SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-KSB/A
Amendment
No. 3
(Mark
One)
| [X] |
Annual
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 for
the fiscal year ended September 30,
2004
|
OR
| [_] |
Transition
Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934 for
the transition period from __ to
___
|
Commission
File Number: 000-19061
USCORP
(Exact
name of registrant as specified in its charter)
|
Nevada
|
87-0403330
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
4535
W. Sahara Ave., Suite 204, Las Vegas, NV 89102
(Address
of principal executive offices)
(702)
933-4034
(Registrant's
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of Each Class
|
Names
of each exchange
on
which registered
|
|
None
|
None
|
Securities
registered pursuant to Section 12(g) of the Act:
Common
Shares, $0.01 Par Value
Indicate
by check mark whether the Registrant (l) has filed all reports required to
be
filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes [X] No [__]
1
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]
State
the
issuer's revenues for its most recent fiscal year. $0.0
State
the
aggregate market value of the voting stock held by non-affiliates computed
by
reference to the price at which the stock was sold, or the average bid and
asked
price of such stock, as of a specified date within the past 60 days. As of
October 7, 2004, the value of such stock was $2,065,370.44.
***
Explanatory
Note:
This amendment Number 3 to the annual report on Form 10-KSB/A for fiscal year
ended September 30, 2004 is being filed to include the certifications that were
inadvertently not included with the previous filing.
2
FORM
10-KSB
September
30, 2004
USCORP
TABLE
OF CONTENTS
|
FORWARD
LOOKING STATEMENTS
|
4
|
|||
|
PART
I
|
||||
|
ITEM
1. Description of Business
|
4
|
|||
|
ITEM
2. Description of Property
|
21
|
|||
|
ITEM
3. Legal Proceedings
|
21
|
|||
|
ITEM
4. Submission of Matters to a Vote of Security Holders
|
21
|
|||
|
PART
II
|
||||
|
ITEM
5. Market for Registrant’s Common Equity and Related Stockholder
Matters
|
22
|
|||
|
ITEM
6. Management’s Discussion and Analysis of Financial Condition and Results
of
Operations
|
23
|
|||
|
ITEM
7. Financial Statements
|
27
|
|||
|
ITEM
8. Changes in and Disagreements with Accountants
|
28
|
|||
|
ITEM
8A. Controls and Procedures
|
28
|
|||
|
ITEM
8B. Other Information
|
29
|
|||
|
PART
III
|
||||
|
ITEM
9. Directors, Executive Officers, Promoters and Control
Persons
|
29
|
|||
|
ITEM
10. Executive Compensation
|
31
|
|||
|
ITEM
11. Security Ownership of Certain Beneficial Owners and
Management
|
32
|
|||
|
ITEM
12. Certain Relationships and Related Transactions
|
33
|
|||
|
ITEM
13. Exhibits
|
33
|
|||
|
ITEM
14. Principal Accountant Fees and Services
|
33
|
|||
|
Signatures
|
35
|
|||
|
PART
F/S
|
||||
|
Financial
Statements
|
F-1
to F-15
|
3
FORWARD
LOOKING STATEMENTS
Some
of
the information contained in this Report may constitute forward-looking
statements or statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are based on current
expectations and projections about future events. The words “estimate”, “plan”,
“intend”, “expect”, “anticipate” and similar expressions are intended to
identify forward-looking statements which involve, and are subject to, known
and
unknown risks, uncertainties and other factors which could cause Registrant’s
actual results, financial or operating performance, or achievements to differ
from future results, financial or operating performance, or achievements
expressed or implied by such forward-looking statements. Projections and
assumptions contained and expressed herein were reasonably based on information
available to Registrant at the time so furnished and as of the date of this
filing. All such projections and assumptions are subject to significant
uncertainties and contingencies, many of which are beyond Registrant’s control,
and no assurance can be given that the projections will be realized. Potential
investors are cautioned not to place undue reliance on any such forward-looking
statements, which speak only as of the date hereof. Registrant undertakes no
obligation to publicly release any revisions to these forward-looking statements
to reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
PART
I
ITEM
1. DESCRIPTION OF BUSINESS
A.
Recent Developments.
Except
as
set forth herein or otherwise in this Form 10-KSB, information presented here
is
as of September 30, 2004.
1.
During
fiscal 2004, Registrant's primary accountant, Henry Schiffer, C.P.A., An
Accountancy Corporation ("Schiffer"), was dismissed by the Company on March
19,
2004.
No
reports on the financial statements prepared by Schiffer over the two most
recent fiscal years contained any adverse opinion or disclaimer of opinion,
or
was qualified or modified as to uncertainty, audit scope, or accounting
principals except for an uncertainty relating to the registrant's ability to
continue as a going concern, which was stated in the reports for both years.
The
decision to change accountants was approved by the Board on March 19, 2004.
During the registrant's two most recent fiscal years, and any subsequent interim
period preceding the dismissal on March 19, 2004, there were no disagreements
with the former accountant, Schiffer, on any matter of accounting principals
or
practices, financial statement disclosure, or auditing scope or procedure,
which
disagreement(s), if not resolved to the satisfaction of Schiffer, would have
caused him to make reference to the subject matter of the disagreement(s) in
connection with his reports.
4
Schiffer
did not advise the registrant that internal controls necessary to develop
reliable financial statements did not exist; no information had come to
Schiffer's attention which would make him unwilling to rely on management's
representations, or unwilling to be associated with the financial statements
prepared by management. Schiffer did not advise the registrant that the scope
of
the audit should be expanded significantly, or that information had come to
his
attention that would materially impact the fairness or reliability of a
previously issued audit report or the underlying financial statements or the
financial statements issued or to be issued covering the fiscal periods
subsequent to the date of the most recent audited financial statements, dated
October 10, 2003, (including information that might preclude the issuance of
an
unqualified audit report).
Following
the dismissal of Schiffer, Registrant retained the services of Donahue
Associates, L.L.C., Monmouth Beach, New Jersey ("Donahue") on March 19, 2004,
as
its principal accountant. For more information please see Registrant's 8-K
Report filed in March 2004.
2.
On May
29, 2004, the Company concluded the acquisition of an aggregate of 29 additional
gold mining claims located in Imperial County, California from two individuals.
In lieu of cash payment for the claims the Company entered into what is
essentially a joint venture with the former owners whereby the Company is
obligated to commence production on these claims within two years with the
former owners entitled to receive 20% of all net smelter returns of gold,
whether paid in cash or in kind.
Under
the
terms of the acquisition, the Company granted each of the two sellers an option
to acquire 50,000 shares of the Company’s common stock at the then current
market price at any time within a two year period. The agreements further
provide that the Company’s obligation to commence gold production within two
years would be terminated in the event that the foregoing stock options were
exercised. Further, in the event that the Company subsequently sells the claims
within two years of the acquisition date, then the sellers will be entitled
to
receive 20% of the net proceeds of such sale. For more information regarding
this acquisition please see Registrant’s 8-K Report dated May 29,
2004.
B.
DESCRIPTION OF CURRENT BUSINESS OPERATIONS.
Registrant’s
plan of operation and business objectives will be to engage in (a) the precious
metals exploration, mining, and refining business, and (b) the acquisition
of
qualified candidates engaged in businesses that would complement Registrant’s
existing or proposed operations. All of Registrant’s business operations are
conducted through its subsidiaries
USMETALS
- Summary of Organization and Business.
USMetals
(“USMetals”) was formed and organized under the laws of the State of Nevada on
May 3, 2000. On or about April 2, 2002, Registrant acquired USMetals; including
its 141 lode mining claims (the “Mining Claims”). The purpose of USMetals is to
engage in the business of acquiring and developing mineral properties, exploring
for gold, silver, and other non-ferrous metals and minerals within the
contiguous United States. It is the further intention of USMetals to mine and
to
process any commercially-proven resources developed at its
properties.
5
The
Mining Claims of USMetals are located in West-Central Arizona, in the Eureka
Mining District of Yavapai County, Arizona, approximately 42 miles west of
Prescott, Arizona. Within the boundaries of USMetals’ Mining Claims, more
commonly referred to as the “Twin Peaks Mine,” are the historic sites of the
Crosby, Hayes, Swiss Belle and Glory Hole Mines, past producers of gold and
silver. The claims are geographically located in the southwestern division
of
the Eureka Mining District, which includes many significant mines and prospects.
The exceptions are the tungsten mines in the Camp Wood area, to the northeast,
the existing historic gold mines and prospects, which abut USMetals’ property to
the southeast along the Santa Maria River, and tungsten, copper, and zinc mines
to the south and southeast. The area has a long history of mining activities.
Mining companies and prospectors can obtain experienced labor, affordable
housing, equipment repair, and mining services within the district.
The
Santa
Maria River traverses the Mining Claims and USMetals is the only company that
holds water rights to that section of the river, a valuable asset for a mining
company in this arid country.
All
of
USMetals’ mining properties are unpatented mining claims; consequently,
Registrant has only possessory title with respect to such properties. The claims
were duly transferred by official deed from the prior owner to USMetals on
March
22, 2002. The real property upon which USMetals’ claims are located is subject
to a paramount lien by the United States of America; all of USMetals’ claims are
subject to the applicable rules and regulations of the United States Department
of the Interior, Bureau of Land Management, which administers USMetals’ use and
activities on said Mining Claims. USMetals has paid all of the required fees
in
order to maintain the 141 Mining Claims, which USMetals owns, for the current
periods. All of the necessary documents and affidavits have been filed with
the
Yavapai County Recorder, as was mentioned hereinabove.
Registrant
and USMetals have had a number of strategic working relationships with various
independent contractors in order to develop its Mining Claims. USMetals further
relies on the declarations and valuations formed and given in past geological
exploration and geochemical studies. USMetals has had consulting relationships
with International Energy and Resources, Inc., It should be noted that if
USMetals was forced to disassociate itself with one or more of the
abovementioned independent contractors, it could readily secure the services
of
other individuals or entities to perform the work or services of equal or
greater quality; the loss of any one or all of the abovementioned contractors
would not cause USMetals material adverse effects; however, each of these firms
has demonstrated its capability and reliability in assisting Registrant and
USMetals to develop the Mining Claims, and, to date, the abovementioned
companies have provided invaluable assistance to Registrant’s senior executive
management in evaluating the potential represented by USMetals’ Mining
Claims.
6
SOUTHWEST
RESOURCE DEVELOPMENT, INC. - Summary of Organization and
Business
Southwest
Resource Development, Inc. (“Southwest”) was formed and organized under the laws
of the State of Nevada on April 3, 2004 as a wholly owned subsidiary of USCorp.
On or about May 29, 2004, Southwest acquired 8 lode and 21 placer mining claims
(the “Mining Claims”) known as the Chocolate Mountain Region Claims and the
Picacho Area Claims. The purpose of Southwest is to engage in the business
of
acquiring and developing mineral properties, exploring for gold, silver, and
other non-ferrous metals and minerals within the contiguous United States.
It is
the further intention of Southwest to mine and to process any
commercially-proven resources developed at its properties.
In
lieu
of cash payment for the claims the Company entered into what is essentially
a
joint venture with the former owners whereby the Company is obligated to
commence production on these claims within two years with the former owners
entitled to receive 20% of all net smelter returns of gold after expenses,
whether paid in cash or in kind.
Registrant
has spent the last 3 years developing a plan that would bring multiple
properties under Company ownership. Through its wholly owned subsidiary,
Southwest Resource Development, Inc., Registrant has acquired for development
of
a total of 3,520 acres of precious metal properties located in the Chocolate
Mountain region of Imperial County, California: Geological testing has
successfully recovered gold and silver from dry washes and feeder rills.
Laboratory analysis indicates these findings warrant continued
development.
The
Chocolate Mountains region, located in southeastern Imperial county of
California, includes the Picacho State Park and surrounding areas that has
a
rich history of gold mining activities dating back to 1775. This property is
in
a district that has been producing gold since the 1800s. In 1890 a large stamp
mill was built beside the Colorado River at the town of Picacho. The Picacho
Mine was opened in the Picacho Basin area and a narrow gauge railroad began
hauling ore from the mine to the mill. By 1904, the town of Picacho had a
population of 2,500 people. The ruins of the mill are a few miles from USCorp's
newly acquired claims in the Picacho State Recreation Area. Thousands of people
visit the old mill ruins each year. To the south and west of the claims there
are ruins of many old placer and lode workings as well as recently producing
major mining operations.
