UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB
 
x Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 2006

or

o 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
incorporation or organization)
(I.R.S. Employer
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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES x NO o
 
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934) YES o NO x

As of May 10, 2006, the Registrant had 34,056,459 shares of Common Stock, par value $.01 per share, outstanding.


USCORP
TABLE OF CONTENTS

 
 
PART I – FINANCIAL INFORMATION
 
 
 
Item 1. Financial Statements
 
Independent Auditors Report
 
Consolidated Balance Sheet as of March 31, 2006 and September 30, 2005 (unaudited)
4
Consolidated Statements of Operations for the Six Months & Quarter Ended March 31, 2006 and March 31, 2005 and from Inception, May 1989 through March 31, 2006 (unaudited)
5
 
6
Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2006 and March 31, 2005 and from Inception, May 1989 through March 31, 2006 (unaudited)
10
Consolidated Statements of Changes in Shareholders’ Equity from Inception, May 1989 through March 31, 2006 as restated
  
Notes to Consolidated Financial Statements (unaudited)
11
 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
16
 
 
Item 3. Controls and Procedures
20
 
 
PART II – OTHER INFORMATION
 
 
 
Item 6. Exhibits
21
 
 
SIGNATURES
22
 
 
2

PART I. FINANCIAL INFORMATION
 
 
DONAHUE ASSOCIATES, LLC
Certified Public Accountants
 
27 Beach Road Suite CO5A
Monmouth Beach, NJ 07750
Tel. 732-229-7723
 

May 11, 2006


The Shareholders
USCorp
 
We have compiled the accompanying financial statements of USCorp for the quarters ending March 31, 2006 and March 31, 2005. These financial statements have been prepared in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants.

A compilation is limited to presenting in the form of financial statement information that is the representation of management. Our compilation in accordance with reviewing standards generally accepted by the Public Company Accounting Oversight Board in the United States of America. We have not audited or reviewed any of the projections, assumptions, or estimates used in compiling the projected financial statements and, accordingly, do not express an opinion or any form of assurance on them.

     
/s/: Donahue Associates LLC
Monmouth Beach, NJ
May 11, 2006 
  
 		  
 
     


3

USCorp.
(an Exploration Stage Company)
Consolidated Balance Sheet
As of March 31, 2006 and September 30, 2005

   
Unaudited
      
ASSETS
  
31-Mar-06
  
30-Sep-05
  
           
Current assets:
              
Cash
 
$
302,778
  
$
627,372
  
               
Total current assets
    
302,778
   
627,372
 
               
Other assets:
              
Equipment- net
    
4,014
   
4,006
 
               
Total assets
  
$
306,792
  
$
631,378
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
              
               
Current liabilities:
              
Accounts payable & accrued expenses
  
$
52,121
  
$
52,121
  
Total current liabilities
    
52,121
   
52,121
 
               
Note payable- shareholder
    
790,625
   
651,429
 
Advances payable shareholders
    
0
   
135,606
 
               
Shareholders' equity:
              
Series A preferred stock, one share convertible to eight shares of common;
              
10% stated dividend, stated value $0.50, 10,000,000 shares authorized,
              
no shares outstanding
   
0
   
0
 
Series B preferred stock, one share convertible to two shares of common;
              
10% cumulative stated dividend, stated value $0.50, 50,000,000 shares authorized,
              
155,000 shares outstanding
    
70,165
   
70,165
 
Common stock- $.01 par value, authorized 300,000,000 shares,
              
issued and outstanding, 32,921,431 shares at September 30, 2005
             
and 34,056,459 at March 31, 2006
    
340,564
   
329,214
 
Additional paid in capital
    
7,206,433
   
7,115,633
 
Accumulated deficit
   
(8,153,116
)
  
(7,722,790
)
Total shareholders' equity
    
(606,119
)
  
(277,943
)
               
Total Liabilities & Shareholders' Equity
  
$
306,792
  
$
631,378
  
 
See the accompanying notes to the consolidated financial statements.

