0.10				0.32

 

9. 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-11				31-Dec-10
Net loss before cumulative preferred dividend		$	(697,647	)		$	(453,813	)
Cumulative dividend preferred payable			(51,250	)			(42,380	)
Net loss to common shareholders		$	(748,897	)		$	(496,193	)
Weighted average			200,511,730				144,875,885
Basic & fully diluted net loss per common share		$	(0.00	)		$	0.00

 

10. Subsequent Event

 

On February 9, 2012 we announced payment in full of all debentures with a combination of stock and cash. The Investors agreed to accept a final payment of $46,000 in cash and 22,894,100 shares of the common stock of USCorp as payment in full for all USCorp debentures and interest on those debentures held by investors. We have paid a total of $171,000 in cash and issued a total of 23,694,100 shares in order to retire debentures in the amount of $633,823 (principal and interest).

 

 

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, 2011.

 

Results of Operations

 

Comparison of operating results for the three months ended December 31, 2011 and December 31, 2010:

 

The Company has no revenues through the date of this report.

 

 

General and administrative expenses were $752,231 compared to $225,519 for the same period a year ago. Consulting costs increased from $158,722 to $163,932 in the three months ended December 31, 2011 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 $58,763 in the three months ended December 31, 2010 to $65,808 for the three months ended December 31, 2011 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. License and claim development expenses were $460,917 in the three months ended December 31, 2011 compared to $0 the same period last year due to costs associated with increasing the number of claims and beginning the drilling program currently underway at the company’s Twin Peaks project site in Arizona.

 

As a result of general and administrative costs, the Company experienced a loss from operations of $752,231 for the three months ended December 31, 2011, compared to loss from operations of $225,519 for the same period last year.

 

Interest expense decreased to ($72,839) during the first three months of fiscal 2010 compared to $0 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 gain on the unhedged loan is $127,239 for the first three months of fiscal year 2011 compared to a loss of ($228,294) 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 $697,647 or $0.00 per share compared to a loss of $453,813, or $0.02 per share for the same period last year.

 

Discussion of Financial Condition: Liquidity and Capital Resources

 

At December 31, 2011 cash on hand was $1,318,281 as compared with $1,686,996 at September 30, 2011. During the first three months of fiscal year 2012, the Company used $640,243 for its operations compared to $182,322 for the first three months of fiscal 2010.

 

At December 31, 2011, the Company had working capital of $1,318,496 compared to a working capital of $1,686,996 at September 30, 2011. The decrease 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, 2011 were $1,401,029 as compared to $1,829,340 at September 30, 2011. The decrease 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 $3,520,898 at December 31, 2011 compared to a deficit of $3,064,301 at September 30, 2011. The increase in stockholders’ deficit was the result of an increase in additional paid in capital and operating losses of $640,243 for the three months ended December 31, 2011 due to costs for exploration of the Twin Peaks project, 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.

 

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, 2011. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective.

 

 

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, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

None.

 

Item 1A. Risk Factors

 

Not Applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the first quarter of fiscal year 2012, the Company issued 11,830,000 common shares and received proceeds of $197,100.

 

During the first quarter of fiscal year 2012, the Company issued 885,000 shares of common stock to consultants for services rendered valued by the Company at $44,250.

 

During the first quarter of fiscal year 2012, the Company issued 20 million shares of preferred A stock and received proceeds of $20,000.

 

During the first quarter of fiscal year 2012 the Company did not issue any options to buy its common stock; also 3,648,333 options to buy common stock expired unexercised; and the Company and received proceeds of $120,500 from the exercise of 7,250,000 options to buy common stock.

 

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.

 

During the period of this report the Annual Meeting of the Shareholders was held. A majority of the shares eligible to vote approved the actions of the Board of Directors in fiscal 2011 including the previously reported Asset Funding/Operation and Shareholders Agreement, with Arizona Gold Corp., a private British Columbia Corporation (“AGC”) and its wholly owned subsidiary, AGC Corp, a private Arizona company (“AGCAZ”), providing for the sale of 172 Arizona mining claims known as the Twin Peaks Project to AGCAZ in exchange for 90,200,000 shares or 61.34% of AGC’s common stock . The Twin Peaks Project now consists of 268 Lode and 8 Placer Claims. (please see our Form 8-K dated March 22, 2011, filed on June 8, 2011 and included herein by reference), as well as the purchase by officers and directors of 20,000,000 Preferred A shares of USCorp.

 

Item 5. Other Information.

 

None.

 

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 21, 2012