Numerous
discoveries of placer gold throughout Imperial County have remained undeveloped
due to a common problem encountered by small miners. Due to the lack of an
adequate water supply to support placer gold recovery operations in the region,
scores of small and medium size mining operations have failed to successfully
recover precious metals known to exist throughout the region. Southwest believes
it has located a potentially adequate water source. Southwest intends to use
a
state of the art gold recovery system designed and developed by the Company’s
Process Engineer for the specific conditions found on these properties. Based
on
the recent reports of geologists and engineers, Southwest believes this property
has the potential to develop into a significant gold producing operation.
7
Historically,
mining has been carried out in the Mesquite Mining District of Imperial County
using old hard rock mining and placer methods. However, in 1984, new mining
methods (“heap leaching”) were used to develop and mine low-grade ore bodies,
with an economically viable cut-off grade as low as .01 to .02 ounces of gold
per ton. The geology and history of this area indicate it is rich in gold
deposits. Test production will determine the cutoff grade and the economic
viability of this property . Southwest intends to go into production as soon
as
possible after approvals and financing are obtained.
Property
descriptions, locations and nature of ownership.
Chocolate
Mountain Region Claims in the Mesquite Mining District of Imperial County,
California, U.S.A., Group #1: 640 acres on four contiguous, unpatented Placer
Claims. Access to these claims is by a private dirt road 2 miles north of the
intersection of Highway 78 and Ogilby Road, near Glamis, California.
Chocolate
Mountain Region Claims in the Mesquite Mining District of Imperial County,
California, U.S.A., Group #2: 17 unpatented Placer Claims. These contiguous
claims cover 2,720 acres. All of these claims are just east of the intersection
of Highway 78 and Ogilby Road. Access to the property is by private dirt
road.
Chocolate
Mountain Region Claims in the Mesquite Mining District of Imperial County,
California, U.S.A., Group #3: 8 unpatented Lode Claims covering 160 acres.
Means
of access to the property is by an unmarked private dirt road, south of Picacho
State Park.
The
141
unpatented lode mining claims, covering 2,820 acres, which the registrant refers
to as the “Twin Peaks Mine,” are located in the Eureka Mining District of
Yavapai County, Arizona, U.S.A. Access to the property from the west is by
county maintained and private dirt roads from Highway 93 (connecting Phoenix,
Arizona with Las Vegas, Nevada).
The
Company, through its wholly owned subsidiaries, owns unpatented mining claims
and pays an annual Maintenance Fee payment to the Bureau of Land Management
(BLM) for each of its claims. Maintenance Fee payments of $125 per claim are
due
on or before August 31 each year.
8
Maps
indicating the locations of our properties.
In
the
Map above “1”“2” and “3” represent the approximate locations of the company’s
properties in the Mesquite Mining District of Imperial County, California.
These
three locations are represented by the number “2” in the map below.
9
History
of previous operations.
Twin
Peaks Mine claims group, in the Eureka Mining District of Yavapai County,
Arizona: From a historical perspective, Spaniards arrived in the area over
400
years ago and used the Santa Maria River to gain access to the claims area.
According to historical sources, the local Indians used to mine gold and silver
in the area, which was refined and shipped to Spain. More recently, in the
1880's, John Lawler and Charles Crosby pioneered the Eureka Mining District.
In
1883, John Lawler discovered the area was rich in gold, silver, lead, and zinc.
Charles
Crosby first discovered the Crosby Mine and worked his claims from 1906 to
1933.
His works are on a mineralized structure and flat zone. When the Crosby Mine
opened in 1906, it processed 120 ounces of gold per day. It operated a 40-stamp
amolotion mill until World War II. The Crosby group of claims are in the
northeast corner of the Twin Peaks claims group.
From
the
mid-1920s to the mid-1930s, a prospector worked the Gloryhole claim, in the
southwest quadrant of the Company’s Twin Peaks claims group. The ore he mined
ran over 8 ounces of gold per ton. In 1941 and 1942, the claim was yielding
2.6
ounces of gold per ton. At that time, the ore was shipped to the railhead at
Hillside and by train to a smelter in El Paso, Texas.
In
1885,
the Hayes Silver Mine opened. The deposit at the mine was so rich - over 300
ounces of gold and silver per ton - that the owners shipped the ore directly
to
England for smelting and refining. The Hayes claims group are part of the
Company’s Twin Peaks claims group.
Chocolate
Mountain Region Claims in the Mesquite Mining District of Imperial County,
California: There has been no commercial scale mining on any of the Company’s
claims in this region.
The
present condition of the property, the work we have completed on the property,
our proposed program of exploration and development, and the current state
of
exploration and development of the property.
Twin
Peaks Mine Claims Group: The Company has completed limited exploration work
on
the property, including drilling 3,000 feet of core samples (in addition to
10,000 feet drilled by prior owners) and road improvements to repair and create
dirt road accesses to the property. The Company relies on geological work of
experts performed under prior ownership in support of our reports of the
presence of gold, silver, uranium and other mineralization on the property.
The
Company is not conducting mineral extraction operations on this property at
this
time.
Chocolate
Mountain Region Claims Groups in the Mesquite Mining District of Imperial
County: The Company has performed very limited work on the property. The Company
relies on geological work of experts performed under prior ownership in support
of our reports of the presence of gold and silver on the property. There are
no
current mineral extraction operations on this property. The proposed program
is
exploratory in nature.
The
physical condition of the plant and equipment and the source of power utilized
with respect to each property.
At
this
time there are no physical plants on any of the Company’s properties. The
Company owns rights to water on the Santa Maria River which traverses the Twin
Peaks Mine property. Power is available on properties adjacent to the Twin
Peaks
Mine and portable generators will be used as necessary. Power is also available
on properties adjacent to our placer claims in California and portable
generators will be used when necessary. There are capped wells on our California
claims. We will supplement well water with trucked water as necessary.
10
Adequate roads exist to each of our claims groups. Some existing roads may need to be, repaired or extended.
A
brief description of the rock formations and mineralization of existing or
potential economic significance on the property, including the identity of
the
principal metallic or other constituents.
In
regards to the Twin Peaks Mine, past geologic valuations have indicated
mineralized material on claims within the boundaries of the Twin Peaks on the
Crosby claims, Hayes claims and Glory Hole claims as follows: 1,200,000 tons
of
ore at the Crosby with 0.118 ounces of gold per ton and 0.520 ounces of silver
per ton; 1,200,000 tons of ore at the Hayes with 0.128 ounces of gold per ton
and 0.960 ounces of silver per ton; 1,200,000 tons of ore at the Crosby with
0.258 ounces of gold per ton and 0.584 ounces of silver per ton;. The Company
uses these reports in support of its determination that economically viable
mineralization is present on the properties as stated in various historical
reports.
According
to past geologic valuations the Crosby claims are within an area of banded
gray
schist that is surrounded by light-colored granite and intruded by pegmatite,
rhyolite-porhyry, and basic dikes. The vein strikes N10E, and dips 25 to 30
degrees E, and attains a width of up to 18 inches in the old workings. Rich
ore
from the oxidized zone shows brecciated quartz with abundant cellular limonite.
The gold is usually found associated with the oxidized iron minerals. The Hayes
and Glory Hole claims are geologically similar to the Crosby claims, and the
gold is also found in association with the oxidized iron minerals. Several
structural zones appear to control the mineralization within the claim group.
It
can be considered that an alignment of a structural trend exists, with a bearing
of about N2OE between the Hayes Mine and the Crosby Mine, with the Swiss Belle
Mine at midway along the trend. Another structural zone which is expressed
by a
dike and is reported to run from the Santa Maria River to the base of Hayes
Peak, has an average bearing of about N53W. The Hayes Shaft was sunk within
this
dike. The dike probably passes slightly west of the Glory Hole Mine and then
intersects a N2OE structural zone near the base of Hayes Peak. A sample taken
at
this intersection assayed 1.167 oz/ton gold and 66.37 oz/ton silver. The
structural zones seem to influence wide areas adjacent to them, which is
confirmed by the voluminous number of favorable assays and also by the Very
Low
Frequency Electromagnetic survey. Cut off grade valuations were not
performed.
Chocolate
Mountain Region Claims Groups in the Mesquite Mining District of Imperial
County: A past geochemical sampling program has indicated mineralized material
at the Goldstar placer claims; tonnage and grade valuations were not performed.
The Company uses such reports in support of its determination that economically
viable mineralization may be present on the properties as stated in various
historical reports.
The
phased nature of the exploration process, and the place in the process our
current exploration activities occupy.
Phase
1
of the exploration process has been completed on a portion of the Hayes group
of
claims within the Twin Peaks mine. PHASE I supplemented the previous exploration
effort with additional geological, geochemical and geophysical surveys,
drilling, excavations and road building. We also completed a scoping study.
PHASE I was designed to furnish pertinent data for the design of PHASE II MINING
OPERATION PLAN.
In
Phase
II we intend to do further exploration on our property, and design and initiate
a Test Production program on selected claims within the Twin Peaks claims group.
This will include an electromagnetic flyover of the entire claim group and
completion of a geochemical survey using the boundaries of individual claims
to
establish a base grid. This sample grid would be tightened in select areas.
Simultaneously, the geology will be mapped in order to determine the overall
extent of pathfinder mineralization for use in planning additional drilling,
gaining a more detailed
understanding of the potential of the entire site, and solidifying the mineral
land position.
11
We will then commence with drilling and assaying in the areas previously targeted in prior geological reports. The drilling program will be designed to confirm the geology and mineralization in the target areas; a broad program is not necessary due to prior geological work. Extra samples will be retained for metallurgical testing on promising zones.
The
results of testing the samples will allow us to plan the conceptual mine and
milling plans, including flow-sheets that will be used in the feasibility study
process along with the on-going economic and cost modeling evaluation of the
project. Finally when the results have been evaluated we will begin the
collection of the environmental data necessary for further exploration,
completion of the feasibility study and mining.
We
have
received a Test Production plan and budget for the Chocolate Mountain Region
Claims in the Mesquite Mining District of Imperial County from our Consulting
Geologist, Quantum GeoConsultants, LLC, summarized as follows:
Test
Production Program Budget and Plan
To
start
placer testing operations we must first purchase and modify a wash plant. The
pad and setup of the wash plant is next.
The
dirt
access road from the Highway to the site (approximately 2 miles) must be
reworked or repaired. We will also need a Front End Loader (“F.E.L.”) with
Back-Hoe attachment. For continuous hard work excavating trenches, digging
test
pits and carrying alluvial material back to the wash plant for processing on
a
daily basis. It would be used for the duration of the test production
program.
The
sampling method is standard in geological exploration and is confined to dry
arroyo drainages and rills. Grab samples taken outside of the dry river beds
and
rills will be by prospectors pick or regular pick and shovel. Instruments to
be
used will be a VLF unit, an EM unit, microscopes, spectrometer, GPS unit,
possibly an I.R. unit, a magnetometer and miscellaneous sieves. A 10 or 12
kW
generator set will independently power the night lights and camper unit. We
need
to determine if the present wells go down a minimum of 400 feet to reach
adequate water supply to support test production wash plant. The estimated
budget for this is $205,000 for a 12 week program.
We
will
make a decision whether to proceed with each successive phase of the exploration
program upon completion of the previous phase and upon analysis of the results
of that program.
The
cutoff grade will be determined as part of the feasibility study process.
We
will
follow QA/QC protocols provided by the Society for Mining, Metallurgy and
Exploration Guidance on best practices for Exploration
www.smenet.org.
12
Recent
Initial Exploration and Exploitation
Although
many companies and individuals are engaged in the mining business, including
large established mining companies, there is a limited supply of desirable
mineral lands available for claim staking, lease, or other acquisition in the
United States and other areas where USMetals contemplates conducting its
exploration and/or production activities. However, it has been determined by
qualified geologists and mining companies that USMetals’ Arizona properties have
mineralization of a variety of precious and non-precious minerals. Historically,
the specific geographic region in which USMetals intends to conduct its
exploratory and mining activities has been the subject of various general
samplings, which were performed by the State of Arizona, the United States
Department of the Interior Bureau of Mines, and the United States Department
of
the Interior Bureau of Land Management.