4

USCorp.
(an Exploration Stage Company)
Unaudited Consolidated Statements of Operations
For the Six Months & Quarter Ended March 31, 2006 and March 31, 2005
and from Inception, May 1989 through March 31, 2006

   
6 Months
31-Mar-06
  
6 Months
31-Mar-05
  
3 Months
31-Mar-06
  
3 Months
31-Mar-05
  
Inception
to Date
  
   
General and administrative expenses:
                      
Consulting
  
$
136,229
  
$
54,189
  
$
46,367
  
$
13,481
  
$
3,262,738
  
Administration
    
136,934
   
79,624
   
108,870
   
79,624
   
3,571,977
 
License expense
    
590
   
45
   
590
   
(5,835
)
  
131,899
 
Professional fees
    
14,334
   
6,830
   
3,884
   
(81,482
)
  
400,461
 
Total general & administrative expenses
    
288,087
   
140,688
   
159,711
   
5,788
   
7,367,075
  
                                 
Net loss from operations
    
(288,087
)
  
(140,688
)
  
(159,711
)
  
(5,788
)
  
(7,367,075
)
                                 
Other income (expenses):
                                
Interest expense
    
(31,639
)
  
(2,394
)
  
(14,904
)
  
(2,394
)
  
(47,526
)
Loss on unhedged underlying
    
(110,600
)
  
0
   
(71,071
)
  
0
   
(125,896
)
Loss on mining claim
    
0
   
0
   
0
   
0
    
(600,000
)
                                 
Net loss before provision for income taxes
    
(430,326
)
  
(143,082
)
  
(245,686
)
  
(8,182
)
  
(8,140,497
)
                                 
Provision for income taxes
    
0
   
0
   
0
   
0
   
0
 
                                 
Net loss before extraordinary item
    
(430,326
)
  
(143,082
)
  
(245,686
)
  
(8,182
)
  
(8,140,497
)
                                 
Extraordinary item:
                                
Loss on early extinguishment of debt (net of tax)
    
0
   
(24,000
)
  
0
   
0
   
(12,619
)
                                 
                                 
Net loss
    
($430,326
)
  
($167,082
)
  
($245,686
)
  
($8,182
)
  
($8,153,116
)
                                 
Basic & fully diluted net loss per common share
    
($0.01
)
  
($0.01
)
  
($0.01
)
  
($0.00
)
      
                                 
Weighted average of common shares outstanding:
                                
Basic & fully diluted
    
33,704,831
   
29,827,647
   
33,904,776
   
30,113,034
       
 
See the accompanying notes to the consolidated financial statements.

5

USCorp.
(an Exploration Stage Company)
Unaudited Consolidated Statements of Cash Flows
For the Six Months Ended March 31, 2006 and March 31, 2005
and from Inception, May 1989 through March 31, 2006

   
31-Mar-06
  
31-Mar-05
  
Inception
to Date
  
   
Operating Activities:
              
Net loss
   
($430,326
)
  
($167,082
)
  
($8,153,116
)
Adjustments to reconcile net income items
                    
not requiring the use of cash:
                    
Loss on sale of mining claim
    
0
   
0
   
600,000
 
Consulting fees
    
102,150
   
64,200
   
2,408,642
 
Depreciation expense
    
996
   
893
   
3,571
 
Interest expense
    
28,596
   
2,394
   
44,483
 
Impairment expense
    
0
   
0
   
2,449,466
 
Loss on early extinguishment of debt (net of tax)
    
0
   
24,000
   
12,619
 
Loss on unhedged underlying
    
110,600
   
0
   
125,896
 
Changes in other operating assets and liabilities :
    
0
             
Accounts payable and accrued expenses
    
0
   
(32,499
)
  
(297,963
)
Net cash used by operations
    
(187,984
)
  
(108,094
)
  
(2,806,402
)
                     
Investing activities:
                    
Purchase of office equipment
    
(1,004
)
  
(3,581
)
  
(7,585
)
Net cash used by investing activities
    
(1,004
)
  
(3,581
)
  
(7,585
)
                     
Financing activities:
                    
Issuance of common stock
    
0
   
48,000
   
2,138,356
 
Issuance of preferred stock
    
0
   
27,843
   
20,508
 
Issuance of note payable to shareholder
    
0
   
0
   
635,663
 
Subscriptions received
    
0
   
0
   
55,175
 
Placement fees
    
0
   
(5,518
)
  
(1,750
)
Advances received (paid) shareholder
    
(135,606
)
  
29,433
   
37,269
 
Capital contributed by shareholders
    
0
   
0
   
231,544
 
Net cash provided by financing activities
    
(135,606
)
  
99,758
   
3,116,765
 
                     
Net increase (decrease) in cash during the fiscal year
    
(324,594
)
  
(11,917
)
  
302,778
 
                     
Cash balance at beginning of the fiscal year
    
627,372
   
16,781
   
0
 
                     
Cash balance at end of the current quarter
  
$
302,778
  
$
4,864
  
$
302,778
  
                     
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 accompanying notes to the consolidated financial statements.


