Edgar Filing: USCORP - Form 10QSB/A

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

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FORM 10-QSB/A
AMENDMENT NO. 1

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 2002

[ ] 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
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(Exact name of registrant as specified in its charter)

Nevada 87-0403330
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(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)

4535 W. SAHARA AVE. SUITE 204
Las Vegas, NV 89102
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(Address of principal executive offices)

(702) 933-4034
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(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 [_]

As of June 30, 2002, the Registrant had 25,571,067 shares of Common Stock par
value $0.01 outstanding.

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USCORP
TABLE OF CONTENTS

Page
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PART I -- FINANCIAL INFORMATION
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Item 1. Financial Statements

Independent Auditors Report 3

Consolidated Balance Sheets as of June 30, 2002 and
September 30, 2001 ........................................... 4

Consolidated Statements of Operations for the three
and nine months ended June 30, 2002 and 2001 ................ 5

Consolidated Statement of Shareholders' Equity for
the period ended June 30, 2002 ............................... 6

Consolidated Statements of Cash Flows for the
nine months ended June 30, 2002 and 2001 ..................... 7

Notes to Consolidated Financial Statements .... ............... 8

Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................... 19

PART II -- OTHER INFORMATION
----------------------------

Item 2. Change in Securities and Use of Proceeds 22

Item 6. Exhibits and Reports on Form 8-K............................... 22

SIGNATURE............................................................... 23
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

The Shareholders
USCorp
4535 W. Sahara Ave. Suite 204
Las Vegas, Nevada 89102

I have audited the accompanying consolidated balance sheet of USCorp (formerly
Fantasticon, Inc.) and Subsidiary as of June 30, 2002 and the related
consolidated statements of income and changes in stockholders' equity, and cash
flows for the period ended June 30, 2002 and 2001. These financial statements
are the responsibility of management. My responsibility is to express an opinion
on these financial statements based on my audit.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements presented are free from
material misstatement. The audit includes assessing the accounting principles
used and significant estimates made by the management, as well as evaluating the
overall financial statement presentation. I believe that my audit provides a
reasonable basis for my opinion.

In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of USCorp
and Subsidiary, a development stage company, for the dates indicated above and
the results of their consolidated operations, stockholders' equity and cash
flows for the year then ended in conformity with generally accepted accounting
principles consistently applied.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in the Notes to
the consolidated financial statements, the Company has suffered losses from
operations and has a lack of net capital that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are described in Note 1. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

Henry Schiffer, CPA
An Accountancy Corporation
Beverly Hills, California
August 16, 2002

USCORP AND SUBSIDIARY
(a Development Stage Company)
CONSOLIDATED BALANCE SHEET

June 30, September 30,
2002 2001
----------- -------------

ASSETS
Current Assets:
Cash $ 118 $ -
----------- -------------
Other Assets:
Mineral properties -- at cost based on successful
efforts method of accounting, net of accumulated
depletion and amortization 1975 to 2001 2,115,758 -

Annual Assessment Work and Lease Payments to the BLM
1975 to 2001 319,600 -
----------- -------------

Total Assets $ 2,435,476 $ -
=========== =============
LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:
Accounts Payable $ 5,364 $ -
----------- -------------

Total Current Liabilities 5,364 -

Shareholders' Equity:
Common stock, $.01 par value; authorized 100,000,000
shares; issued, and outstanding 25,571,067 at
June 30, 2002; 10,560,657 at September 30, 2001. 255,711 105,607
Additional paid in capital 5,410,193 2,567,777
Retained deficit (3,235,792) (2,673,384)
----------- -------------

Total Shareholders' Equity 2,430,112 -
----------- -------------

Total Liabilities & Shareholders' Equity $ 2,435,476 $ -
=========== =============

The accompanying notes are an integral part of these financial statements.