Registrant
has relied upon a number of studies by companies that are not presently
affiliated or associated with USMetals to determine the feasibility and
valuation of USMetals’ pursuit to develop the Mining Claims. These studies are
comprised of several exploration techniques, such as geological and geophysical
surveys, drilling, and excavations, in order to determine the economic
potential, and subsequent exploration and mining , of the Claims. These
different firms, have utilized varied means to calculate the potential of the
exploration and development of the Twin Peaks Mine’s Mining Claims.
Early
Exploration Conducted and Valuations.
Past
geological studies indicated that beginning in 1981 a geologist performed
certain exploratory drillings in order to obtain samples of the contents from
the Crosby Mine Site No. 6, located Yavapai County, Arizona (one of the claims
in USMetals’ Twin Peaks Mine). The geologist drilled 28 core drill holes on the
Crosby Mine site. His report was based on 200-foot depth cores. This area was
18,519 cubic yards, or approximately 20,000 tons of mineralized material. The
total area that was drilled was 1,500’ x 600’ x 200’. A total of 744 core
samples were taken from the 6,000-foot of core hole drillings. The samples
were
assayed for gold and silver.
The
results indicated the presence of mineralization of gold and silver. The core
samples also revealed quartz monzonite porphyry formations throughout the area
of sampling. The many faults located in this area were of considerable
importance in controlling supergene enrichment; the largest quantity and highest
grade of ore occurs when these faults intersect or are closely spaced. There
was
significant evidence of this enrichment recorded from the samples taken from
the
Crosby Mine site area. And, the gold and silver that was found is natural to
the
formations of the enrichment zone.
Recent
Exploration and Samplings
Recent
geological surveys provided by International Energy and Resources, Inc., (IERI),
one of USMetals’ principal advisors have confirmed prior geological reports. It
was verified that the Twin Peaks Mine is on a mineralized structure and flat
zone with gold and silver carrying mineralization.
Historically,
over 10,000 feet of core drillings were performed and over 1,500 fire assays
were conducted. These assays showed an overall average of .14 ounces of gold
per
ton and .595 ounces of silver per ton, on one area covering 3 claims.
13
The
geological, geophysical, and geochemical studies stated above were reviewed
and
evaluated by an independent mining, consulting, and geologic firm that was
engaged to evaluate the commercial feasibility of the claims. The report and
economic study recommended the continuation of exploration and the start of
production.
The
geological justification for the exploration project at the Twin Peaks Mine
is
that numerous past geological studies have found gold and silver mineralization
in economically viable quantities at various locations within the boundaries
of
the claims group. There are also areas within the claims group that contain
uranium and areas containing complex ores.
The
geological justification for the exploration project at the Chocolate Mountain
Region claims is that there is visible gold in the ground and past geological
studies have found gold and silver in economically viable quantities at various
locations within the boundaries of the claims groups.
A
breakdown of the exploration timetable and budget, including estimated amounts
that will be required for each exploration activity.
The
six
month exploration timetable and budget for the Twin Peaks Mine is as
follows:
The
total
cost is projected to be $2.4 million to complete a electromagnetic flyover,
a
comprehensive drilling program, road repair and extensions, design and building
of a test mill of 50 to 1,000 tons per day capacity. The estimate of six month
time period is an estimate of time need to perform tasks only and does not
take
into account delays for governmental review and approval of our mining plan.
The
12
week exploration timetable and budget for the Chocolate Mountain Region claims
is as follows:
The
total
cost is projected to be $205,000 to complete an electromagnetic flyover,
comprehensive road repair and extensions, design and purchase of a wash plant
of
10 tons per hour capacity. The estimate of twelve week time period is an
estimate of time needed to perform tasks only and does not take into account
delays for governmental review and approval of our mining plan.
How
the exploration program will be funded.
We
are
seeking funding via equity or debt financing in the form of private placements,
working interest joint venture, and/or gold bullion loans in the United States,
Europe and Asia.
Identification
of who will be conducting any proposed exploration work, and a discussion of
their qualifications.
To
date
the Company has contracted with International Energy and Resources, Inc., and
Quantum GeoConsultants, LLC, for limited exploration and geological work on
the
Company’s properties. Given adequate financing we intend to use additional
qualified mining consultants and engineers subject to their availability and
willingness and our need, but we have not contracted with any other vendors
as
of the date of this report. A summary of the qualifications of International
Energy and Resources, Inc., a wholly owned subsidiary of US American Resources,
Inc., and Quantum GeoConsultants, LLC, follows:
14
USCorp
Consultants
Quantum
GeoConsultants, LLC.
Edwin
Arbar, Managing Partner: Bachelor Degree: Bioscience, Geoscience, Western State
College, Colorado, U.S.A.
Certificates:
Advanced Environmental Engineering: Mining industry waste and water pollution
control and remediation. University of Concepcion, Concepcion, Chile.
Gemstone
Certifications: Gemological Institute of America, Los Angeles, California.
Certificates for Diamond Grading, Diamond Appraisal, and Colored Gemstones
Registered
Environmental Assessor; State of California, Registered #REA-03167
Summary
of experience: Retired from Fluor Mining and Metals division of Fluor
Corporation as a Senior Manager after 40 years of project engineering and field
management of domestic and international world class E.P.C.M. projects in the
following categories: Geophysical exploration; Drilling/blasting; O/P and U/G
mine development/production; Mass excavations; Crushing/conveyor systems; Ore
processing plants; Heap leach pads; Open and closed circuit SX/EW units;
Precious metal placer development and recovery systems; Tailings ponds; Toxic
waste water treatment; Salt water conversion plants; Environmental
assessment/remediation; Microwave/fiber optic communication systems; Crude
oil
refineries w/LNG facilities; Petrochemical plants; Power generation plants
and
hi-power transmission lines; Major oil, gas and mineral concentrates pipelines;
Railroads and back-country air ports; Offshore oil/gas production platforms
and
marine pipelines; High-tech research and development centers; Diamond
exploration and recovery systems.
Metals
Exploration/Development Consultant: August 2002 to present
Perform
professional services as a member of a mining industry consulting group:
Performing audits on technical and due diligence reports by conducting on-site
studies and review of historical and new data including, but not limited to:
Geological surveys; Geochemical tests; Geophysical surveys; 3-D aerial photo
studies; Review satellite photos; Perform assays and/or verify historical assay
test reports; Review core drilling logs and reports; Conduct/review laboratory
tests and feasibility studies; Prepare/review pilot plant flow sheets and
reports; Title search and review; Review/verify water rights and legal data;
Review right-of-way easements; Review B.L.M. permits; Review E.I.R.'s and
related data; Review status of fees/taxes paid for patented and un-patented
mineral claims; Review safety, cost and schedules: for multi-national owners
and/or investors based in the U.S.A., Canada, Argentina, Chile, Brazil, Bolivia,
Peru, Alaska and Mexico.
International
Energy and Resources, Inc., a
wholly
owned subsidiary of US American Resources, Inc. and
Subsidiaries include:
Hilbrands
And Western Mining Company a wholly owned subsidiary of US American
Resources
Ted
Hilbrands, and Arie Hilbrands, Owner Operators. Hilbrands and Western is an
Arizona-based mining company with 30 years of experience in mining, drilling,
and exploration. Expert witness for U.S. Mineral Surveyor, worked extensively
on
construction projects with the US Army Corps of Engineers. They have extensive
knowledge in land survey, mine ownership and leaching, mill construction and
management.
15
Specific
Environmental Regulation.
Mining
is
subject to potential risks and liabilities associated with pollution of the
environment and the disposal of waste products occurring as a result of mineral
exploration and production. Environmental liability may result from mining
activities conducted by others prior to USMetals’ ownership of a property.
Insurance for environmental risks (including potential liability for pollution
or other hazards as a result of the disposal of waste products occurring from
exploration and production) is not generally available at a reasonable price
to
companies within the industry. To the extent USMetals is subject to
environmental liabilities, the payment of such liabilities would reduce funds
otherwise available to USMetals and could have a material adverse effect on
USMetals.
In
the
context of environmental compliance and permitting, including the approval
of
reclamation plans, USMetals must comply with standards, laws and regulations
which may entail greater or lesser costs and delays depending on the nature
of
the activity to be permitted, constructed and operated and how stringently
the
regulations are implemented by the applicable regulatory authority. It is
possible that the costs and delays associated with compliance with such laws,
regulations and permits could become such that a company would not proceed
with
the development of a project or the operation or further development of a mine.
Laws, regulations and regulatory policies involving the protection and
remediation of the environment are constantly changing at all levels of
government and are generally becoming more restrictive and the costs imposed
on
the development and operation of mineral properties are increasing as a result
of such changes. USMetals has made, and expects to make in the future,
significant expenditures to comply with such laws and regulations.
The
Environmental Protection Agency (“EPA”)
continues the development of a solid waste regulatory program specific to mining
operations under the Resource Conservation and Recovery Act (“RCRA”).
The
difficulty is that many Federal laws duplicate existing state
regulations.
Mining
companies in the United States are also subject to regulations under (i) the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
(“CERCLA”)
which
regulates and establishes liability for the release of hazardous substances
and
(ii) the Endangered Species Act (“ESA”)
which
identifies endangered species of plants and animals and regulates activities
to
protect these species and their habitats. Revisions to CERCLA and ESA are being
considered by Congress; the impact on USMetals of these revisions is not clear
at this time. Environmental laws and regulations enacted and adopted in the
future may have a significant impact upon USMetals’ future operations.
Reclamation
plans which are approved by various environmental regulatory authorities are
subject to on-going review and modification. Although USMetals’ management
believes that the reclamation plans developed and implemented for its mine
sites
are reasonable under current conditions, any future re-determination of
reclamation conditions or requirements could significantly increase USMetals’
costs of implementation of such plans.
16
Competition.
There
is
aggressive competition within the minerals industry to discover and acquire
properties considered to have commercial potential. USMetals will compete for
promising gold exploration projects with other entities, many of which have
greater financial and other resources than USMetals In addition, USMetals will
compete with other firms in its efforts to obtain financing to explore and
develop mineral properties including the claims its already owns. Further,
the
mining industry is typified by companies with significantly greater financial
resources and market recognition than the Company. At present, Registrant is
not
a significant factor within this industry.
Employees
and Independent Contractors.
As
of the
Date of this Report, Registrant did not employ any persons other than its
executive officers and directors named herein.
As
of the
Date of this Report, Registrant and its wholly owned subsidiaries have utilized
two principal consultants/advisors: Quantum GeoConsulting Group, under its
managing partner, Edwin Arbar and International Energy and Resources, Inc.
(IERI) under the guidance and direction of IERI’s current Chairman and CEO, John
Owen, which, in turn, employ subcontractors that perform work indirectly for
Registrant and its subsidiaries.
C.
Risk Factors
Lack
of Operating History and Earnings.
Registrant has no operating history or revenues. Registrant expects to incur
further losses in the foreseeable future due to significant costs associated
with its business development, and the business development of its subsidiaries,
including costs associated with its acquisition of new mining claims and/or
operations. There can be no assurance that Registrant’s operations will ever
generate sufficient revenues to fund its continuing operations that Registrant
will ever generate positive cash flow from its operations, or that Registrant
will attain or thereafter sustain profitability in any future
period.
Speculative
Nature of Registrant’s Proposed Operations; Dependence Upon Management.
The
success of Registrant’s operations, independently and through its subsidiaries,
and its proposed plan of operation will depend largely on the operations,
financial condition, and management of Registrant. While management intends
to
engage in the business purposes stated herein, there can be no assurance that
it, or any of its subsidiaries, will be successful in conducting such business.
Presently, Registrant is totally dependent upon the personal efforts of its
current management. The loss of any officer or director of Registrant could
have
a material adverse effect upon its business and future prospects. Registrant
does not presently have key-man life insurance upon the life of any of its
officers or directors. None of our management are chemists, metallurgists,
mining engineers or geologists and as such do not have the technical experience
in exploring for, starting, and/or operating a mine. Upon adequate funding
management intends to hire qualified and experienced personnel, including
additional officers and directors, and mining specialists, professionals and
consulting firms to advise management as needed; however there can be no
assurance that management will be successful in raising the necessary funds,
recruiting, hiring and retaining such qualified individuals.. Such
consultants have no fiduciary duty to Registrant or its shareholders, and may
not perform as expected. The success of Registrant will, in significant part,
depend upon the efforts and abilities of management, including such consultants
as are or may be engaged in the future.
See
“PART III, ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS”.