6
USCorp.
(an Exploration Stage Company)
Statement of Consolidated Changes in Shareholders’ Equity
From Inception, May 1989 to March 31, 2006
As Restated


   
Common
Shares
  
Common
Par Value
  
Paid in
Capital
  
Accumulated
Deficit
  
Total
  
Stock
Price *
  
   
                           
                           
Inception
    
0
  
$
0
  
$
0
  
$
0
  
$
0
        
                                       
Issuance of common stock
    
84,688
    
847
   
1,185,153
         
1,186,000
  
$
0.07
  
                                       
Net income fiscal 1990
                      
520,000
   
520,000
       
                                       
Balance at September 30, 1990-unaudited
    
84,688
    
847
    
1,185,153
    
520,000
    
1,706,000
        
                                       
Net income fiscal 1991
                      
1,108,000
   
1,108,000
       
                                       
                                       
Balance at September 30, 1991-unaudited
    
84,688
   
847
   
1,185,153
   
1,628,000
   
2,814,000
       
                                       
Issuance of common stock
    
472
   
5
   
32,411
         
32,416
  
$
0.22
  
                                       
Net income fiscal 1992
                      
466,000
   
466,000
       
                                       
Balance at September 30, 1992-unaudited
    
85,160
   
852
   
1,217,564
   
2,094,000
   
3,312,416
       
                                       
Net loss fiscal 1993
                      
(3,116,767
)
  
(3,116,767
)
      
                                       
Balance at September 30, 1993-unaudited
    
85,160
   
852
   
1,217,564
   
(1,022,767
)
  
195,649
       
                                       
Net loss fiscal 1994
                      
(63,388
)
  
(63,388
)
      
                                       
Balance at September 30, 1994-unaudited
    
85,160
   
852
   
1,217,564
   
(1,086,155
)
  
132,261
       
                                       
Net income fiscal 1995
                      
(132,261
)
  
(132,261
)
      
                                       
Balance at September 30, 1995-unaudited
    
85,160
   
852
   
1,217,564
   
(1,218,416
)
  
0
       
                                       
Net loss fiscal 1996
                      
0
   
0
       
                                       
Balance at September 30, 1996-unaudited
    
85,160
   
852
   
1,217,564
   
(1,218,416
)
  
0
       

See the accompanying notes to the consolidated financial statements
*Adjusted for stock splits

7

USCorp.
(an Exploration Stage Company)
Statement of Consolidated Changes in Shareholders’ Equity
From Inception, May 1989 to March 31, 2006
As Restated
(Continued)


   
Common
Shares
  
Common
Par Value
  
Paid in
Capital
  
Accumulated
Deficit
  
Total
  
Stock
Price *
  
   
                           
Stock issued for mining claim
    
150,000
   
1,500
   
598,500
         
600,000
 
$
0.20
  
                                       
Issuance of common stock
    
50,000
   
500
   
59,874
         
60,374
 
$
0.06
  
                                       
Stock issued for services
    
14,878
   
149
   
29,608
         
29,757
  
$
0.10
  
                                       
Net loss fiscal 1997
                      
(90,131
)
  
(90,131
)
      
                                       
Balance at September 30, 1997-unaudited
    
300,038
   
3,001
   
1,905,546
   
(1,308,547
)
  
600,000
       
                                       
Capital contributed by shareholder
                
58,668
          
58,668
        
                                       
                                       
Net loss fiscal 1998
                      
(58,668
)
  
(58,668
)
      
                                       
Balance at September 30, 1998-unaudited
    
300,038
   
3,001
   
1,964,214
   
(1,367,215
)
  
600,000
       
                                       
Capital contributed by shareholder
                
28,654
          
28,654
        
                                       
Net income fiscal 1999
                      
(26,705
)
  
(26,705
)
      
                                       
Balance at September 30, 1999-unaudited
    
300,038
   
3,001
   
1,992,868
   
(1,393,920
)
  
601,949
       
                                       
Capital contributed by shareholder
                
22,750
          
22,750
        
                                       
Net loss fiscal 2000
                      
(624,699
)
  
(624,699
)
      
                                       
Balance at September 30, 2000-unaudited
    
300,038
   
3,001
   
2,015,618
   
(2,018,619
)
  
0
       

See the accompanying notes to the consolidated financial statements

*Adjusted for stock splits

8

USCorp.
(an Exploration Stage Company)
Statement of Consolidated Changes in Shareholders’ Equity
From Inception, May 1989 to March 31, 2006
As Restated
(Continued)



   
Common
 
Common
 
Paid in
 
Accumulated
      
Stock
  
   
Shares
  
Par Value
  
Capital
  
Deficit
 
Total
  
Price *
  
                           
                           