USCORP AND SUBSIDIARY
(a Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDING
JUNE 30,2002 AND JUNE 30, 2001

Nine Months Ended Three Months Ended
----------------------- -----------------------
June 30, June 30,
2002 2001 2002 2001
---------- ---------- ---------- ----------

Net Sales $ - $ - $ - $ -
Less Cost Of Sales - - - -
---------- ---------- ---------- ----------
Gross Profit - - - -

Administrative Expenses:
Consulting 11,000 - 9,000 -
Public Relations 2,794 - 2,794 -
Accounting & Legal 40,179 - 14,275 -
Travel 2,354 - 869 -
Corporate Maintenance 2,248 - 877 -
Communications & Clerical 8,801 - 4,289 -
Transfer Agent 4,084 - 3,000 -
Bank Charges 60 - - -
Office Expenses 4,766 - - -
Officer Expenses 5,000 - - -
Printing 986 - - -
Utilities 774 - - -
Entertainment 1,500 - - -
---------- ---------- ---------- ----------
Total Administrative Expenses 84,544 - 35,104 -

Loss From Operations (84,544) - (35,104) -
Other Income (expenses):
Interest Income - - - -
Interest Expense - - - -
---------- ---------- ---------- ----------

Net Loss Before Income Tax Provision (84,544) - (35,104) -
Income Tax Expense - - - -
---------- ---------- ---------- ----------

Net Loss $ (84,544) $ - $ (35,104) $ -
========== ========== ========== ==========
Earnings Per Common Share:
Basic $ ( .00) - $ ( .00) -
========== ========== ========== ==========
Weighted Average Of Common Share:
Basic 25,337,083 - 10,560,657 -
========== ========== ========== ==========

The accompanying notes are an integral part of these financial statements.

USCORP AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
FOR THE PERIOD ENDED JUNE 30,2002

Common Stock
------------------------ Additional Retained
Shares Amount Paid-In Capital Deficit Total
---------- ---------- --------------- ----------- ----------

Balance at September 30 2001 10,560,657 $ 105,607 $ 2,567,777 $(2,673,384) $ 0
Combination of Retained Deficit and
Development Stage Deficit
---------- ---------- --------------- ----------- ----------

Balance at December 31, 2001 10,560,657 105,607 2,567,777 (2,673,384) 0

Cancellation of 6,025,000 common stock (6,025,000) (60,250) 60,250 0

Adjustment 1 for 10 split down (4,082,091) (40,821) 40,821 0

Issue 24,200,000 shares to acquire USMetals 24,200,000 242,000 (242,000) 0

Issue 650,000 shares per 2002 Employee
Compensation Plan 650,000 6,500 (6,500) (480,000) (480,000)

Increase in Paid in Capital 2,435,358 2,435,358

Expense 650,000 shares @ $.72 per share 480,000 480,000

Issue 310,000 shares to officers and directors 310,000 3,100 (3,100) 0

Cancellation of 42,500 common stock (42,500) (425) 425 0

Capital contributed by a stockholder 84,662 84,662

Loss from Operations (84,544) (84,544)
---------- ---------- --------------- ----------- ----------

Balance at June 30, 2002 25,571,067 $ 255,711 $ 5,417,693 $ (3,237,928) $2,435,476

The accompanying notes are an integral part of these financial statements.

USCORP AND SUBSIDIARY
(a Development Stage Company)
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDING
JUNE 30, 2002 AND JUNE 30, 2001

June 30, June 30,
2002 2001
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Operating Activities
Net Loss
Changes in Other Operating Assets & Liabilities: $ (84,544) $ -
Accrued Expenses - -
--------- ---------

Net Cash Provided By (used by) Operations (84,544) -
--------- ---------

Financing Activities:
Contributed Capital by Stockholders 84,662 -
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Net Cash Provided by Financing Activities 84,662 -
--------- ---------

Net Increase (decrease) in Cash During Fiscal Year 118 -
Cash Balance at beginning of Fiscal Year - -
--------- ---------
Cash Balance at End of Period $ 118 $ -
========= =========
Supplemental Disclosures of Cash Flow Information:
Interest Paid During the Fiscal Year - -
Income Taxes Paid During the Fiscal Year - -

The accompanying notes are an integral part of these financial statements.

USCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002

NOTE 1 - ORGANIZATION AND ACCOUNTING POLICIES

Nature of Operations

USCorp (the "Company") is a publicly held corporation formed on May 22, 1989 in
the state of Nevada as The Movie Greats Network, Inc. On August 4, 1992, The
Company changed its name to the Program Entertainment Group, Inc. and on August
5, 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 USCorp.