17
Risks
Inherent In Exploration and Mining Operations. Mineral
exploration is highly speculative and capital intensive. Most exploration
efforts are not successful, in that they do not result in the discovery of
mineralization of sufficient quantity or quality to be profitably mined.
Registrant’s Mining Claims are also indirectly subject to all hazards and risks
normally incidental to developing and operating mining properties. These risks
include insufficient ore reserves, fluctuations in production costs that may
make mining of reserves uneconomic; significant environmental and other
regulatory restrictions; and the risks of injury to persons, property or the
environment. In particular, the profitability of gold mining operations is
directly related to the price of gold. The price of gold fluctuates widely
and
is affected by numerous factors that are beyond the control of any mining
company. These factors include expectations with respect to the rate of
inflation, the exchange rates of the dollar and other currencies, interest
rates, global or regional political, economic or banking crises, and a number
of
other factors. If the price of gold should drop dramatically, the value of
the
Mining Claims could also drop dramatically, and the Company might then be unable
to recover its investment in those interests or properties. Selection of a
property for exploration or development; the determination to construct a mine
and to place it into production, and the dedication of funds necessary to
achieve such purposes, are decisions that must be made long before the first
revenues from production will be received. Price fluctuations between the time
that such decisions are made and the commencement of production can drastically
affect the economics of a mine. The volatility of gold prices represents a
substantial risk, generally, which no amount of planning or technical expertise
can eliminate.
Uncertainty
of Reserves and Mineralization Estimates. There
are
numerous uncertainties inherent in estimating proven and probable reserves
and
mineralization, including many factors beyond Registrant’s control. The
estimation of reserves and mineralization is a subjective process and the
accuracy of any such estimates is a function of the quality of available data
and of engineering and geological interpretation and judgment. Results of
drilling, metallurgical testing and production and the evaluation of mine plans
subsequent to the date of any estimate may justify revision of such estimates.
No assurances can be given that the volume and grade of reserves recovered
and
rates of production will not be less than anticipated. Assumptions about prices
are subject to great uncertainty and gold prices have fluctuated widely in
the
past. Declines in the market price of gold or other precious metals also may
render reserves or mineralization containing relatively lower grades of ore
uneconomic to exploit. Changes in operating and capital costs and other factors
including, but not limited to, short-term operating factors such as the need
for
sequential development of ore bodies and the processing of new or different
ore
grades, may materially and adversely affect reserves.
Environmental
Risks. Mining
is
subject to potential risks and liabilities associated with pollution of the
environment and the disposal of waste products occurring as a result of mineral
exploration and production. Insurance against environmental risks (including
potential liability for pollution or other hazards as a result of the disposal
of waste products occurring from exploration and production) is not generally
available to Registrant (or to other companies within the
gold
industry) at a reasonable price. To the extent Registrant becomes subject
to
environmental liabilities, the satisfaction of any such liabilities would
reduce
funds otherwise available and could have a material adverse effect on
Registrant. Laws and regulations intended to ensure the protection of the
environment are constantly changing, and are generally becoming more
restrictive.
18
Proposed
Federal Legislation. Over
the
past ten years, the U.S. Congress has adopted revisions of the General Mining
Law of 1872, which governs the creation of mining claims and related activities
on Federal public lands in the United States. Similarly, the U. S. Congress
and
the Clinton Administration eliminated the U.S. Bureau of Mines, which was the
agency responsible for gathering and maintaining data on mines throughout the
United States. Beyond changes to the existing laws, the Congress or the Bush
Administration may propose or adopt new laws; any such revisions could also
impair USMetals’ and Southwest’s ability to develop, in the future, any mineral
prospects that are located on unpatented mining claims on Federal
lands.
Title
to Properties. The
validity of unpatented mining claims, which constitute all of Registrant’s
property holdings, is often uncertain and such validity is always subject to
contest. Unpatented mining claims are unique property interests and are
generally considered subject to greater title risks than patented mining claims,
or other real property interests that are owned in fee simple. Registrant has
not filed any patent applications for any of its properties that are located
on
Federal public lands in the United States, (specifically, in the States of
Arizona and California), and, under changes to the General Mining Law, patents
may not be available for such properties. Although management believes it has
taken requisite action to acquire satisfactory title to its undeveloped
properties, it does not intend to go to the expense to obtain title opinions
until financing is secured to develop the property, with the attendant risk
that
title to some properties, particularly title to undeveloped properties, may
be
defective.
Competition.
There
is
aggressive competition within the minerals industry to discover and acquire
properties considered to have commercial potential. Registrant will compete
for
promising gold exploration projects with other entities, many of which have
greater financial and other resources than Registrant. In addition, Registrant
will compete with other firms in its efforts to obtain financing to explore
and
develop mineral properties.
Registrant’s
Financial Statements Contain a “Going Concern
Qualification.”
Registrant may not be able to operate as a going concern. The independent
auditors’ report accompanying its financial statements contains an explanation
that Registrant’s financial statements have been prepared assuming that it will
continue as a going concern. Note 1 to these financial statements indicates
that
Registrant is in the development stage and needs additional funds to implement
its plan of operations. This condition raises substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Registrant’s audit report and financial statements are included herein as “PART
F/S”.
Uncertainty
As To Management's Ability To Control Costs And Expenses. With
respect to Registrant's development of its mining properties and the
implementation of commercial operations, management cannot accurately project
or
give any assur-ance, with respect to its ability to control develop-ment and
operating costs and/or expenses. Conse-quently, if management is not able to
ade-quately control costs and expenses, such operations may not generate any
profit or may result in operating losses.
No
Dividends.
The
Company has not paid any dividends nor, by reason of its present financial
status and contemplated financial requirements, does it anticipate paying any
dividends in the foreseeable future.
19
Risks of Low-Priced Stocks And Possible Effect of “Penny Stock” Rules on Liquidity. Currently Registrant’s stock is defined as a “penny stock” under Rule 3a51-1 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934. In general, a “penny stock” includes securities of companies which are not listed on the principal stock exchanges or the National Association of Securities Dealers Automated Quotation System (“NASDAQ”) or National Market System (“NASDAQ NMS”) and have a bid price in the market of less than $5.00; and companies with net tangible assets of less than $2,000,000 ($5,000,000 if the issuer has been in continuous operation for less than three years), or which has recorded revenues of less than $6,000,000 in the last three years. “Penny stocks” are subject to rule 15g-9, which imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses, or individuals who are officers or directors of the issuer of the securities). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. Consequently, this rule may adversely affect the ability of broker-dealers to sell Registrant’s stock, and therefore, may adversely affect the ability of Registrant’s stockholders to sell stock in the public market.
Shares
Eligible for Future Sale.
A total
of 29,531,459 shares of Common Stock are issued and outstanding as of the date
of this Report, of which approximately 23,586,257 shares thereof are “restricted
securities” as that term is defined under the Securities Act. Therefore, all
such restricted shares must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from registration becomes available.
One exemption that may be available in the future is Rule 144 adopted under
the
Securities Act. Generally, under Rule 144 any person holding restricted
securities for at least one year may publicly sell in ordinary brokerage
transactions, within a 3 month period, the greater of one (1%) percent of the
total number of a company’s shares outstanding or the average weekly reported
volume during the four weeks preceding the sale, if certain conditions of Rule
144 are satisfied by the company and the seller. Furthermore, with respect
to
sellers who are “non-affiliates” of the company, as that term is defined in Rule
144, the volume sale limitation does not apply and an unlimited number of shares
may be sold, provided the seller meets a holding period of 2 years. Sales under
Rule 144 may have a depressive effect on the market price of Registrant’s
securities, should a public market be available for Registrant’s shares.
Safe
Harbor Statement:
Under
the United States Private Securities Litigation Reform Act of 1995, except
for
the statements of historical fact contained herein, the information presented
constitutes “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements,
including but not limited to those with respect to the price of gold, the timing
of the exploration of the Company’s properties, the timing of the development of
the Company’s properties, the timing and amount of estimated future production,
costs of production, mineralization and “reserve” determination involve known
and unknown risks, uncertainties and other factors which may cause the actual
results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the actual results of current
exploration and development activities, conclusions of economic evaluations,
changes in project parameters as plans continue to be refined, future prices
of
gold, silver or other metals and minerals. Although the Company has attempted
to
identify important factors that could cause actual results to differ materially,
there may be other factors that cause results not to be as anticipated,
estimated or intended. There can be no assurance that such statements will
prove
to be accurate as actual results and future events could differ materially
from
those anticipated in such statements. Accordingly, readers should not place
undue reliance on forward-looking statements.
(See
“Forward Looking Statements”, PART I).
20
(D)
Reports to Security Holders
The
public may read and copy any materials filed with the SEC at the SEC’s Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. The public
may
obtain information on the operation of the Public Reference Room by calling
the
SEC at 1-800-SEC-0330. The SEC maintains an internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the SEC. The address of that SEC internet site is
http://www.sec.gov.
ITEM
2. DESCRIPTION OF PROPERTY
The
Company's principle executive offices are located at 4535 W. Sahara Ave., Suite
204, Las Vegas, NV 89102 and its telephone number is (702)
933-4034.
ITEM
3. LEGAL PROCEEDINGS
During
the fiscal year ended September 30, 2004, the Company was not a party to legal
proceedings requiring disclosure in this Report and none of the Company's
officers or directors are involved in any litigation in their capacities as
such
officers or directors of the Company.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Two
matters were put to the vote of the shareholders during the fiscal year ended
on
September 30, 2004. On June 14, 2004 the shareholders approved the addition
of a
second class of convertible preferred stock, 50,000,000 shares designated Series
B and convertible into two shares
of
common stock. On September 15, 2004 the shareholders approved increasing the
number of common shares authorized to be issued from 100,000,000 to 300,000,000.
Subsequent to the date of this report, on November 8, 2004, the shareholders
approved the addition of a second class of common stock, 25,000,000 shares
designated Series B common.
21
PART
II
ITEM
5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The
Company's securities are quoted on the OTC Bulletin Board and as of December
23,
2003 the Company’s shares are also traded on the Third Segment of the Berlin
Stock Exchange under symbol UCP.BER, WKN number A0BLBB.
The
following table sets forth for the periods indicated the range of high and
low
closing bid quotations for the Company's common stock during the past two fiscal
years. These quotations represent inter-dealer prices without retail mark-up,
mark-down or commission and may not represent actual transactions:
|
PERIOD
|
HIGH
|
LOW
|
|||||
|
Quarter
ended December 31, 2002
|
$
|
3.00
|
$
|
0.31
|
|||
|
Quarter
ended March 30, 2003
|
$
|
1.01
|
$
|
0.31
|
|||
|
Quarter
ended June 30, 2003
|
$
|
0.40
|
$
|
0.31
|
|||
|
Quarter
ended September 30, 2003
|
$
|
0.45
|
$
|
0.27
|
|||
|
Quarter
ended December 31, 2003
|
$
|
0.55
|
$
|
0.23
|
|||
|
Quarter
ended March 30, 2004
|
$
|
0.50
|
$
|
0.31
|
|||
|
Quarter
ended June 30, 2004
|
$
|
0.63
|
$
|
0.34
|
|||
|
Quarter
ended September 30, 2004
|
$
|
0.44
|
$
|
0.25
|
|||
On
October 7, 2004 the reported closing price for the Company's common stock was
$0.26 per share; there were approximately 171 record holders of the Company's
shares.
The
Company has not paid any dividends and there are presently no plans to pay
any
such dividends in the foreseeable future. The declaration and payment of
dividends in the future will be determined by the Board of Directors in light
of
conditions then existing, including earning, financial condition, capital
requirements and other factors. There are no contractual restrictions on the
Company's present or future ability to pay dividends. Further, there are no
restrictions on any of the Company's subsidiaries which would, in the future,
adversely affect the Company's ability to pay dividends to its
shareholders.
Recent
Sales of registered and unregistered securities.
During
fiscal year 2004, the Company issued (i) 1,069,945 shares of common stock to
vendors to pay outstanding invoices of $470,776; (ii) 550,000 shares of common
stock and received proceeds of $212,000.
Additionally,
In June 2004, the Company commenced a private placement of 6 million units
of
its securities with each unit consisting of one share of preferred stock and
one
warrant to purchase an additional share of preferred stock at a price of $0.50
per unit. The offer terminates in January 2005. Each preferred share is
convertible into two common shares at any time at the election of the preferred
shareholder. Each warrant represents the right of the holder to purchase one
additional preferred share at a price of $0.50 during the two-year period
following the date of
their
issuance. The Company may call the warrants at any time at a redemption price
of
$0.001 per warrant provided the price of its common stock has traded above
$1
for 20 consecutive days.