Issuance of common stock
    
103,535
   
1,035
   
611,943
         
612,978
 
$
0.15
  
                                       
Issued stock for compensation
    
50,000
   
500
   
19,571
         
20,071
 
$
0.04
  
                                       
Capital contributed by shareholder
                
21,719
         
21,719
       
                                       
Net loss fiscal 2001
                      
(654,768
)
  
(654,768
)
      
                                       
Balance at September 30, 2001-unaudited
    
453,573
   
4,536
   
2,668,851
   
(2,673,387
)
  
0
       
                                       
Issued stock to purchase mining claim
    
24,200,000
    
242,000
   
2,207,466
         
2,449,466
 
$
0.10
  
                                       
Issued shares to employees
    
267,500
    
2,675
   
(2,675
)
        
0
 
$
0.00
  
                                       
Capital contributed by shareholders
                
143,480
         
143,480
       
                                       
                                       
Net loss for the fiscal year
                      
(2,591,671
)
  
(2,591,671
)
      
                                       
Balance at September 30, 2002-unaudited
    
24,921,073
   
249,211
   
5,017,122
   
(5,265,058
)
  
1,275
       
                                       
Issued stock for services
    
872,000
   
8,720
   
264,064
         
272,784
 
$
0.31
  
                                       
Beneficial conversion feature
                
3,767
         
3,767
       
                                       
Capital contributed by shareholders
                
81,472
         
81,472
       
                                       
                                       
Net loss for the fiscal year
                      
(865,287
)
  
(865,287
)
      
                                       
Balance at September 30, 2003
    
25,793,073
   
257,931
   
5,366,425
   
(6,130,345
)
  
(505,989
)
      

See the accompanying notes to the consolidated financial statements

*Adjusted for stock splits

 

9

USCorp.
(an Exploration Stage Company)
Statement of Consolidated Changes in Shareholders’ Equity
From Inception, May 1989 to March 31, 2006
As Restated
(Continued)

   
Common
 
Common
 
Paid in
 
Accumulated
      
Stock
  
   
Shares
  
Par Value
  
Capital
  
Deficit
 
Total
  
Price *
  
                           
                           
Issuance of common stock
    
550,000
    
5,500
   
206,500
         
212,000
 
$
0.39
  
                                       
Issued stock to pay bills
    
1,069,945
   
10,699
   
460,077
         
470,776
 
$
0.44
  
                                       
Issued stock for services
    
2,118,441
    
21,184
   
652,714
         
673,898
 
$
0.32
  
                                       
Net loss for the fiscal year
                      
(964,108
)
  
(964,108
)
      
                                       
Balance at September 30, 2004
    
29,531,459
 
$
295,314
  
$
6,685,716
    
($7,094,453
)
  
($113,423
)
      
                                       
Issuance of common stock
    
150,000
   
1,500
   
46,500
         
48,000
 
$
0.32
  
                                       
Issued stock for services
    
2,840,000
   
28,400
   
331,600
         
360,000
 
$
0.13
  
                                       
Issued stock to pay debt
    
400,000
   
4,000
   
50,000
         
54,000
 
$
0.14
  
                                       
Issuance of warrants
                
1,817
         
1,817
       
                                       
Net loss for the fiscal year
                      
(628,337
)
  
(628,337
)
      
                                       
Balance at September 30, 2005
    
32,921,459
   
329,214
   
7,115,633
   
(7,722,790
)
  
(277,943
)
      
                                       
Issued stock for services
    
1,135,000
   
11,350
   
90,800
         
102,150
 
$
0.09
  
                                       
Net loss for the period
                      
(430,326
)
  
(430,326
)
      
                                       
Balance at March 31, 2006
    
34,056,459
 
$
340,564
  
$
7,206,433
    
($8,153,116
)
  
($606,119
)
      

See the accompanying notes to the consolidated financial statements

*Adjusted for stock splits


10


USCorp.
(an Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Six Months Ended March 31, 2006 and March 31, 2005

1.    
 Organization of the Company and Significant Accounting Principles

USCorp. (the “Company”) is a publicly held corporation formed in May 1989 in the state of Nevada as The Movie Greats Network, Inc. In August 1992, the Company changed its name to The Program Entertainment Group, Inc. In August 1997, the Company changed its name to Santa Maria Resources, Inc. In September 2000, the Company changed its name to Fantasticon, Inc. and in January 2002 the Company changed its name to US Corp.