On October 15, 2000, pursuant to an agreement signed on September 1, 2000, the
Company's wholly owned subsidiary, Fantasticon.com, Inc., a Nevada corporation,
merged with Fantasticon.Com, Inc., a Delaware corporation, Madman Backstage
Productions, Inc., and Impact Interactive, Inc. Pursuant to the agreement, Santa
Maria Resources Inc. changed its name to Fantasticon Inc. and effected a 1:2
reverse split of its common stock. As a condition of the agreement, Santa Maria
divested itself of its business operations prior to the merger. The merger was
rescinded in its entirety by the shareholders in January 2002. 6,025,000 shares
issued to former management have been cancelled and returned to the Treasury. In
addition, effective March 6, 2002 the Company effected a 1:10 reverse split of
its common stock. Accordingly, equity has been restated to reflect the number of
shares outstanding after the cancellation of said shares and the subsequent
reverse split. The statement of operations presented for the three months ended
June 30, 2002 and 2001 and the balance sheet presented at June 30, 2002
represent the results of operations and financial position of USCorp and
USMetals.

In April 2002 USCorp acquired USMetals, Inc. ("USMetals"), a Nevada corporation
as a wholly owned subsidiary. All of the Company's mining business operations
are conducted at this time through USMetals. USMetals owns 141 Lode Mining
Claims near Bagdad, Arizona, called the Twin Peaks Mine.

Management Plans

The company has incurred a net loss of approximately $84,662 during 2002. At
June 30 2002, current liabilities are $5,364 and current assets are
approximately $2,435,476.

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

o Raise $20,000,000 in a private placement.
o Resume and complete exploration and drilling on all claims of the
Twin Peaks mine.
o Build a test plant.
o Complete feasibility studies on the Twin Peaks mine.
o Bring the Twin Peaks mine to full-scale commercial mining.
o 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 current obligations in 2002 and 2003.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company, and
its wholly owned subsidiary, USMetals, Inc. ("USMetals"). All significant
intercompany accounts and transactions have been eliminated in consolidation.

The Company conducts all of its mining operations through its wholly owned
subsidiary, USMetals. International Energy Resources, Inc. ("IERI") has agreed
to continue to supervise and direct the work of the mine Exploration and
Development Team upon adequate funding of the project.

Mineral Properties

The Company uses the successful efforts method of accounting for mineral
properties. Under this methodology, costs incurred to acquire mineral interest
in properties, to drill and equip exploratory sites within the Twin Peaks claims
groups are capitalized. Costs to conduct exploration and assay work that does
not find proved reserves, geological and geophysical costs and costs of carrying
and retaining unproved sites will be expensed.

Potential mineral properties that are individually significant will be
periodically assessed for impairment of value and a loss will be recognized at
the time of impairment by providing an impairment allowance. Other unproved
properties will be amortized based on the Company's experience of successful
drilling and historical lease expirations.

An impairment loss is indicated whenever net capitalized costs exceed expected
future net cash flow based on engineering estimates. In this circumstance, the
Company will recognize an impairment loss for the amount by which the carrying
value of the properties exceeds the estimated fair value (based on discounted
cash flow).

On the sale or retirement of a complete claim of proved property, the cost and
related accumulated depletion and amortization will be eliminated from the
property accounts, and the resultant gain or loss will be recognized. On the
retirement or sale of a partial claim of property, the cost will be charged to
accumulated depletion and amortization with a resulting gain or loss recognized
in earnings.

NOTE 2 MINING CLAIMS ACQUIRED AND PURCHASED-APPRAISED VALUES:

The Company owns 141 unpatented contiguous mining claims totaling approximately
2,820 acres in Township 13, 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 1978 the 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.

Appraisal and Valuation

The Late Mr. N. H. Carouso, formerly President of Geo-Processing, Inc., was
retained in 1985 by the prior owners of these claims to prepare an Economic
Evaluation of the 134 claims in the group at that time. Mr. Carouso earned a
Bachelor of Arts and a Master of Science degree from the University of
California, College of Engineering, Department of Mineral Technology and Mining.
This report was for the recovery of gold and silver only.

The following is a statement from Mr. Carouso's report:

"The mining claims project area offers excellent economic potential. With the
gold and silver mineralization cropping out at the surface and the favorable
topography for surface mining techniques, it is felt that an early cash flow can
be expected. The gross dollar potential of the areas evaluated, which the writer
(Mr. Carouso) feels represents only about 30% of the potential of the entire
group of claims, if combined, could be $280,836,000.00. Even if one then takes a
50% confidence factor as to the grade of ore, the gross dollar potential would
be $115,418,000., and with an expected 70% recovery of precious metals, the
adjusted gross dollar potential would be $80,792,600.00 based on a spot price of
$325/oz, for gold and $6.00/oz. for silver, and mining to a depth of 100 feet."