22
The
preferred shares accrue interest at the rate of 10% per annum of the purchase
price of $0.50, or $0.05 per year, payable annually in arrears. The Company
may
elect to make payment of interest in the form of common shares. In which case
the number of common shares payable will equal the amount of interest payable
divided by the closing price of the common shares on the date the dividend
is
declared by the Company.
The
preferred shares are redeemable by the Company at any time after one year from
the date of their issuance provided that the common shares have sustained a
trading price of not less than $1.00 per common share for at least 20
consecutive trading days. If the Company elects to redeem the Shares, the
redemption price shall be determined as follows:
| (i) |
During
the second year after their issuance at $0.575 per preferred
share;
|
| (ii) |
During
the third year after their issuance at $0.55 per preferred
share;
|
| (iii) |
During
the fourth year after their issuance at $0.525 per preferred
share;
|
| (iv) |
After
the fourth year after their issuance at $0.50 per preferred
share.
|
During
September 2004, the Company received $55,175 of subscriptions for 112,500 units
in this private placement.
Finally,
the company issued registered shares as follows: 2,118,441 shares of common
stock to consultants for services rendered valued at $673,898.
ITEM
6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You
should read the following discussion and analysis in conjunction with the
Consolidated Financial Statements and Notes thereto, and the other financial
data appearing elsewhere in this Report.
The
information set forth in Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934,
as
amended, and the Private Securities Litigation Reform Act of 1995, including,
among others (i) expected changes in the Company's revenues and profitability,
(ii) prospective business opportunities and (iii) the Company's strategy for
financing its business. Forward-looking statements are statements other than
historical information or statements of current condition. Some forward-looking
statements may be identified by use of terms such as "believes", "anticipates",
"intends" or "expects". These forward-looking statements relate to the plans,
objectives and expectations of the Company for future operations. Although
the
Company believes that its expectations with respect to the forward-looking
statements are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, in light of the risks and
uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be regarded as a
representation by the Company or any other person that the objectives or plans
of the Company will be achieved.
23
The
Company's revenues and results of operations could differ materially from those
projected in the forward-looking statements as a result of numerous factors,
including, but not limited to, the following: (i) changes in external
competitive market factors, (ii) termination of certain operating agreements
or
inability to enter into additional operating agreements, (iii) inability to
satisfy anticipated working capital or other cash requirements, (iv) changes
in
or developments under domestic or foreign laws, regulations, governmental
requirements or in the mining industry, (v) changes in the Company's business
strategy or an inability to execute its strategy due to unanticipated changes
in
the market, (vi) various competitive factors that may prevent the Company from
competing successfully in the marketplace, and (ix) the Company's lack of
liquidity and its ability to raise additional capital. In light of these risks
and uncertainties, there can be no assurance that actual results, performance
or
achievements of the Company will not differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. The foregoing review of important factors should not be construed
as
exhaustive. The Company undertakes no obligation to release publicly the results
of any future revisions it may make to forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence
of
unanticipated events.
OVERVIEW
The
Company is an “exploration stage" company. During fiscal year ended September
30, 2004, the Company's activities centered on the exploration of USMetals'
mining property known as the Twin Peaks Mine and the acquisition of Chocolate
Mountain Region Claims in the Mesquite Mining District of Imperial County,
California. During the fiscal year, the Company did not engage in any
commercially viable operations and realized no revenues from its activities.
The
annual costs incurred to date were primarily for the continued exploration
of
the Company's mining properties, expansion and maintenance of the Company's
website, legal and accounting costs in conjunction with the Company's general
and administrative expenses in anticipation of completing exploration and
commencing a test production program on the Company’s mining properties. The
annual maintenance fee payment for the 170 claims owned by the Registrant was
increased from $100 per claim to $125 per claim for a total of $21,250.
All
of
the Company's mining business activities are conducted at this time through
its
subsidiaries, USMetals and Southwest Resource Development, Inc. International
Energy Resources, Inc. has agreed to continue to supervise and direct the work
of the Twin Peaks Mine Project Team upon adequate funding.
The
Registrant, through its wholly owned subsidiary, USMetals, Inc., owns 141
unpatented contiguous mining claims totaling 2,820 acres in the Eureka Mining
District of Yavapai County, Arizona. These claims have a history of mining
activity from the middle of the 19th century to the beginning of World War
II.
Gold, silver, copper and other minerals were recovered in important quantities.
The previous owners started acquisition of this claim group in the early 1940's
and by the mid-1980's the claims group totaled 134 claims. Exploration, drilling
and assessment work was done and several geological reports were completed
indicating the presence of economically viable deposits of precious metals
and
complex ores.
Impairment
Expense
We
acquired the Twin Peaks Mine asset in 2002 and have been conducting limited
exploration work on it, with the goal of commencing mineral production, for
three years. Exploration activities have confirmed the presence of
mineralization on this property. However, we have not commenced
mining activities due to a lack of funding. Consequently, per our accounting
policy regarding impairment charges, we decided to impair this asset and take
it
off the balance sheet. However, we are still aggressively pursing the financing
necessary to complete a bankable feasibility study and proceed with our plans
to
commence mining activity. We believe with proper funding, the portions of the
Twin Peaks property which have been more extensively explored could result
in a
value in excess of $200,000,000 per independent estimates of prior geochemical
evaluations and geological studies.
24
We need 20 million to achieve a commercial level of mining on the Company’s properties. We have prepared plans for completion of bankable feasibility studies and test production programs on our properties that require smaller amounts of capital. We are seeking funding via equity or debt financing in Europe, the United States and Asia via private placement, working interest joint venture, and/or gold bullion loans.
The
Registrant, through its wholly owned subsidiary Southwest Resource development,
Inc., owns 8 unpatented lode and 21 unpatented placer mining claims totaling
approximately 3,520 acres in eastern Imperial County, California which the
Company refers to as the Chocolate Mountain Region Claims in the Mesquite Mining
District of Imperial County. These claims and the surrounding Mesquite Mining
District have a history of mining activity going back almost 200 years. The
exploration, drilling and assessment work at the Chocolate Mountain Region
Claims in the Mesquite Mining District of Imperial County, was done and
geological reports were completed by prior owners and indicated the presence
of
economically viable deposits of precious metals.
I.
Results of Operations
Comparison
of operating results.
The
Company has not yet commenced commercial operations and has had no revenues
from
operations.
General
and administrative expense for fiscal 2004 was $956,174 compared to $865,287
for
last year, an increase of approximately 10.5%. The main areas of increase were
in administration costs ($149,048 for fiscal 2004 compared to $83,532 last
year); license expense ($26,289 in fiscal 2004 compared to $14,100 in fiscal
2003) and professional fees ($50,180 in fiscal 2004 compared to $5,133 in fiscal
2003). The increase in license expense was due to (a) an increase by the Bureau
of Land Management in the year lease payment from $100 to $125 per claim and
(b)
to the increase in claims from 141 to 170.
After
interest expense in fiscal 2004 of $7,934, compared to $0 in the prior year,
the
Company realized a net loss for fiscal 2004 of $964,108 as compared to a net
loss of $865,287 for the prior fiscal year. This loss translated into a loss
of
$0.04 per shares for fiscal 2004, compared to a loss of only $0.03 for fiscal
2003.
II.
Discussion of Financial Condition: Liquidity and Capital
Resources
At
September 30, 2004 cash on hand was $16,781 as compared with $59,555 at
September 30, 2003. During fiscal 2004 the Company received $267,175 through
the
sale of common stock and preferred stock. In addition, the Company received
services and the cancellation of existing indebtedness in the aggregate amount
of $1,144,674 through the issuance of additional shares of common stock.
See,
“Recent Sales of Unregistered Securities”
above.
The
Company used these cash proceeds to pay for its business operations.
25
At September 30, 2004, the Company had a working capital deficit of $115,840 compared to working capital deficit of $505,989 at September 30, 2003. Working capital increased mainly as a result of issuing preferred and common stock in cancellation of existing debt and for cash proceeds as discussed above.
Total
assets at September 30, 2004 were $2,468,664 as compared to $2,509,021 at
September 30, 2003.
The
Company's total stockholders' equity increased $392,566 from September 30,
2003
to $2,336,043 at September 30, 2004. Stockholders’ equity increased because of
the issuance of preferred and common stock for cash proceeds and in payment
for
services and cancellation of prior debt as discussed above.
Impact
of Inflation
The
general level of inflation has been relatively low during the last several
fiscal years and has not had a significant impact on the Company.
26
ITEM
7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
Index
to Financial
Statements
|
||||
|
Independent
Auditor’s Report
|
F-1
|
|||
|
Consolidated
Balance Sheets
|
F-2
|
|||
|
Consolidated
Statement of Operations
|
F-3
|
|||
|
Consolidated
Statement of Cash Flows
|
F-4
|
|||
|
Consolidated
Statement of Changes in Shareholders Equity
|
F-5
- F-7
|
|||
|
Notes
to the Consolidated Financial Statements
|
F-8
- F-15
|
27
|
DONAHUE
ASSOCIATES, L.L.C.
27
BEACH ROAD, SUITE CO5-A
MONMOUTH
BEACH, NJ. 07750
Phone:
(732) 229-7723
|
Independent
Auditor’s Report
The
Shareholders
USCorp.
(a
Exploration Stage Company)
We
have
audited the accompanying consolidated balance sheets of USCorp. as of September
30, 2004 and September 30, 2003 and the related consolidated statements of
operations and consolidated statements of changes in shareholders’ equity and
cash flows for the years then ended. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We
conducted our audit in accordance with auditing standards generally accepted
by
the Public Company Accounting Oversight Board in the United States. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In
our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of USCorp. as of September 30, 2004
and September 30, 2003 and the related consolidated statements of operations
and
consolidated statement of changes in shareholders’ equity and cash flows for the
years then ended then ended in conformity with generally accepted accounting
principles generally accepted in the United States of America.
As
more
fully discussed in Note 2 to the consolidated financial statements, there are
significant matters concerning the Company that raise substantial doubt as
to
the ability of the Company to continue as a going concern. Management’s plans
with regard to these matters are also described in Note 2 to the consolidated
financial statements. The consolidated financial statements do not include
any
adjustments relating to the recoverability and classification of recorded assets
or the amounts and classifications of recorded liabilities that might be
necessary in the event that the Company cannot continue in
existence.
/s/
Donahue Associates, L.L.C.
Donahue
Associates, L.L.C.
Monmouth
Beach, New Jersey
November
10, 2004
F-1
USCorp.
(an
Exploration Stage Company)
Consolidated
Balance Sheets
As
of September 30, 2004 and September 30, 2003
|
ASSETS
|
2004
|
2003
|
|||||
|
Current
assets:
|
|||||||
|
Cash
|
$
|
16,781
|
$
|
59,555
|
|||
|
Total
current assets
|
16,781
|
59,555
|
|||||
|
Other
assets:
|
|||||||
|
Equipment-
net
|
2,417
|
0
|
|||||
|
Total
assets
|
$
|
19,198
|
$
|
59,555
|
|||
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
|
Current
liabilities:
|
|||||||
|
Accounts
payable & accrued expenses
|
$
|
38,797
|
$
|
529,311
|
|||
|
Subscriptions
payable-net
|
49,657
|
0
|
|||||
|
Advance
payable to shareholder
|
44,167
|
36,233
|
|||||
|
Total
current liabilities
|
132,621
|
565,544
|
|||||
|
Shareholders'
equity:
|
|||||||
|
Series
A preferred stock, one share convertible to eight shares of
common;
|
|||||||
|
no
stated dividend, stated value $0.01, 10,000,000 shares
authorized,
|
|||||||
|
no
shares outstanding at September 30, 2004 and September 30,
2003
|
$
|
0
|
$
|
0
|
|||
|
Series
B preferred stock, one share convertible to two shares of
common;
|
|||||||
|
10%
cumulative stated dividend, stated value $0.50, 50,000,000 shares
authorized,
|
|||||||
|
no
shares outstanding at September 30, 2004 and September 30,
2003
|
0
|
0
|
|||||
|
Common
stock- $.01 par value, authorized 100,000,000 shares,
|
|||||||
|
Issued
and outstanding, 29,531,459 shares at September 30, 2004
|
|||||||
|
and
25,793,073 shares at September 30, 2003
|
295,314
|
257,931
|
|||||
|
Additional
paid in capital
|
6,685,716
|
5,366,425
|
|||||
|
Accumulated
deficit during exploration stage
|
(7,094,453
|
)
|
(6,130,345
|
)
|
|||
|
Total
shareholders' equity
|
(113,423
|
)
|
|||||
|
Total
Liabilities & Shareholders' Equity
|
$
|
19,198
|
$
|
59,555
|
|||
|
See
the notes to the financial statements.
|
|||||||
F-2
USCorp.