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

The Company, through its wholly-owned subsidiary, USMetals, owns 141 Lode Mining Claims in the Eureka Mining District of Yavapai County, Arizona, called the Twin Peaks Mine; and through its wholly-owned, subsidiary Southwest Resource Development, Inc., owns 8 Lode and 21 Placer Claims in the Mesquite Mining District of Imperial County, California, which the Company refers to as the Chocolate Mountain Region Claims, and 1 Placer and 1 Lode claim which the Company refers to as the Kingman Area Claims, near Kingman, Arizona. As announced by the Company on May 5, 2006, based on the exploration and test results, the Company has determined that it is not economically viable to pursue exploration or development of this property any longer. Accordingly, due to certain conditions of the acquisition not being met, title to the claims has reverted back to prior claim holder.

The Company has no business operations to date.

Use of Estimates- The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make reasonable estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses at the date of the financial statements and for the period they include. Actual results may differ from these estimates.

Cash and interest bearing deposits- For the purpose of calculating changes in cash flows, cash includes all cash balances and highly liquid short-term investments with an original maturity of three months or less.

Long Lived Assets- The Company reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount.

11

USCorp.
(an Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Six Months Ended March 31, 2006 and March 31, 2005

1.    
Organization of the Company and Significant Accounting Principles (Cont.)

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. Costs incurred to acquire mineral interest in properties, to drill and equip exploratory sites within the claims groups are expensed to the Statement of Operations. Costs to conduct exploration and assay work that does not find proved reserves, geological and geophysical costs and costs of carrying and retaining unproved sites are expensed to the statement of operations. Potential mineral properties are periodically assessed for impairment of value and a loss will be recognized at the time of impairment.

Revenue Recognition- Mineral sales will result from undivided interests held by the Company in mineral properties. Sales of minerals will be recognized when delivered to be picked up by the purchaser. Mineral sales from marketing activities will result from sales by the Company of minerals produced by the Company (or affiliated entities) and will be recognized when delivered to purchasers. Mining revenues generated from the Company’s day rate contracts, included in mine services revenue, will be recognized as services are performed or delivered.

Exploration Stage Company- the Company has had no operations or revenues since its inception and therefore qualifies for treatment as an Exploration Stage company as per Statement of Financial Accounting Standards (SFAS) No. 7. As per SFAS No.7, financial transactions are accounted for as per generally accepted accounting principles. Costs incurred during the development stage are accumulated in “losses accumulated during the development stage” and are reported in the Stockholders’ Equity section of the balance sheet.

2.     
Going Concern

The accompanying consolidated financial statements have been presented in accordance with generally accepted accounting principals, which assume the continuity of the Company as a going concern. However, the Company has incurred significant losses since its inception and has no business operations and continues to rely on the issuance of shares to raise capital to fund its business operations.

Management’s plans with regard to this matter are as follows:


12

USCorp.
(an Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Six Months Ended March 31, 2006 and March 31, 2005


2. Going Concern (Cont.)
- Raise capital to complete the Company’s mining plan of operations.
- Complete exploration and drilling on claims of the Twin Peaks Mine in the Eureka Mining District of Arizona and Chocolate Mountain Region Claims in the Mesquite Mining District of California.
- Complete testing, reports and feasibility studies on the Twin Peaks Mine in the Eureka Mining District of Arizona and Chocolate Mountain Region Claims in the Mesquite Mining District of California; and
- Bring the Twin Peaks Mine in the Eureka Mining District of Arizona and Chocolate Mountain Region Claims in the Mesquite Mining District of California to full-scale commercial mining.

3. Net Loss per Share

The Company applies SFAS No. 128, “Earnings per Share” to calculate loss per share. In accordance with SFAS No. 128, basic net loss per share has been computed based on the weighted average of common shares outstanding during the years, adjusted for the financial instruments outstanding that are convertible into common stock during the years. At March 31, 2006, there were 155,000 shares of preferred stock and 155,000 preferred warrants convertible into that were convertible into 620,000 shares of common stock, however these financial instruments have been excluded from the calculation of loss per share because their inclusion would be anti-dilutive.

Loss per share has been calculated as follows:

   
31-Mar-06
  
31-Mar-05
  
Net loss before cumulative preferred dividend
    
($430,326
)
  
($167,082
)
Cumulative dividend preferred
    
(9,342
)
  
0
  
Net loss
    
($439,668
)
  
($167,082
)
Weighted average
    
33,704,831
    
29,827,647
 
Basic & fully diluted net loss per common share
    
($0.01
)
  
($0.01
)

4. Related Party Transactions

During the six months ended March 31, 2006 and March 31, 2005, the Company was provided office space by the chief executive officer and majority shareholder.

During the six months ended March 31 2006, the Company repaid $135,606 of advances from a shareholder. The Company imputed interest of 9% on the outstanding advance balance based on the Company’s current borrowing rate, and recorded interest of $3,043 in the statement of operations.