Other minerals are available from these claims as reported from the United
States Geological Survey conducted in 1940. Of the minerals listed, one of the
most notable was a content of Uranium Ore, U308 (Yellow Cake) which has a
content ranging from .43% to 1.77% by volume. The Company has discussed the
potential availability of mining U308 Uranium Ore. Management intends upon
receipt of adequate funding to determine viability of economical recovery of
uranium.

Additional minerals referred to as "Complex Ores" that have been identified on
these claims have been ignored due to the expensive and sophisticated process of
mining "Complex Ores." Management intends upon receipt of adequate funding to
determine the extent of "Complex Ore" deposits and the feasibility of their
economical recovery.

Revenue Recognition

Mineral sales result from undivided interests held by the Company in various
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.

Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax basis of assets and liabilities and their financial
reporting amounts based on enacted laws and statutory rates applicable to the
period in which the differences are expected to affect taxable income. Valuation
allowances are established when, in management's opinion, it is more likely than
not that a portion or all of the deferred tax assets will not be realized.

Use of Estimates

In preparing financial statements, generally accepted accounting principles
require management to make estimates and assumptions in determining the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Recent Accounting Pronouncements

On July 20, 2001, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 is effective for all business combinations completed after
June 30, 2001. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001; however, certain provisions of SFAS No. 142 apply to goodwill
and other intangible assets acquired between July 1, 2001 and the effective date
of SFAS No. 142.

Major provisions of SFAS Nos. 141 and 142 and their effective dates for the
Company are as follows:

o All business combinations initiated after June 30, 2001 must use the
purchase method of accounting. The pooling of interest method of accounting
is prohibited, except for transactions initiated before July 1, 2001.

o Intangible assets acquired in a business combination must be recorded
separately from goodwill if they arise from contractual or other legal
rights or are separable from the acquired entity and can be sold,
transferred, rented or exchanged, either individually or as part of a
related contract, asset or liability.

o Effective January 1, 2002, goodwill and intangible assets with indefinite
lives will be tested for impairment annually and whenever there is an
impairment indicator.

o All acquired goodwill must be assigned to reporting units for purposes of
impairment testing and segment reporting.

In June 2001, FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations, and in August 2001, issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 143 requires entities to
record the fair value of liability for an asset retirement obligation in the
period in which it is incurred and a corresponding increase in the carrying
amount of the long-lived asset. Subsequently, the asset retirement cost should
be allocated to expense using a systematic and rational method. SFAS No. 143 is
effective for fiscal years beginning after June 15, 2002. SFAS No. 144 addresses
financial accounting and reporting for the impairment of long-lived assets and
for long-lived assets to be disposed of. It supersedes, with exceptions, SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets to Be Disposed Of,
and is effective for the fiscal years beginning after December 15, 2001. The
Company is currently assessing the impact of SFAS Nos. 143 and 144. However, at
this time, the Company does not feel that the impact of these statements will be
material to its consolidated financial position or results of operations.

NOTE 3 - STOCKHOLDERS' EQUITY

On May 1, 2002, the Company adopted an employee stock option plan for certain
employees with a maximum of 2,045,357 shares, which may be issued and granted
exercisable at $.72 per share. During 2002, the Company issued and granted a
total of 650,000 options under the plan.

Option Terms. The plan provides for incentive stock options and non-qualified
stock options. The committee or the Registrant's Board of Directors will
determine whether an option is an incentive stock option or a non-qualified
stock option when it grants the option and the option will be evidenced by an
agreement describing the material terms of the option. The committee or the
Registrant's Board of Directors will determine the exercise price of an option.
The exercise price of an incentive stock option may not be less than the fair
market value of the Registrant's Common Stock on the date of the grant, or less
than 110% of the fair market value if the participant owns more than 10% of the
Registrant's outstanding Common Stock. When the incentive stock option is
exercised, we will be entitled to place a legend on the certificates
representing the shares of Common Stock purchased upon exercise of the option to
identify them as shares of Common Stock purchased upon the exercise of an
incentive stock option. The exercise price of non-qualified stock options may be
greater than, less than or equal to the fair market value of the Common Stock on
the date that the option is awarded, based upon any reasonable measure of fair
market value. The committee may permit the exercise price to be paid in cash or
by the delivery of previously owned shares of Common Stock, and, if permitted in
the applicable option agreement, through a cashless exercise executed through a
broker or by having a number of shares of Common Stock otherwise issuable at the
time of exercise withheld.