(a
Exploration Stage Company)
Consolidated Statements of Operations
For
the Years Ended September 30, 2004 and September 30, 2003
and
from Inception, May 1989 through September 30, 2004
|
2004
|
2003
|
Unaudited
Inception to
Date |
||||||||
|
General
and administrative expenses:
|
||||||||||
|
Consulting
|
$
|
730,657
|
$
|
762,522
|
$
|
2,752,789
|
||||
|
Impairment
Expense
|
2,449,466
|
|||||||||
|
Administration
|
149,048
|
83,532
|
840,113
|
|||||||
|
License
expense
|
26,289
|
14,100
|
109,532
|
|||||||
|
Professional
fees
|
50,180
|
5,133
|
334,619
|
|||||||
|
Total
general & administrative expenses
|
956,174
|
865,287
|
6,486,519
|
|||||||
|
Net
loss from operations
|
(956,174
|
)
|
(865,287
|
)
|
(6,486,519
|
)
|
||||
|
Other
income (expenses):
|
||||||||||
|
Interest
expense
|
(7,934
|
)
|
0
|
(7,934
|
)
|
|||||
|
Loss
on mining claim
|
0
|
0
|
(600,000
|
)
|
||||||
|
Net
loss before provision for income taxes
|
(964,108
|
)
|
(865,287
|
)
|
(7,094,453
|
)
|
||||
|
Provision
for income taxes
|
0
|
0
|
0
|
|||||||
|
Net
loss
|
($964,108
|
)
|
($865,287
|
)
|
(7,094,453
|
)
|
||||
|
Basic
& fully diluted net loss per common share
|
($0.04
|
)
|
($0.03
|
)
|
||||||
|
Weighted
average of common shares outstanding:
|
||||||||||
|
Basic
& fully diluted
|
27,352,907
|
25,352,944
|
||||||||
|
See
the notes to the financial statements.
|
||||||||||
F-3
USCorp.
(a
Exploration Stage Company)
Consolidated
Statements of Cash Flows
For
the Years Ended September 30, 2004 and September 30, 2003
and
from Inception, May 1989 through September 30, 2004
|
2004
|
2003
|
Unaudited
Inception to
Date |
||||||||
|
Operating
Activities:
|
||||||||||
|
Net
loss
|
($964,108
|
)
|
($865,287
|
)
|
|
)
|
||||
|
Adjustments
to reconcile net income items
|
||||||||||
|
not
requiring the use of cash:
|
||||||||||
|
Loss
on sale of mining claim
|
0
|
0
|
600,000
|
|||||||
|
Consulting
fees
|
673,898
|
272,784
|
1,946,492
|
|||||||
|
Depreciation
expense
|
583
|
0
|
583
|
|||||||
|
Interest
expense
|
7,934
|
7,934
|
||||||||
|
Impairment
expense
|
2,449,466
|
|||||||||
|
Changes
in other operating assets and liabilities :
|
||||||||||
|
Accounts
payable and accrued expenses
|
(19,738
|
)
|
529,309
|
(303,749
|
)
|
|||||
|
Net
cash used by operations
|
(301,431
|
)
|
(63,194
|
)
|
(2,393,727
|
)
|
||||
|
Investing
activities:
|
||||||||||
|
Purchase
of equipment
|
(3,000
|
)
|
0
|
(3,000
|
)
|
|||||
|
Net
cash used by investing activities
|
(3,000
|
)
|
0
|
(3,000
|
)
|
|||||
|
Financing
activities:
|
||||||||||
|
Issuance
of common stock
|
212,000
|
0
|
2,088,539
|
|||||||
|
Subscriptions
received
|
55,175
|
0
|
55,175
|
|||||||
|
Placement
fees
|
(5,518
|
)
|
0
|
(1,750
|
)
|
|||||
|
Advance
from shareholder
|
0
|
40,000
|
40,000
|
|||||||
|
Capital
contributed by shareholders
|
0
|
81,472
|
231,544
|
|||||||
|
Net
cash provided by financing activities
|
261,657
|
121,472
|
2,413,508
|
|||||||
|
Net
increase (decrease) in cash during the fiscal year
|
(42,774
|
)
|
58,278
|
16,781
|
||||||
|
Cash
balance at beginning of the fiscal year
|
59,555
|
1,277
|
0
|
|||||||
|
Cash
balance at end of the fiscal year
|
$
|
16,781
|
$
|
59,555
|
$
|
16,781
|
||||
|
Supplemental
disclosures of cash flow information:
|
||||||||||
|
Interest
paid during the fiscal year
|
$
|
0
|
$
|
0
|
$
|
0
|
||||
|
Income
taxes paid during the fiscal year
|
$
|
0
|
$
|
0
|
$
|
0
|
||||
|
See
the notes to the financial statements.
|
||||||||||
F-4
USCorp.
(a
Exploration Stage Company)
Consolidated
Statement of Changes in Shareholders’ Equity
From
Inception to September 30, 2004
(
as Restated)
|
Common
Shares |
Common
Par
Value |
Paid
in Capital |
Accumulated Deficit |
Total
|
Stock Price
* |
||||||||||||||
|
Inception
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||||||
|
Issuance
of common stock-6/6/89
|
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- 4/3/92
|
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
|
|||||||||||||
F-5
USCorp.
(a
Exploration Stage Company)
Consolidated
Statement of Changes in Shareholders’ Equity
From
Inception to September 30, 2004
(as
Restated)
(Continued)
|
Common
Shares |
Common
Par
Value |
Paid
in Capital |
Accumulated Deficit |
Total
|
Stock Price
* |
||||||||||||||
|
Stock
issued for mining claim- 9/15/97
|
150,000
|
1,500
|
598,500
|
600,000
|
$
|
0.20
|
|||||||||||||
|
Issuance
of common stock- 9/15/97
|
50,000
|
500
|
59,874
|
60,374
|
$
|
0.06
|
|||||||||||||
|
Stock
issued for services- 9/15/97
|
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
|
|||||||||||||
F-6
USCorp.
(a
Exploration Stage Company)
Consolidated Statement of Changes in Shareholders’ Equity
From
Inception to September 30, 2004
(as
Restated)
(Continued)
|
Common
Shares |
Common
Par
Value |
Paid
in
Capital
|
Accumulated Deficit |
Total
|
Stock Price
* |
||||||||||||||
|
Issuance
of common stock- 12/7/00
|
103,535
|
1,035
|
611,943
|
612,978
|
$
|
0.15
|
|||||||||||||
|
Issued
stock for compensation- 1/2/01
|
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
|
|||||||||||||
|
Purchase
mining claim- 4/2/02
|
24,200,000
|
242,000
|
2,207,466
|
2,449,466
|
$
|
0.10
|
|||||||||||||
|
Issued
shares to employees- 9/11/02
|
267,500
|
2,675
|
(2,675
|
)
|
0
|
$
|
0.00
|
||||||||||||
|
Capital
contributed by shareholders
|
143,480
|
143,480
|
|||||||||||||||||
|
Net
loss for the fiscal year
|
(2,591,671
|
)
|
(2,591,671
|
)
|
|||||||||||||||
|
Balance
at September 30, 2002-unaudited
|
24,921,073
|
249,211
|
5,017,122
|
(5,265,058
|
)
|
1,275
|
|||||||||||||
|
Issued
stock for services- 9/12/03
|
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
|
)
|
||||||||||||
|
Issuance
of common stock- 12/29/03
|
550,000
|
5,500
|
206,500
|
212,000
|
$
|
0.39
|
|||||||||||||
|
Issued
stock to pay bills- 2/23/04
|
1,069,945
|
10,699
|
460,077
|
470,776
|
$
|
0.44
|
|||||||||||||
|
Issued
stock for services- 9/15/29
|
2,118,441
|
21,184
|
652,714
|
673,898
|
$
|
0.32
|
|||||||||||||
|
Net
loss for the fiscal year
|
(964,108
|
)
|
(964,108
|
)
|
|||||||||||||||
|
Balance
at September 30, 2004
|
29,531,459
|
$
|
295,314
|
$
|
6,685,716
|
(7,094,453
|
)
|
(113,423
|
)
|
||||||||||
| See the notes to the financial statements. |
*-
Price adjusted for stock
splits.
|
F-7
USCorp.
(a
Exploration Stage Company)
Notes
to the Consolidated Financial Statements
For
the Years Ended September 30, 2004 and September 30,
2003
| 1. |
Organization
of the Company and Significant Accounting
Principles
|
USCorp.
(the “Company”) is a publicly held corporation formed in May 1989 in the state
of Nevada as The Movie Greats Network, Inc. In August 1992, the Company changed
its name to The Program Entertainment Group, Inc. and in August 1997 the Company
changed its name to Santa Maria Resources, Inc. In September 2000 the Company
changed its name to Fantasticon, Inc. and in January 2002 the Company changed
its name to US Corp.
In
April
2002 the Company purchased by issuing 24,200,000 shares of common stock 141
unpatented Lode Mining Claims in the Eureka Mining District of Yavapai County,
Arizona, called the Twin Peaks Mine. Through its wholly owned subsidiary
Southwest Resource Development, Inc., the Company owns 8 unpatented Lode and
21
unpatented Placer Claims in the Mesquite Mining District of Imperial County,
California, which the Company refers to as the Chocolate Mountain Region
Claims.
The
Company has no business operations to date.
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 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.
F-8
Shareholder
Loans Payable- The
Company applies Emerging Issues Task Force (EITF) No. 98-5, Accounting
for Convertible Debt Issued with Beneficial Conversion
Features.
EITF
No.98-5 requires that a beneficial conversion feature be recognized upon the
issuance of the debt with a favorable conversion feature, and the resultant
debt
discount be amortized to interest expense during the period from the date of
issuance to the date the securities become convertible.
Property
and Equipment-
Property
and equipment are stated at cost. Depreciation expense is computed using the
straight-line method over the estimated useful life of the asset, which is
estimated at three years.
Income
taxes- The
Company accounts for income taxes in accordance with the Statement of Accounting
Standards No. 109 (SFAS No. 109), "Accounting
for Income Taxes".
SFAS
No. 109 requires an asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between financial statement and income tax
bases of assets and liabilities that will result in taxable income or deductible
expenses in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets and liabilities to the amount expected to be realized. Income tax expense
is the tax payable or refundable for the period adjusted for the change during
the period in deferred tax assets and liabilities.
Mineral
Properties-
The
Company is an exploration stage company. All costs incurred in the exploration
for proved reserves are expensed to the statement of operations.
Revenue
Recognition-
Mineral
sales will result from undivided interests held by the Company in mineral
properties. Sales of minerals will be recognized when delivered to be picked
up
by the purchaser. Mineral sales from marketing activities will result from
sales
by the Company of minerals produced by the Company (or affiliated entities)
and
will be recognized when delivered to purchasers. Mining revenues generated
from
the Company’s day rate contracts, included in mine services revenue, will be
recognized as services are performed or delivered.
Exploration
Stage Company-
the
Company has had no operations or revenues since its inception and therefore
qualifies for treatment as an exploration stage company as per Statement of
Financial Accounting Standards (SFAS) No. 7. As per SFAS No. 7, financial
transactions are accounted for as per generally accepted accounted principles.
Costs incurred during the exploration stage are accumulated in “losses
accumulated during the exploration stage” and are reported in the Stockholders’
Equity section of the balance sheet.
F-9
| 2. |
Going
Concern
|
The
accompanying financial statements have been presented in accordance with
generally accepted accounting principals, which assume the continuity of the
Company as a going concern. However, during the twelve months ending September
30, 2004 and in the prior several fiscal years, the Company has experienced,
and
continues to experience, certain going concern issues related to profitability.
The Company incurred a net loss of $964,108 in fiscal 2004 and $7,094,453 since
its inception and continues to rely on the issuance of shares to raise capital
to fund its business operations.