13

USCorp.
(an Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Six Months Ended March 31, 2006 and March 31, 2005



4. Related Part Transactions (Cont.)
In September 2005, the Company issued a promissory note to a shareholder and received proceeds of $635,663. The note requires the Company to pay the shareholder 1,634 ounces of Gold Bullion (.999 pure) in September 2007. The note is unsecured and carries interest of 9%. As a result of the transaction, the Company recorded interest expense of $28,596 and a loss on the underlying derivative gold contract of $110,600 in the statement of operations for the six months ended March 31, 2006.

5. Gold Bullion Promissory Note

In September 2005, the Company issued a promissory note to a shareholder and received proceeds of $635,663. The note requires the Company to pay the shareholder 1,634 ounces of Gold Bullion (.999 pure) in September 2007. As a result of the transaction, the Company recorded interest expense of $28,596 and a loss on the underlying derivative gold contract of $110,600 in the statement of operations for the first six months of fiscal year 2006. The loss on the underlying derivative gold contract has been calculated as follows.

Carrying value of loan
 
$
664,729
  
Fair value of loan
    
790,625
 
Life to date loss on unhedged underlying derivative
  
$
125,896
  


6. Property and Equipment

A summary of equipment is as follows:

   
31-Mar-06
  
30-Sep-05
  
Office equipment
  
$
7,585
  
$
6,581
  
Accumulated depreciation
    
(3,571
)
  
(2,575
)
Net property & equipment
  
$
4,014
  
$
4,006
  


14

USCorp.
(an Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Six Months Ended March 31, 2006 and March 31, 2005

7. Issuances of Common stock

During the first six months of fiscal year 2006, the Company issued 1,135,000 valued at $.09 per share for a total value of $102,150: 835,000 shares of common stock to consultants for services, 300,000 shares were issued to the former owners of the Chocolate Mountain Region Claims in exchange for waiving any time limit to develop the property.

Subsequent to the date of this report the Company has issued to a European Fund 5,000,000 Class B non-voting Common Shares of a 25,000,000 share commitment of a 250,000,000 share private placement under Regulation S. Under Regulation S these shares will trade outside of the United States. The European fund has listed these shares on the Open Market (Freiverkehr) of the Frankfurt Exchange in Germany. The Company expects to receive 0.068 Euros per share upon consummation of the private placement.

8. Warrants Outstanding

At March 31, 2006, common stock warrants outstanding were comprised as follows:

   
Amount
  
Wgtd Avg Exercise Price
  
Wgtd Years to Maturity
  
Outstanding at September 30, 2005
    
155,000
             
Issued
    
0
             
Outstanding at March 31, 2006
    
155,000
 
$
0.50
    
0.79
 

 
15

USCorp.
(an Exploration Stage Company)
Notes to Consolidated Financial Statements
For the Six Months Ended March 31, 2006 and March 31, 2005

9. Income Tax Provision
 
Provision for income taxes is comprised of the following:
   
 31-Mar-06
  
31-Mar-05
  
Net loss before provision for income taxes
    
($288,087
)
  
($140,688
)
Current tax expense:
              
Federal
  
$
0
  
$
0
  
State
    
0
    
0
  
Total
  
$
0
  
$
0
  
Less deferred tax benefit:
              
Timing differences
    
(2,228,159
)
  
(1,539,566
)
Allowance for recoverability
    
2,228,159
   
1,539,566
 
Provision for income taxes
  
$
0
  
$
0
  
               
A reconciliation of provision for income taxes at the statutory rate to provision for income taxes at the Company's effective tax rate is as follows:
              
               
Statutory U.S. federal rate
    
34
%
  
34
%
Statutory state and local income tax
    
10
%
  
10
%
Less allowance for tax recoverability
    
-44
%
  
-44
%
Effective rate
    
0
%
  
0
%
               
Deferred income taxes are comprised of the following:
              
               
Timing differences
  
$
2,228,159
  
$
1,539,566
  
Allowance for recoverability
    
(2,228,159
)
  
(1,539,566
)
Deferred tax benefit
  
$
0
  
$
0
  
 
Note: The deferred tax benefits arising from the timing differences begin to expire in fiscal year 2010 and may not be recoverable upon the purchase of the Company under current IRS statutes.
 
10. Subsequent Events

On April 21, 2006 USCorp increased the number authorized common class A shares from 300,000,000 to 550,000,000 shares by amendment to the articles of incorporation.

As announced by the Company on May 5, 2006, based on the exploration and test results, the Company has determined that it is not economically viable to pursue exploration or development of the Kingman Area Tailings any longer. Accordingly, due to certain conditions of the acquisition not being met, title to the claims has reverted back to prior claim holder.
 