The committee or the Registrant's Board of Directors will also determine the
term of an option. The term of an incentive stock option or non-qualified stock
option may not exceed ten years from the date of grant, but any incentive stock
option granted to a participant who owns more than 10% of the Registrant's
outstanding Common Stock will not be exercisable after the expiration of five
years after the date the option is granted. Subject to any further limitations
in the applicable agreement, if a participant's employment terminates, an
incentive stock option will terminate and become unexercisable no later than
three months after the date of termination of employment. If, however,
termination of employment is due to death or disability, one year will be
substituted for the three-month period. Incentive stock options are also subject
to the further restriction that the aggregate fair market value, determined as
of the date of the grant, of the Registrant's Common Stock as to which any
incentive stock option first becomes exercisable in any calendar year is limited
to $100,000 per recipient. If incentive stock options covering more than
$100,000 worth of the Registrant's Common Stock first become exercisable in any
one calendar year, the excess will be non-qualified options. For purposes of
determining which options, if any, have been granted in excess of the $100,000
limit, options will be considered to become exercisable in the order granted.

The Company has decided to expense the value of the options when granted to
account for its employee option plan in which compensation is recognized at the
date of the grant. The fair market value exercise price of all options was the
average of the closing price of the Company's stock for the five day period
preceding the registration of the option shares. Accordingly, the compensation
cost has been recognized for the options issued.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

General Commitments

The company has secured various commitments related to development and
production of its mineral properties contingent upon receipt of adequate
funding. It is management's belief that such commitments will not have
significant adverse impact to the Company's financial position or results of
operations.

Leases

As of the date of this report, all office furniture and equipment has been
contributed by a shareholder. In March 2002, the 141 lode mine claims leases
were transferred to USMetals, Inc. These claims leases are renewable annually by
USMetals. Rent expense under these leases is $14,100 each year.

Litigation

The Company is not a party to any matters of litigation.

NOTE 5 - RELATED PARTY TRANSACTIONS

Joint Venture Agreements

USMetals, Inc. has no joint venture agreements at this time. Mining exploration
and development has been performed under the general supervision and direction
of International Energy and Resources, Inc., ("IERI") which was under agreement
with prior owners of the property. IERI has agreed to provide similar services
to the Company upon securing adequate financing. IERI will supervise and direct
third parties for the purpose of completing the exploration and development of
the Twin Peaks Mine claims group.

NOTE 6 - ACQUISITION OF BUSINESS

On April 2, 2002, the Company acquired USMetals, Inc. ("USMetals") for
24,200,000 shares of its common stock in a share-for-share exchange whereby
USMetals became a wholly owned subsidiary of USCorp. USMetals owns the 141 lode
mining claims known as the Twin Peaks mine near Baghdad, Arizona. The fair value
of the property is based upon the values that were estimated by field
personnel. The estimated fair market values of the assets acquired and
liabilities assumed in the acquisition of USMetals are as follows:

Estimated fair value of assets acquired
Property 319,600
Mine Development
Hayes Mining, Phillips Mining 400,000
American Metals and Minerals 297,758
Santa Maria Resources 600,000
International Energy and Resources 818,000
---------
Total fair value of assets 2,435,358

Liabilities assumed
Annual Lease Payment -
----------
Estimated fair value of acquisition $2,435,358
==========

The following summarizes pro forma unaudited projections of results of
operations for the first five years of full scale commercial production. These
estimates were prepared for a prior owner of the property by Ernst and Whinney.
Management believes these projections are a fair representation of the potential
of the Twin Peaks Mine. However, management cannot guarantee any particular
result in any given year, or that full scale commercial production will commence
in any given year or will continue in any succession of years. These pro forma
projections are not necessarily indicative of future results.

Please note that the price per ounce of Gold used by Ernst and Whinney in these
projections is $400. This price and the corresponding values in the projections
which follow should be reduced by 25% in order to reflect the current range of
prices per ounce of Gold.