Management’s
plans with regard to this matter are as follows:
|
-
|
Raise
capital to complete the company’s mining plan of
operations.
|
|
-
|
Complete
exploration and drilling on claims of the Twin Peaks Mine and Chocolate
Mountain Region Claims.
|
|
-
|
Complete
testing operations on all
properties.
|
|
-
|
Complete
reports and feasibility studies on the Twin Peaks Mine and Chocolate
Mountain Region Claims.
|
|
-
|
Bring
the Twin Peaks Mine and Chocolate Mountain Region Claims to full-scale
commercial mining.
|
|
-
|
Obtain
a credit facility based in part on the value of its proven reserves
when
necessary and if appropriate given market
conditions.
|
3.
Net Loss per Share
The
Company applies SFAS No. 128, “Earnings
per Share”to
calculate loss per share. In accordance with SFAS No. 128, basic net loss per
share has been computed based on the weighted average of common shares
outstanding during the years. Fully diluted loss per share includes the dilutive
effects of outstanding common stock equivalents. There were shareholder notes
convertible into 100,000 shares of common stock outstanding during fiscal 2004
that expired on September 30, 2004. The effect of the outstanding convertible
debt is not included in the calculation for net loss per share because their
inclusion would be anti-dilutive.
The
weighted average of common shares outstanding for the fiscal years ended 2004
and 2003 has been computed as follows:
|
2004
|
2003
|
||||||
|
Shares
outstanding
|
29,531,459
|
25,793,073
|
|||||
|
Weighted
average
|
27,352,907
|
25,352,944
|
|||||
F-10
4.
Issuances of Common Stock
During
fiscal year 2003, the Company issued 872,000 shares to employees and consultants
for services rendered valued at $272,784.
During
fiscal year 2004, the Company issued 1,069,945 shares of common stock to vendors
to pay outstanding invoices of $470,776.
During
fiscal year 2004, the Company issued 550,000 shares of common stock and received
proceeds of $212,000.
During
fiscal year 2004, the Company issued 2,118,441 shares of common stock to
consultants for services rendered valued at $673,898.
5.
Related Party Transactions
The
Company is provided office space by the chief executive officer and majority
shareholder at no cost to the Company.
During
fiscal year 2003, the chief executive officer and majority shareholder and
other
shareholders contributed capital of $81,472 to the Company for no
shares.
In
September 2003, the Company issued convertible debt at no interest to
shareholders in the Company and received proceeds of $40,000. The debt matured
in September 2004 and entitled the shareholders to convert the debt into 100,000
shares of common stock at an exercise price of $0.40 per share. The Company
recorded a beneficial conversion feature of $3,767 as a result of the
transaction and amortized the beneficial conversion feature to interest expense
during fiscal year 2004. In addition, the Company imputed interest on the
shareholder advance of 10% and recorded the interest expense in the statement
of
operations.
6.
Property and Equipment
A
summary
of equipment at September 30, 2004 is as follows:
|
2004
|
2003
|
||||||
|
Office
equipment
|
3,000
|
0
|
|||||
|
Accumulated
depreciation
|
(583
|
)
|
0
|
||||
|
Net
property & equipment
|
$
|
2,417
|
$
|
0
|
|||
F-11
7.
Private Placement
In
June
2004, the Company offered a private placement of 6 million units. Each unit
of
the private placement contained on share of preferred stock and one warrant
at a
price of $0.50 per unit. The offer terminates in January 2005.
Each
preferred share is convertible into two common shares at any time at the
election of the preferred shareholder. Each warrant represents the right of
the
holder to purchase one additional preferred share at a price of $0.50 during
the
two-year period following the date of their issuance. The Company may call
the
warrants at any time at a redemption price of $0.001 per warrant provided the
price of its common stock has traded above $1 for 20 consecutive days.
The
preferred shares accrue interest at the rate of 10% per annum of the purchase
price of $0.50, or $0.05 per year, payable annually in arrears. The Company
may
elect to make payment of interest in the form of common shares. In which case
the number of common shares payable will equal the amount of interest payable
divided by the closing price of the common shares on the date the dividend
is
declared by the Company.
The
preferred shares are redeemable by the Company at any time after one year from
the date of their issuance provided that the common shares have sustained a
trading price of not less than $1.00 per common share for at least 20
consecutive trading days. If the Company elects to redeem the Shares, the
redemption price shall be determined as follows:
| (v) |
During
the second year after their issuance at $0.575 per preferred
share;
|
| (vi) |
During
the third year after their issuance at $0.55 per preferred
share;
|
| (vii) |
During
the fourth year after their issuance at $0.525 per preferred
share;
|
| (viii) |
After
the fourth year after their issuance at $0.50 per preferred
share.
|
During
September 2004, the Company received $55,175 of subscriptions for 112,500
units.
F-12
8.
Income Tax Provision
|
Provision
for income taxes is comprised of the following:
|
|||||||
|
2004
|
2003
|
||||||
|
Net
loss before provision for income taxes
|
($957,174
|
)
|
($865,287
|
)
|
|||
|
Current
tax expense:
|
|||||||
|
Federal
|
$
|
0
|
$
|
0
|
|||
|
State
|
0
|
0
|
|||||
|
Total
|
$
|
0
|
$
|
0
|
|||
|
|
|||||||
|
Less
deferred tax benefit:
|
|||||||
|
Timing
differences
|
(1,871,059
|
)
|
(1,482,447
|
)
|
|||
|
Allowance
for recoverability
|
1,871,059
|
1,482,447
|
|||||
|
Provision
for income taxes
|
$
|
0
|
$
|
0
|
|||
|
|
|||||||
|
A
reconciliation of provision for income taxes at the statutory rate
to
provision
|
|||||||
|
for
income taxes at the Company's effective tax rate is as
follows:
|
|||||||
|
|
|||||||
|
Statutory
U.S. federal rate
|
34
|
%
|
34
|
%
|
|||
|
Statutory
state and local income tax
|
10
|
%
|
10
|
%
|
|||
|
Less
allowance for tax recoverability
|
-44
|
%
|
-44
|
%
|
|||
|
Effective
rate
|
0
|
%
|
0
|
%
|
|||
|
Deferred
income taxes are comprised of the following:
|
|||||||
|
Timing
differences
|
$
|
1,871,059
|
$
|
1,482,447
|
|||
|
Allowance
for recoverability
|
(1,871,059
|
)
|
(1,482,447
|
)
|
|||
|
Deferred
tax benefit
|
$
|
0
|
$
|
0
|
|||
|
Note:
The deferred tax benefits arising from the timing differences begin
to
expire in fiscal year 2010
and may not be recoverable upon the purchase of the Company under
current
IRS statutes.
|
|||||||
9.
Addendum to the Consolidated Statement of Cash Flows
The
following transaction during the fiscal year 2004 has been classified as a
non-cash transaction and has been excluded from the statement of cash
flows.
During
fiscal year 2004, the Company issued 1,069,945 shares of common stock to a
consultant to pay for outstanding invoices of $470,776.
F-13
10.
Restatement
Statement
of Financial Accounting Standards (SFAS) No. 7 requires the statement of changes
in shareholders’ equity since inception include dates of stock issuances and
prices. The statement of operations for fiscal 2003 and 2004 were not affected
by the restatement.
Subsequent
to the issuance of this report, management decided that the mining asset
acquired in fiscal year 2002, which was presented in the balance sheet as a
fixed asset, should be accounted for as an impaired expense in the Statement
of
Operations. The following table compares the original financial statement
reported amounts and the restated financial statement amounts.
|
2004
|
2004
|
2003
|
2003
|
||||||||||
|
As
Reported
|
As
Restated
|
As
Reported
|
As
Restated
|
||||||||||
|
Total
assets
|
$
|
2,468,664
|
$
|
19,198
|
$
|
2,509,021
|
$
|
59,555
|
|||||
|
Shareholders'
equity
|
$
|
2,336,043
|
($113,423
|
)
|
$
|
1,943,477
|
($505,989
|
)
|
|||||
11.
Stock Warrants Outstanding
At
September 30, 2003, the Company received a loan from two shareholders of
$40,000. The loans are unsecured and mature September 30, 2004 at no stated
interest rate. The loan agreement calls gives the option to the shareholders
to
convert the proceeds of the loan into shares of common stock at $.40 per share.
As a result, the Company has imputed a beneficial conversion feature of $3,767
to the proceeds received. The beneficial conversion feature was amortized to
interest expense over fiscal 2004.
The
following table summarizes the details of the number of warrants issued and
outstanding and the weighted average exercise price and years remaining on
the
warrants.
|
Amount
|
Wgtd
Avg Exercise
Price |
Wgtd
Avg Years
to |
||||||||
|
Outstanding
at October 1, 2002
|
0
|
|||||||||
|
Issued
|
100,000
|
|||||||||
|
Expired
|
0
|
|||||||||
|
Exercised
|
0
|
|||||||||
|
Outstanding
at September 30, 2003
|
100,000
|
$
|
0.40
|
1
|
||||||
|
Issued
|
0
|
|||||||||
|
Expired
|
0
|
|||||||||
|
Exercised
|
(100,000
|
)
|
||||||||
|
Outstanding
at September 30, 2004
|
0
|
$
|
0.00
|
0
|
||||||
F-14
11.
Stock Warrants Outstanding, continued
The
Company applied the Black-Scholes option pricing model to determine the fair
value of the detachable stock warrants and common stock warrants issued in
fiscal year 2004. The following assumptions were used in the model. The dividend
yield is 0%, volatility is 20%, and a risk-free interest rate of 2%. The fair
values generated by the Black-Scholes model may not be indicative of the future
values, if any, that may be received by the warrant holder.
12.
Subsequent Event
In
October 2004, the Company issued 115,000 shares of preferred B stock to
subscription purchasers discussed in Note 7 and new subscription purchases
received in October 2004. Also in October 2004 the shareholders approved a
new
class of Common Stock, 25,000,000 shares of $.001 par value Series B Common
Stock.
F-15
ITEM
8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
i.
Registrant's primary accountant, Henry Schiffer, C.P.A., An Accountancy
Corporation ("Schiffer"), was dismissed by the Company on March 19,
2004.
ii.
No
reports on the financial statements prepared by Schiffer over the two most
recent fiscal years contained any adverse opinion or disclaimer of opinion,
or
was qualified or modified as to uncertainty, audit scope, or accounting
principals except for an uncertainty relating to the registrant's ability to
continue as a going concern, which was stated in the reports for both years.
iii.
The
decision to change accountants was approved by the Board on March 19,
2004.
iv.
During the registrant's two most recent fiscal years, and any subsequent interim
period preceding the dismissal on March 19, 2004, there were no disagreements
with the former accountant, Schiffer, on any matter of accounting principals
or
practices, financial statement disclosure, or auditing scope or procedure,
which
disagreement(s), if not resolved to the satisfaction of Schiffer, would have
caused him to make reference to the subject matter of the disagreement(s) in
connection with his reports.
Schiffer
did not advise the registrant that internal controls necessary to develop
reliable financial statements did not exist; no information had come to
Schiffer's attention which would make him unwilling to rely on management's
representations, or unwilling to be associated with the financial statements
prepared by management. Schiffer did not advise the registrant that the scope
of
the audit should be expanded significantly, or that information had come to
his
attention that would materially impact the fairness or reliability of a
previously issued audit report or the underlying financial statements or the
financial statements issued or to be issued covering the fiscal periods
subsequent to the date of the most recent audited financial statements, dated
October 10, 2003, (including information that might preclude the issuance of
an
unqualified audit report).
v.
The
registrant retained the services of Donahue Associates, L.L.C., Monmouth Beach,
New Jersey ("Donahue") on March 19, 2004, as its principal accountant and to
conduct an audit for the year ended September 30, 2003.
vi.
The
registrant did not contact the new accountant prior to its engaging the new
accountant regarding the application of accounting principals to a specified
transaction, or the type of audit opinion that might be rendered on the
registrant's financial statements.
vii.
The
registrant did not contact the new accountant prior to its engaging the new
accountant regarding any matter that was either the subject of a disagreement
or
a reportable event.
ITEM
8A. CONTROLS AND PROCEDURES
(a)
Evaluation of disclosure and controls and procedures. Our Chief Executive
Officer and Chief Financial Officer have evaluated the effectiveness of the
design and operation of our disclosure controls and procedures as of September
30, 2004. This evaluation was carried out under the supervision and with the
participation of our management, including our principal executive officer
and
principal financial officer.