16

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
You should read the following discussion and analysis in conjunction with the Consolidated Financial Statements and Notes thereto, and the other financial data appearing elsewhere in this Report.
 
The information set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, including, among others (i) expected changes in the Company's revenues and profitability, (ii) prospective business opportunities and (iii) the Company's strategy for financing its business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as "believes", "anticipates", "intends" or "expects". These forward-looking statements relate to the plans, objectives and expectations of the Company for future operations. Although the Company believes that its expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of its knowledge of its business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved.
 
The Company's revenues and results of operations could differ materially from those projected in the forward-looking statements as a result of numerous factors, including, but not limited to, the following: (i) changes in external competitive market factors, (ii) termination of certain operating agreements or inability to enter into additional operating agreements, (iii) inability to satisfy anticipated working capital or other cash requirements, (iv) changes in or developments under domestic or foreign laws, regulations, governmental requirements or in the mining industry, (v) changes in the Company's business strategy or an inability to execute its strategy due to unanticipated changes in the market, (vi) various competitive factors that may prevent the Company from competing successfully in the marketplace, and (ix) the Company's ability to raise additional capital. In light of these risks and uncertainties, there can be no assurance that actual results, performance or achievements of the Company will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. The foregoing review of important factors should not be construed as exhaustive. The Company undertakes no obligation to release publicly the results of any future revisions it may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
 
Significant Accounting Policies and Estimates
 
Management's Discussion and Analysis of Financial Condition and Results of Operations discusses the Company's consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to reserves and intangible assets.  Management bases its estimates and judgments on historical experiences and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. These accounting policies are described at relevant sections in this discussion and analysis and in the notes to the consolidated financial statements included in our Annual Report on Form l0-KSB for the fiscal year ended September 30, 2005.
 

17

OVERVIEW
 
The Company is an "exploration stage" company. During period ended March 31, 2006, the Company's operations centered on completing exploration of USMetals' mining property known as the Twin Peaks Mine, Southwest’s mining property known as the Chocolate Mountain Region claims, and its mining property known as the Kingman Area Mine Tailings. During the period, the Company did not engage in any commercially viable operations and realized no revenues from operations. The annual operating costs incurred to date were primarily for the continued exploration of the Company's mining properties, obtaining permits and approvals, maintenance of the Company's website, legal, accounting costs in conjunction with the Company's general and administrative expenses in anticipation of completing exploration of USMetals' and Southwest’s mining properties and related acquisition costs. The annual payment to the Bureau of Land Management (BLM) for the claims owned by the Registrant is $125 per claim effective September 1, 2004.
 
All of the Company's mining business activities are conducted at this time through its subsidiaries, USMetals and Southwest Resource Development, Inc.
 
The Company, through its wholly-owned subsidiary, USMetals, owns 141 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. 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 for four years, with the goal of commencing mineral production. 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.

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 equity or debt financing in Europe, North America and Asia via private placement, working interest joint venture, and/or gold bullion loans.

Chocolate Mountain Region Claims Acquisition

On June 15, 2004 the Company filed a Form 8-K with the Securities and Exchange Commission reporting that 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 was obligated to commence production on these claims with the former owners entitled to receive 20% of all net returns of gold, whether paid in cash or in kind. Further, in the event that the Company subsequently sells the claims, then the sellers will be entitled to receive 20% of the proceeds of such sale.
 
18

The Company gave each of the two sellers 150,000 shares of the Company’s common stock in exchange for waiving the Company’s obligation to commence gold production within any time period. The Company now has unencumbered rights to explore and develop these properties at any time without risk of the claims reverting to their prior owners.
 
Kingman Area Tailings Acquisition
 
On February 14, 2005, the Company filed a Form 8-K with the Securities and Exchange Commission reporting that the Company concluded the acquisition of 2 additional gold mining claims located near Kingman, Arizona from a private corporation. These claims consist of one 20 acre lode claim and one 40 acre placer claim. The placer claim covers and includes the underlying lode claim. In lieu of cash payment for the claims the Company entered into what is essentially a joint venture with the former owners entitling them o receive a minority percentage of all net returns of gold, after expenses, whether paid in cash or in kind.
 
As announced by the Company on May 5, 2006, based on the exploration and test results, the Company has determined that it is not economically viable to pursue exploration or development of this property any longer. Accordingly, due to certain conditions of the acquisition not being met, title to the claims has reverted back to prior claim holder. Subsequent to the date of this report the 250,000 shares issued in connection with this acquisition were cancelled and returned to the treasury.
 