PROJECTED
CASH FLOW
FIRST 5 YEARS

YEAR YEAR YEAR YEAR YEAR TOTAL
1 2 3 4 5
----------- ------------- ------------ ------------- ------------ -------------

Statistics
Tons of ore mined (000) 276 690 1,380 2,760 4,140 9,246
Ore reserve, beginning of year 3.6 million 10.8 million 25.1 million 48.7 million 95.9 million
New Proven Reserves (Tons) 7.5 million 15.0 million 25.0 million 50 million 100 million 191.8 million
Ore Grade - Gold (oz/ton) 0.12 0.12 0.12 0.12 0.12
- Silver (oz/ton) 0.57 0.57 0.57 0.57 0.57
Tons of Ore processed (000) 276 690 1,380 2,760 4,140 9,246
Recoverable oz - Gold 33,120 82,800 165,600 331,200 496,800 1,109,520
- Silver 157,320 393,300 786,600 1,573,200 2,359,800 5,270,220
Sales in oz - Gold 33,120 82,800 165,600 331,200 496,800 1,109,520
- Silver 157,320 393,300 786,600 1,573,200 2,359,800 5,270,220

------------------------------------ ----------- ------------- ------------ ------------- ------------ -------------
Revenue - Gold @ $400/oz. 13,248,000 33,120,000 66,240,000 132,480,000 198,720,000 443,808,000
- Silver @ $5/oz. 786,600 1,966,500 3,933,000 7,866,000 11,799,000 26,351,100
----------- ------------- ------------ ------------- ------------ -------------
Total Revenue 14,034,600 35,086,500 70,173,000 140,346,000 210,519,000 470,159,100

Operating Costs: Mining 1,290,000 1,770,100 2,760,000 4,560,000 5,904,000 16,284,100
Processing 2,021,800 2,692,200 4,162,700 6,517,600 8,805,600 24,199,900
G&A (site) 364,200 439,800 666,600 1,069,800 1,473,000 4,013,400
----------- ------------- ------------ ------------- ------------ -------------
Total Operating Expenses 3,676,000 4,902,100 7,589,300 12,147,400 16,182,600 44,497,400
Capital Expenditures 4,629,700 3,846,750 6,574,600 10,135,300 20,456,300 45,642,650
----------- ------------- ------------ ------------- ------------ -------------
Total Expenditures 8,305,700 8,748,850 14,163,900 22,282,700 36,638,900 90,140,050
Income Taxes 4,284,742 13,240,579 27,803,954 57,545,435 87,006,857 189,881,567
Net Cash Flow after Taxes 1,444,158 13,097,071 28,205,146 60,517,865 86,873,243
Accumulated Net Cash Flows 1,444,158 14,541,229 42,746,375 103,264,240 190,137,483 190,137,483
Present Value - Beginning of Year
10% 1,312,871 10,824,026 21,190,943 41,334,516 53,941,449 128,603,805
12% 1,289,427 10,440,904 20,075,865 38,460,197 49,294,211 119,560,604
14% 1,266,805 10,077,771 19,037,670 35,831,434 45,119,240 111,332,920
16% 1,244,964 9,733,257 18,069,843 33,423,478 41,361,482 103,833,024

PROJECTED
PROFIT/LOSS

FIRST 5 YEARS

YEAR YEAR YEAR YEAR YEAR
1 2 3 4 5
--------- ----------- ------------ ------------ -----------

Net Cash Flow Before Taxes 5,728,900 26,337,650 56,009,100 118,063,000 173,880,100

Add - Capital Expenditures 4,629,700 3,846,750 6,574,600 10,135,300 20,456,300
Less - Depreciation (462,970) (847,645) (1,505,105) (2,518,635) (4,564,265)
Less - Depletion (15% Gross) (2,105,190) (5,262,975) (10,525,950) (21,051,900) (31,577,850)
--------- ----------- ------------ ------------ -----------
Taxable Income 7,790,440 24,073,780 50,552,645 104,627,765 158,194,285

State Income Tax (10%) 779,044 2,407,378 5,055,265 10,462,777 15,819,429
7,011,396 21,666,402 45,497,381 94,164,989 142,374,857
federal Income Tax (50%) (3,505,698) (10,833,201) (22,748,690) (47,082,494) (71,187,428)

Net Income 3,505,698 10,833,201 22,748,690 47,082,494 71,187,428

The operations of USMetals are included in the accompanying consolidated
financial statements subsequent to the acquisition.