Based on this evaluation, these officers have concluded that the design and
operation of our disclosure controls and procedures are effective.
28
(b)
Changes in internal controls. There were no significant changes to our internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of their most recent evaluation.
Disclosure
controls and procedures are our controls and other procedures that are designed
to ensure that information required to be disclosed by us in the reports that
we
file or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by
us in
the reports that we file under the Exchange Act is accumulated and communicated
to our management, including principal executive officer and principal financial
officer, as appropriate, to allow timely decisions regarding required
disclosure.
Item
8B. Other Information
In
October 2004 the shareholders approved a new class of Common Stock, 25,000,000
shares of $.001 par value Series B Common Stock. Effective November 17, 2004,
the Company amended its Articles of Incorporation to create a new series of
$.001 par value common stock in the amount of 25,000,000 shares.
PART
III
ITEM
9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH
SECTION 16(a) OF THE EXCHANGE ACT.
|
Name
|
Age
|
Position
Held
|
|
Robert
Dultz
|
63
|
Chief
Executive Officer, acting Chief Financial Officer and Chairman
|
|
Larry
Dietz
|
57
|
President
and Director
|
|
Spencer
Eubank
|
52
|
Secretary,
Treasurer and Director
|
|
Carl
W. O'Baugh
|
73
|
Director
|
|
Tom
Owens
|
56
|
Director
|
|
Judith
Ahrens
|
64
|
Director
|
Directors
hold office until the next annual shareholders meeting or until their death,
resignation, retirement, removal, disqualification, or until a successor has
been elected and qualified. Vacancies in the Board are filled by majority vote
of the remaining directors. Officers of the Company serve at the will of the
Board of Directors.
29
BUSINESS
EXPERIENCE OF CURRENT DIRECTORS AND OFFICERS AS OF SEPTEMBER 30,
2004
Robert
Dultz USCorp’s Chairman and CEO since January 2002 has a 25-year association
with the Twin Peaks property and as an individual is a former owner of a portion
of the claims which make up the Twin Peaks property. Former Chairman and
President of a prior corporate owner of the Twin Peaks claims and since 2000
has
been a majority shareholder of corporate owners of the claims. Mr. Dultz has
served on the boards of several publicly traded companies. Mr. Dultz spends
in
excess of 90% of his time working for USCorp.
Larry
Dietz, The Company’s President and Director since January 2002, and has a
20-year association with the Twin peaks property and is former President of
a
prior corporate owner of the Twin Peaks claims. He served as President of Dietz
and Associates, a mining consultancy, since 1982 and He is an expert in
Arizona’s geology. Dietz authored the Arizona Mineral Industry Location System,
a database identifying all known mineral occurrences in the state. He is
Registered Expert Witness with the Technical Advisory Services for Attorneys.
Associate member of the Society of Mining Engineers of the American Institute
of
Mining, Metallurgical and Petroleum Engineers. Mr. Dietz currently works full
time for PacifiCare at the Arizona State Retirement System. He devotes less
than
5% of his time to USCorp
Spencer
Eubank, the Company’s Secretary-Treasurer and a Director since January 2002. Mr.
Eubank has served on the boards of several publicly traded companies. He has
a
15-year association with the Twin Peaks property and since 2000 has been a
shareholder and consultant to corporate owners of the claims. As an individual
he is a former owner of 97 of the claims which make up the Twin Peaks property.
Mr. Eubank spends in excess of 90% of his time working for USCorp on a
consulting basis.
Carl
W.
O’ Baugh, an Independent Director of the Company since January 2002, and has
a
20-year association with the Twin peaks property. Former Vice President of
USCorp and Former President of a prior corporate owner of the Twin Peaks claims.
Former President of Golconda Gems, Inc., a wholesale gem cutting, importing
and
distribution company with operations in the United States and Mexico. Extensive
knowledge and experience of gems, minerals and metals. Mr. O’Baugh as been
retired since 2000 and devotes less than 5% of his time to USCorp.
Tom
Owens, is an Independent Director for the Company. He currently works full
time
as a litigation consultant and investigator. While serving with the Army in
Bosnia Mr. Owens served as a public relations specialist before retiring from
the military in 2000. In Bosnia Mr. Owens hosted a daily four-hour drive-time
radio show carried via satellite to 134 countries. He supervised the preparation
of the daily television newscast originating from Bosnia and led the first-ever
U.S. news crew granted unescorted access inside a deployed Russian combat
brigade. In 1994, Mr. Owens authored his book, Lying Eyes, a chronology of
his
work as a part of the team of professionals representing LAPD beating victim
Rodney King. Mr. Owens worked as a law enforcement officer where he achieved
the
rank of captain. He holds the Los Angeles Police Medal and Police Star for
valorous actions, awarded for service to the people of the city of Los Angeles.
Mr. Owens serves the Registrant as an independent Director and on the
Registrant's Audit Committee. Mr. Owens spends less than 10% of his time working
for the Company.
Judith
Ahrens an Independent Director of the Company since July 2003. Ms. Ahrens is
a
former lobbyist in Washington DC and has worked in public relations for National
and State elected officials. Since 2000 Ms.
Ahrens has worked full time for National Grants Conferences. She devotes less
than 10% of her time to USCorp.
30
(b)
Family relationships.
There
are
no family relationships among the officers or directors.
(c)
Involvement in certain legal proceedings.
There
have been no events under any bankruptcy act, no criminal proceedings and no
judgments or injunctions material to the evaluation of the ability and integrity
of any director or executive officer during the past five years.
(d)
Adoption of Code of Ethics.
On
September 22, 2004 USCorp adopted a Code of Ethics for officers and directors
of
the Company, included in this report as Exhibit 14.
COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT
Section
16(a) of the Securities Exchange Act of 1934 requires the Company's officers
and
directors, and persons who own more than ten percent of its common stock, to
file reports of ownership and changes of ownership with the Securities and
Exchange Commission ("SEC") and each exchange (or market quotation system)
on
which the Company's securities are registered. Officers, directors and greater
than ten-percent stockholders are required by SEC regulation to furnish the
Company with copies of all ownership forms they file.
Based
solely on current management's review of the copies of such forms received
by it
from former management, the Company believes that, during the year ended
September 30, 2004 its officers, directors, and greater than ten-percent
beneficial owners complied with all applicable filing
requirements.
ITEM
10. EXECUTIVE COMPENSATION
During
the fiscal year, USCorp's officers or directors did not devote their full time
to the affairs of USCorp. As reported in previous Form 10-QSB filings by the
Company they did not receive compensation for their services; however, USCorp's
officers received shares of the Company's common stock in consideration of
their
agreement to serve.
31
ITEM
11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth the security ownership of executive officers,
directors and certain beneficial owners of more than five percent (5%) of
issuer's voting securities as of September 30, 2004. Unless otherwise stated,
the Company believes the shares indicated were held directly.
|
Title
of
Class
|
Name
and Address of Beneficial Owner
|
Amount
of
Ownership
|
Percentage
of
Ownership
|
|
Common
|
Robert
Dultz (1) c/o USCorp,
4535
W. Sahara Ave., Suite 204,
Las
Vegas, NV 89102
|
7,234,820
|
24.50%
|
|
Common
|
Dultz
Family Trust, Robert Dultz Trustee (1) c/o USCorp,
4535
W. Sahara Ave., Suite 204,
Las
Vegas, NV 89102
|
10,000,000
|
33.86%
|
|
Common
|
Larry
Dietz (1) c/o USCorp,
4535
W. Sahara Ave., Suite 204,
Las
Vegas, NV 89102
|
51,000
|
0.17%
|
|
Common
|
Spencer
Eubank (1) c/o USCorp,
4535
W. Sahara Ave., Suite 204,
Las
Vegas, NV 89102
|
240,750
|
0.82%
|
|
Common
|
Carl
O’Baugh (1) c/o USCorp,
4535
W. Sahara Ave., Suite 204,
Las
Vegas, NV 89102
|
50,250
|
0.17%
|
|
Common
|
Tom
Owens (1) c/o USCorp,
4535
W. Sahara Ave., Suite 204,
Las
Vegas, NV 89102
|
50,000
|
0.17%
|
|
Common
|
Judith
Ahrens (1) c/o USCorp,
4535
W. Sahara Ave., Suite 204,
Las
Vegas, NV 89102
|
50,000
|
0.17%
|
|
Common
|
U.S.
Metals And Minerals, Inc.
2338
W. Royal Palm Rd., Suite J,
Phoenix,
AZ 85021
|
2,700,000
|
9.14%
|
|
Common
|
Officers,
Directors and Affiliates as a group
(7
individuals)
|
20,376,820
|
69.00%
|
32
ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The
Company is provided office equipment and space by the chief executive officer
and majority shareholder at no cost to the Company.
PART
IV
ITEM
13. EXHIBITS
(A)
EXHIBITS
14.1 Code
of
Ethics for Chief Executive Officer and Senior Financial Officers*
23.1 Consent
of International Energy and Resources, Inc.
31.1 Certification
Pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1 Certification
Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
*
Previously filed
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
Audit
Committee has adopted a policy regarding the retention of the independent
auditors that requires pre-approval of all services by the Audit Committee
or
the Chairman of the Audit Committee. When services are pre-approved by the
Chairman of the Audit Committee, notice of such approvals is given
simultaneously to the other members of the Audit Committee.
The
Audit
Committee has reviewed and discussed the fees paid to Donahue Associates, L.L.C.
for the reports covering fiscal 2003 and 2004 for audit, audit-related, tax
and
other services.
The
Audit
Committee has reviewed and discussed the audited financial statements with
the
Company's management; and discussed with Donahue Associates, L.L.C., independent
auditors for the Company, the matters required to be discussed by Statement
on
Auditing Standards No. 61, Communication with Audit Committees, as
amended.
The
aggregate fees billed for the fiscal years ended September 30, 2003 and
September 30, 2004 for professional services rendered by Donahue Associates,
L.L.C. for the audit of the Company’s financial statements were $1,750 for
fiscal 2003 and $2,500 and $2,550 for audit and quarterly review of interim
financial statements filed on Form 10QSB, respectively, for fiscal
2004.
The
aggregate fees billed during the last two fiscal years for professional services
rendered by Henry Schiffer, C.P.A. for the audit of the Company’s financial
statements for the fiscal year ended September 30, 2003 and for his review
of
financial statements included in the Company’s Form 10-QSB’s during the last two
fiscal years ended September 30, 2003 and other services that are normally
provided by an accountant
in connection with statutory and regulatory filings or engagements during such
fiscal years were $4,000 for fiscal 2003 and $5,000 for fiscal
2002.
33
Audit-Related
Fees
Donahue
Associates, L.L.C. did not bill us for any assurance or related services that
were related to the performance of the audit of the financial
statements.
Henry
Schiffer, C.P.A. did not bill us for any assurance or related services that
were
related to the performance of the audit of the financial
statements.
Tax
Fees
Since
March 19, 2004 Donahue Associates, L.L.C. has not provided any professional
services for tax compliance, tax advice and tax planning.
Henry
Schiffer, C.P.A. did not provide any professional services for tax compliance,
tax advice and tax planning.
Other
Fees
No
other
fees were paid to Donahue Associates, L.L.C. or to Henry Schiffer,
C.P.A.
34
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this amended report to be signed on its
behalf by the undersigned, thereunto duly authorized.
|
USCORP.
|
||
| |
|
|
| /s/ Larry Dietz | ||
|
Larry
Dietz
President
and Director
|
||
| Date: December 30, 2005 | ||
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
|
Signature
|
Title
|
Date
|
|
/s/
Robert Dultz
|
Chairman
and Chief
|
October
13, 2005
|
|
Robert
Dultz
|
Executive
Officer
|
|
|
/s/
Larry Dietz
|
President
and Director
|
October
13, 2005
|
|
Larry
Dietz
|
||
|
/s/
Carl O'Baugh
|
Vice
President and Director
|
October
13, 2005
|
|
Carl
O'Baugh
|
||
|
/s/
Spencer Eubank
|
Secretary
Treasurer and Director
|
October
13, 2005
|
|
Spencer
Eubank
|
and
Acting Chief Financial Officer
|
|
|
/s/
Judith Ahrens
|
Director
|
October
13, 2005
|
|
Judith
Ahrens
|
35