MANAGEMENT'S EXPLORATION PLANS

In order to improve operations and liquidity and meet its cash flow needs, the Company has or intends to do the following:

- Secure additional equity or debt financing needed to accomplish corporate goals from private sources and institutional funds, nationally and internationally;
 
- Complete acquisitions of other potential producing properties in regions near our present Twin Peaks Mine, our California properties and in other areas of Arizona, California and Nevada;
 
- Establish a corporate office in Arizona, field offices on or near the Company’s properties in California and Arizona and an office centrally located near the financial markets of Southern California;
 
- Complete exploration of the Twin Peaks Mine, and Chocolate Mountain Region Claims, in order to determine reserves, the best mining methods and recovery rates by implementing a comprehensive exploration program on all claims owned by the Company;
 
- Retain an environmental consulting firm to design post-production reclamation programs;
 
- Complete bankable feasibility studies meeting SEC standards for placing the true reserve value of existing claims on the financial statements;
 
- Complete, file and secure approvals for drilling, reclamation and Mining Plans of Operations with the U.S. Bureau of Land Management (BLM); and

- Obtain a credit facility based in part on the value of its proven reserves when necessary and if appropriate given market conditions.

As a result of these plans, management believes that it will generate sufficient cash flows to meet its obligations in 2006. On April 27, 2006, the Company signed a term sheet with Dutchess Capital Management, LLC providing for an equity line of credit of up to $10,000,000. The Company anticipates executing definitive documents for the equity line in its third fiscal quarter of 2006. However, no assurances can be given that such definitive documents will be executed.

19

Discussion of Financial Condition.

As of March 31, 2006 the Company had total assets of $306,792 with total liabilities of $52,121. The Company has incurred a net loss of approximately $430,326 for the three months ended March 31, 2006.

During the quarter, the Company implemented a test drilling program on the Company’s Kingman Area Tailings as announced in a press release dated March 21, 2006. In addition management has continued to acquire and implement office systems upgrades in preparation for completing exploration and mining permitting of the Company’s properties.

The Company will require significant additional funds in order to complete exploration of the Twin Peaks Mine and its other properties. Subsequent to the date of this report the Company has entered into a term sheet with Dutchess Capital Management, LLC providing for an equity line of credit of up to $10,000,000.  Based upon available cash on hand, management is of the opinion that, without additional financing, the Company will have adequate funds available to meet its cash needs for the next three (3) months, and through the remainder of the current fiscal year.  Thereafter, it will need to secure additional funds in order to continue its operations.

Subsequent to the date of this report the Company has issued to a European Fund 5,000,000 Class B non-voting Common Shares of a 25,000,000 share commitment of a 250,000,000 share private placement under Regulation S. Under Regulation S these shares will only trade outside of the United States. The European fund has listed these shares on the Open Market (Freiverkehr) of the Frankfurt Exchange in Germany. The Company expects to receive 0.068 Euros per share upon consummation of the private placement.
 
ITEM 3. CONTROLS AND PROCEDURES

Under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.

There has been no change in the Company's internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

There are currently no legal proceedings against the company at this time.
 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.
 
Item 3. Defaults Upon Senior Securities.

None.

20

Item 4. Submission of Matters to a Vote of Security Holders.
 
There were no matters requiring a vote of security holders during this period.

Item 5. Other Information.
 
On October 29, 2003 we announced a non-binding letter of intent to acquire International Energy and Resources, Inc. (“IERI”), and on March 12, 2004 we announced an extension to that Letter of Intent. The non-binding letter of intent has been cancelled by all parties. IERI was recently acquired by another corporation. We are discussing with IERI’s new parent corporation, U.S. American Resources, Inc., possible mining-related business operations.
 
On July 14, 2004 we announced consulting agreements with Victor Asai and Glenn Martin. Mr. Asai and Mr. Martin are no longer providing consulting services to the Company. Both men remain shareholders of USCorp.
 
On January 31, 2005, we filed an 8-K with the SEC and issued a press release announcing a Letter of Intent to acquire a private Arizona corporation which owned mining claims near Kingman, Arizona. We did not acquire this corporation; instead we acquired the claims from the corporation.

ITEM 6. EXHIBITS

   (a) Exhibits:
 
 
31.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
31.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
32.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

21
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

USCORP      
       
By:   /s/ ROBERT DULTZ      
Robert Dultz
Chairman and Chief Executive Officer
Dated: May 12, 2006
    
 
       
By:  /s/ SPENCER EUBANK      
Spencer Eubank
Secretary-Treasurer and Acting Chief Financial Officer
Date: May 12, 2006
    
 
22