NOTE 7 - MINERAL RESERVE DATA (UNAUDITED)

The following estimates of proved reserve quantities and related standardized
measure of discounted net cash flows are estimated only, and do not purport to
reflect realizable values or fair market values of the Company's reserves. The
Company emphasizes that reserve estimates are inherently imprecise and that
estimates of new discoveries are more imprecise than those of producing mining
properties.

Accordingly, these estimates are expected to change as future information
becomes available. All of the Company's reserves are located in the United
States, in the State of Arizona.

The following is a quote from a report prepared by International Energy and
Resources, Inc. (The full report is available from the Company upon written
request). All references to "Exhibits" refer to Exhibits of IERI's Report.

"...The Twin Peaks Mine is on the same structure and flat zone as the Phelps
Dodge deposit. The claims and previous producing mines are on the Jasper Peak
with gold carrying mineralization ... To date, numerous geological, geochemical,
and geophysical studies have been conducted to confirm historical assays and
establish estimated reserves. In the 1980's over 10,000 feet of core drillings
were done 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,
which proves over 652,000 ounces of gold and 2,488,000 ounces of silver in
reserve using 1 area covering 3 claims. At $250 per ounce for gold and $5.00 per
ounce for silver this represents $175,440,000.00. If we extend the depth to 400
ft. (early miners tunneled to this depth and the drilling results verified ore
to this depth) the total amount would be multiplied by 4 and the value would be
$701,760,000.00. If we extend the same areas to a depth of 2,000 ft, which is
the depth that the Phelps Dodge Mine in Bagdad is being mined, the estimated
inferred reserves would be approximately: $3,508,800,000.000 (over 3.5 billion
dollars).

Some of the geological, geophysical, and geochemical studies listed above were
audited and evaluated by Nicholas H. Carouso, President of Geo-Processing, Inc.
which was an independent mining, consulting, and geology firm. Mr. Carouso's
report and economic study recommended the continuation of exploration and start
of production. (*Excerpts from Carouso's report and assays mentioned above are
part of exhibits #4, #5, and #6 [of IERI's Report])

In January 2001, International Energy and Resources, Inc. hired Spooner and
Associates to do further geological studies. Spooner and Associates have over
100 years of mining experience (*see Twin Peaks Mine Mining Team). After Spooner
and Associates' Senior Geologist Scott Spooner and Cad Drawing Survey Specialist
Eric C. Monk audited the geological studies previously mentioned they visited
The Twin Peaks Mine in late January 2001. In March of 2001, by recommendation of
Spooner and Associates, International Energy and Resources, Inc. mobilized a
crew to build approximately 10 miles of road to gain access to the historic
Hayes Mining area. This would enable them to conduct further geological studies.
(*see exhibit #1 [of IERI's Report]).

In late March 2001 International Energy and Resources, Inc. hired Hillbrands and
Western Mining Co. to drill holes so that ore samples could be collected and
assayed. They have currently drilled approximately 30 holes measuring 100 ft. in
depth for a total of 3,000 ft. of drill cuttings. Spooner and Associates
retained over 30 samples for assaying. In conjunction with the drilling
operation, Spooner and Associates have also taken numerous ground samples from
two different locations surrounding the historic Hayes Mine. These samples have
also been assayed. The results of the geological studies were as follows:

Drill hole #30 was subject to a standard fire assay as well as oxidation prior
to standard fire assaying. This assay and oxidation process was conducted on
cuttings taken at a depth of 40-50ft. The standard fire assay results revealed
gold values of .20 opt (ounces of ore per ton); while oxidation followed by fire
assaying showed gold values of 1.16 opt. This structure is approximately 3,400
ft. long x 100 ft. wide x 100 ft. in depth. This yields reserves of 2,014,815
tons of ore x 1.16 opt gold equaling 2,337,185 ounces of gold. The lower results
from the standard fire assaying are due to the presence of sulfides and
arsenides that tend to drive the gold and silver into the slag phase during
standard fire assaying (*see exhibit #2). With this in mind it is reasonable to
assume that all previous standard fire assays done would increase 5.8 times
through oxidation prior to fire assaying.

Rock material from the hanging wall and footwall of the quartz vein were subject
to crushing, screening, and fire assaying. The results from the quartz dike
revealed an average of .57 opt from fire assaying and 5.8 times or 3.31 opt
using the oxidation method. That yields reserves of 16,694,056 ounces of gold.
Rock chips were taken from the red conglomerate located just south of the Hayes
Mine and just west of the volcanic plug. The fire assays revealed .20 opt of
gold. As stated previously oxidation prior to fire assaying should increase the
gold amount by 5.8 times to 1.16 opt. This area has ore reserves of 2,395,477
ounces of gold. These three areas have a combined total of 9,138,687 tons of
ore, which yields a total of 21,426,718 reserves ounces of gold.

From these studies it is International Energy and Resources, Inc.'s and Spooner
and Associates' recommendation that USMetals, Inc...do a fly over to determine
areas of mineralization...a six month drilling program using reverse circular
and core drilling to depths of 500 ft. per hole in conjunction with a pilot mill
to further prove and develop reserves. It is important to note that
International Energy And Resources, Inc. hasn't done any work on the Crosby area
of the claims, and that history of this area is very favorable to further
development."

Potential ore reserves are estimated reserves of ore that geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years form known ore deposits under existing economic and operating
conditions.

Operating costs and production taxes are estimated with respect to production of
mineral properties. Future development costs are based on the best estimate of
such costs assuming current economic and operating conditions.

Income tax expense is computed based on applying the appropriate statutory tax
rate to the excess of future cash inflows less future production and development
costs over the current tax basis of the properties involved, less applicable
carryforwards, for both regular and alternative minimum tax.

The future net revenue information assumes no escalation of costs or prices,
except for mineral sales which may be made under terms of contracts which would
include fixed and determinable escalation. Future costs and prices could
significantly vary from estimated amounts and, accordingly, revisions in the
future could be significant.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION OR PLAN OF OPERATIONS

You should read the following discussion and analysis in conjunction with the
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, licensing
requirements or telecommunications standards, (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

Prior to April 2002, the Company, a development-stage company, did not have any
business operations.

Liabilities assumed
Annual Lease Payment -
----------
Estimated fair value of acquisition $2,435,358
==========

As a result of the acquisition and change in control of the Company, the
following individuals have been added to the Company's board of directors
following the closing of the acquisition: Robert Dultz, Michael D. Love, Donald
E. Brown and Tom Owens, an outside director. Mr. Dultz has become the Chairman
of the Board of Directors and Mr. Love and Mr. Brown have become Vice Presidents
of the Company.

Complete details of the transaction have been disclosed in a Current Report on
Form 8-K dated April 2, 2002.

All of the Company's mining business operations are conducted at this time
through its subsidiary, USMetals. International Energy Resources, Inc. has
agreed to continue to supervise and direct the work of the mine Exploration and
Development Team upon adequate funding of the project.

As a result of the acquisition, the Company owns 141 unpatented contiguous
mining claims totaling approximately 2,820 acres in Township 13, 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
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.

Appraisal and Valuation

The following is a statement from Mr. Carouso's report:

MANAGEMENT PLANS

The company has incurred a net loss of approximately $84,662 during 2002. At
June 30 2002, current liabilities are $5,364 and current assets are
approximately $2,435,476.

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

o Raise $20,000,000 in a private placement.

o Resume and complete exploration and drilling on all claims of the Twin
Peaks mine.

o Build a test plant.

o Complete feasibility studies on the Twin Peaks mine.

o Bring the Twin Peaks mine to full-scale commercial mining.

o 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 current obligations in 2002 and 2003.

PART II - OTHER INFORMATION

ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS

During this period the Registrant issued 24,200,000 shares of common stock (the
"Acquisition Shares") to the stockholders of USMetals, Inc., in consideration
for the acquisition of all the issued and outstanding shares of USMetals.

The Acquisition Shares were issued in reliance upon an exemption from
registration provided by Section 4(2) of the Securities Act of 1933.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits :

99.1 Certification Pursuant to Section 906 of the Sarbanes-oxley Act
of 2002 *

(b) Reports on Form 8-K:

In a report dated April 2, 2002, Registrant reported under Item 1,
change in control of Registrant; under Item 2, the acquisition of USMetals;
Inc., and under Item 5, reported Directors, Proposed Directors, Officers,
and Proposed Officers of Registrant; New Committees of the Registrant's
Board of Directors.

* Previously filed

SIGNATURE

Pursuant to the requirements 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

Date: August 23, 2002 By: /s/ Larry Dietz
-------------------------
Larry Dietz
President and Director

By: /s/ Robert Dultz
--------------------------
Robert Dultz
Chairman, Chief Executive Officer,
Chief Financial Officer